Author Topic: Is This Thinking Okay? Calculating Nest Egg for Two Goal Posts  (Read 1622 times)

CornusKousa

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Is This Thinking Okay? Calculating Nest Egg for Two Goal Posts
« on: December 14, 2016, 06:56:44 PM »
Hi folks,
New convert to the Mustachian way here. I'm in the process of figuring out my numbers, but I couldn't find a satisfying calculator because I've two goalposts.
• FI - earlier the better
• RE - where I mayhave long-term health care costs and need a bigger nest egg

From the blog, I read that optimism is a component of thinking like a Mustachian, so I wonder if this conservatism veers into paranoia. I see the importance of investing in one's own health from this calculation, at least. If this line of thinking is reasonable though, are the formulas I'm using reasonable?

• ROR = 5% after inflation
• FV of nest egg at age of FI=FV(ROR, (age of FI - current age), -(annual contribution), -(current nest egg), contribution made at end of year)
• FV of nest egg at age of RE=FV(ROR, (age of RE - age of FI), (current annual spending + ACA), -(FV of nest egg at age of FI), withdrawal made at beginning of year)

Thanks!
-C
« Last Edit: December 16, 2016, 08:36:59 AM by CornusKousa »

CornusKousa

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• Posts: 2
Re: Is This Thinking Okay? Calculating Nest Egg for Two Goal Posts
« Reply #1 on: December 16, 2016, 08:42:43 AM »
While I think the formulas are decent, I applied a little optimism and found I could hit FI sooner if I thought less about goalposts and more about what I wanted to do with my freedom. Thus I've nixed the link.

See you on the bright side,
-C

arebelspy

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Re: Is This Thinking Okay? Calculating Nest Egg for Two Goal Posts
« Reply #2 on: January 25, 2017, 05:19:46 PM »
While I think the formulas are decent, I applied a little optimism and found I could hit FI sooner if I thought less about goalposts and more about what I wanted to do with my freedom.

Definitely good!  I'd think you'd still want to calculate projections to various milestones though, no?

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Proud Foot

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Re: Is This Thinking Okay? Calculating Nest Egg for Two Goal Posts
« Reply #3 on: January 26, 2017, 12:16:30 PM »
Those look like good formulas but make it seem more like you have a FI and ER goals of a specific age rather than amount.  Once you have those FI and ER amounts you can use your formulas to check if your current annual contributions will get you to those amounts by your goal age or if you need to increase contributions.   Welcome to the forums and it looks like you have a good start!