In part 1 of this series, I outlined my retirement plan from 1984 based on saving 10% of my salary into a 401k and expecting a 12% return on investement(ROI). I also outlined that although these numbers were appropriate for 1984 they are way too optimistic in today’s markets.
So, how did my original plan go? Was it more like the eighty’s or more like the current day? Well of course it went like the ninety’s and the ought’s; In other words, half and half. At the end of 2000 I was actually way ahead. My Salary had grown by an average of over 10% annually. And although I had a late start to fully contributing to the plan, I had caught up because of my salary growth and by contributing an average 15%, instead of 10%, of my salary when I finally did start. I also experienced 18% ROI during the nineties.
Then 2000 brought the dot-com bubble burst and the portfolio dropped 16% each of the first two years of the new millennium. This took away all of my headroom on my original plan. However this was followed by an average of 15% growth the next 5 years. So, my retirement saving was still ahead of plan. During this time and as a result of the dot-com burst my field, my career and my annual income started gyrating. I worked for a start-up for 4 years and then went independent and started my own consulting business. I rolled my 401k out of my prior employer’s plan and hired a broker/manager. I continued to contribute 15% and by 2007, I was still on track. But the salad days were coming to an end. Part 3 of the series, like in a good play, thickens the plot.