Meg, a reader, asks:
My goal has long been to reach $1MM (net worth, not assets) by age 30 – which is under 6 years away for me. I’ve been working actively towards the goal for over a year now, so if I reach it it will have been $1MM in 7yrs. Not nearly as impressive as 7MM in 7 yrs, but that’s if I do it the most conservative way possible with minimal risk and leverage. If all goes according to that plan (which primarily involves utilizing real estate leverage) I will reach $2MM by 35 and then more than double it again by 40…of course that’s almost 2 decades away. Maybe I should look into ramping up my plan with some risk!
[AJC: My response …]
Now, I suggest that you work backwards:
How much income do you need (forget inflation for now, just use today’s dollars) and by when (figure costs of family, college, travel, etc.) … no more work for you OR hubby from then on!
OK, then double that amount for every 20 years until The Date (that accounts for 4% inflation) … and, multiply by 20 (if you want to be really conservtive, multiply by anything up to 40) to get The Number – that’s your Net Worth target (assuming that you also obey the 20% Rule).
Now, do you need to ramp up your plan with some risk, or not?!
Retirement Planning Made Easy!
Adrian, you are a godsend. I love how you take complex financial concepts and break it down so eloquently.
Keep up the good work, it’s much appreciated.
@ Ryan – How come my wife doesn’t think so? 😛 But, thanks! Stick around for more …