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New Retirement Goal

June 23rd, 2024 at 03:37 am

I am finally setting my next bigger picture retirement goal.  It's been 3 years since we hit our $500K retirement goal.  I drafted this post in January (have been slow to publish) and so I'd say we took a 2.5 year breather re: retirement goals.  Wanted to let the stock market rebound, let college sort out, etc.  Real estate is still a mess.  I suppose we've decided that part is moot until we decide where we want to settle. 

A lot of my "meh" feelings about it has been the markets.  At current, the smaller homes in our neighborhood are selling for the same price as our larger home.  (This renders downsizing completely useless.  In addition to this, our property taxes and utilities would increase.  I would have been okay with that to pocket $200K, but makes no financial sense in the moment.)  I think that doubling our last retirement goal in 5 years was doable, but it was just kind of depressing while the market was down.  & of course, the housing thing was a compounding factor because if we can't cash out $200K to throw at retirement then that's $200K more we need to come up with.

In the meantime, we mostly figured out college for both our kids.  Still some financial unknowns but I think it's about 90% more clear than it was 2 years ago.

Ideally, I'd like to put less emphasis on retirement savings.  But the reality is it's just not efficient to lower retirement contributions.  After pondering for a couple of years and going more with the flow, I can see we won't change much.  Will continue to contribute to work retirement plans up to the match and will continue to max out IRAs.  Not sure how successful we will be with increasing IRA limits and two in college, but will keep trying.

That said, our $500K retirement goal (by 45) was a big stretch goal.  We are going to continue to hit things pretty hard, but...  I am no longer interested in the stretch goal being the priority.  

Note: Age 45 goal was 6x salary

So our new goal will be more realistic:

$1 Mil in retirement accounts by age 52.

This presumes 6 years and a 7% rate of return.

I do think that 'thinking it' is 90% of the battle, and I think is some of why I wrestled with setting a more conservative goal.  In the end, I am just setting both the realistic goal and the stretch goal.  The stretch goal is to hit $1 Mil by age 50.  The stretch goal is a stretch goal, but I do think it is possible.  I am doing my part to write it down and believe in it.  Mostly, I have other priorities and don't want to sacrifice too much for the stretch goal.

Along the same lines, I don't know how I will feel about catch up contributions when we turn 50.  My gut feeling is "meh".   The whole point of making retirement *the* priority in our 20s/30s is that we don't want to spend our 50s catching up.  But if I really think about it, I am less of a fan of our retirement work plans and have no plans to ever max out.   I do prefer self directed IRAs and I can see taking advantage of catch up space.  Which is just another $1K per year, each.  Once our kids fly the nest, I am sure that will be fine.

Other than that, our bigger plan is just to work less.  Our expenses should drop considerably when our kids fly the nest.  & so that may be a situation where we could max out everything (and do all the catch up contributions).  But the bigger plan in our 50s is to work less.  Not to save more.   More likely will be cutting back work hours and lowering retirement contributions.  

We turn 50 in 2026.   That will probably be a bit of a transition year where we pay the last of the college expenses.   

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