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April 28, 2006


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"The magic number is pretty simple. Take your savings and multiply by .04 (4%), if you can live on that amount of money, go ahead and retire."

I am 31 and I think I can retire easily, but in a "foreign" country!

Speaking as your anonymous reader, I will point out that my savings came at a price and the job isn't done yet. I have an emergency cushion, but I wish it was bigger. I have some money saved for my kids' college education, but I haven't reached the finish line on that either. And to reach my retirement nest egg goal will require three things. One, the money will need to compound from now until I'm 59 1/2. Two, I'll need a return of about 7% after inflation. Three, I'll need for nothing to go so horribly wrong that I have to tap that savings.

I couldn't have gotten to this point without my wife. I'm frugal, but she has the discipline to actually do the financial work. She has evaluated all of the mutual funds in every 401(k) all along. She's filled out the paperwork. She's done any number of awful tasks for which I can't thank her enough.

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