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what are your $$ plans for the next 3 years?
Old 08-03-2007, 08:16 PM   #1
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what are your $$ plans for the next 3 years?

How far ahead do you plan? Do you have goals for every year? Do you prioritize your goals on an annual basis?

Although the market has sucked the last few weeks, I should meet one of my goals to reach the $250k balance in my retirement funds early 2008. Then my goal to fully fund the emergency fund should be reached in 2009. After that, things get a little more vague, although it inolves increasing Vanguard investments. What's your 3-year plan?
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Old 08-03-2007, 09:08 PM   #2
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Congratulations on reaching $250K in your retirement funds! That is wonderful.

I plan to retire in a little less than three years.

Yes, I do prioritize my goals. My first priority goal (after fully funding my 401K) was to pay off my house in 2006, and I did it. Then I was able to set up a Roth IRA and build my nestegg outside of retirement funds, and that is what I am doing now.

Now, I have goals for every month for my savings out of my paycheck. I am doing very well on that, which has allowed me to increase those goals a little.

I have computed goals for every year for my 401K and Roth IRA, computed knowing that I am contributing the max to both, and assuming a return based on prior performance.

I also project what would result from this years trends by the end of the year, if they continue. As of this morning my December 2007 projection of 401K balance has fallen to about $3K-$4K below original goals. Should fall farther when I check tomorrow! I don't think $5K is going to keep me from ER, though.

You asked how far ahead I plan. I run my numbers until I'm 102, at which point I might be long gone. It's kind of hard, though, because I don't really know what assisted living is going to cost a quarter century from now. The further out I look, the fuzzier things get. At least I am thinking about it.
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Old 08-03-2007, 10:30 PM   #3
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>How far ahead do you plan?

20 years.

>Do you have goals for every year?

Specific plans for the next 0-3 years, very broad goals for 15-20 years. Wife and I reset our goals every year or so.
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Old 08-03-2007, 11:17 PM   #4
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I plan in 5 year increments. The first 5 years are very detailed, right down to how much I plan to invest each month. I set annual income goals and list the specific activities/benchmarks I need to hit in order to reach my goals. I update the '5 year plan' every year. The second 5 years on up are just done in outline form with basic information - these also get updated annually. I review my personal goals at least once a week. Sometimes I look at them everyday! It's a very healthy obsession! Sorta like exercise for the mind...

IMHO, the most important thing is to have a plan. Most people don't have a plan- they 'go with the flow'. What's the old saying? "If you fail to plan, then you plan to fail".

Congrats on reaching your goals!
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Old 08-03-2007, 11:54 PM   #5
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We have annual goals for the next 5 years, and after that, things get pretty fuzzy. Daydreaming about our annual goals has been my favorite pastime in the last few months. I'm probably spending way too much time on it. Due to tax withholdings and some other issues, it doesn't make sense for us to make monthly goals. Every quarter we look at our numbers and get a sense of whether we are on track.

In terms of listing priorities, I only did that for this year and next year. It's mostly things like "study xx fund," or "shop around for cheaper insurance," etc. Mainly our priorities are LBOM and saving money. (like everyone else here)

It sounds like you're well on track in building a healthy nest egg. Congrats!
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Old 08-04-2007, 09:50 AM   #6
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I'm ER & have a spread sheet that goes out for the next 35 years (about when I expect to check out).
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Old 08-04-2007, 11:08 AM   #7
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I guess we've reached a point where our annual savings/spending ratio is set at a level we're comfortable with, our emergency fund is established, and we're maxing out all available retirement savings plans; so it's "steady as she goes" for the next 3 years in terms of savings/investing plans.

There will be some big life changes over the next 3 years: we'll probably need to buy a new (to us) car, we'll probably move to a new house and it will likely be in a new state, and I'll probably change jobs. But those aren't really strictly investment/money plans.

Beyond saving and sticking with our investment allocation (and ignoring what happens to the stock market in the short term) one of my goals is paying off all debt (mortgage and student loans) but I'll have to balance that against savings.
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Old 08-04-2007, 11:29 AM   #8
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I retired last year at 48. While I always planned to retire early, the only plan I had
was "max out the 401k, save some additional $$, learn to invest it", and then watch
until the dividend flow became enough to live on. Once it got there, I just waited
for work to start sucking to retire. I tried balance-watching for awhile, but found it
just added tension for no additional benefit. I also tried setting per-month savings
goals for awhile, but found that real life kept intruding, so I went back to just sending
a check to Schwab whenever my checking account got too large.
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Old 08-04-2007, 11:51 AM   #9
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Quote:
Originally Posted by CyclingInvestor View Post
I retired last year at 48. While I always planned to retire early, the only plan I had
was "max out the 401k, save some additional $$, learn to invest it", and then watch
until the dividend flow became enough to live on. Once it got there, I just waited
for work to start sucking to retire. I tried balance-watching for awhile, but found it
just added tension for no additional benefit. I also tried setting per-month savings
goals for awhile, but found that real life kept intruding, so I went back to just sending
a check to Schwab whenever my checking account got too large.
Just curious CI, what kind of funds did you have available in your 401k? My 401k funds mostly suck so I only have one or two choices, not of which provide me with what would be ideal.
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Old 08-04-2007, 12:36 PM   #10
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I turned 53 early this week and hopefully have many years to live off my investments. That said, I plan to stay on the low end of my SWR over the next 3 years and probably until I reach social security age. No more than 3% per year. I won't need another car for several years and can't foresee any major purchases so that shouldn't be a problem.

If the market decides to really give us a bloody nose, a tightening of the belt over the next 3 years will most certainly be in order.
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Old 08-04-2007, 02:02 PM   #11
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Quote:
Originally Posted by wildcat View Post
Just curious CI, what kind of funds did you have available in your 401k? My 401k funds mostly suck so I only have one or two choices, not of which provide me with what would be ideal.
a bunch of lame ones, plus an SP500 index fund, which was the only one I used up
until the last few years when they expanded the selections. However, the IRA rollover
I set up in 1997 when I switched jobs after 14 years had the bulk of my $$, so after
that my 401k only had a minor role (when I retired in 2006 my IRA was still 7 times
as large as my 401k)
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Old 08-04-2007, 05:13 PM   #12
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BTW, CI, I have always liked your system of managing investments/finances. Fairly simple yet effective.
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Old 08-05-2007, 08:21 PM   #13
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We have goals that go out 8 years (till DH can retire from the military). I check twice per year to see whether we are on track. It's a rather loose system (about the second round of serious planning I did) and I may try to update it one of these months. On the other hand, it's hard to project out that far so rough estimates seem appropriate.
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Old 08-06-2007, 11:03 AM   #14
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My general goal is to increase the amount I save every year once I get my raise in January (gov't worker).

More specific shorter term goals are to reach $1M in NW by my 40th birthday, in about a year and a half, and to reach $1M in investment assets (i.e. not including home equity) 4 years later.

Each year I create goals/hopes for that year: Savings should be $X; 401(k) account will hopefully grow to $X etc.

As others do, I have a retirement planning spreadsheet from now until I am 90 with projections, and I update it every year with actual results.
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Old 08-06-2007, 04:23 PM   #15
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Quote:
Originally Posted by Want2retire View Post

You asked how far ahead I plan. I run my numbers until I'm 102, at which point I might be long gone. It's kind of hard, though, because I don't really know what assisted living is going to cost a quarter century from now. The further out I look, the fuzzier things get. At least I am thinking about it.
Buy long-term care insurance now. Then you won't have to worry about it
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Old 08-07-2007, 09:20 AM   #16
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I have very definitive goals for the next 2 years. I plan out how much I can put aside from my pay each month, plus how much of my birthday/christmas money gifts I'll put aside.

beyond 2 years, I'm working on it right now. I actually just finished 3 really good books: Overcoming Underearing & the Secrets of 6 Figure Women (both by Barbara Stanny) & One Person/Multiple Careers: A New Model for Work/Life Success by Marci Alboher. So I'm on my way to becoming a 6 figure 'slash person' (someone with multiple careers). What exactly that is going to entail, both personally & financially, I'm only just beginning to get the meerest grasp of. But I bet it's going to be fun!
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Old 08-08-2007, 04:36 AM   #17
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We plan to retire or go part time at least.
A new used car is also on the plan and a long trip abroad to celebrate.
41% of our assets (apart from house paid off ) are stocks and funds right now, so the market might say a word to our plan, but part time would be doable already now, so we are confident.
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Old 08-08-2007, 04:55 AM   #18
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If you are talking about finances. I plan for certain purchase in the interim term (2-3 years).

The only large expenditure on the horizon is possible the replacement of a car. We will probably pay cash.


Further out ( 4-5 years) we will have down-sized the house. We should net some money out of the deal. The excess money will be re-invested.
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Old 08-08-2007, 10:22 AM   #19
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I wish that I had more specific goals, but for the most part it's just to save as much as we can. (and hope I don't have to buy another car in the next few months)

My job is completely wearing down on me, though I like much of it in theory. There is one person in my job position in 17 cities, and almost all of the others have quit or been fired in the past year (2 in the past month), so I'm pretty sure it's not just me being negative. Because of that uncertainty, the only goals we have at the moment are to hit a milestone of 500k soon, but that depends more on which way the stock market goes than how much we can save. If I quit my job it will mean a lot less money getting saved every month.

Within the next 5 years I think we'd like to leave L.A, but that's where things get fuzzy. Live where? Do what? We still have a lot of dollars to sock away before we can really RE, and we might decide to just downshift earlier, which may mean working more years, but working less stressful jobs.

We had the goal of saving for a house, but that's just not going to happen here. An OK house still costs $700-800K, and the one next door to our apt isn't that nice and is on the market for 1 million. So for now, we pay our relatively cheap rent, and try not to go crazy. But at 3:41 this morning i woke up remembering three specific things I forgot to do at work yesterday, and it took me another hour to get back to sleep (the upstairs neighbors and their dogs then woke up at 6 and started running around.

I'm complaining. But I guess my main goal right now is escape.
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Old 08-08-2007, 12:34 PM   #20
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Here's how I handle things.

I have a number of prioritized targets that I work on and review nearly daily. The list started with Dave Ramsey's 7 step financial plan, but I have augmented and reprioritized it considerably.

I evaluate my prioritization of these targets regularly. However, I don't anticipate them changing much if at all. Like Want2Retire, I pretty much know what I want.

Each target is measurable and I know every day where I stand in relation to each one. I try to spend some time thinking about all of them, but I also try to focus most of my energy on my highest priority target that is not currently achieved. (I use Excel's conditional formatting to color the actual value red or green depending on it's relationship to a goal cell.)

I also project forward into the future in three different areas: (1) I project out what would happen if I died today to make sure there would be enough money to get my kids raised and through college. Since my youngest is 5, this goes out about 17 years. (2) I project out their college costs to make sure I am saving enough for their college. Again, this goes out about 17 years. (3) I project out for my retirement. This spreadsheet goes out about 30 or 40 years.

But all of those spreadsheets are dynamic projections based on where I am now and what assumptions I choose to make about inflation, investment returns, etc. I do not say to myself, "My goal is to retire at age 50" and then try to schedule everything to fit that goal. I look at my dynamic spreadsheets and they tell me that I can retire at 53 given where I am and my assumptions, and then I look at that and see how I feel. If that's too long for me, then I might raise my retirement contributions, which would change one of my assumed values ("I will save X for retirement monthly"), which would then rejigger the whole spreadsheet and tell me I can now retire at 52. Or whatever. Since a lot of my plan depends on how my investments behave, it doesn't work for me to try to say that I want $1M by the age of 45 or whatever.

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