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25 in Chicago suburbs taking first steps
Old 04-22-2014, 04:39 PM   #1
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25 in Chicago suburbs taking first steps

My fiance (getting married next june) and I turned 25 early this year and have been doing some planning for our futures. Our current plan is to try and retire at some point between the ages of 35 and 40. Currently we are finishing paying off our student loans so we can focus more on retirement savings and possibly a down payment on a house.

current retirement savings ~70k (almost all in stocks atm)
income 115k pre tax
expenses ~33k/year
Debt ~18k student loans and ~17k car loans
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Old 04-22-2014, 05:10 PM   #2
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Quote:
Originally Posted by smurphy1 View Post
My fiance (getting married next june) and I turned 25 early this year and have been doing some planning for our futures. Our current plan is to try and retire at some point between the ages of 35 and 40. Currently we are finishing paying off our student loans so we can focus more on retirement savings and possibly a down payment on a house.

current retirement savings ~70k (almost all in stocks atm)
income 115k pre tax
expenses ~33k/year
Debt ~18k student loans and ~17k car loans
Based on the info provided I would say the chances of both of you never working again by age 40 is very small. You could maybe quit your fulltime jobs and do occasional work but I would call that semi-retired not retired. Good luck though.
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Old 04-22-2014, 05:12 PM   #3
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Welcome to the forum!

The best thing is that you're thinking about retirement. Many people don't until much later, sometimes too late. That said, I believe that unless you're willing to permanently adopt a very lean lifestyle I think you'll find targeting retirement at 35 or 40 a bit optimistic unless you expect dramatic increases in income later on.

There's a link to FIRECalc at the bottom of the page and that will give you a place to start.
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Old 04-22-2014, 05:55 PM   #4
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Welcome to the forum!

The best thing is that you're thinking about retirement. Many people don't until much later, sometimes too late. That said, I believe that unless you're willing to permanently adopt a very lean lifestyle I think you'll find targeting retirement at 35 or 40 a bit optimistic unless you expect dramatic increases in income later on.

There's a link to FIRECalc at the bottom of the page and that will give you a place to start.
Thanks. I am expecting a significant increase in my salary over the next several years but as you say it might not be enough. At this point we don't really know what lifestyle we will want but we are happy with the lean one we live now. Saving a lot now gives us the freedom to choose later.
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Old 04-22-2014, 06:11 PM   #5
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If you go ERE you might be able to make it but the suburbs of Chicago are expensive! Still, if you can figure it all out let us know as I would love to achieve your goals myself
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Old 04-23-2014, 01:15 AM   #6
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Originally Posted by smurphy1 View Post
Thanks. I am expecting a significant increase in my salary over the next several years but as you say it might not be enough. At this point we don't really know what lifestyle we will want but we are happy with the lean one we live now. Saving a lot now gives us the freedom to choose later.
I was thinking that you will likely see a few raises in the next 15 years, considering you and your fiance are just 25 and assuming you are in positions that have some kind of career paths (and the boomers are going to have to leave the work force sooner or later, which has been predicted to make employment prospects for your age group very interesting). Some people try to live on one spouse's salary and to not spend those raises when they happen, which could have a sweet impact on your nest egg; a few good years in the markets will also likely happen. Keep doing what you've been doing in terms of finances and you should be just fine imho.

And remember to enjoy the journey.
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Old 04-23-2014, 01:31 AM   #7
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Let's say your $70k savings doubles to $140k in 10 years, when you are 35. In fact, let's say it goes to $200k with additional contributions, etc. Since you'd be living off your nest egg for so long (50 years, if not more), assume you'd use a 2 percent nest egg withdrawal rate instead of the more conventional 4 percent. That would give you only $4,000 a year to live off of. But since math is not my strong point, agree with others that you should toy with FIREcalc and other planning tools. But don't despair. Just the fact that you are thinking about finances at your age puts you ahead of the game- and most of the people in the country. A pat on the back is on order!
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Old 04-23-2014, 05:15 AM   #8
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Let's say your $70k savings doubles to $140k in 10 years, when you are 35. In fact, let's say it goes to $200k with additional contributions, etc. Since you'd be living off your nest egg for so long (50 years, if not more), assume you'd use a 2 percent nest egg withdrawal rate instead of the more conventional 4 percent. That would give you only $4,000 a year to live off of. But since math is not my strong point, agree with others that you should toy with FIREcalc and other planning tools. But don't despair. Just the fact that you are thinking about finances at your age puts you ahead of the game- and most of the people in the country. A pat on the back is on order!
These numbers are WAY off.

Looks to me like you are in line to save $30k+ per year right now and could certainly increase that over time if your income increases faster than expenses. 10 years + investment increases which should be a minimum of $400k + extra savings + what you have now.

Personally I'd plan on a closer to 3-4% WR but you can see what Firecalc comes up with there. Based on $33k in expenses that means getting to around $1M in savings so while 10 years might be tough I could certainly see it happening by age 40.

Sounds to me like you're on a good track.
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