$3,376,500
November 24, 2009Jon Brooks Comments OffOn Boston Gal’s Open Wallet, a blog of the “ongoing chronicle of a single 30-something Bostonian who is seeking enlightenment and control of her Net Worth,” Boston Gal writes about the factors that helped create a “financial neurotic,” as she calls herself:
I learned at an early age that while I could be too sick to go to school I was never too sick to walk the paper route. I also learned that if your college aged sibling needed money for books you gave them money out of your passbook account for books – no questions asked. If you were at the grocery store and your Mom did not have enough cash to pay the cashier you just quietly took back the items and reshelved them – you never complained or made a scene about it. Frankly, you learned to add the cart up as you helped your Mom shop and periodically reminded her of the ongoing total to try to prevent the money shortfall from happening again at the checkout.
All of these and many many more small and big financial experiences instilled a fear of someday becoming a bag lady. Someone homeless and without money.
So you can imagine how she felt when in 2005, a newspaper article prompted her to calculate how much money she’d need to retire.
The questioner mentioned the mandatory age for disbursements from an IRA which is currently 70 1/2. Which means I have 36 years, 9 months, and 16 days left to save. Now for the hard part – figuring out my future cash-flow needs. Luckily my crystal ball is handy and after peering in it I have decided I need $4,000 per month to cover my cash-flow needs. If I assume 3% rise in inflation over the next 35+ years that means I will need $11,255 per month or $135,060 annually.
So – that means I need to have $135,060 X 25 = $3,376,500 in my IRA by the time I am 70 1/2.
OK – that is pretty shocking – how the heck am I going to do that???? Even if I round up the time I have left to save to 37 years it seems pretty hopeless ($3,376,500/37 = $91,256.76 per year needed to save). OK – so obviously straight savings will never work. That means I have got to start getting my current savings to work harder. I will need to ponder this. For some reason I assumed that if I someday managed to accumulate one million dollars I would be all set. It is shocking to realize that I need to set the bar much higher than that.
Ever since that time, she has assiduously charted her net worth (currently around $522,000) in quest of attaining that magic number.
Besides ferreting out and commenting on useful media reports on personal finance, Boston Gal’s blog chronicles her financial life and the decisions big and small she makes that affect it. Opening your finances to public scrutiny may seem strange to some, but she explains it this way:
Speaking publicly about your personal finances has always been a no-no in my family. The result of this is that I often felt unprepared and uneducated about financial matters. I am now in my mid-30′s, single, with a fairly well established professional career. Because I live alone I make all the financial decisions in my life – good or bad. This site is meant to be a tool for me to tackle and hopefully accomplish various financial goals while along the way hopefully educating and preparing other woman and men who read this for their financial lives. If your parents and peers can’t or won’t show you the way, hopefully sites like this will.
Good luck, Boston Gal.
