Wow what a week! Over 600 views on this site and we’re up to 10 subscribers. I’m not a writer so it’s nice to receive some feedback on my articles. Personal Finance is just an interest of mine, one which has amazing rewards if I can stay focused. It would be amazing to stop working full time and be able to travel every summer with the kids. This last week has been a little crazy. My parents and brother arrived for a visit from the UK, they’re staying with us for two weeks and we’ve spent some great time together. Our big boy is about to finish Kindergarten and is growing up fast! We’re excited for the summer, we joined a pool for $600 for the summer and we’ve already been five times and I imagine we’ll be spending a lot of time there over the next couple of months.
Anyway back to the real stuff…It’s easy to just name my site and throw a random number out there…but that’s not exactly what happened. Today I will walk you through my expected expenses in retirement and demonstrate how I came up with my magical $1,500,000 number!
I created a really boring budget…WAIT..don’t go to sleep just yet, or put on your fake glasses (like my favorite episode of the Simpsons). I spent about 5 minutes making and guessing future expenses, always keeping it rather conservative. Nearer the time I will look at the numbers in more depth, right now I’m too focused on accumulation to worry about $100k here or there. I have read from amazing people in the Financial Independence family that to retire, you should have 25x annual expenses or rather, the 4% safe withdrawal rule. This will generally be enough not to run out of money. I am assuming that I will have my house paid off, we plan on moving from the Suburbs of New York to Florida where houses and life is a lot cheaper.
SO….I know the suspense is killing you so i’ll jump straight in and show you my predicted future expenditure:
|Mortgage / Tax||$400.00|
I have no idea how much Healthcare will cost my family of four. Hopefully it’s less. Maybe we can find a health care hack before we reach our budget. Anyway, $5000 per month in expenses x 12 months = $60,000 annual expenses. Multiply this by 25 and we reach my target of $1,500,000.
After my may update, I am about 28% towards my goal. We’re on target to achieve our third straight year of investing $80,000. I believe we’re approximately five years away from reaching our number, we’re into year four of this plan. It will be great to reach FI before 40.
We might decide to move earlier if we can get part time jobs we enjoy. Once we have the house paid off we’ll have a lot of options. What’s your FI number, how long is it taking you to achieve it?
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