I usually get confused and overwhelmed when I try using retirement calculators. That's why I use the 8x rule of thumb as my goalposts for our retirement. But Firefly's post about Coast FIRE made me curious to try that calculator. (https://walletburst.com/tools/coast-fire-calc/)
I ran the numbers once, and it said at our current pace we'd reach Coast FIRE in 11 years! That would be incredible!
But then I realized what they meant by "net worth" was total invested. My net worth calculations count the value of our home, so I had to redo it. But, I also realized that initially I had $1500 listed for housing because even after we pay off the mortgage we'll have property taxes and insurance. I forgot that we do intend to still have rental properties, so the money from those should at least offset our housing expenses. Also, I estimated we put aside $2,500 but realized it's closer to $2,700 (conservatively). So I lowered my "net worth," raised retirement contributions, removed the line for housing expenses and tried again.
Here's my attempt at a retirement budget. (Let me know if you see any glaring omissions here.) Keep in mind this is for three adults.
I'm in between my spouses' age, so I used my age but our combined retirement investments.
Current age: 47
Retirement age: 65
Annual spending in retirement: $84,000
Current net worth (retirement balance): $732,687
Monthly contribution: $2,700 (varies, but this is a conservative approximate average)
Investment growth rate: 7%
Inflation rate: 3%
Withdrawal rate: 4%
Coast FIRE number at current age: $1,036,619
Result: You're 12 years from Coast FIRE!
Unbelievable. I only seem to have added one year in my new calculation. Is this telling me at this rate I'll be done saving for retirement by 59 and be able to retire at 65? If so that's amazing, because if you'd asked me when I'd have enough saved I'd've said "never." I'm sure I'm doing something wrong in the above calculations. Can you poke holes in this scenario?
May 29th, 2021 at 09:20 pm 1622323244
It is unfortunate how much health care costs in this country. I plan on staying until 57 only for the lifetime health care benefits.
May 29th, 2021 at 11:36 pm 1622331364
May 30th, 2021 at 07:00 pm 1622401248
& thanks Firefly for sharing that tool. This is the first time I've ever had a glimmer of hope that we could catch up on our retirement savings!
May 31st, 2021 at 01:38 pm 1622468289