Lately I’ve been spending a lot of time going over my spreadsheets and playing with various scenarios for our retirement. I often wonder how long I need to work before I can walk away and have enough to last the rest of my life. In reality, I think my wife will live much longer than I will so most of my scenarios ensure that she will be taken care of long after I’m gone.
Today I was looking over all the data and realized that if we stopped saving for our retirement today, and ended up with zero debt at retirement, we’d actually have a pretty comfortable existence. The key to this is not having any debt. When you calculate how much we’d get for social security at 62, a small pension I’ll get from work and a 4% return on our investments, we’d be able to maintain our current lifestyle (once the house is paid off). We won’t make anywhere near as much each month as we are currently making from our jobs, but we don’t SPEND that much today so our lifestyle wouldn’t be impacted. That’s one of the many benefits of living on much less than you make.
Of course we won’t stop saving and investing for our future and we don’t have any plans to walk away from our jobs in our early forties but it’s nice to know that we’ve got everything pointed in the right direction. From here on out, everything we do will lower our risks of unplanned events impacting our retirement. When I say this, I mean that, if we both lost our jobs and found jobs that paid half as much, we’d still be okay in retirement, assuming that we could live off our new income and weren’t able to put any money away. Obviously if we lost our jobs and couldn’t find new ones, we’d be at much higher risk of having to dig in to our retirement investments. That’s something I hope never happens.