how am I doing

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date how am I doing s o 06-20-2007  Re: how am I doing learnfpga@gmail... 06-20-2007  Re: how am I doing s o 06-20-2007  Re: how am I doing Will Trice 06-20-2007  Re: how am I doing BreadWithSpam 06-22-2007  Re: how am I doing jIM 06-20-2007  Re: how am I doing s o 06-21-2007  Re: how am I doing joetaxpayer 06-21-2007  Re: how am I doing jIM 06-21-2007  Re: how am I doing s o 06-21-2007  Re: how am I doing Bill Woessner 06-20-2007  Re: how am I doing Douglas Johnson 06-21-2007  Re: how am I doing Bill Woessner 06-21-2007  Re: how am I doing BreadWithSpam 06-22-2007  Re: how am I doing joetaxpayer 06-20-2007  Re: how am I doing s o 06-21-2007  Re: how am I doing joetaxpayer 06-21-2007  Re: how am I doing jIM 06-21-2007
Posted by s o on June 20, 2007, 3:16 pm Hi all, I'd like to get a sanity check on my financials, any comments are welcomed. Married with 2 kids, wife and I in the 30's. I'm the only income, slightly over $80k/yr(but had much lower paying jobs until a few years ago). I'm maxing out the 401k to get the matching(8% of salary, employer matches 50% of that, which rounds up to $8k/yr. current balance is less than $30k). My roth ira (started 3 yrs ago) balance = 13K. Just started her ira this yr with 3k. We live a frugal life, no debt except the $140k mortgage, I'm also putting away $200 - $300 per month into the kids' 529. So after all expenses and savings, we could still manage to stash maybe $1k each month(we mostly shop thrift stores, flee markets, etc.) We'd like to venture into rental properties when we've saved up enough $. We hope to retire by early or mid 50's of age, that's work part time on my own terms, pursue some hobbies and traveling. According to my Exel spreadsheet, this is quite doable, but I'd like to get a second opinion. Without the mortgage, we could live happily on $30k to $40/ yr (in today's $), I'm using a 10% annualized return over 23 yrs. My ira and 401k are diversified among US big cap, small cap, intnal and emerging market funds, no bonds. thanks in advance. s o Posted by learnfpga@gmail.com on June 20, 2007, 4:09 pm > Hi all, > > I'd like to get a sanity check on my financials, any comments are > welcomed. > > Married with 2 kids, wife and I in the 30's. I'm the only income, > slightly over $80k/yr(but had much lower paying jobs until a few years > ago). > > I'm maxing out the 401k to get the matching(8% of salary, employer > matches 50% of that, which rounds up to $8k/yr. current balance is > less than $30k). > > My roth ira (started 3 yrs ago) balance = 13K. Just started her ira > this yr with 3k. > > We live a frugal life, no debt except the $140k mortgage, I'm also > putting away $200 - $300 per month into the kids' 529. So after all > expenses and savings, we could still manage to stash maybe $1k each > month(we mostly shop thrift stores, flee markets, etc.) We'd like to > venture into rental properties when we've saved up enough $. > > We hope to retire by early or mid 50's of age, that's work part time > on my own terms, pursue some hobbies and traveling. According to my > Exel spreadsheet, this is quite doable, but I'd like to get a second > opinion. Without the mortgage, we could live happily on $30k to $40/ > yr (in today's $), I'm using a 10% annualized return over 23 yrs. My > ira and 401k are diversified among US big cap, small cap, intnal and > emerging market funds, no bonds. > > thanks in advance. > > s o I think you are doing everything right. But a few comments..... 1) Is 30-40K todays money or money after 23 years. (assuming inflation 3% per year) 2) Americans are living longer so how long will that 30-40K last after you retire? 3) I have not seen your excel sheets but may be your wife can work part-time to boost your income. Hope this helps.... Good Luck ======================================= MODERATOR'S COMMENT: Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted. Posted by s o on June 20, 2007, 7:08 pm the $30k - $40k/yr living expense is in today's dollar. the numbers I used for my Excel is as follows: annual input = 14k ($8k to 401k plus $6k to our ira's. I could put in the other $2k into her ira if I want) annualized ROI = 10% of years = 23 that gives me about $1.1 mil. these numbers don't include the extra $1k we save each month earmarked for rental/other investments. right now I just park them in a 6-month CD. any comments are welcomed. thanks. s o Posted by Will Trice on June 20, 2007, 9:39 pm s o wrote: > the $30k - $40k/yr living expense is in today's dollar. > > the numbers I used for my Excel is as follows: > annual input = 14k ($8k to 401k plus $6k to our ira's. I could put > in the other $2k into her ira if I want) > annualized ROI = 10% > of years = 23 > that gives me about $1.1 mil. $35k in today's dollars is maybe $63k in twenty years when you begin drawing down. That makes your withdrawals almost 6% of your $1.1M. That's a pretty hefty drawdown if you want you money to last you through retirement. Maybe social security can reduce your withdrawal needs? -Will Posted by on June 22, 2007, 1:59 pm > the $30k - $40k/yr living expense is in today's dollar. It's not a terrible idea to do everything in today's dollars, but that means that when you compute your growth rates, you use "real" returns, not "nominal" ones. Over the last 80 years or so, the CPI has put inflation at about 3.2%/yr (1929->2006). > annualized ROI = 10% That's a very optimistic ROI if it's assumed to be an *after inflation* (ie. "real") rate. For reference, a certain *very* well regarded balanced fund, invested at roughly 65/35 stock/bonds has returned a bit over 8% "nominal" (or about 5% "real") over that same '29->2006 period. Actual return on stocks alone? Long-run over most of the last century has been closer to 6.5 or 7% real, and that includes a historical shift over that period to a much higher P/E than was typical earlier on (when folks considered stocks "riskier"). (Note that 7% is very close to your ROI of 10% - if you are working in "nominal" rather than "real" space - but then you need to grow your spending in nominal space, too, which you don't seem to have been doing) Not to rain on your parade, but I'd rather see you use more conservative and realistic numbers in your projections. -- Plain Bread alone for e-mail, thanks. The rest gets trashed. No HTML in E-Mail! -- http://www.expita.com/nomime.html Are you posting responses that are easy for others to follow? http://www.greenend.org.uk/rjk/2000/06/14/quoting