Bichon Frise wrote:
Have you tried to calculate how much of a golden egg you would need if you were to retire today at whatever age you desire to do so? For instance, if you want to retire at 60, do you know how much of a nugget you would need?
A great question. I do track every penny in mint. So we are on top of where we spend. This is a tough question though and at this point I think my opinion is more! We are 30 and 27. I'd expect our incomes to change. We also plan to have kids. It's really hard to say. At our current income, to retire for 20 years @ 80% of income we'd need around $8 million. This sounds like a lot, but it is 35 years from now, so I don't really think it is crazy. Of course to get there will take some diligent investing. But I must admit, I think it's hard to nail down an exact number yet.
why do you think you'll need to replace 80% of your income? I'm skeptical you will need to do that. And if you did, $200k*.8*25=$4mil, not $8mil. Assumes "4% rule", the merits of which should be debated in another conversation.
Here is another way to think about it. Assume the 4% rule is valid. Assume no market return (not realistic, I know, but this is just an example in our whimsical world)...
If you save 10%, you would need 225 yrs to have saved enough to replace your income using the 4% rule (.9/.1*25)
10% - 225 yrs
15% - 142 yrs
25% - 75 yrs
50% - 25 yrs
This blog uses an equation to factor in ROR and that lowers the time. http://the-military-guide.com/2011/01/03/how-many-years-does-it-take-to-become-financially-independent-2/
If you don't want to think hard about your expenses in retirement, you can't make proper decisions with your money today. I can't tell you what is right, only you can decide that.
Consider this exchange from Lewis Carroll's book:
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where–” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
“–so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”