As I turn 35, I just spent a good chunk of time updating all of our investment accounts. I recently read All About Asset Allocation by Richard Ferri and decided that my haphazard investment selections needed to change, and I needed to really focus on what we wanted. We want to retire when I turn 50 (exactly 15 years from now), with approximately $2.4 million in assets. Now, that’s a lot of money, and I’m basing it off the 85% rule – we’ll want 85% of our current salary in retirement, then multiply by 25 for a safe withdrawal rate of 4%. I’m hoping that we can work to reduce that number closer to $1.5 to $1.6 million (and also the retirement age!) as we work through our debts and lowering our expenses.
We’ve been very aggressive investors up until now – only about 5% in bonds, the rest in equities of varying types – but with a 15 year horizon, we want to start being a little more conservative. I learned a lot about assets and their correlations and statistics in the book, and I took a look at what we were doing – we had a halfway decent allocation for our very aggressive model, but it could be improved.