Reaching goals feels fantastic. When we drop those 10 (or 20) pounds that we’ve been working so hard to lose, we leap off the scale and do a pirouette in the bathroom. (Wait…am I the only one?)
And with saving for retirement, it’s no different. (Well, minus the scale and the bathroom.)
When my husband and I first dug ourselves out of our $40,000 pile of debt, and started really saving for retirement a few years ago, we laid out a plan. But first…if you didn’t know, I’m an Excel junkie. I love numbers, formulas, forecasting and finance. So naturally, I used this to my advantage. I built out a spreadsheet that tells me where we need to be at the end of each year, to reach our goal of $1,000,000 in 7 years from now (based on a 9% average return on investment). Here’s what my spreadsheet spit out…
Year 2013 was a great year. We saw record-high returns throughout the summer into the fall. We beat our target by several thousand dollars, and passed the $90,000 mark. Sweet. Now we’re looking at 2014. And to help us know if we’re on track, I calculate what our balance SHOULD be at different points in the year.
On January 1st of this year, our balance was $90,897. Our first official benchmark this year was to reach $125,000 by June . And as of last night, June 4th, WE DID IT! We hit $125,070.77. (Our total NET WORTH? According to PersonalCapital.com, we just hit $220,827!)
Which means that from a combination of savings, employer matches and investment returns, we increased our balance by $34,174 in just over 5 months! It’s a relief to know that we’re on track to make our savings goal for the year. A lot can happen between now and the end of 2014, but I’m choosing to be positive. Our next benchmark is to reach $150,000 by September. I promise to post another update then too, good or bad. So we’ve got just under 4 months to save another $25,000, and if things go as well as they have so far, we should make our goal. By the last day of 2014, our balance needs to be $174,153 to meet our total annual savings benchmark.
This is the point where someone says, “How do you do it? How do you put away that much money?”
Well, we’re not like everyone else. We’re a dual-income family, which of course helps immensely. But the real key? We live on one income, and save the other. That’s the part that so many find difficult. I realize that single-earner households can’t save like we do and living on one income can be a struggle. But trust me, it’s a conscious, but not-always-easy decision NOT TO SPEND EVERYTHING WE EARN.
So many dual-income families in America spend like…a dual-income family. Duh, right? But it’s true. What is even more sad is that even the dual-income families cry and complain that they “don’t have enough.” The likely scenario? They have plenty. But they choose to spend it…on enormous flat-screen televisions, new SUVs and sports cars, boats, McMansions and “things”. They’re too busy keeping up with the Jones’.
Well, you know what? I don’t want to be like the Jones’. When I’m living my life free from the daily grind…on my terms…without an alarm clock…traveling the world in (hopefully) 7 years, there won’t be a single regret. There aren’t enough cars, clothes or luxury homes to make me give up my dreams of early retirement. In fact, when we reach our goal, we’re going to drive by the Jones’ house and wave goodbye, as we take off to celebrate our newfound freedom. Meanwhile, Mr. and Mrs. Jones will continue to sit in a cubicle for the next 30 years, wasting away their lives, all so they can pay for things they don’t need with money they don’t have, to impress people they don’t even like. No thanks.