Hi, I'm new to the forum. After devouring the blog, I took a closer look at my family's assets, and I think we may already have more than I thought saved for retirement at 60 (now I just have to worry about those pesky years before that). I tried to demonstrate this to my wife, but I couldn't get the message across. Somebody please sanity check me!
Our facts:
We each are 33 years old, so 27 years until the age where we can take no worries withdrawals from our 401(k)s (ignoring the exceptions that exist).
$272k in 401(k)s, mostly Roth money (so tax-free on withdrawal)
Assuming a 5% after-inflation annual return, this sum will be worth $1,015,500 in today's dollars when we are age 60. A 4% withdrawal rate would provide us with $40,620 annually. Our current spending is $60,000 annually (which we are taking steps to reduce to more Mustachian levels).
Additionally, we will continue to contribute enough to 401(k)s to earn the employer match as long as we both work, so the actual balance in 27 years will be somewhat higher. Plus social security will kick in at age 67 and will provide something as well.
Is it useful to look at it as we've saved 2/3 of what we need for the years 60 onward already? I was really pleasantly surprised to reach that conclusion. I'm finding that the mental gymnastics of splitting the goal of "enough to retire" into pieces like that makes it more real than just gunning for one huge number.
We have been aggressively paying down our mortgage for the last 4 years, and it will finally be gone in September (the $60k number above doesn't include any mortgage payments as we have all of the debt on a HELOC, so we just pay as much as we can each month). We don't have much in the way of liquid assets due to the focus on the mortgage.
Our plan has always been to finish off the mortgage and then max the 401(k)s, but now I am rethinking this. I may be better served to keep the 401(k) contributions at just enough to receive the match, and divert anything after that to building up a nice big base of liquid assets. I understand that I would be losing the tax deferral on the growth, but that is a trade I'm willing to make for liquidity. Thoughts?