The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Scotland2016 on December 20, 2018, 12:54:42 PM
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Hello! I love the Time to FI calculator, but our situation is less straightforward and I'm not sure how to calculate our time to FI. I would love to create an Excel spreadsheet or something, but I am not mathematically inclined. Is there a calculator out there somewhere that can help?
Here are our details:
Me (35) and Husband (53)
My annual income: $43,000
Husband's annual income: $12,000 (He is FIRE'd and has a very small business. Mostly takes care of the house/kids.)
Amount we take OUT of our investments per year: $36,000
Amount we put IN our investments per year (through my mandatory retirement): $12,470
Current annual spending: $84,765
Total investments: roughly $755,000
Thank you in advance for any suggestions!
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In order to retire at your current level of spending (~$85k), you'll need a little over $2.1M. Right now, you're not saving anything ($36k out of investments and $12k into investments). If you assuming 3% inflation and 8% interest on your investments, then you could retire in about 36 years.
**edited to update my numbers due to a math error!
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I'm a bit confused by your numbers, and there really isn't enough info, but the general advice is 25X your expenses - so a shade over $2 million dollars would be the goal. At 5% (conservative estimate of real return, assuming you've got mostly stocks in your portfolio), I'm getting on the order of 35 years if you continue to net withdraw $24K.
Of course, within 35 years you'll both reach social security eligibility, which could cover a substantial portion of your spending. And if you get 7% real instead of 5%, you're looking at more like 22 years. And most people's expenses go down in retirement.
I played around with this one to get those approximate figures.:
https://www.bankrate.com/calculators/savings/savings-withdrawal-calculator-tool.aspx (https://www.bankrate.com/calculators/savings/savings-withdrawal-calculator-tool.aspx)
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In order to retire at your current level of spending (~$85k), you'll need a little over $2.1M. Right now, you're not saving anything ($36k out of investments and $12k into investments). If you assuming 3% inflation and 8% interest on your investments, then you could retire in about 36 years.
**edited to update my numbers due to a math error!
Thank you! So to get to that number, how did you factor in the roughly $24,000 annual withdrawals?
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I'm a bit confused by your numbers, and there really isn't enough info, but the general advice is 25X your expenses - so a shade over $2 million dollars would be the goal. At 5% (conservative estimate of real return, assuming you've got mostly stocks in your portfolio), I'm getting on the order of 35 years if you continue to net withdraw $24K.
Of course, within 35 years you'll both reach social security eligibility, which could cover a substantial portion of your spending. And if you get 7% real instead of 5%, you're looking at more like 22 years. And most people's expenses go down in retirement.
I played around with this one to get those approximate figures.:
https://www.bankrate.com/calculators/savings/savings-withdrawal-calculator-tool.aspx (https://www.bankrate.com/calculators/savings/savings-withdrawal-calculator-tool.aspx)
Thank you! I really like the calculator. It helps a lot.
Can I clarify anything on our numbers? I make $43,000 a year and put a mandatory 14.5% ($6,235) into retirement, which brings my pay down to $36,765. My employer adds another $6,235 to my retirement, for a total of $12,470. We need about $84,765 per year until some large child-related expenses go away, so $84,765-$36,765-$12,000= $36,000 which we take out of investments.
Yes, our investments are mostly stocks. We aren't eligible for Social Security.
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In order to retire at your current level of spending (~$85k), you'll need a little over $2.1M. Right now, you're not saving anything ($36k out of investments and $12k into investments). If you assuming 3% inflation and 8% interest on your investments, then you could retire in about 36 years.
**edited to update my numbers due to a math error!
Thank you! So to get to that number, how did you factor in the roughly $24,000 annual withdrawals?
I used an 8% increase on your investments and annually inflated your spending (with included the increased withdrawals) by 3%.
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You might try one or more of the calculators mentioned at Best and/or Recommended Retirement Calculator - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175) and links therein.
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You might try to use the FIRE calculator that I made:
https://engaging-data.com/fire-calculator/
If there are things that you find lacking in this or other calculators, please let me know as I'm always looking for ways to improve upon the calculator.