Month: September 2016

Being Frustrated With Where You Are At Financially

Yesterday I posted our Sept 2016 Financial Status Update.  While our savings are growing and we are getting on the right track, I feel horribly behind.  We are a year or two away from 30 years old, and have only just started making decent money.  The multiple irons in the fire are starting to pay off.  But my plan of “earlier” retirement in my early 50’s seems impossible many days.

Here is the current estimate given actual savings rate, a retirement at age 50, and with working a little bit part-time from 50-65 ($15k/year).  I delayed taking Social Security until age 70, and conservatively estimated an annual benefit of only $20k combined for my wife and I (SS is heavily underfunded and currently estimated to pay 76% of benefits after 2037 – link).  There is a chance I would run out of money before I turned 70, and a really good chance of completely running out of savings in my early 80’s.  Very bleak.

perscap_retire50_actual_2016_sept

perscap_retire50_actual_incomeevents_2016_sept

Astute readers will notice there was a $700 drop from yesterday to today in total savings/investments.  Got to love market volatility, mainly from oil prices and the Wells Fargo scandal.  Good thing I am a long-term investor as I have many years and decades to weather these storms.

 

What gives me some hope though is that the “$18,908 per year” that Personal Capital “sees” me saving each year is probably a low estimate since I have only been using them for a little over a year and I have already saved $23,000+ in 2016 so far.  With the same numbers, except increasing annual savings to $25k, I have a better chance of retiring at 50.  I won’t be living it up at $45,000/yr nor will I leave an inheritance, but there is a good chance I wouldn’t run out of money before I die.

perscap_retire50_25kyear_2016_sept

 

And if I increase the savings to $30k per year, I am even better off.  I should be able to save that much money in all of my retirement and investment account combined, but it will take some effort.  And it looks like it may be required if I want to retire at 50-ish.

perscap_retire50_30kyear_2016_sept

 

This last chart looks amazing with a 98% chance, right?!  To make this happen, I only need to save $30k per year and work until I am 65.  Not ideal and probably overkill for my needs, but it lets me know that my actual retirement is probably somewhere between 55-65.  Hence the frustrated title.  Some get frustrated and give up; most have at least thought about it.  The only way to change the numbers is to make more and save more, which I am working on.  Perseverance, hard work, and being uncomfortable with where you are at are key to getting ahead.  But it is a painful process.

perscap_retire65_30kyear_2016_sept

Financial Status Update – Sept 2016

Posting your personal finances online for all to see is rather intimidating.  The modicum of privacy the internet provides is making it easier, however there is always the fear of your private matters becoming too public and not being as successful as you had hoped to be.  But, I have been reading financial blogs for years and loved seeing real numbers.

On a side note: I will say though that many/most bloggers had amazing incomes and savings rates (personal choices such as no kids, moving for jobs, etc) which almost made it seem impossible for the “average person”.  I hate using the term “Average”, or aspiring to be such, so please don’t think I am putting them down.  I just found it hard to relate because I had different life priorities (especially children, desiring to live near family, and initially foregoing college due to cost) which consumed more of my budget or precluded me from a large income early in my 20’s.  While frustrating from the financial aspect, hopefully my smaller numbers will be easier to relate to.

So, where are we at for mid 2016?  I just climbed above $46,000 in my retirement and investment accounts!  Woo Hoo!  May not seem like a big deal, but as of January 1st, I only had $22k in there.  My goal for the year was to break $50,000 and I should bust right through that!  In less than two years, I should be over $100,000!  I’m excited about entering my 30’s with a much better financial outlook than just a few short years prior.

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perscap_portfolio_2016_sept

I have been using Personal Capital for just over a year now, and I love it.  It makes it so simple to get excited about all the little contributions adding up week after week and month after month.  Before, I would have to log into each account individually and be less excited about the seemingly small jumps.  I currently have 7 different investment/retirement accounts (doesn’t include bank or credit cards) from two jobs and other personal investments.  These include the standard 401(k), Roth IRA’s for the wife and I, a brokerage account, and a Prosper investment.  When I have a choice, I use Vanguard due to low fees and excellent options.  My current Portfolio Allocation is a little crazy because I am saving for a house down-payment in one of these accounts (hence large cash percentage) and all the different accounts make it difficult to keep an exact percentage of each category.  As time goes on, I will be able to consolidate and have larger $ amounts in each account to overcome this.

 

I mentioned my financial plan before.  Another thing I like about Personal Capital is their Retirement Planner.  You input your desired retirement age, add how much you think you will need in retirement (used $45k/yr), and any other estimated expenses (e.g. kids’ college) and increases.  While merely an estimate, it does use your actual investment balance and savings rate to make it more realistic.  If I work until I am 65 and live an OK life in retirement, I should be good:

perscap_retire65_2016_sept

 

The problem is, I don’t want to work full-time until I am 65 years old.  But, the numbers look less promising when I retire at 50 and work part-time (making $15k/yr) for the next 15 years.  The main lesson or take-away here is I need to save more money each year ($25-30k minimum).  The difficulty will be balancing this living well below my means with wanting to live life to the fullest.  We will see how the numbers improve as Personal Capital “sees” a higher annual savings rate.

perscap_retire50_2016_sept