My Financial Journey

In producing the many excel spreadsheets that I have that tell me how much I need to save to in order to get x dollars x years down the road, I’m always kind of curious as to what I should put in there for my compound annual return rate. Certainly having a realistic and accurate return rate is vital to any kind of financial planning exercise. Especially seeing as how most of my calculations span 30 or more years of investment performance the return rate can drastically change the final numbers. If I were to set my expected return rate too high I would drastically over inflate my numbers and be poorly disappointed with my actual results.

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How many years do you have till retirement? Thinking about putting off saving for retirement just one more year? Well check out the chart below to see what it will cost you.

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When it comes to saving for retirement most people are pretty good at coming up with excuses as to why they can’t save for retirement right now. There’s the mortgage, the cost of raising kids, just not getting paid enough at work, need a new car, need to remodel the house, putting it off until they are older, don’t know how to invest, the stock market stinks right now, need to pay off the credit cards, really want to a buy a new (fill in the blank) first. I’ll admit it saving for retirement is not that easy. Especially if you haven’t been in the habit of saving before. It’s kind of like trying to get to the gym and exercise to lose those extra 20lbs you put on. There never seems to be enough time to get around to it and in the beginning it can be pretty overwhelming and you are likely to be fairly unsuccessful starting out so most people either never start or quit shortly after.

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Well I decided that we aren’t going to run out of money in the near future, so I went ahead and sent my wife’s 2006 Roth IRA contribution off to Scottrade.  This means that other than my 401k we won’t be able to contribute anymore money to our retirement accounts until 2007, but it also means that we are being proactive and have already contributed our 2006 contributions before probably a majority of people who do actually contribute to their IRAs make their 2005 tax contribution (sometime shortly before they file their taxes on April 15th).

Anyway look for a good boost to our net worth in next month’s financial report.