I’m so excited to share that this morning, my husband and I sat down and put together our current savings plan.
According to several trusted sites, including Mr. Money Mustache. we need 25 times our annual expenses saved to be financially independent. This is so that we can safely withdraw 4% per year to live off of. I’ll get into that more in another post of my own but definitely check his post out if you can. With that rule, our retirement number is $1,000,000. Our only “debt” is our mortgage.
It is a little overwhelming to see at first glance. With our current savings being $45,211 we need $954,788.14 more before we can safely retire. At our previous savings rate that would take about 60 MORE years. Isn’t that crazy? I am 34 years old right now. I’m not trying to retire at 94 years old. Haha! Instead, we calculated a new savings rate of about 40% of our yearly income.
We will have to work hard at this, but if we do it then we can retire in about 19 years. This is still more years than I would like it to be. We are being very conservative with our numbers and not including any savings from my husband’s earnings. He owns his own business and it is still very new. Right now almost all of his earnings are going right back into the business. Eventually, our savings rate can go up even more with his income, and the number of years until retirement will reduce as well. It is just hard to say for sure right now, so we are leaving his income out completely.
Actually, We are Starting our Journey Again…
We are technically starting our financial independence journey over again. About five years ago, my husband and I attended Financial Peace University at our church. This program by Dave Ramsey is something I still highly recommend to people just starting out on their financial independence journey. I can wholeheartedly say that this program saved our lives and our marriage. We got out of all consumer debt and learned about savings. Unfortunately, we were super diligent for about 4 years and then this last year we have really not paid any attention to where we were headed financially.
I am excited to keep everyone (including myself!) updated on our numbers monthly. Let me know if you create your own savings plan or if you have any questions on what to include or how to get started!
Veronica