Are we on track...

[TheHaitian]

To have 500k in just retirement funds by 40? Goal of 5M by 60? We are both 35...

401k (me) - $132k
403b (DW) - $141K 

I do have about 15k in HSA but not counting it since we used about 20k of it at the beginning of this year to pay off some medical debt that I was carrying on some 0% cards, and since we are considering trying for another baby next year might use it towards fertility treatment (we started this year but with COVID we put a stop to it). 

I currently max and my wife does 10%, hopefully will work her way back to maxing at some point.  Goal Retirement age is still 60 for me (65 if I can still wing it but not because I have to but because I want to), wife doesn't plan to ever retire, continue working part time in some capacity. 

[Apple]

I had retirement savings of $250k at 35 and hit $500k at 40.  I did not max (lowest year in that time was $7113 plus a match, and highest was $13,636 plus a match.  The total with match was still less than the $19.5k max.)

It's going to depend on how you are invested and how the markets do, but if you're maxing and things go ok, you should have a better chance than I did.

Not sure about $5M by 60 though.  You'd have to both max, both get a match, and get some crazy gains to get that high at 60 if you get $500k at 40.

According to my Phil Script, a yearly investment of $39,000.00 bearing an annual return of 11% could grow to $2,779,340.60 in 20 years!

Even if you maxed an IRA on top of the 401k:  $51,000.00/yr. @ 11%/ann. for 20 years: $3,634,522.33

So, maybe maxing both, getting a match, and then doing catch up contributions as soon as you hit 50?  Still need good market returns though.


ETA: Ignore those numbers, didn't realize the "Phil Script" doesn't allow for a current balance and future contributions.  Use a regular compound interest calculator for that.

[gs11rmb]

Nov 29, 2020 21:37:44 GMT -5 TheHaitian said:

To have 500k in just retirement funds by 40? Goal of 5M by 60? We are both 35...

401k (me) - $132k
403b (DW) - $141K 

I do have about 15k in HSA but not counting it since we used about 20k of it at the beginning of this year to pay off some medical debt that I was carrying on some 0% cards, and since we are considering trying for another baby next year might use it towards fertility treatment (we started this year but with COVID we put a stop to it). 

I currently max and my wife does 10%, hopefully will work her way back to maxing at some point.  Goal Retirement age is still 60 for me (65 if I can still wing it but not because I have to but because I want to), wife doesn't plan to ever retire, continue working part time in some capacity. 

How are you calculating getting from $500K to $5M in a period of 20 years?

[Lizard Queen]

I've got >$5M by 60 using Phil's 11% + some assumptions as to how much is going on each year. I have a little less than $500k in 5 years.

[wanttofire]

Considering a conservative 7% return. You would have to save $72k/year to reach $5M assuming you have $500k at 40.

Getting to 500k at 40 is doable considering your contribution.

[WannabeWealthy]

That's a lot of millions in a matter of 20yrs.  I agree with the others though, it's probably way too dreamy.  The markets are most certainly going to be in flux during those 20yrs and you aren't considering your own life's circumstances or expenses during that time. If you plan on more children and then putting them through college, that's going to take a lot.  Also, health doesn't stay constant over 20yrs time (not even 10yrs time).

[TheHaitian]

Nov 29, 2020 22:38:26 GMT -5 Apple said:

I had retirement savings of $250k at 35 and hit $500k at 40.  I did not max (lowest year in that time was $7113 plus a match, and highest was $13,636 plus a match.  The total with match was still less than the $19.5k max.)

It's going to depend on how you are invested and how the markets do, but if you're maxing and things go ok, you should have a better chance than I did.

Not sure about $5M by 60 though.  You'd have to both max, both get a match, and get some crazy gains to get that high at 60 if you get $500k at 40.

According to my Phil Script, a yearly investment of $39,000.00 bearing an annual return of 11% could grow to $2,779,340.60 in 20 years!

Even if you maxed an IRA on top of the 401k:  $51,000.00/yr. @ 11%/ann. for 20 years: $3,634,522.33

So, maybe maxing both, getting a match, and then doing catch up contributions as soon as you hit 50?  Still need good market returns though.

Thank you... a little more information :

So I used 8% at my base. Without employer contributions we currently contribute ~27.5k/year or ~2.3k/month

With my employer contributions that is an extra ~3.5k/year. My wife job used to contribute ~6.2k/year but momentarily stopped due to Covid. Not sure when they will start again.

Also 5M my apologies, I meant to say overall not just in 401k/403b’s. Goal is at least ~3M in retirement accounts by 60 (seems we might be able to reach that) and ~2M or so in taxable accounts / savings, etc.

So per my calculations using a base of 2k/month (to keep it simple) and return rate of 8% and 270k starting balance :
- I have 549k in 5 years
- I have 3.8M in 25 years

Do you agree?

*just checked and my employer has contributed $3846.78 so far this year so I was not too far off.
*numbers are based on our contributions alone without including possible employer contributions, DW increasing contributions and catch up phase between 50-60.

[TheHaitian]

Nov 30, 2020 9:15:24 GMT -5 gs11rmb said:

Nov 29, 2020 21:37:44 GMT -5 TheHaitian said:

To have 500k in just retirement funds by 40? Goal of 5M by 60? We are both 35...

401k (me) - $132k
403b (DW) - $141K 

I do have about 15k in HSA but not counting it since we used about 20k of it at the beginning of this year to pay off some medical debt that I was carrying on some 0% cards, and since we are considering trying for another baby next year might use it towards fertility treatment (we started this year but with COVID we put a stop to it). 

I currently max and my wife does 10%, hopefully will work her way back to maxing at some point.  Goal Retirement age is still 60 for me (65 if I can still wing it but not because I have to but because I want to), wife doesn't plan to ever retire, continue working part time in some capacity. 

How are you calculating getting from $500K to $5M in a period of 20 years?

500k at 8% adding $0 over 20 years = $2,463,401.50

Still at 8% adding $2,500/month or 25k/year = $3,935,952.50
——> we currently contribute ~27.5k/year without employer match

Still at 8% adding $4,400/month or 52.8k/year = $5,055,091.20
——> last one would be with the help of maxing 2 retirement accounts ~40k/year + employer match

[TheHaitian]

Nov 30, 2020 12:37:33 GMT -5 WannabeWealthy said:

That's a lot of millions in a matter of 20yrs.  I agree with the others though, it's probably way too dreamy.  The markets are most certainly going to be in flux during those 20yrs and you aren't considering your own life's circumstances or expenses during that time. If you plan on more children and then putting them through college, that's going to take a lot.  Also, health doesn't stay constant over 20yrs time (not even 10yrs time).

You cannot pre-plan life emergencies or I don’t have the magic ball to see what will happen. If things happen you re-adjust and plan a new path, make new calculations.

I can only calculate based on the information I have in front of me now, we are well insured, we have medical, dental insurance; we have short term and long term insurance, we have life insurance that would cover the mortgage + kids education and money left behind.

We are both employed, the most one of us has been unemployed is ~3-6 months. We are both putting money aside for our kids education and if my wife remain in academia a good portion of that will be covered; but we are still saving as if not.

Again we will adjust / re-calculate and make new plans based on the new information we have. Those calculations are based on the info as of today.

[giramomma]

Using the rule of 72, you should get there...

Our money hasn't that quickly, but it's more because of asset allocation, too.

[Apple]

Nov 30, 2020 16:25:34 GMT -5 TheHaitian said:

Nov 29, 2020 22:38:26 GMT -5 Apple said:

I had retirement savings of $250k at 35 and hit $500k at 40.  I did not max (lowest year in that time was $7113 plus a match, and highest was $13,636 plus a match.  The total with match was still less than the $19.5k max.)

It's going to depend on how you are invested and how the markets do, but if you're maxing and things go ok, you should have a better chance than I did.

Not sure about $5M by 60 though.  You'd have to both max, both get a match, and get some crazy gains to get that high at 60 if you get $500k at 40.

According to my Phil Script, a yearly investment of $39,000.00 bearing an annual return of 11% could grow to $2,779,340.60 in 20 years!

Even if you maxed an IRA on top of the 401k:  $51,000.00/yr. @ 11%/ann. for 20 years: $3,634,522.33

So, maybe maxing both, getting a match, and then doing catch up contributions as soon as you hit 50?  Still need good market returns though.

Thank you... a little more information :

So I used 8% at my base. Without employer contributions we currently contribute ~27.5k/year or ~2.3k/month

With my employer contributions that is an extra ~3.5k/year. My wife job used to contribute ~6.2k/year but momentarily stopped due to Covid. Not sure when they will start again.

Also 5M my apologies, I meant to say overall not just in 401k/403b’s. Goal is at least ~3M in retirement accounts by 60 (seems we might be able to reach that) and ~2M or so in taxable accounts / savings, etc.

So per my calculations using a base of 2k/month (to keep it simple) and return rate of 8% and 270k starting balance :
- I have 549k in 5 years
- I have 3.8M in 25 years

Do you agree?

*just checked and my employer has contributed $3846.78 so far this year so I was not too far off.
*numbers are based on our contributions alone without including possible employer contributions, DW increasing contributions and catch up phase between 50-60.

Yeah, these numbers look more realistic.  I just realized the "Phil button" doesn't let you do a current amount on top of the monthly amount, so I went back to looking at a regular compound interest calculator.

Best of luck!

[CCL]

What kind of investments do you have your retirement accounts in?

[TheHaitian]

Dec 1, 2020 16:57:46 GMT -5 CCL said:

What kind of investments do you have your retirement accounts in?

My wife is 100% in Vanguard 500 Index Fund Investor shares (VFINX)
I am 100% in TRP Equity Index Trust CL A

[CCL]

So I looked up the TRP fund and it looks like it's pretty much an S&P index fund. I was just curious where you were getting your rate of return from.

[TheHaitian]

Dec 2, 2020 0:42:45 GMT -5 CCL said:

So I looked up the TRP fund and it looks like it's pretty much an S&P index fund. I was just curious where you were getting your rate of return from.

And?

[ArchietheDragon]

Nov 29, 2020 21:37:44 GMT -5 TheHaitian said:

To have 500k in just retirement funds by 40? Goal of 5M by 60? We are both 35...

401k (me) - $132k
403b (DW) - $141K 

I do have about 15k in HSA but not counting it since we used about 20k of it at the beginning of this year to pay off some medical debt that I was carrying on some 0% cards, and since we are considering trying for another baby next year might use it towards fertility treatment (we started this year but with COVID we put a stop to it). 

I currently max and my wife does 10%, hopefully will work her way back to maxing at some point.  Goal Retirement age is still 60 for me (65 if I can still wing it but not because I have to but because I want to), wife doesn't plan to ever retire, continue working part time in some capacity. 

You are on track,Haitian. Keep it up and keep your eye on the prize.

[jelloshots4all]

Dec 3, 2020 10:33:34 GMT -5 ArchietheDragon said:

Nov 29, 2020 21:37:44 GMT -5 TheHaitian said:

To have 500k in just retirement funds by 40? Goal of 5M by 60? We are both 35...

401k (me) - $132k
403b (DW) - $141K 

I do have about 15k in HSA but not counting it since we used about 20k of it at the beginning of this year to pay off some medical debt that I was carrying on some 0% cards, and since we are considering trying for another baby next year might use it towards fertility treatment (we started this year but with COVID we put a stop to it). 

I currently max and my wife does 10%, hopefully will work her way back to maxing at some point.  Goal Retirement age is still 60 for me (65 if I can still wing it but not because I have to but because I want to), wife doesn't plan to ever retire, continue working part time in some capacity. 

You are on track,Haitian. Keep it up and keep your eye on the prize.

Can I ask why you think you need $5M?

[TheHaitian]

Dec 4, 2020 19:25:49 GMT -5 jelloshots4all said:

Dec 3, 2020 10:33:34 GMT -5 ArchietheDragon said:

You are on track,Haitian. Keep it up and keep your eye on the prize.

Can I ask why you think you need $5M?

5M X 4% = $200,000 before taxes

Not too far from what we are bringing in now ; so figure minus mortgage, minus student loans, minus some debt and minus raising kids = nice retirement.

Figure enough to cover the basics + some emergencies and some extra spending for fun.

[jeffreymo]

Dec 4, 2020 21:36:37 GMT -5 TheHaitian said:

Dec 4, 2020 19:25:49 GMT -5 jelloshots4all said:

Can I ask why you think you need $5M?

5M X 4% = $200,000 before taxes

Not too far from what we are bringing in now ; so figure minus mortgage, minus student loans, minus some debt and minus raising kids = nice retirement.

Figure enough to cover the basics + some emergencies and some extra spending for fun.

So if $200k income is your goal you could probably retire a little earlier, and with less as you could draw down the principal - unless you planned on leaving behind a large estate.

[TheHaitian]

Dec 5, 2020 7:15:25 GMT -5 jeffreymo said:

Dec 4, 2020 21:36:37 GMT -5 TheHaitian said:

5M X 4% = $200,000 before taxes

Not too far from what we are bringing in now ; so figure minus mortgage, minus student loans, minus some debt and minus raising kids = nice retirement.

Figure enough to cover the basics + some emergencies and some extra spending for fun.

So if $200k income is your goal you could probably retire a little earlier, and with less as you could draw down the principal - unless you planned on leaving behind a large estate.

Leaving behind a large estate is not the priority but if it happens it happens.

Mostly I rather be in a position where every shit that could go wrong goes wrong and I am still in a position to maintain a somewhat comfortable retirement, so extra conservative.