First Person: Retiring Early With Half a Million Dollars in My 401(k)

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My husband and I are each saving up a half a million dollars for retirement, using our 401(k) accounts.

My husband makes more money than I do, but I started saving earlier for my retirement. He plans to work longer.

My financial goal is to retire in another 18 years when I am 57. My husband, who is older than me, will probably wait until his full retirement age at 67.

In order to figure out how much I need to save into my 401(k) to meet my goal, I used a 401(k) contribution calculator.

After plugging in the numbers, I realized I needed to increase the percentage of my salary that I save so that I can retire early.

Common assumptions

Under the "common assumptions" category, I had to punch in the years until retirement. I decided I will retire in another 18 years. I added in my annual income as well as expected annual salary increases. Because I can't always count on a lucrative pay raises, I decided to put in an extremely conservative estimate of just 1 percent annual salary increase. Working in the media industry, I've experienced pay cuts as well as pay raises.

Plan information

Under the "plan information" category, I put in my current 401(k) balance. I decided to err on the conservative side when putting in my expected annual before-tax return on the savings. I said I expect a 4 percent return, which is pathetic, but very doable even with the volatile stock market. As far as employer match, I added in the 3 percent maximum employer match.

Contribution information

For the contribution information section, I had to decide what percentage of my salary I'd want deducted from my paycheck and contributed into my 401(k) plan. I usually contribute about 10 percent of my income. In order to meet my goal of having a half a million dollars for retirement, however, I'll have to increase my contribution to the maximum allowed of 30 percent.

For me, using the calculator on the impact of increasing my 401(k) contribution took away the mystery of how I could meet my retirement goals. I won't have to rely on crazy high stock market returns in order to retire early. I've heard some financial experts say a person can expect a 10 percent annual return on their money, but I'm not counting on that. As a back-up plan, I can work until my full retirement age if necessary.

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More from this contributor:

How I Sabotage My Retirement

My Gen X Plan for Retirement

Seeing my future self as a Millionaire


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