When we say we need $2 million, we really are saying we need to have a net worth of $2 million (total assets minus all liabilities) by the time we turn 40. So at the time of retirement, we can convert all our net assets to an investment portfolio that generates income and growth that we can start to immediately draw from forever.
Being 27, and with 13 years to go, here’s where we think our net worth could grow to:
These are really rough numbers and although it’s possible to achieve, here’s what could throw it off:
- Retiring before a stock market crash and the investment portfolio is worth $900,000 instead of $1,200,000. There are ways to eliminate some of this risk so will talk about this more in later posts.
- Not being able to set aside $4,500 a month
- Outgrowing our house and we may need to upgrade to a bigger house
Here’s what we’ll do to stay on track or ensure we can still retire in our 40’s:
- Delay retirement by a few years after 40 if we need to
- Work part-time during retirement if needed so we can draw less from the investment portfolio and at least be semi-retired
- Save more than $4,500 a month whenever possible
- Borrow to invest during stock market crashes/corrections (I would never recommend this to anyone but myself)
A lot of things can throw us off from now until retirement but we’re confident that by planning early and establishing a mini blue print, success will be in our favour and we’ll be able to come up with that $2 million.