The financial markets of 2009 turned scary in March but ended the year with a nice return. The S&P 500 had a total return (including dividends) of 26.46% for the year. There were also a number of dividend stocks that stopped or decreased their dividend payments throughout 2009.

A few years ago I started tracking our yearly progress towards reaching our retirement goals of having $2 million in retirement assets as well as reaching $40,000 in dividend stock income. I originally wanted to complete both these goals by the time I am 60 which is 14 years from now. But with the market decline in 2008, we will have to add a couple of years to our goal and our new plan is to retire at age 62 which is in 16 years. I have been using Bloomberg's Retirement Planner on their personal finance calculators site to come up with what we will need at retirement.

Retirement Assets
In order to reach our retirement goal, we will need an average investment return of 8.5% along with a 10% contribution to our retirement plans for the next 16 years. I have used $95,000 for our annual household income. I am using 3% for inflation, 2% for expected salary increases and 8% return on investment in retirement. To calculate the amount needed for the end of 2010, I start with our 2009 year end retirement balance of $522,034 which is the balance of our retirement accounts as well as our taxable stock accounts. We then add the 8.5% investment return which is $44,373 for a total of $566,407. Next I add our retirement contributions of $9,500 which is a 10% contribution for a grand total of $575,907 in retirement assets needed at the end of 2010.

As part of our retirement contributions, we will fully fund my wife's Roth IRA's and add some to mine for total IRA contributions of $6,000. My wife will make 6% contributions to her 401(k) and I will contribute 12% to my 403(b) plan.

2010 Retirement Plan Summary
$522,034 2009 year end retirement asset balance
$44,373 8.5% investment return
$9,500 2010 contributions to our retirement accounts
$575,907 2010 year end plan (2009 year end plan $404,432, actual $522,034)

2010 Net Worth Goal
Our 2010 Net Worth goal for the end of the year will be $836,907 which is the increase in retirement assets that includes and 8.5% investment return and $9,500 in contributions for 2010.

2010 Net Worth Goal
$575,907 2010 Year End Retirement Balance
$205,000 House
$12,000 Cash
$8,000 Cars
$3,000 Personal Property
$33,000 529 Accounts
$836,907 Total (2009 Net Worth Plan $683,637, actual $788,767)

Let's hope the 2010 plan goes as well as 2009. I will go over my 2010 Dividend Income Goal on Friday.