I was at the same level at your age nearly 20 years ago. I had created a 15-year accumulation plan in 1998 and looked towards an early retirement at 50 with the same $1.3M you mentioned. All of the tools at the time said I am golden and should be perfectly fine. I heard about the mantra of “Saving too much.” Of course other helpful hints were provided such as “Don’t worry, you got a pension”, “Slow down and enjoy things”, “You have plenty of time to save for retirement”, “Just a few thousand in savings, the company pension and retiree medical plan, plus with social security, that is all you will need!” and plenty of others.I am 43, wife is 39. Have 2 kids, age 5 and 2.
We have reached $1M in our combined 401k and Roth accounts (i.e. retirement specific funds). Another $500k+ in non-retirement funds.
According to Monte Carlo analysis, if we never contributed another cent to the retirement fund, we could have anywhere from $1.5M to $5M (in real dollars) in these funds in 20 years in a 75/25 portfolio (current mix).
We contribute the max to 401k each year (and plan to continue to do so) and with the company match this comes out about to $69k contributed each year.
I guess my question is - should something happen and for whatever reason we had to stop contributing as much to retirement, it almost seems like we've front-loaded enough that we should still be "ok" in retirement. So in some respect I can "rest easy".
Is this thinking correct or am I still "behind" where I should be?
Thankfully the most valuable lesson I learned in schooling was when I took accounting in high school beginning at age 16. I learned about the “Magic of compounding” and why to never break it. I never ‘slowed down’ in my financial plan.
These software planners arrive at a conclusion based upon:
•Future returns will match exactly as past returns used for the simulation occurred.
•Your job will remain as stated until you retire.
•Any benefit promises and calculations made will never change or be eliminated.
•You will be immortal and not have any negative health changes.
•You will be a dynamo and never get laid off.
•Your company is in the same bloodline as Tabasco or Coca Cola and will be around forever.
So, how did the 15-year plan and all those unsolicited helpful hints work out once those 15 years transpired?
•The pension was turned into a cash balance plan and later dissolved.
•The paid off house was sold during the real estate frenzy.
•The ‘magic number’ needed to be increased several times.
•The group retiree medical benefit was eliminated.
•The business was later outsourced.
This is why one should not take the numbers for granted or decide to ‘rest easy.’
Statistics: Posted by Hacksawdave — Fri Jan 24, 2025 8:29 pm — Replies 7 — Views 621