[USER]

I keep plugging in numbers to retirements calculators, hoping to retire around 55 and all say I won’t have enough to retire early. Am I plugging in something wrong?

27, married, no kids but will probably have 1 in our 30s. Live in CA so HCOL. Not an option to move out of state due to job.
Zero debt (except for mortgage)
Only own 1 car- fully paid off, expecting to buy another in the future
2 mortgages totaling – $5500
Rental income- $3300
We net roughly $120k/yr
Max out Roth $6500 per person
1 person max out 401k w/ 50% match- $22,500 (totaling 33,750 contribution a yr)
We spend about $6k/ month (living expenses, bills, groceries, etc) I assume this will go up once we have a kid but we also don’t plan to have a kid unless income increases to afford one.
Save about $4k/month
Current investments (Roth IRA/ IRA/ 401k/Stocks) are $100k
Stocks- 60k to be vested over the next 3 yrs
Cash – $70k

Assuming need for 80% of current income for retirement.

I thought we were OK but every calculator says we’re going to be short and need to work longer and start investing more now.

Currently debating on starting to invest in index funds or do more real estate.

[Jay]

Don’t delay having kids. If you really want, go for it. As long as you practice good financial discipline, things will fall in place. Your life is now. You’ll not be 27 again. Live it. You have one chance to be young.

[Kreg]

Nobody can afford kids. You just do it because it makes you 100x richer than money ever will.

[JC Mitch]

If you move to a new house every few years and convert your old home into a rental, you get crazy tax breaks and don’t have to pay commercial loan rates.

FWIW, you are probably going to be shocked at how expensive kids are and how much this messes up your plans, though.

Don’t miss: I want an estimate that assumes no income beyond the year I retired – 2021. Is there a calculator for this?

[Nita]

You should have more than enough. With $100k invested currently and if you continue to invest $4k/month for the next 28 yrs, at an inflation-corrected 7%, you will have $4.5M by the time you’re 55.

If your expenses are at 72k/yr x25 = $1.8M that you would need to cover expenses in a 30-yr retirement. And then you will presumably have rental income on top of that. Even if you wanted much more conservative numbers, account for health insurance etc, reduce savings a for a kid, projections are excellent. Congrats! Wish I’d had your financial sense in my 20s.

[Karenchad]

Just wanting to comment about not being mentally ready for kids yet. We didn’t have our first child until age 31. Our 2nd at age 34. There are pros/cons to delaying children to your 30s but we did get to travel and live life freely in our 20s.

We had rental income and only my husband worked part time on the side. It gave us a ton of freedom to enjoy.

We also took a chance with buying into a company owning a route that paid off. None of this likely would’ve happened if we had kids early in our marriage. So I fully understand waiting until you’ve had time to travel and enjoy.

I will say.. of all the things we did, places we went and risks we took, having kids is by far the biggest adventure of all.

Explore these too: Starting a fun discussion on areas to move for retirement if you can give recommendations!

[Tom]

What model are you using? Most models are a replacement of income model vs. a replacement of expenses. You are talking 28 years out. Lots of variables from now to 55. Set your life up where you have a good balance of enjoyment and investing.

It will work out in the end.

[Kate]

If you are paying $5500/month in mortgages, in theory those should be paid off (or very close) at age 55. Yet, you are expecting to still need 80% of your income in retirement. That would mean a very significant increase in your spending. What kind of life do you want to live in retirement? If you want to continue a relatively frugal life in retirement, you likely don’t need 80% of your current income once you are mortgage free. Depends a lot on lifestyle and spending creep. And kids are expensive.

Though, to state the obvious, I think the best thing to do to help with retirement is to continue to sock away savings into your retirement accounts. Can the 2nd person start putting money in a 401k or equivalent? You are so young, and the money you save now gets to compound for sooooo long.

[Author]

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