Comments on: Your Retirement Income Planning – Made Simple

By: Financial Samurai

Financial Samurai — Sun, 08 Nov 2009 16:44:55 +0000

Daniel – Way to think big! I like the $6.5 million figure! But yeah, best to check the calculator

Thnx again for the article Neal. I like.

Sam

By: Benjamin Cope

Benjamin Cope — Thu, 05 Nov 2009 16:15:24 +0000

I love the picture of the cat on the door. =)

By: Bonnie

Bonnie — Wed, 04 Nov 2009 16:08:04 +0000

neal: thanks for your article. it somewhat alleviates my anxiety about retiring by confirming that i’m doing just about all i can do at this point for retirement. i plan to “retire” in 5 years; i’ll be just shy of 62. i’ll be getting a pretty good pension at that time, plus i can decide whether i’ll take social security at 62 or can afford to let it ride for awhile. i have no debt except for a mortgage and i will have a few more years left on that after retirement. so that mortgage balance may be the deciding factor as to whether to take social security sooner rather than later. i’m also thinking that i may trade my house for a condo, thereby eliminating the mortgage issue entirely, reducing it substantially or even making a profit and increasing my retirement fund. in the meantime, i continue to contribute to a deferred compensation plan through my employer, which has grown over the years to a considerable amount (even with last year’s hit)and will continue to grow over the next five. and i have other mutual funds. i will probably work at least part-time for awhile at something entirely different from what i do currently (i don’t want to have to think that much after retiring). your costco greeter reference may not be that far-fetched. i’ve joked about being a wal-mart greeter. and i’m looking forward to having alot more time for various volunteer activities that i currently dabble in. a couple of years ago when the thought of retirement actually became something tangible, and when i started crunching the numbers, i was afraid but decided that i just can’t worry about it. i can only do what i can do with what i have, and i think i’ve been doing it.

By: Neal

Neal — Tue, 03 Nov 2009 23:48:32 +0000

Also….as time goes on,….it will be easier and more likely that you’ll be able to sock more away.,..

By: Daniel

Daniel — Tue, 03 Nov 2009 19:07:25 +0000

Assuming a 3% increase per year, it’s close to $2 million. But I guess further education and dual incomes can make a big difference.

By: Evan

Evan — Tue, 03 Nov 2009 19:04:47 +0000

First you always assume you are going to be saving just $5,000. Business owners have the opportunity to save upwards of $45K (if their cash flow obviously allows for it).

By: Daniel

Daniel — Tue, 03 Nov 2009 18:41:05 +0000

Yah..so basically it’s going to be impossible to retire? How can anyone possibly save up enough? I was a 0 or two off..lol

By: Evan

Evan — Tue, 03 Nov 2009 17:56:09 +0000

Just read your site you seem to be 23 – so using the same inputs at 23 – and you contributed $5k EVERY year (not just the 9) you get to a number of $1.2 still way off the 6.5

By: Evan

Evan — Tue, 03 Nov 2009 17:54:20 +0000

Daniel,

While I LOVE your enthusiasm your numbers are WAYYYYYYYYYYYYYYYYYYYYYYYY off. Go check out the Calculator at Dinkytown.com

Input Summary
Annual contribution $5,000
Starting balance 0
Current age 30
Age of retirement 65
Years until retirement 35
Expected rate of return 7.00%

This equals just shy of $740,000 at age 65…no where near your projection of $6.5 Million. If you were wondering to get to your $6.5 Number – you need compounded results of 16% EVERY year.

By: Daniel

Daniel — Tue, 03 Nov 2009 17:18:32 +0000

Here’s my plan:

Save $5,000 in Roth IRAs each year for the next 9 years.

Watch that $60,000 (assuming 7% growth) grow into $6.5 million over the following 35 years. Why is my goal $6.5? Well, $1.25 million sounds like a good goal today, but in 44 years, $1.25 million may not sound like much. Based on the past 44 years, $1.25 million today will be worth a little over $8 million when I retire. After taxes, that’s more like $5.6 million.

44 years ago, someone with $188,000 felt the same way as someone today with $1.25 million!

That means that if you had $1.25 million in 44 years…you’d have only $188,000 in today’s dollars! Long term goals often forget this important aspect of the economy!