My financial goals for our early retirement are to achieve the following by age 50:
- House paid off
- College saving account fully funded
- Taxable accounts: $300K
- Retirement accounts: $500K
- Holdings in India: $100K
How did I arrive at these figures?
- We want to pay off the house before even considering leaving our jobs. We are making early payments on our mortgage to reach this goal.
- We want to fully find the college account before leaving our jobs as well. I estimate $60K for a 4-year college degree at a public university.
- The taxable account target of $300K is intended for our early retirement years. This is based on a 4% yearly withdrawal resulting in $1000/month during the first year of our early retirement, with inflation-adjusted increases in subsequent years. This money will be held initially in dollars, but will be partially converted to Indian rupees as we get closer to retirement.
- The retirement nest egg of $500K is intended to be used after we reach full retirement age. This should allow it to grow tax-deferred for about 15 years before we start withdrawals. This will be held in US dollars, with a significant portion in non-US equities. We should also be eligible for Social security and a pension at the time that we start withdrawing from these accounts.
- The holdings in India of $100K are intended for initial setup expenses upon moving to India. This is partly in real estate, and the rest in safe fixed-term bank accounts.
All figures are in 2007 dollars. I expect to revise them in the future, depending on rate of inflation, currency exchange rate etc.
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