Join Early Retirement Today
Reply
 
Thread Tools Display Modes
A small step, but...
Old 08-30-2004, 07:39 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
A small step, but...

I have a fairly simplistic spreadsheet I use to track how close I am to the "zone" where I can potentially ER. I assume an income need and step it up for inflation, assume an annual savings amount, and assume a uniform 10% annual return on all investments. The house, changes in standard of living, and (most sigbificantly) future college costs are all ignored. Like I said, it is crude, but it roughly allows me to track how close I might be to seriously thinking about ERing.

I haven't updated this sheet for about a year, but I was noodling around the PC this weekend and came across it. When I tossed in my current balance and boosted investment contributions to get closer to reality, I found that rather than being 15 or 16 years away, I am more like 12 years away. Not too shabby. Realistically, I probably won't even think about it until the mortgage is paid off (14 years) and I have some sort of plan for financing kiddies college costs. Still, its nice to know that we are at least making some progress.
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: A small step, but...
Old 08-30-2004, 03:34 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
samclem's Avatar
 
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
Re: A small step, but...

brewer12345,
- I asume you used FIRECALC (not your spreadsheet) to obtain the target value you'd need to begin ESR, right?
- Only time will tell, but my guess is that most folks here believe the next 12 years are unlikely to see 10% overall returns from a diversified portfolio. If your portfolio isn't diversified, you could do much better--or much worse.

samclem
samclem is offline   Reply With Quote
Re: A small step, but...
Old 08-30-2004, 05:00 PM   #3
Full time employment: Posting here.
 
Join Date: Mar 2004
Posts: 526
Re: A small step, but...

Hey, are the kids born yet? If so, start a 529 plan for them. You already know this, but, the earlier you start, the less you have to put in.

Check out: www.savingforcollege.com

I think that's the url. Good luck!

Anne
trumpeting_angel is offline   Reply With Quote
Re: A small step, but...
Old 08-31-2004, 04:35 AM   #4
Recycles dryer sheets
 
Join Date: May 2004
Posts: 495
Send a message via AIM to yelnad Send a message via Yahoo to yelnad
Re: A small step, but...

Even if the kids aren't born yet, you can start a 529 for them. I have one with my husband listed as the beneficiary, and as long as it's within the family, it will only cost me $10 to change it over to my child's name (when I get one!).
__________________
Yelnad --"What you're paying for is an education, not a room at the Sheraton,and sometimes that education is uncomfortable."- Jim Terhune, Dean of Student Affairs, Colgate University
yelnad is offline   Reply With Quote
Re: A small step, but...
Old 08-31-2004, 06:29 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2003
Posts: 18,085
Re: A small step, but...

samclem:

I haven't bothered using FIREcalc to get anything like an exact value. I am quite far away (in years and assets) from even the possibility of FIRE and there are a lot of variables that can change between now and then. For now, it is enough to have a rough guess of what I will need and when I get closer to "the zone" I can be a bit more exacting. I am not interested in going out with a knife's edge of safety margin anyway.

As far as my return assumptions, I am aware they are aggressive compared to what all the pundits are saying. I use 10% as my bogey and I am aware that it could be too high or too low an assumption. I primarily manage my own money, buying individual equities and the like. I have an intentionally concentrated portfolio and I try very hard NOT to replicate the indexes (aside from an intentionally indexed portfolio in a 401k). Over the past 5 years, I have had a pretty good track record, and I made plenty of nice shekels through the bear market. No guarantees that this will continue, but if t becomes clear that I don't have time for this anymore, I will turn into an indexer and live with it.

On the 529:

I am suspicious of the whole 529 deal for a number of reasons. Most of these programs are more expensive than typical mutual funds, and most of them allow far less control over participant funds than I am comfy with. Perhaps of most concern, the tax goody that motivates these things is subject to a sunset provision in 2009 or 2010. Its not at all clear that this will in fact be rectified by Congress, especially since we are in heavy deficits already and the Repugs are making noises about the whole international policeman act going on indefinately ("I am not sure we can win this war" but we are still going to spend untold billions on it). How do you guys get past the tax issue here? My kiddo was just born in June, so depending on Congress to do the right thing in 18 years is a real stretch in my mind. I'm not even convinced that Roths will truly end up being tax free (slap a national sales tax on everything and there goes a lot of your "tax free" status).
__________________
"All animals are equal, but some animals are more equal than others."

- George Orwell

Ezekiel 23:20
brewer12345 is offline   Reply With Quote
Re: A small step, but...
Old 08-31-2004, 06:48 AM   #6
Recycles dryer sheets
 
Join Date: May 2004
Posts: 495
Send a message via AIM to yelnad Send a message via Yahoo to yelnad
Re: A small step, but...

Also - the PA 529 (called the TAP program) just increased fees. There are some that are definitely better than others, but do your homework regardless.
__________________
Yelnad --"What you're paying for is an education, not a room at the Sheraton,and sometimes that education is uncomfortable."- Jim Terhune, Dean of Student Affairs, Colgate University
yelnad is offline   Reply With Quote
Re: A small step, but...
Old 08-31-2004, 05:53 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,505
Re: A small step, but...

Quote:
I'm not even convinced that Roths will truly end up being tax free (slap a national sales tax on everything and there goes a lot of your "tax free" status).
I agree here. *Personally, i think that's the strongest argument for a traditional IRA. *One bird in the hand>two in the bush. *You can be absolutely positive you'll get your tax break if you use traditionals.
azanon is offline   Reply With Quote
Predicting the tax laws
Old 09-01-2004, 06:08 AM   #8
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Predicting the tax laws

Quote:

I agree here. *Personally, i think that's the strongest argument for a traditional IRA. *One bird in the hand>two in the bush. *You can be absolutely positive you'll get your tax break if you use traditionals.
My friend, nothing regarding taxes is absolute. For example, if you make a deductible traditional IRA contribution in the 10% bracket, and take distributions out when you are in the 28% bracket, you have just lost 18% of your money.

Don't try to predict what the tax laws will be in the future, just go with what the tax laws are right now.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
New Small Cap Intl ETF Olav23 FIRE and Money 0 04-28-2007 06:31 PM
small business headaches spark0506 Other topics 5 04-27-2006 08:29 AM
Small Is Beautiful - Redux Danny Other topics 6 03-22-2006 09:03 AM
Trailer Home with Land or Small House...You Decide daystar Young Dreamers 18 12-04-2004 10:20 AM
Total Market versus S&P 500 Austin_Explorer FIRE and Money 14 09-21-2004 07:00 AM

» Quick Links

 
All times are GMT -6. The time now is 01:13 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.