Retirement status check-in

November 21, 2009 at 8:49 am (goals) ()

My company uses Paychex  for employee benefits and wages. They have an interesting online retirement calculator that I just discovered and began playing with. The basics to start: my age (upper 30s), annual salary (almost $50,000 including overtime), my current savings (currently $46K, a week ago it was $50K, darn it!), and my monthly savings allotment. 

They have some basic pre-sets, such as annual cost of living raises, or 3%, and expected rate of return, 7%. Right now I’m in a somewhat aggressive mix of funds, since I don’t care and it will be 25-30 years before I start seeing any of this money, if not longer. 

So here’s the wakeup call. To get enough in there for it to continue making money in interest, enough to live on, I would have to get about 1.6 million to retire and live at 80-85% of my current salary. So how much would I have to put in savings every month to reach that goal? 

15% of my salary! 

It’s funny, I started thinking what it would look like once I’m out of debt. You know the thoughts, “if I didn’t have to pay the minimums or pay extra towards the principals, what would I do with the extra money that I’m throwing away every month?” I think all the learning I’ve done by reading and joining the PF blog community has been a major education. I think I’d love to live a little less frugally, but not excessively so. I’d like to be able to save up for some vacation trips, a month for southern france, a scotch and photo tour of scotland, that kind of thing. But I think I’m finally grown up financially. I don’t think I’ll ever be as frivolous as I’ve been. I know I will never rack up debt again.

I know when this long journey is over (and I still have a long ways to go), that I’ll definitely continue budgetting and instead of debt-paying, saving. I fully expect to increase my 401K allotment significantly past the current 3% that I contribute. That’s enough right now to get an employee match (not much, but at least something). I’ll also continue to sock cash away to have at least a 6-month cushion of living expenses. I’ll also start contributing to a Roth IRA every year and begin investing.

I guess once I become debt-free, 15% won’t be that big of a deal, I think I already spend about 25-30% on debt each month.

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