I recently had my eyes opened on retirement. I was trudging along planning to retire from the Navy with a generous pension and then get a “beltway bandit” job at a defense contractor to rake in some big cash before I permanently retired. Now, I might find myself going down the contractor path, but as of right now that is not my plan.
After some research I discovered I might be able to just retire from the Navy.
Currently, we live in Northern Virginia and the cost of living here is very high. Way too high to retire on just my Navy pension. That’s ok as my wife and I have no intention to retire in this area. We are looking at several locations, our most promising current locale is Northwest Washington State. My goal between now and retiring from the Navy is to save for a big down payment on a house in the Pacific Northwest.
In this blog post I want to discuss some the websites I peruse regularly for financial/retirement advice, some of the calculators available online and budgeting options, to include Excel spreadsheets and paid for software.
So the first site I stumbled upon for the topic of early retirement was a guy who calls himself Mr. Money Mustache (mrmoneymustache.com). His blog focuses on budgeting, cutting costs and retiring earlier. MMM and his wife retired at 30 to raise their son. Their current annual budget is $27,000 (they own their home outright). MMM has been featured on a slew of financial, self-help and news sites/programs, most recently in a Washington Post article (http://goo.gl/FcuQk).
His frugality may be more than some folks (your dedicated scribe included) can live with, but he provides some great motivation with financial “face punches” to folks spending huge amounts of money and working their entire lives to maintain a ridiculous” Exploding Volcano of Wastefulness”.
MMM has over 300 blog articles and a very active forum of “Mustachians” who share advice and “badassity”. A great group of folks.
Next up is The Military Guide website (http://the-military-guide.com) Doug “Nords” Nordman has literally written the book on military financial independence (http://goo.gl/ur3HY). He and his bride are retired (he from active duty Navy, she from the Navy Reserves). They live in Hawaii, where he splits his time between surfing, managing a rental property and running a kickass website/blog.
Nords posts tend to be more aligned with military financial independence and retirement, but he still covers a lot of ground of great use to almost anyone. He is a regular poster on many other sites (to include MMM, where I first found out about him). His posts are very well written and very entertaining.
There are a slew available online. I’ll discuss two I really like.
Todd R. Tresidder is the owner of financialmentor.com and a financial coach. His website provides a plethora of advice and some of the best financial calculators out there. My favorite is his Ultimate Retirement Calculator, http://financialmentor.com/calculator/best-retirement-calculator
This calculator asks for your age at the end of the current year, age to retire, life expectancy, annual desired income and allows you to input several variables, such as cost of living adjustments to pensions, expected rate of return, expected inflation etc. It is a fairly comprehensive calculator, but lacks any type of historical averaging or Monte Carlo simulations, it just runs the numbers against your predicted returns. The lack of historical returns is on purpose, Todd does not think it is particularly relevant. It is a great calculator to run various dollar amounts through as far as how much income you will need, what size estate you want to leave etc.
Nords did a great review/explanation of Todd’s calculators here (http://goo.gl/BHigD)
Firecalc http://www.firecalc.com/ is a very powerful retirement calculator that runs your predicted finances through scenarios involving data from every year since 1871. The end result looks like a kid’s Spirograph gone horribly wrong, but will show you the percent chance your retirement plan will work across all the years. This is handy to give you a percent chance your savings and spend plan will support you your entire retirement. If your plan survives contact with the crash of 1929 you are probably in pretty good shape!!
There are a bunch of financial calculators available, and I have only listed two. They are my favorite and you should try several to see what works for you. It is important to understand the investing philosophy of the owner of the calculator and ensure that philosophy aligns with yours.
I have toyed with many budgets over the years with limited success. Once my wife and I got serious about this new retire early plan, I modified an Excel based monthly budget and started using it.
What really made it much more effective than previous attempts was one important change to my system. Previously we spent pretty much what we wanted and did our best to pay off debts early. With the new system, my wife and I agreed to pay ourselves an allowance every two weeks. This allowance was automatically transferred to our own accounts to be spent however we wanted. Everything else in the main checking account went to monthly bills and investments.
This has worked very well to help us pay off debts and get our financial house in better order.
Recently, I purchased YNAB – You Need a Budget (youneedabudget.com) This is a software budget system(cost is $60) and focuses on giving every dollar a job by budgeting. The other goal of YNAB is to get you out of the paycheck to paycheck cycle allowing you to get a month or more ahead.
I am fairly new to YNAB, but really like it. The software has a broad following and a strong forum community to answer questions as well as lots of free training to go with your software. Definitely a community feel and focus.
Here is my affiliate link which will get you $6.00 off the price (full disclosure, it gets me $6 as well!) http://ynab.refr.cc/WJ2XRXZ
So that is a very quick rundown of various sites and software I’m using to chart my family’s plans for the future. Future posts will run some example retirement scenarios to see how they work.
I’d love to hear from you on your retirement plans and goals in the comments section.
This entry was posted in Retirement Stuff by Rich