Monday, February 23, 2009

Early Retirement Still A Possibility

Unlike many around me, I'm feeling good about my 403(b) plan and my prospects for eventual retirement. Yes, like everyone else, the value of my retirement holdings has declined--significantly--in the last year or so. If I was thinking about retiring inside of the next ten years, I would be worried.

But I'm not retiring in the next ten years unless I win the lottery or something equally unlikely happens. Depending on how well my investments perform between now and the day I retire, I'm looking at somewhere between 12 and 17 more years. If I cut back on frivolous spending (perish the thought!) and increase contributions to my retirement account, I could maybe retire in ten years if I really, really wanted to.

I could also die tomorrow. For the record, nothing would piss me off more than to scrimp and save for retirement for years only to die before I retire. Since I'm not sure if anger would still be an available option, I've opted to avoid sacrificing for the future beyond what is absolutely necessary. There are no promises or guarantees. It's a gamble any way you go.

I do contribute the maximum that my employer will match to my 403(b) every month. Besides that, I have an IRA that I rolled over from a previous employer, and I contribute to a Roth IRA every month. Along with the proceeds of my investments, I'll get Social Security, and a very small pension for time I put in with an employer years ago. I should have enough to be comfortable--at least, that's what my financial planner tells me. And yes, I pay someone to manage my retirement portfolio. It's way too important to leave in the hands of a rank amateur, like me, for example.

I admit, it hurts to see the balance in my retirement accounts dropping month after month, quarter after quarter. While the value of my holdings has declined, I haven't been hit as hard as a lot of people thanks to a very smart planner. I take consolation in knowing that my monthly contributions are buying stocks, mutual funds, and other investments at bargain-basement prices.

Thanks to dollar cost averaging (the pay-off of regular monthly contributions), my monthly contribution buys less when investments are expensive and more when they are cheap. As a result, I now own many more shares than I could have afforded to buy at last years' prices.

The ironic thing is that depending on the timing and magnitude of the eventual turnaround, it might be more possible for me to retire in ten years than it would have been without the recession. And that, folks, makes me anything but...

The Crotchety Old Man

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