MyPlan Retirement Projections
December 10, 2006
Wanda posted a link to this nifty calculator that just panders to my love of online calculators that crunch my retirement goals and the likelihood of reaching them.
Answering the questions based on the real amount of money I’m taking home as opposed to base salary, I find that I’m not on track AT ALL:
Age: 24
Savings thus far: $5000
Contributions/month: $400
Investing Style: Aggressive Growth Goal: 2,943,000
On Track for – Poor Performance: 745.00
On Track for – Average Performance: 1,737,000
Boy, and I was all proud that I had racked up 4k in my 403(b) in that last nine months!
My insistence on funding the e-fund more has a lot to do with that, maybe I need to reduce the amount I expect to save in my cash savings monthly now that I’m so close to my goal and increase the retirement funding. Or I should reach my goal first? Hmmm ….. It looks like I have to double my contributions to make a significant change, otherwise the most I could expect from even average market performance is possibly making my goal. I suppose there’s only so much I can save every month, now it’s just a matter of making adjustments like putting more into a Roth, the 403(b) and less into cash savings.
It’s a step by step process. Also a calculator is only based on so many circumstances, which will constantly change. I would fill up the e-fund and others while continuing to add to retirement. Once those are set, boost up your retirement.
I’m assuming the calculator says how much you have to do each month, without any thoughts to changing that in the future. You will most likely be adding more than $750 a month in the future as you make more money. It’ll even itself out.
Yes, and I did forget to mention my peeve about the calculator: it reduces the amount of money you will require at retirement if you choose to retire earlier. I understand that it’s simplemindedly basing the retirement goal on 85% of whatever you’ve made at the younger age rather than the older timepoint, but I think it gives a silly impression that you need less money for a longer retirement.
Hm, yes I know that I’ll be adding more money as I get older and make more, but I wonder how much that is counterbalanced by the compounding rule? That is, the money you invest at a younger age is “worth” more because it’ll have longer to compound over time. I suppose my logic is that I can save more now in the retirement fund because it’s more to compound over a longer period of time, vs. making paltry contributions now and trying to make it up later on when the money has less time to compound. Like a fine wine ….
I generally agree that you should put as much as possible in retirement now when you know you can. But you don’t want to end up having to borrow from retirement because you have an emergency and don’t have enough in your emergency fund. Although saving for the far future is important, you can’t risk the near future.
Oh, I wasn’t even considering stopping the efund savings at all, just maybe taking it down about 100 bucks/mo and adding that $100 to the 403(b). But that goes against my wanting to fill it up anyway, so maybe after this efund is set up, I’ll look at it again.