I haven’t set my financial goals yet, but I’m going to attempt to do that within the next week or so. There are several things that need to be taken into account when considering financial goals:

1. A guessed rate of inflation
2. The cost of living for your current standard of living
3. Expected interest return on your total investments upon age of retirement

The upside is that you can set some guessed numbers here and start to work out where you really need to be, there are calculators online as well that will help you estimate these things as well [click here to do a Google search for retirement calculators]. The downside is that this is going to be an algebraic equation that has no known numbers and you’re dealing with all variables. However, there are strong, well established numbers that you can use. For example you could use 3.5% as the average rate of inflation, you probably know what your current cost of living is, and you can optimistically assess various investments with the assumption that there will probably be other investments like it upon your retirement (and more than likely those same investments will still exist).

A rough look at my current investing and retirement calculations tells me that I’m going to die working. I will never be able to retire in with my current spending, saving and investing goals. That means I need to change my goals! According to one calculator I should save 6.145 million dollars before retiring. At my current rate of savings and conservative interest on my IRA I will never reach that in my lifetime.

Setting Your Own Financial Goals

Now that I can see I’m not going to be able to cut it with my current strategy I’m convinced that I need to wipe out all debt (duh!) and aggressively feed my investment pyramid so that I can retire with my wife and live at a comfort level I’m used to. Because I know things change financially due to job changes, medical needs and life being complex I’m going to have to set a goal and then revisit it over time to make sure its realistic and that I’m on course to achieve those goals.

My personal goal is to have roughly 6 million dollars in savings for retirement. I’m not confident that I can do it now because I don’t know enough now about how to invest and reach those goals, but if you’ll read along with me and we learn together we’ll set some goals and find ways to refine them and achieve them!

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This entry was posted on Monday, July 2nd, 2007 at 10:44 pm and is filed under Foundations, Retirement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.