My Financial Goals: Long-term, Mid-term, and Monthly

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I am doing a bit of tinkering with this site, and I wanted to restate clearly my goals. Contrary to the inspirational image to the left, I feel that if you don’t write your goals down clearly, they are much less likely to happen. I am still separating them into Long-term, Mid-term, and Monthly Goals:

Long-term Goal
I want to be financial free by the time I am age 55. I am 26 now. By financially free I mean that I can live a simple life without having to work a full-time job. I probably will work some, but I want the freedom not to have to. In order to this, I am estimating that I will need $50,000 a year in today’s dollars. Assuming 3% inflation a year, an 8% annual return on my investments, and a safe withdrawal rate of 4% a year during retirement, that will require $3 million dollars in 30 years ($1.2 million in today’s dollars). Wow! To be on pace to do that, according to my calcualtions, I will need about $1 million by age 45.

Therefore, my new long-term goal is $1 million by age 45, or in 19 years.

Mid-term Goal
Based on my wife and I’s current school/job status, we will not be geographically stable until 2007. We plan on settling down and having kids in a very expensive area, and would like to buy the home we will live in for the foreseeable future then. Based on the current real estate prices, in order to get 20% down we will need $100,000 in non-retirement funds. Yes, this is a lot of money and very few people pay 20% down anymore. If we don’t have too, fine. But I think we can do it.

Therefore, my mid-term goal is $100,000 non-retirment funds by mid-2007, or in 26 months.

Monthly Goals
In order to reach my long- and mid-term goals, I try to set manageable smaller goals on a monthly basis. You can see my monthly goals and if I meet them by clicking on the Goals Category.

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  1. For those that read this post in the first couple hours that it was posted, I have since taken inflation into account and adjusted my long-term goal accordingly. One of the resources I used was this site (Thanks Michael).

    Before my goal was $1,500,000 at age 55, and now I have revised it to be $1,000,000 at age 45, with the expectation that I will keep working and saving until retirement at age 55.

  2. I know I just made fun of those inspirational posters, but I actually kind of like this one.

  3. William Frantz says

    What’s the target price of your home? $100k is 20% of $500k, but you can’t plan to use 100% of those funds toward your down payment. There are all kinds of associated fees with buying a house; points on the mortgage, moving expenses, and so on.

    Your $50k/year target may be unrealistic. That’s about $3k/mo after taxes. That probably won’t cover your mortgage payment assuming a 30/year fixed rate which you will still be paying at age 55. Furthermore, your tax deduction for mortgage interest at that time will be greatly reduced since you are mostly paying principle in the last few years.

  4. Books: Agree that ?Millionaire Next Door? is a great book; also recommend adding ?The Intelligent Asset Allocator? by William Bernstein to your list.

    Investments: You?re definitely on the right track with the index funds. The more I read, the more I realize that any fund but an index fund will eventually have subpar returns. Two asset classes you don’t have that I would recommend (as part of an intelligent asset allocation plan, see the book above) are small cap value and emerging market funds. Also, checkout this web sight for the best financial advice I know of: I’m just a customer of this fee-only planner and don’t receive any compensation for referrals or anything else.

    Goals: Your goals are realistic. I’m fascinated that your numbers are almost identical to mine: 100K intermediate term, 1000K by 45, retire at 55, live on 50K/yr.

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