As we’re getting closer to paying off our non-mortgage debt, I’m plotting how and when we’re going to retire early.  My goal is to replace our current expenses minus mortgage (but not insurance and taxes) and daycare plus 20%. We currently do not pay health insurance premiums (100% covered by my employer), and we’ll expect to be paying for those in retirement.  I also want to travel more, since we’ll have more time.  I figure 20% gives us a lot of wiggle room to reduce expenses if we need to.

I want to grow our investable assets to $1.6million, which gives us a safe withdrawal of $48,000 (at a 3% rate) – $64,000 (at a 4% rate), which will cover essential expenses plus some.  At 6% interest, when we have that kind of nest egg, the interest/increases alone can cover our current costs (with mortgage).

Inspired by Mr 1500, I’ve made some estimates on what our goals are for contributions and interest accumulation and spread it out over the next few years.  I used an assumed 6% interest rate, which is moderate, and may be too aggressive depending on who you ask.  Also, there’s no inflation accounted for in this plan, mostly because I suck at doing interest rate calculations when they involve inflation.

I’m hoping my contribution numbers are kinda low, 60,000 is only 32% of our gross income, which is a pretty dismal savings rate.  But these are the numbers I feel are realistic given our current situation and plans.  If we happen to contribute more, that’s great, but these are the minimums I’d like to see.  Seeing the information in table form like this will help make sure we’re on track or if we need to revise our plans (for better or worse).  This table only includes our invested assets, not our savings accounts, nor our house, so it’s already a bit conservative, but Dad’s a bit conservative as well, and we’d rather not have to return to the workforce if we don’t want to.