Review of 2010 and 2011 Financial Plan

The financial markets of 2010 turned down over the summer but ended the year with a nice return. The S&P 500 had a total return (including dividends) of 15.1% for the year. Many dividend stocks increased their dividend payments in 2010, a nice change from the cuts of 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 $30,000 in dividend stock income. I originally wanted to complete both these goals by the time I am 60 which is 13 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 15 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 15 years. I have used $95,000 for our annual household income that we will need in retirement. I am using 3% for inflation, 2% for expected salary increases and 8% return on investment during retirement.

We finished 2010 with retirement assets of $615,699 versus our end of year goal of $575,907. So we were $39,792 over goal for the end of 2010.

To calculate the amount needed for the end of 2011, I start with our 2010 year end retirement balance of $615,699 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 $52,334 for a total of $668,033. Next I add our retirement contributions of $9,500 which is a 10% contribution for a grand total of $677,533 in retirement assets needed at the end of 2011.

As part of our retirement contributions, we will make contributions to our Roth IRA's as well make 6% contributions to our 401(k) and 403(b) plan.

2011 Retirement Goal
$615,699 2010 year end retirement asset balance
$52,334 8.5% investment return
$9,500 2010 contributions to our retirement accounts
$677,533 2011 year end goal

Net Worth
We finished 2010 with a new worth of $914,573 versus our 2010 Net Worth goal of $836,907 which is $77,666 over the 2010 goal.

2011 Net Worth Goal
$677,533 2011 year end retirement goal
$205,000 House
$30,000 Cash
$6,000 Cars
$3,000 Personal Property
$38,000 529 Accounts
$959,533 Total

Let's hope the 2011 plan goes as well as 2010. I will go over my 2010 Dividend Income Goal on Monday.