retirement, Retirement, RETIREMENT – pt 2

So I was watching an interview with Carl of 1500days.com and started thinking. At my current rate how much will I have assuming everything stays consistent. Odds are they won’t, the Roth IRA contribution limits will be raised, and ideally I will earn enough to be ineligible at some point. I’ll turn 60 in the year 2043. I don’t foresee myself working that long, it’s 26 years away. On the reverse side, god willing I’d like to live well past 80 and 20 years of retiring in the traditional sense seems like hell.

Looking back to 26 years ago… I was in 2nd grade, lived downstairs in my grandmother’s home, dad was on dialysis / collecting SSI, mom worked at a nursing home, the car she drove was an 97hp 1987 Nissan Stanza. The car would shake over 50mph and kind of scary on the highway, but she did keep it for almost 10 years. We had a Brother Word Processor with a monochrome display and a floppy disk for software / data saves. I thought that was the coolest thing ever. No home computer, I only heard about the information superhighway on TV. George HW Bush was still president, Batman Returns made its debut. I wouldn’t start part time working until 7 years later at the amazing wage of $5.15/hr, my first check was a whopping $80 net.

In what I would consider a comfortable level of saving and taking current 2018 laws into account. I wouldn’t hit 6 figures until 2021, quarter mil 2024, half mil 2029, full mil 2035. That number is *bullshit* though. I’ll go into why after the table.

Year  401k  Roth IRA  Retirement Total
1/1/18  $          34,000  $                –  $             34,000
1/1/19  $          56,160  $          6,480  $             62,640
1/1/20  $          80,093  $        13,478  $             93,571
1/1/21  $        105,940  $        21,037  $           126,977
1/1/22  $        133,855  $        29,200  $           163,055
1/1/23  $        164,004  $        38,016  $           202,019
1/1/24  $        196,564  $        47,537  $           244,101
1/1/25  $        231,729  $        57,820  $           289,549
1/1/26  $        269,708  $        68,925  $           338,633
1/1/27  $        310,724  $        80,919  $           391,644
1/1/28  $        355,022  $        93,873  $           448,895
1/1/29  $        402,864  $      107,863  $           510,727
1/1/30  $        454,533  $      122,972  $           577,505
1/1/31  $        510,336  $      139,290  $           649,625
1/1/32  $        570,603  $      156,913  $           727,515
1/1/33  $        635,691  $      175,946  $           811,637
1/1/34  $        705,986  $      196,501  $           902,487
1/1/35  $        781,905  $      218,701  $        1,000,606
1/1/36  $        863,897  $      242,678  $        1,106,575
1/1/37  $        952,449  $      268,572  $        1,221,021
1/1/38  $     1,048,085  $      296,538  $        1,344,623
1/1/39  $     1,151,372  $      326,741  $        1,478,112
1/1/40  $     1,262,922  $      359,360  $        1,622,281
1/1/41  $     1,383,395  $      394,589  $        1,777,984
1/1/42  $     1,513,507  $      432,636  $        1,946,143
1/1/43  $     1,654,028  $      473,726  $        2,127,754
  1. I didn’t include any employer match into account. In most companies that would be 3-5%. That adds at least $2k/year to the total.
  2. Inflation – Our dollars are going to be worth way less in the future so more retirement will be needed.
  3. I will have investments outside of retirement accounts. Once the car is paid off, conservatively I could save an additional $10k/yr. Let’s assume that loan is completely gone by 2020.
     Year  Investments
    1/1/20  $        10,000
    1/1/21  $   20,800.00
    1/1/22  $   32,464.00
    1/1/23  $   45,061.12
    1/1/24  $   58,666.01
    1/1/25  $   73,359.29
    1/1/26  $   89,228.03
    1/1/27  $ 106,366.28
    1/1/28  $ 124,875.58
    1/1/29  $ 144,865.62
    1/1/30  $ 166,454.87
    1/1/31  $ 189,771.26
    1/1/32  $ 214,952.97
    1/1/33  $ 242,149.20
    1/1/34  $ 271,521.14
    1/1/35  $ 303,242.83
    1/1/36  $ 337,502.26
    1/1/37  $ 374,502.44
    1/1/38  $ 414,462.63
    1/1/39  $ 457,619.64
    1/1/40  $ 504,229.21
    1/1/41  $ 554,567.55
    1/1/42  $ 608,932.96
    1/1/43  $ 667,647.59
  4. So taking the above chart into account while still being able to live a comfortable life, if I were to stick at the contributions, get the same 8% growth, and be in good enough health to work, that would be me at a combined total of $2.79MM.
  5. If I ever pursue the business option, I could potentially contribute to a SEP IRA which could be up to $55k per year. Of course I’d need to have a business, ample sales / profits to justify it… but fun to think about.
  6. Passive income. Rental properties, cash flow businesses, online stores. An extra $10k /yr could make a huge difference.

The main point I’m trying to get across…. If you’re in your 20s invest! If you’re in your 30s, 40s, 50s, 60s… invest. The quality of life you have may very well depend on it.

One thought on “retirement, Retirement, RETIREMENT – pt 2

  1. Hey there! Sorry I have not commented on the last few posts – i was out of town and couldn’t view much other than what was on my phone and I hate typing out comments with two fingers!

    Yes, yes, yes, yes, everyone should invest and the sooner the better. I started when I was in my 30s, and even though I am doing a lot better than most people my age (and that is sad, sad, sad), I still wish I had started earlier because of the compounding of interest. I really think financial literacy should be taught in schools, so that when kids are 17 or 18, they don’t make some of dumb decisions that many of us have.

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