I love goals — I’m a goal-setting guy. As Yogi Berra said, “If you don’t know where you’re going, you’ll end up someplace else.” The great thing about reading personal finance blogs is I can see how a bunch of different people are managing their money to achieve a goal, whether it’s early retirement or buying a llama farm or whatever. Also, let’s be honest, people in the offline world are weird when it comes to money. Face to face, many people get squirrelly and uncomfortable when talking about budgets and net worth. It’s a cultural taboo, it’s considered private. You don’t ask your neighbors about their their sex life, their strange-looking facial moles, or their net worth. Awkward silence will ensue.
So, on the vast interwebs, financial voyeurs rejoice! We are free to be honest about our finances and our goals, and everyone can follow along. It can be inspiring and funny and encouraging. Maybe even arousing to some readers, who knows? I hope not. Awkward.
Anywho … A smart personal finance plan requires having a goal, making a plan to reach that goal, and tracking progress. Is the plan working? Can it work better? If it’s not working, what needs to change — the goal or the process? All good questions that can only be answered by getting started. So here I go.
As I said in About Rich, I like my career and I earn a decent income. I’m not looking to grow a mustache and escape mainstream society, and I certainly don’t want to spend more time at my kids’ school. That’s why we underpay teachers! What I want is financial security for my family, the freedom to splurge on fun experiences, and the option to retire around age 55, if I feel like it. I’m starting with a retirement date rather than a number, because my job provides a pension that kicks in fully after a certain number of years worked. I’m not leaving that on the table. Also, at 55, my kids will be out of the house and (you’re dang right) in college. So anyway, let’s say 55.
At 55, I’d like to have a Net Worth of $2 Million. This will be, I think, around $1.5 Million in retirement accounts (401k / IRA) and $500K or so in investments. If I add that to my pension income, I think I’m set for life.
Since 55 is almost 15 years away, I want a shorter term goal as well, so let’s say $1 Million at age 45. For wiggle room, I’ll say anytime before I turn 46. That gives me 4.7 years to get there. My net worth right now is $562,880, so I have $437,120 to go, meaning I need to increase net worth by around $93,000 per year or $7,750 per month. Can I do it? Continue reading “Rich’s Goal: $1 Million at Age 45, $2 Million at 55”