Mid-Term Goal: $100,000 Non-Retirement by mid-2007

After setting my Short-Term Goal for this month, I am now setting my Mid-Term Goal. As I have mentioned, I plan to buy a house in an area with insane real estate prices for the long term for family reasons. As we are planning to move in mid-2007, that is the target date. $100,000 in non-retirement accounts will be enough for a good-sized downpayment, as well as other incidental costs.

Let’s check on the current status – If I contribute $14,000 to my wife and I’s Roth IRA in January for 2004/2005, my net worth will look like:

Non-retirement: $23,366
Retirement:        $32,384

Thus, I am 23% to my goal, with 2.5 years remaining. That means my required savings and earnings pace will have to amount to $2555/month. That’s going to be tough, the stock and bond markets will hopefully help me out. If I assume a certain earnings rate, then my monthly savings amount may be more reasonable. I will have to consult my economics-trained friends! My other option is to put less into retirement.

Comments

  1. Maybe you should contribute to Roth IRA anyway. You can always withdraw your original contribution anytime without any penalty, so this $14,000 can become your non-retirement assets if you need it to be.

    BTW, great blog! Keep it up!

  2. Thanks MM!

    You’re right, the contribution itself can be taken anytime, I confused the contribution and the earnings, as they are treated separately penalty-wise. That’s good, it gives me a fallback plan.

  3. I don’t suggest taking money outta retirement plans for any thing. Let’ say that you want to buy a $150,000 house and you take 20% ($30,000) out of your IRA. Let’s say you roth IRA is generating 10% a year. After 40 years that $30,000 would have become $1,500,000.
    Please correct my math if it is wrong.

  4. I totally agree, but it’s nice to know that it’s an option. That’s why I’m trying to keep everything non-retirement. I also think 10% return is going to be very unlikely if you diversify at all – and the numbers are a little bit more down to earth if you use something less.

    But I like the way you think – that’s how I justify saving ten bucks here and there – compound interest rocks!

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