Retirement Plan 2018

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
  • YieldStreet: 12% (13% target return less 1% cash drag)

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 @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 @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 @12% Return $2,125,000