Thursday, March 29, 2007

Goals of retirement

Right now I have the goal in mind of retiring at 55 and DH 57. I think it's a really ambitious goal and one I doubt we'll be able to reach. But there is nothing wrong with dreaming.

As I stated in my previous post, my biggest concern is covering our medical costs associated with retiring early without group medical insurance. I think this could be circumvented by us saving a lot, or we could both work part-time jobs that offer group medical coverage. I'm not sure yet what the best option would be.

Right now we're on track I believe to replace 100% of our current income. However this is an unrealistic number because we're at 50% earning power, and starting out in our careers. So I'm really not sure how much we'll really need. But the best I can do is estimate what we'll need.

Somewhere I read that we should save 25 x our current salary in order to generate a nest egg large enough for a withdrawal rate of 4% without running out. That means we need to save about $3 million. I'm currently planning for double that. I think we will in reality end up close to the $4-5 million dollar range.

Another issue for us, is that retirement at 55 may not be feasible if we don't hurry and have our children. Our parents were done childbearing at this age, so we had left home by their 50th birthdays if not 45. So they were able to spend these past 10 years building their retirement kitty, while DH and I are trying to do it now in the earlier years of our careers. I'm not sure which is a better plan kids early and save more later, or save now and have kids later. I think it's a toss up, mainly because our parents were probably more mature than we are to have had children so early. So it's not just financial reasons that delay us from having children.

Anyway my current goals for retirement is retire with $6M at the age of 55, already have paid for college and the home, and travel and see the world.

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