Simple Retirement Plan

[Tyler Newleaf]

I have been reading MMM for a few years now and he has shaped a few of the things I do.  I haven't quite hit his level of frugality, or matched many of the readers I've seen on here.  I would love to retire "early" but I'm just not sure if it's possible for me because of some of the debt I've racked up. 

I just wanted some feedback on my general plan...If I retire with no mortgage, no car payments or consumer debt, and I max out my retirement funds starting at age 35, is it fair to say that is a decent plan?   I have some other investments but taking all of that out of the equation, if I retire at 60, would that be enough or am I way behind the 8ball on this one?  I'd love to hear people's thoughts.

[ohana]

Well, you need to do a bit more homework.  What are your annual expenses, for example?

[WerKater]

I have been reading MMM for a few years now and he has shaped a few of the things I do.  I haven't quite hit his level of frugality, or matched many of the readers I've seen on here.  I would love to retire "early" but I'm just not sure if it's possible for me because of some of the debt I've racked up. 

I just wanted some feedback on my general plan...If I retire with no mortgage, no car payments or consumer debt, and I max out my retirement funds starting at age 35, is it fair to say that is a decent plan?   I have some other investments but taking all of that out of the equation, if I retire at 60, would that be enough or am I way behind the 8ball on this one?  I'd love to hear people's thoughts.

Depends:
- How much do you spend annually?
- What does it mean exactly in your case to max out your retirement funds? How large a stash are you projecting to have at age 60?

[forummm]

Use something like cFIREsim or FIREcalc to see if your savings rate and expenditures are in line for that kind of retirement.

[Tyler Newleaf]

Thanks for all of the responses...so for some additional information.

Looking at my yearly spending, deducting mortgages and car loans, I'm right about the 55k a year mark.  I'm sure I could chisels this down more, but if I'm being honest this is where I'm at now.

I used the 401k and Roth IRA calculators and they came up with the figures that at 60, I would have:
401k: 2.1 million
IRA:  334,000

I'll have to take a look at the FIREcalc. 

[RWD]

Thanks for all of the responses...so for some additional information.

Looking at my yearly spending, deducting mortgages and car loans, I'm right about the 55k a year mark.  I'm sure I could chisels this down more, but if I'm being honest this is where I'm at now.

I used the 401k and Roth IRA calculators and they came up with the figures that at 60, I would have:
401k: 2.1 million
IRA:  334,000

I'll have to take a look at the FIREcalc.

I assume those numbers come from $23.5k/year invested for 25 years at 9.7%? If we assume 2% inflation then you'll need to sustain about $90.2k/year in 25 years. Using the 4% rule that means you would need $2.26 million. So yes, your plan should work.

$55k/year is pretty high if you're not including your mortgage and car payments. How many people are you supporting? How many people will you be supporting after retirement? For comparison, my wife and I spend about $20k/year combined (excluding mortgage and car payments). You may wish to start a case study thread if you want help with your budget.

[Tyler Newleaf]

Now that you mention it, this year I did spend more than normal due to a wedding and new house purchase.  I was just trying to gauge how much those retirement investments would support.  RWD, thanks for the response!  I have a few investment properties and my wife is a teacher, so that will also help.  I should dial back some of the spending and become a little more meticulous with the tracking of it.  Perhaps early retirement could still be a reality...

[Spork]

As others have said: you do need more detail.  How much you spend matters a lot.

That said: Your general plan was mine.  I believe DW and I started when I was about 32.  We started examining/trimming expenses and maxing out savings.  I retired at 50.  Like you, I think my spending is "more than most here" ... but still "way less than my peers."

[Tyler Newleaf]

Thanks Spork,  yea that sounds about right.  I'm 33 now, have some money saved up and some investments.  I'm a few months away from paying off the last of my stupid consumer debt and I can start maxing those out.    I think the trick is, as others have eluded to, trimming down and allocating that money to something that will help make money.  RWD had a good point about the case study.  I think that would be helpful to say the least.