Hello from the Dempseys

[angelo0000]

Hey everyone! My wife and I found this forum this morning and are very excited to learn from the community. We are a young couple (we are each 29) and have a lofty goal of retiring at age 45. We have two small children (5 and 8mos).

Our goal for retirement is about 6k a month. We started investing/saving about 4years ago and now have about 80k between ira/401k. I still have good income growth potential in my career We have a house with little equity and are really thinking of getting out of it to free up money to invest/save more...we were kinda stupid and bought way more house than we should have.

I'm still trying to figure out how much we would need...initially the number in my head was 2.5m TNW but I'm not sure that is a valid number. Maybe I can learn more from the community and adjust my expectations

 

[JBmadera]

welcome! lot's of great info here and congrats on starting early.

jb

 

[Gumby]

Welcome aboard. To determine how much you need, you must have a firm grasp on how much you spend. Do you have a budget or otherwise track your spending now? Do you know how your spending will change after you retire? (hard to predict this far in advance, I know, but you need to make a rough cut). Will you have pension income? The generally accepted rule around these parts is that you should have 25 X your cash needs in retirement (spending minus pension, if any).

Try running a few scenarios through Firecalc (the link is at the bottom of the page) to get a better feel for things. And ask a lot of questions. Someone here will probably know the answer.

Best wishes,

Gumby

 

[Green Retirement]

Hello Dempsey's:
A $6,000 budget requires a net worth of $1.8 million. To reach that goal in 15 years you will need to save $50,000 per year at an average annual rate of 9%. If you can't save $50k per year, and most people can't, you then have two choices, delay your retirement or reduce your budget.

Retire in 20 years saving 25k per year.
Retire in 15 years saving 30k per year with a $4,000 per month budget.

I'm not a big fan of real estate, the historical returns are small, and the overall costs are large. So you may want to listen to your gut on getting rid of the real estate to free up more money for saving. Welcome to the forum!

 

[angelo0000]

Thanks for the thoughts..we are very budget oriented. We even give ourselves a bi-weekly allowance which is to include gas/eating out/misc and its a small number. Most of our friends laugh that I drive 30 miles to work one way and only get 100 bux every two weeks for gas and lunch money at work..but hey it works for us!

Our 6k number comes from the fact that right now we live pretty lean (outside of our stupid house payment). All of our expenses total about 6200 a month. Assuming the house is paid off when we retire, 6k a month would provide a comfortable ER where we can just do something we are passionate about and not worry so much about the income it produces.

I'll take a look at the calcs you suggested..didnt know about them

 

[HsiaoChu]

Your expenses now for the kids are going to blossom. Unless your income is really heavy duty, you won't believe how the expenses will mount as the kids get older. Clothing, food, braces, activities, health costs, just stuff for the kids............ having a child is like having an extra car and running it everyday. I had two of them; your age now. We could really have put away the funds if we hadn't had children.

Z

 

[Texas Proud]

Your expenses now for the kids are going to blossom. Unless your income is really heavy duty, you won't believe how the expenses will mount as the kids get older. Clothing, food, braces, activities, health costs, just stuff for the kids............ having a child is like having an extra car and running it everyday. I had two of them; your age now. We could really have put away the funds if we hadn't had children.

Z

Agree.... I married someone with two kids and I am surprised how much they cost... now!!! It is funny how they can get by with less when the income is lower