Anyway, the idea is to not just daydream about someday becoming a millionaire, but to lay out specific steps to get there, and to make a pledge to do it. Since I had already told Airbear I was going to make us millionaires someday (well, obviously), I thought this would be a fun way to make that goal real. (Plus you get a fancy little image - what are they called? Buttons? Banners? I don't know - to put on your site once you're in the club. No, I don't know how that works. You'll see it, if I manage to get it figured out.) I know what you're thinking - I am a teacher, I make $12 per year, how delusional am I being right now? But bear with me. It's not as insane of an idea as it sounds at first. To whit:
In order to make us[1] millionaires, I, Nitza Pizza (ha ha) pledge to do at LEAST[2] the following each year:
- Contribute 3% to my SIMPLE IRA every year in order to qualify for the full (3%) match from my employer. Total annual contribution = $2,500 (Actually, it varies, because my paychecks vary with bonuses and stuff, but it will always be at least this much, and likely a lot more as the economy and my salary improve. But we'll go with this number for ease of calculation.)
- Make Airbear contribute 6% to his 401k every year in order to qualify for the full (6% - lucky!!) match from his employer. Total annual contribution = $13,300 (Again, will be at least this amount. Also, maybe I should go work at his company.)
- Max out my Roth IRA every year. (Already done for 2010 - first time ever - woot!) Total annual contribution = $5,000.
- Continue to find ways to accumulate "extra income" - cash back on my rewards card, surveys, interest, etc. Total annual contribution = $1,000. It was actually more than double this last year, but I want to set an achievable goal that leaves me room to actually spend money, too.
- Contribute to non-retirement long term savings (so that not ALL of the money is locked away for 35 years). Total annual contribution = $2,000. Again, between the two of us we typically save a lot more than this each year (we certainly did the last two years!), but some of that savings is actually for SPENDING on things. Like fabulous vacations. And books.
But here comes the really fun part. On his post for this challenge, J. Money (ha ha, YES, again with the names! Brilliant!) also includes a link to this millionaire calculator, and I used that to figure out when we will theoretically reach our goal, according to the plan laid out above. Taking into account our current retirement balances, inflation, and some estimated rates of return, Airbear & I should be millionaires in:
(drumroll)
18 years and 5 months!
Yes, that's a long time[3], BUT(t) it's not infinity. So this means that I was right (of course) when I told Airbear I'd do it. More importantly, while that sounds like a long-ass time from now (and it is), it will happen when I am 49 years old. 49! Suddenly that sounds a lot sooner, doesn't it? And that's just doing things we're already easily doing - no insane frugality, no 'going without,' no eating Alpo in order to hoard all the money, etc. We will still be able to save for things like down payments and vacations and college tuition and all that crap - this is mostly automatic deductions (and, shit, $7900/yr of it is free money in retirement matching). If we are able to easily fit in a Roth for Aaron, then that's great - it shortens the time horizon to 16 years and 7 months (47!!!), but even if we don't - even if we take that $5k a year and blow it on hookers (kidding! obviously I meant books) - even without that, being a millionaire at age 49 still sounds like a pretty sweet deal to me. Of course inflation being what it is, being a millionaire won't be like yacht-sailing-champagne-bathing money, but - and more importantly for me personally - it does feel like a reassuring place to be in when I turn 50 and retirement is on the horizon. Don't you think?
[1] Because Airbear is now My! New! Husband!, I am making this goal a collective one. And yes, I do have THE POWER (muahahah) to make pledges about what he will contribute to his retirement. Because I am The Boss.
[2] Gotta give myself room to overachieve!
[3] I ran the calculator with just myself, no Airbear, and it took me 35 years and 4 months. Ha ha ha. More disgusting than funny, really, but what can ya do but laugh![4]
[4] Besides kill your employers, I mean.[5]
[5] That is a joke. [6]
[6] It really is a joke, but aside from that, I looked back at that year number and realized, you know what? In 35 years and 4 months, I would still only be 66. Look at that!
