Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Where should I be?
Old 02-04-2006, 01:26 PM   #1
Confused about dryer sheets
Join Date: Oct 2005
Posts: 7
Where should I be?

I know this is a pretty general question, but where do you think a 34 year old should be "financially' to be able to retire around 50-55?
IRA/401K should be approximately....
House mortgage should be approximately....
Taxable account should be approximately...
Other debt should be approximately....

I'm doing pretty well (in my opinion - no debt besides mortgage and wifes student loan, approximately $140k in retirement account, approximate net worth between wife and I of $340k, combined income approximatly $90k), but my wife and I are thinking of building a new house this year (probably around $250k, loan of $150-$175k) and just afraid it may set me back in my goals for ER. I don't want to be too frugal to be afraid to "live" now, but also don't want to handcuff my future. Any thoughts?

deafcat 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 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: Where should I be?
Old 02-04-2006, 03:28 PM   #2
Thinks s/he gets paid by the post
retire@40's Avatar
Join Date: Feb 2004
Posts: 2,669
Re: Where should I be?

You are where you are now, so it doesn't matter where you "should" be since there's nothing you can do about where you were or where your are now.

The more important question is "where should you be by age 50 or 55."

You need to forecast 2 numbers adjusting them for inflation:*
1)* Future Cash Outflow
2)* Future Income-Producing Net Worth

If your future income-producing net worth at age 50 is not at least 25 times your future cash outflow, then you need to save more and/or work longer.

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
Re: Where should I be?
Old 02-08-2006, 09:11 AM   #3
Full time employment: Posting here.
kaudrey's Avatar
Join Date: Feb 2006
Location: Alexandria, Va
Posts: 857
Re: Where should I be?

I read an article on MSN Money that was pretty interesting - it gave some generalizations about how to be financial sound in retirement.

The measures were as follows:

Monthly debt payments (house, car, student loans, cc balances): less than 36% of monthly income (same measure used by mortgage lenders).

Savings: 12% of income per year (I'd personally suggest more to retire early)

Savings amassed: 90% of annual income at age 35, 1.7x income at 40, and 3x income at 50.

Mortgage to Income should be at 1.00 at 45 and paid off at retirement.

You've already hit the "savings amassed" suggestion for 35, so as an intermediate goal, you could shoot for the 1.7x income at 40. This is just one person's opinion, of course, but I found it useful as another measuring tool.

Two roads diverged in a wood, and I - I took the one less travelled by...
kaudrey is offline   Reply With Quote
Re: Where should I be?
Old 02-08-2006, 09:45 AM   #4
Thinks s/he gets paid by the post
MasterBlaster's Avatar
Join Date: Jun 2005
Posts: 4,360
Re: Where should I be?

Here's a link to a guide for someone who wants to retire at 65 with 80 percent of their working income:

The analysis includes social security etc

here's a link to the article:

If you want to retire at 50 then add 15 years to your age.

One thing to note is that the author assumes a 5 percent safe withdrawal rate. Which is probably too high for someone retireing at 50. The analysis shows that if you have saved 12 times your current income then at a 5 percent withdrawal rate your stash will provide 60 percent of your working income. Social Security is then assumed to get you up to the target 80 percent of income.

The analysis assumes that you earn an inflation adjusted rate of 5 percent on your money and that your salary keeps up with inflation.

This analysis may not be correct for many people. If your house is paid for your expenses may be much less than 80 percent of your current income. I find that my current expenses are only about 30 percent of my income. So for me, I could get by on much less than 80 percent of my income. So, the 60 percent of income that the 12 times current income savings provides would be more than enough for me.

If you find that with your expenses that you can get by on say two thirds of the suggested 60 percent of your income then just scale all of the numbers back by the factor 0.66 (40/60 = 0.66)

Nonetheless, the table is a somewhat useful guide for how much savings you should have.

So to answer your question directly - As a 34 year old (rounded to 35) that wants to retire at 50-55 you should have savings right now of between 3 and 4.5 times your current salary. That would be $270k to $405k for your $90k income. Your debt including house mortgage should be below 0.75-1.0 times your current salary. So your total debt should be below $67.5 to $90k for your $90k income level.

It wasn't clear how your savings and net worth were distributed. So if your net worth (savings) is $140k exclusive of home equity then you will need to work an addition 5-10 years (to 55-60 years old) before you can retire. If your net worth is $340k exclusive of home equity then you are on track for your 50-55 year old ER date.

Attached Images
File Type: gif savings and debt.gif (8.2 KB, 191 views)
Attached Files
File Type: gif_thumb savings and debt.gif_thumb (19.6 KB, 2 views)
MasterBlaster is offline   Reply With Quote
Re: Where should I be?
Old 02-08-2006, 12:18 PM   #5
Recycles dryer sheets
Join Date: Jul 2005
Posts: 113
Re: Where should I be?

Originally Posted by MasterBlaster
Here's a link to a guide for someone who wants to retire at 65 with 80 percent of their working income:

The analysis includes social security etc

here's a link to the article:
Thank you for the *.gif. Those are helpful benchmarks for someone whose future income is less predictable. I like the .1 savings to income at age 30. It really shows that if you start saving $$$ in your 20's you are well ahead of schedule.
boutros is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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


All times are GMT -6. The time now is 06:47 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.