Retirement is one of my long-term goals, same as many people including the ones that just joined the workforce or graduated college. But when you are faced with the real numbers needed for it, and the possibility of Social Security not being around by then, like many other millennials, I have my doubts about being able to retire or when that would be possible.
The other day I was reviewing our family budget, and with my husband, we did some tweaks to our monthly budget and added couple goals to it. One of it was to continue contributing to my recently opened ROTH IRA account. I just graduated last year from college, and I opened this account last year while I was getting paid as an intern just to start something as I knew how important it was to start even if it was small. I started a job this year, it offers a 401K but it doesn’t have a match, so adding up on all possible fees and others makes saving on that account not worth it. Yet I know I need to save, I’m almost 30 and I haven’t been working in the US for too long, so even if there’s a chance of social security I still haven’t been contributing as much, yet.
While editing and adding goals to our budget on Mint.com, I found really good information that opened my eyes to the possibility of retirement and how I would have to be living by then if I just keep my small contribution.
My retirement savings goal, for now, is to save $50 a month. Later I will save more but right now it is what it is. I also wanted to assume that I want to be able to draw $20,000/year starting in 30 years (when I’m 60). I thought that amount is a little low, but let’s say I won’t have a mortgage or other debts, I would have some other investments and my husband will have his retirement income too. Also assuming no health issues, because that can be quite expensive, –one can only hope. Here is how the goal looked:
Screenshot of Mint.com goal creation
I will need $694,368 if I want to retire in my 60’s, that’s a lot of money but the thing is that I will be contributing only $128,060, so the power of compounding that my husband talks so much about, is real. With all that in place, and assuming I make my investments in an aggressive way, with a potential 9% average annual return I am aiming to retire at 60 and be able to live with $20,000/year in today’s dollars, for up to 30 years more. Meaning I have to be dead by 90 otherwise I won’t have any money left. 🙂
Am I being reasonable? $20,000 seems like nothing today, even if my husband has an income and we don’t have debts. Not only that, but $20,000/year when I turn 60 is still my desire, the software has yet to calculate if that’s realistic or not. Here comes my answer from the software:
Screenshot of Mint.com Goal for Retirement