Working Toward Retirement – June

Hooray! We are back in the black this month – up $3,882. Anytime we have positive growth, it’s always a good feeling.

One of these days I’ll get around to sharing my financial spreadsheet. More specifically, my compound interest calculator for retirement. Until I get the time to figure out how to record my screen and do a voice over, I’ll just talk about it.

My goal is to retire when I’m 62. Our youngest will be 18, so Christy will be wrapping her career as a teacher to our home schooled children, so we can retire together.

To do that, I have a goal of $2 million in our retirement savings. I know that is more than enough, but I want to account for dips in the market.

My original goal was $1.4-$1.6 million. I looked at all the major crashes since the start of the stock market and most ranged from 15-30%. I wanted to give us a 30% buffer to account for downturns in the market so we can weather them through until the market goes back up.

To do that by 62 we will have to average a 12% rate of return on our investments. I think we can do that.

Our current rate of return since October in my work 401k is 27%. My investments in both my work 401k and Vanguard accounts have 10 year rate of returns averaging 13-17% and Christy’s Betterment account has a rate of return of 22%.

I know those are high and times are fairly good, but with that, I feel pretty good about us having an average return of 12% over the next 16 years and meeting that $2 million retirement goal. Even if we had a 10% rate of return and ended up at $1.6 million, we’d be absolutely fine. I’m just overly cautious.

I ran a lot of scenarios through my spreadsheet and anywhere we land, it’s looking like we’ll be able to have significantly more annually than we are living off of now (if Social Security is still around) to travel and be generous to those we love and charitable organizations.

My hope is to be those parents that people we know always tell us about. Their parents will rent a 10 bedroom house on the beach once a year for all of their family to spend a week together or take all their children and grandchildren to Disney. We’d love it if we could make that happen for our kids.