It’s been almost a year since I wrote about early retirement. Retiring from my current job at 54 after 30 years in my retirement system is my second best case scenario.

 

My best case scenario is to become financially independent earlier than 2027, but I’m not really sure what I need in order to do that. (Frankly, I’m not sure I’d be able to retire with a pension after 30 years since I don’t know how much that will be, and there are “penalties” or percentages off for every year one is younger than 60, I believe).

 

I know there are many different measures to determine how much money I’ll need to retire.  I’m going to start with the simplest.

 

The simplest measure I’ve read about is the 4% rule.  I believe the thought behind it is that your investments will increase by 4% a year, so you can count on living off your increase. Then again, maybe the idea is that you people are retired for 25 years so you want to have 25 times what you spend each year saved. Then again, the rule may have nothing to do with either of the above scenarios, but in short, you take what you believe you’ll spend per year and multiply it by 25.

 

A typical example is that if you live off $40,000 a year, you need one-million dollars to retire because 40,000 x 25 = 1,000,000.

 

Though I’m married, I’d like to simply consider my financial contribution to the family (my husband and I) without considering that I may need to support my husband or that he may need to support me.

 

I currently contribute $1764 per month to the family pot. I spend another $100-200 per month traveling, clothing, eating out, and craft supplies. If I add 200 to 1764, we’ll get 1964, so let’s just go with an even 2000.  Without considering health care, which is primarily paid for by my employer, then, I spend about $2000 a month.  That’s 24,000 a year. So I take 24,000 x 25 and the amount of money I need to have saved in order to retire/be financially independent is: 600,000.

 

Wow. That’s a whole lot less than one million.

 

It’s a lot more than I have right now though, too. The last time I figured how much money I have for retirement, which was about a year ago, the number was $154,564.15. It looks like I need about 4 times my current saved amount to be financially independent.

 

Disclaimer: I know that the measure I’m using (the 4% rule) is very general and that my personal estimates (spending 2000 a month, having 155,000 for retirement) are simply as accurate as I can figure them in a short amount of time.

However, it’s a start! My next step? To find and use a retirement calendar online. I’ll let you know when I do! Until then . . .

Peace Out (and In)!

~Jaye

 

 

 

 

 

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