Monday, June 11, 2007

It's Really All About Asset Allocation: Part 2 of 2

I negotiated the CNN tool with the following known variables (well some are assumed because I don't really have a job yet):
  • Current Age: 22 (My age when I start full time employment)
  • Desired Retirement Age: 65
  • Life Expectancy: 85
  • Current Income: 65,000 (I hope that is somewhere around my potential starting salary)
  • Typical Annual Raise: 4% (I believe that is a fair average)
  • Desired Annual Income @ Retirement: 65% of current income --> I figure I already will be saving 20% toward retirement and 10% toward housing expenses
  • Expected Benefits from Social Security: $0 --> Social Security will fail
  • Age Payments Begin: 65
  • 401k Balance: $0
  • Contribution %: 10%
  • Company Match: 25%
  • IRAs: $10,000 in my Roth
  • Annual Contribution: I plan on maxing it out $4,000
  • Tax Rates: Whatever CNN said
  • Portfolio: Aggressive ---> But this is the unknown!

The results were great! In order to achieve my goals, I only need to yield 5.06% on my investments throughout retirement, which suggests I can be pretty conservative if I maintain my current contribution rate!


Steve said...

Another great post man. I showed this to my mom to show her how far she missed the boat on investing.

rmacguidwin said...

Thanks for the support steve...

Brian Restuccia said...

Expected Benefits from Social Security: $0 --> Social Security will fail

Either that or we will be taxed like Swedes. Either way, it doesn't look good