What I did about 10 years ago was create a spreadsheet that modeled this. I had columns for college costs, 529 plans, IRA/401K plans, taxable accounts, house value, and mortgage. I continued out the calculations to something like age 80
I had a 3.9% rate of increase for college tuition, 4% for 529 growth, 2% for housing growth, 8% for equity growth, and 2% for inflation. I modeled my total compensation as staying constant. I then calculated my current expenses (not including children) and figured that would also grow by inflation. I had a final column that multiplied those expenses by 25 (4% rule) to see how much I needed saved in order to retire.
I then also had a sheet that showed what the actual numbers were at the end of each year. Something that I found interesting is that the two sets of numbers that ended up being roughly the same between the actual and projected were the college costs and the annual expenses.
I had a 3.9% rate of increase for college tuition, 4% for 529 growth, 2% for housing growth, 8% for equity growth, and 2% for inflation. I modeled my total compensation as staying constant. I then calculated my current expenses (not including children) and figured that would also grow by inflation. I had a final column that multiplied those expenses by 25 (4% rule) to see how much I needed saved in order to retire.
I then also had a sheet that showed what the actual numbers were at the end of each year. Something that I found interesting is that the two sets of numbers that ended up being roughly the same between the actual and projected were the college costs and the annual expenses.
Statistics: Posted by 986racer — Sun Jan 05, 2025 11:47 am