As part of the Festival of Under 30 Finances the question posed by host My Financial Journey is:

At what age do you want/plan to be financially independent (IE you don’t have to work full-time if you don’t want to) and what is your plan to get there?

Ideally I would like to have enough money to sustain me without taking away from principal with reinvesting for inflation. So assuming a conservative 5.5% return for the principal, and assuming inflation at 3.5%, that means I have to be able to live on 2% of my total savings. I figure today I could probably do this on about $40,000 which would be the return from $2 million dollars.

But then there is a curve effect… 2 million today adjusted for inflation is about $2.5 million 10 years from now. So I can’t set my goal of savings 2 million in 10 years or else I will fall short of what is really needed.

Realistically with our current plan of 2 kids realistically I think I will probably be able to think about retiring around 52 which is 26 years from now. By this time with inflation i will need about $4 million dollars for this plan.

I don’t really have any magical plans to make this happen. Currently I am contributing the maximum amount to my 401k and ROTH IRAs, and then spreading out the remaining money through various taxable vehicles (ETFs and high yield savings mostly). My goal is to save 30% of my income towards this goal which if that happens would be very obtainable.

Even at this time, I most likely would not completely stop working. Pretty far away to say my skills would still be useful but I think I could start a consulting business and work part time on whatever the latest technology is at that time.

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