Author Topic: Do you hypothetically calculate your wealth a retirement age if you didn't RE?  (Read 7832 times)

ender

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DW and I have been evaluating life insurance options. One of the factors we have considered is the amount of money in retirement if one of us stops working, helping to bridge Social Security survivors to retirement age/etc. This required some extrapolation of our "future planning" spreadsheet -- for retirement contributions/growth/net worth -- way past where it previously was. It had stopped at age 50 (because seriously who wants to even consider working past 50???).

Anyways, I put some additional rows on there pushing it out to age 60 to check our retirement assets for traditional retirement ages and WOW is it weird to see those numbers. If we were to stop contributing after this year we will have a million in 2015-dollars in retirement accounts when we're age 60, assuming 5% average after-inflation returns**. That's with what we have in there now... in our 20s... ignoring any more contributions over our working careers.

... so for fun, I added contributions back in and realized how easy** it is to become multimillionaires if you save even just the 401k max a year with a nominal match (no IRAs), never really get raises, have much lower than $100k total income, and work until your 50s or early 60s (not that anyone here plans on this ha).

Anyone else do something like this, for fun? I found it really encouraging to realize how dramatically different of a lifestyle my wife and I are living than most folks.

**Obviously there is a lot of uncertainty in predicting 5% after-inflation average growth for that many years, blah blah, it's fun to put 7% which was the S&P real return :)

Zamboni

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Yes, I have a spreadsheet that does this with my information.  I have columns with different return rates.  If you are in your 20's and maxing things out, then you are in awesome shape.  But don't stop making contributions yet!  Middle-aged me thanks young me for my contributions, and middle-aged you will do the same some day, so keep up the good work!

jonchappelle

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Yea, I do this too. I have a column for future predictions of savings/net worth as a mustachian, and another for my old savings rate as a blind consumerist clown (basic 401k match). When I update my budget for the week, it's a nice reminder to see how much further ahead I am now.

Cromacster

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This topic has been discussed before.  I think we figured if an individual saves 80k and lets it sit for 35 years (age 30-65), they will have 1MM by retirement.  It is sort of mind boggling how easy a traditional retirement could be with a little bit of planning.

For my wife and I if we stopped saving anything now and just let our investments sit (30-35 years), by traditional retirement age our NW would be around 5MM

JLee

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Wow, if all I did was max my 401k every year I'd have an inflation-adjusted $2.6MM by 65.  $3.3MM if I max 401k and IRA.

Exflyboy

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I was reflecting on this the other day.. I did some similar projections about 10 years ago and came up with $1.3M at this point.

Well, the laws of compound interest are real.. As of Friday I had a liquid NW of $1,539,000 plus the paid off house (I'm RE'd).

Clearly I had been saving a bit more than I was projecting and the massive run up in the last three years or so has distorted the projections (in a good way).

Now these projections I did when I had less than $100k so its cool to see it actually work.

Of course there will be a pullback at somepoint.. just don't stop buying on the way down..:)

horsepoor

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Yeah, if I work until 57.5 and max my TSP each year, I'll have more money than I know what do do with, not even counting the 32% pension plus SS, and the near certainty of having a paid off home by that point.  It's part of why I am interested in ER, or hitting FI and then shifting to part-time or freelance.  And I'm a dumbass who didn't get semi-serious until a decade into my career.

TheOldestYoungMan

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I figured out that if I worked until I was 75, lived until 92 (longest living male ancestor), making all the contributions I could, with reasonable rates of return, maintaining my expenses this low, I could potentially die with like 80 million dollars in assets.  Adjusted for inflation it's only 12.8 mil in today's dollars, but that's still a stupid amount of money.

As I'm not the type to do anything with that except die and have it ruin my loved ones' lives, I'm glad I found this community and realized that I don't actually have to sell my time, if I don't want to.  Each minute becomes more valuable than the one before, and each dollar less so.

celticmyst08

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I always roll my eyes every time I hear people complain about how "it's impossible to have a million dollars for retirement" blah blah. If I retired at 65 (40 years from now) and only contributed $500/month to retirement accounts, assuming 7% return, I would have $1.5M. Most people pay more than $500/month in credit card bills alone.

At the rate we are currently saving, if I retired in 40 years, we would have $3.45M. Once we are done paying for my tuition in two years, we will be saving way more.

birdman2003

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Today I am 30, if I keep doing what I'm doing (and assume 5% annual growth) by 40 I will have $600k and can retire.

If I work until I am 65, I would have over $3 Million ... wow ... but that's not going to happen.

BBub

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Currently 30.  5% returns at my current pace results in Fi in 7 yrs with $1.25M liquid & a paid off house.  If I kept going to 65, assuming various return estimates I'd have:

3%: $7.8 million
5%:$12 million. 
7%: $19 million
9%: $30 Million
11%: $49 Million
23% (warren buffett style): $1 Billion Dollars, muuaahhahaha

Anyone want to meet up on my private jet in 35 yrs?  (Don't worry it'll be handicap accessible).  Ok that's terrible.


dandarc

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Got a hearty laugh out of my FIL a couple years ago when they were asking about this stuff and the answer was "about $10 million if we keep doing what we are doing to age 67".

Probably won't hit that number, but not for the reasons offered that night (which were along the lines of "you can't get an 8% return!  Banks are only paying 1%!") - will probably stop saving as aggressively in the $1.5 million range as we'll have enough at that point to both quit our jobs if we are so inclined.  I expect that total to continue rising from that point, but not nearly as fast.

dividendman

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Each minute becomes more valuable than the one before, and each dollar less so.

Eloquently put.

arebelspy

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Yes, I could have tens of millions quite easily.

No thanks.

I'd rather not sell decades of my life so cheaply (or for any price).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
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pdxvandal

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My grandpa had a successful insurance career and worked all the way up to 60. That being said, he was a good investor / saver and probably had a few million bucks. He enjoyed it to an extent with plenty of snowbirding to Arizona and lived in nice, but modest, average-sized homes.

He could have easily retired at 50. I don't want to end up with too much money and too little time.

BBub

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Yes, I could have tens of millions quite easily.

No thanks.

I'd rather not sell decades of my life so cheaply (or for any price).

+10 million
« Last Edit: April 29, 2015, 01:09:17 PM by BBub »

boarder42

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yeah my spreadsheet goes down along ways and if we kept up what we do now til 50 we would have over 7MM in today's dollars. not sure what i would do with that

nottoolatetostart

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Fun game!

I just did it if my husband was working (I am planning on retiring in a few years or if I get laid off sooner). If kept working until 55 (he is 34) and kept everything the same, we'd have 7.5MM. If he went to 65, well, my Excel just blew up...15MM. He doesn't know when he wants to quit...so I give a ballpark between 41-50.

MLKnits

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Yup, and I did it both ways like you did: if I stop contributing entirely at my hoped RE age (but don't withdraw) and if I keep contributing.

Honestly, the growth from the first one was still so substantial (time + $$$$$ = $$$$$$$) that I suspect if I find myself SWAMI'd, I might revert back to being a spendypants for a while ;)

Nah, hopefully by then I'll have fully embraced the stoic joy.

chasesfish

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Yes, its easy to do.

Another twist to the game:  Once you've saved up FI money but continue to work, you could theoretically turn your savings rate to zero and the funds will still double every 8-10 years depending on.

I can't help but think how wildly different my spending could be, even if the stuff doesn't actually make someone happy.

YoungInvestor

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I've tried it up until 75 years old and dying at 100 years old, I guess I could come up with a hundred million dollars.

Is it worth it? Probably not. I want to stop at a SWR of 2% to allow for raising expenses if I feel like travelling a lot, or buy a sports car or whatnot.

ShoulderThingThatGoesUp

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Yes, its easy to do.

Another twist to the game:  Once you've saved up FI money but continue to work, you could theoretically turn your savings rate to zero and the funds will still double every 8-10 years depending on.

I can't help but think how wildly different my spending could be, even if the stuff doesn't actually make someone happy.

We'll be FI by 40, but I'll keep working to send kids to college. So this is basically the plan.

MandyM

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In today's dollars I would have something north of $3.3 million. And that is assuming I save the same amount every year, which means its a low-ball number. I'm guessing it would really be closer to the $4-5 million range if I estimated raises, bonuses, paying off mortgage, etc. At that point my expenses would hardly make a dent in it during retirement, WR somewhere around 0.75%.


soccerluvof4

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Yes, I could have tens of millions quite easily.

No thanks.

I'd rather not sell decades of my life so cheaply (or for any price).



Ahhh...so well said!!