what are your $$ plans for the next 3 years?

[SingleMomDreamer]

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?

 

[W2R]

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.

 

[Webzter]

>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.

 

[Alex]

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!

 

[GoodSense]

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!

 

[dex]

I'm ER & have a spread sheet that goes out for the next 35 years (about when I expect to check out).

 

[Lusitan]

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.

 

[CyclingInvestor]

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.

 

[wildcat]

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.

 

[Dawg52]

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.

 

[CyclingInvestor]

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)

 

[wildcat]

BTW, CI, I have always liked your system of managing investments/finances. Fairly simple yet effective.

 

[WM]

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.

 

[kaudrey]

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.

 

[jnojr]

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

 

[Celany]

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!

 

[chris2008]

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.

 

[chinaco]

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.

 

[tricky88]

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.

 

[SecondCor521]

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.

2Cor521

 

[Fireup2020]

I wish I had the discipline to "plan." I have number crunched and number crunched with my military retirement $$$$'s, TSP (also investing in a lifecycle fund) - and am retiring from the reserve in 2008. I just kept jacking my Deferred compensation (pre-tax retirement savings for state employees) until I "felt" it - and 20% of my salary is going into that - a Prudential Lifecycle fund. A new car on the horizon is the only large purchase coming up. Other $$$ going into a MM account and an ING account - my vacation/travel fund! I admit I have no specific $$ goals. (rather embarassing here)

 

[pj86]

My goals for the next 3 years are:

25K (euro) by june 2008 (when I graduate): This might be a stretch (I will be at 18K after this month), but 25K is really a goal I've had for a long time.

After that, I am thinking of paying myself a minumum wage (500 euro or so), saving the rest, and withdraw 2% at the end of each year as a bonus. First withdrawal will be end of 2008 probably.

I like the idea of rolling into financial independance like that.

However, my ideas change a lot and the exact numbers will depend on what job and life I go for.

 

[FIREd]

Each December I draw a game plan for the upcoming year: I create a budget, try to identify expenses that can be cut or eliminated and establish a (challenging) savings target for both retirement and non-retirement accounts. During the year I track expenses and savings to make sure my goals are reached or exceeded by year end (I mostly use automatic investments to make sure I reach my savings goal). Then the cycle starts all over again. I find that our income changes too much from year to year which makes it difficult to establish these goals several years in advance.
Once we know how much we haved saved in any given year, the numbers are plugged into an excel spreadsheet based a model extracted from the book "work less, live more": it lays out our financial plan for the next 30 years (or I should say that it extrapolates our financial plan based on our current situation). Each year we update the spreadsheet to reflect the current situation (actual amount of savings, actual annual expenses, actual savings rate) which gives us a new baseline for the next 30 years. I also monitor the ratio total financial assets / expected annual living expenses in retirement. When the ratio reaches 25, then I'll know that FIRE has become a reality. Right now it's about 7 (I am 33), so we still have some ways to go...

 

[Tiger]

I have a 3 year goal plan. Build my money market fund back up to two years of emergency funds. Get up to $X in total portfolio. When my wife retires in 2 1/2 years sell my house, move out west and buy a house for cash. Kick back and watch the world go by.

 

[deserat]

My goals range from lifestyle goals to what I need to save materially to have that lifestyle - example, I want to retire early, so minimization of my monthly 'lifestyle costs' now will help me toward that goal by learning LBYM skills, adjusting one's expectations regarding material wants, etc. The next is to track my expenses for that desired lifestyle - with that idea in mind, calculate what would be needed in investment, pension, etc income to meet the expense amount. Next is to figure out how soon that amount can be amassed - it's an optimization problem with income, current expenses, savings and investment performance.

Practically, I've come up with a minimal amount to have amassed, possible pension amounts and times they will be available and save at least enough to meet my yearly goals - actually, we've been saving more than what we originally agreed upon - retirement will probably happen earlier than we thought - which is fine with us. The hardest part is trying to 'live' now while save for later - i.e. making the decision to enjoy our lives now - example, we have savings for vacation for travel - it is important to us and will be part of our retirement - we find ways to travel inexpensively and although those dollars could go towards our retirement goals, we are exceeding our original goals for the amounts we need for retirements - it is a combination of after tax savings, deferred tax savings and pension income - we will have a time where one pension and after tax savings will be our source for income (from 10-15 years), then my pensions will start along with easier access to the tax deferred accounts (no 72t withdrawals unless absolutely necessary). It's been an interesting ride so far!