Retirement Changes Under the New Tax Law
We reassessed our target numbers based on the new tax bill, a new investment strategy, and current spending figure. The risk-free interest rate is the return investors are willing to accept for an investment with no risk. I assume the risk-free rate of return is 12%.
Housing Expense
- Townhouse for Rent: $2,500 – $3,000
- 3-4 Bedroom House for Rent: $3,200 – $4,000
- 5-6 Bedroom House for Rent: $4,500 – $6,000
Passive Income
- DLI Fund: 8%
- YieldStreet: 12%
Option 1: A Happy Marriage Without Kids (Target $0.67 million)
| Expenses | Monthly | Yearly |
|---|---|---|
| Rent (Townhouse) | $3,000 | $36,000 |
| Utilities + Food + Gas | $1,500 | $18,000 |
| Miscellaneous Expenses | $1,200 | $14,400 |
| Total Expenses | $5,700 | $68,400 |
| Retirement Target | ||
| Retirement Income Needs @CA | $80,000 | |
| Retirement Asset Needs @8% Return | $1,000,000 | |
| Retirement Asset Needs @12% Return | $666,667 | |
Option 2: A Happy Marriage With Kids (Target $1.04 million)
| Expenses | Monthly | Yearly |
|---|---|---|
| Rent (4 Bedroom House) | $4,000 | $48,000 |
| Utilities + Food + Gas | $2,500 | $30,000 |
| Miscellaneous Expenses | $2,000 | $24,000 |
| Total Expenses | $8,500 | $102,000 |
| Retirement Target | ||
| Retirement Income Needs @CA | $125,000 | |
| Retirement Asset Needs @8% Return | $1,562,500 | |
| Retirement Asset Needs @12% Return | $1,041,667 | |
Option 3: A Happy Marriage With Kids & Luxury Life (Target $2.12 million)
| Expenses | Monthly | Yearly |
|---|---|---|
| Rent (6 Bedroom House) | $6,000 | $72,000 |
| Utilities + Food + Gas | $2,500 | $30,000 |
| Miscellaneous Expenses | $2,000 | $24,000 |
| Luxury Expenses | $5,000 | $60,000 |
| Total Expenses | $15,500 | $186,000 |
| Retirement Target | ||
| Retirement Income Needs @CA | $255,000 | |
| Retirement Asset Needs @8% Return | $3,187,500 | |
| Retirement Asset Needs @12% Return | $2,125,000 | |
