While I am not currently seeing myself fully retired from working at the age of 60, I realize the need to set a goal for my retirement portfolio to ensure I have a sufficient amount of money in my retirement portfolio to draw on should I decide to stop working permanently.

The only reason I don’t see myself getting fully retired is because I enjoy challenging myself, achieving goals whether I am working or not. Who knows, it is certainly possible by the time I turn 60 that I may find myself wanting to work until I am 70 just to avoid sheer boredom. Then again, I could end up working part-time every now and then if my alternative income streams reduces a need to depend on my earned income from my employers. There are just too many variables that I can not foresee, especially that far into the future.

Setting a Deadline

One thing I do know is to automate my income by directing 20 percent of my income towards my retirement portfolio and managing it to achieve a satisfactory return on my investment. In order to do this, I need to set a deadline. At the present moment, the earliest I can withdraw from my IRA is 59 and 1/2.

First of all, what is 59 and 1/2? Are we three years old and 2 months? Whoever came up with that number needs to grow up a little and round it up or down. We all know when our birthday is. Why make more work for us to figure out the day we become exactly 59 and 1/2 plus one day? For the sake of sanity, it’s retirement we are talking about here, that means less working.

Another possibility is that this number could change if the American lifestyle ends up pushing the average life span of my generation beyond 100 years old and the economic system America is built on changes the laws to raise the age from 59 and 1/2 to 63 and 3/4? See how ridiculous the fraction is?

Bottom line is, I rounded it up to age 60. I know what exactly what day I turn 60, thank you very much. (Believe it or not, I did not know exactly what day my birthday was until I was 14 years old.) So that tells me, the day after I turn 60, if I choose to do so, I can begin withdrawing from my retirement portfolio.

So, let’s see, I created a deadline for my retirement portfolio. April 2035. That’s 27 years from now so I better get cracking.

Setting a Specific Dollar Amount

With all the fuss about inflation and the value of the dollar, it is next to impossible to actually predict how much money I will need when I become eligible for the early bird special and senior citizen discount at my local AARP convention. The future inflation rate at the best is a guess. Again, this is another variable beyond our control. Inflation may be higher in America and lower in Brazil or lower in America or higher in Moscow. The value of the dollar, the euro, the yen, the lira, the pesos, etc… will always go up and down until we tie the world’s economy 1 to 1 and we all go up or down together.

So with that in mind, I am going to err on the side of caution and use 6 percent as the average inflation rate from today to the day I turn into dust. This will allow me to move ahead of the trailing average of inflation should it rise from the historical 3 percent today to 4.5 percent ten years from now.

If anything, should inflation fall to 1 percent a year, hey, I will come out ahead. Should inflation rises to 6 percent a year, at least I hedged my bets. After all, that’s what investing for the future is all about, betting the odds in your favor.

So, let’s see, 27 years from now in April 2035, I want to see 2 and 1/2 million dollars in my retirement portfolio. (Here we go again with fractions. What’s going on here?) In order to achieve that with an inflation rate of 6 percent, I would need to manage my retirement portfolio to ensure I garner a 12% return each year for the next 27 years.

Like I said before, who knows, maybe I would end up working till 70 and that would certainly blow my 2.5 million dollar ship out of the water. Of course, that is just my retirement portfolio. That does not include my lending portfolio nor my real estate portfolio nor my emergency fund nor my yada yada. Oh, and there is the possibility of social security.

So regardless of the outcome of inflation or the terms of my employment, I know this much.

I have to put away $550 a month (or more if I manage my portfolio to garner a return less than 12% per year) and manage my portfolio to ensure I garner a 12% annual ROI for the next 27 years.

Tell me, what is your specific dollar amount you want to see in your retirement portfolio by your targeted withdrawal age (regardless of whether you keep working or not) ?

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