As a DGI I’m working to Financial Independence (FI). Most of my readers are working to the same goal. As you can see on my Twitter account (@polliesdividend), my goal is to reach FI when I’m 50 years old. This year I’ll be 42 years old. So is my goal realistic? In this blog post I’ll look into it. I’ll try to calculate how much I need when I’m retired.

So it is time to crunch some numbers.

At this moment my *Vrijheid Fonds* has a value of € 55,000. Every year I donate all dividend that I get from my Portfolio and will add approx. € 4,000 of fresh capital. At this moment my weighted dividend yield is 3.66% (see here)

With these three numbers I can calculate my future value of my *Vrijheid Fonds*. The future value of my *Vrijheid Fonds* depends on the dividend Yield, Dividend Growth rate and the stock prices.

I can’t look into the future and can’t say what the stock market will do. Therefore I have to work in this blog post with an estimate. A yearly gain of 8% will give me approx. € 145,000. And a yearly gain of 15% will give me approx. € 235,000

With a weighted dividend Yield of 3.66 % and a weighted average dividend growth rate of 6.92% a yearly growth of 12% must be do able. With these numbers my *Vrijheid Fonds* will be approx. € 191,000 when I turn 50 years of age.

With an average dividend yield of 3.66% this will give me €7,200 in dividend every year. This by far not enough to retire! (booh, booh) I’ll need about € 40,000 per year to keep up the same life style. So my *Vrijheid Fonds* needs to be € 1,2M before I can live of my passive income. With the same financial numbers as above I will reach this value when I’ll turn 65!

What can I do to speed this up? Keep pumping in fresh capital as much as possible and as early as possible. So this is what I’m going to do.

At what age do you reach FI?

What is your advice for me, to reach FI sooner?

Cheers,

Pollie

Sorry for the reality check….keep pumping additional capital when you have it and the timeframe should decrease. Another option is to lifestyle reduction…which I think most people in retirement end up doing anyways whether they had originally planned to or not. At least that is what I am hearing from my parents and former bosses whom have already enter those latter phase in life.

Best wishes for retirement at any age before 65. 🙂 AFFJ

Reality kicks in hard 😀

But not a problem, it makes me more determine to reach my goal sooner.

And I forgot to take in account my pension fund from my employer

So I can retire way before my 65th birthday.

Taking on a different lifestyle? That is an option, but I want all the best for my little princesses 😁

Cheers,

Pollie

I am planning at 45, 31 years Old now. I can invest around 30k a year so this goal is realistic if I can keep working on Nice projects.

Advice? Maybe take a little bit more risk in your investment choices of earn more money 🙂

Hello DD,

Thanks for stopping by.

What a great amount you can invest every year. This will make is possible to retire early.

For me: i do not want to take more risk. I’m a DGI and not a gambler. 😀

And i can retire sooner because I forgot my pension fund from my employer.

Cheers,

Pollie

I’d say a deeper analysis of your real financial needs at retirement would help you get a more positive result. You can surely keep a high lifestyle and that’s fine, but most retirees end up slowing it down a little. For example, car related expenses tend to drop a lot when retirement arrives. Food too. On the other hand, you might spend more on traveling or hobbies… It all depends on what you what you want!

Hello Divguy,

Thanks for stopping by and taking the time to write a comment.

I agree that a deeper analysis of my financial needs in my retirement will help.

At this moment i will not make a change. This is something for the next years to think about it.

And what i forgot in this article is that i have pension fund of my employer. This will also givings me a lot of cash every month when i turn 67 .

Cheers,

Pollie

Employer pension fund is always a good extra! So many don’t have them anymore! Good thing you still have time ahead to, it might become clearer by itself too!

Nicely said.

A employers pension is something extras 😀

Hi!

Great blog!

After 15 years (35 now) of investing back and forth I have finally come to realise that my best investments by far has been the shares which I never sold also during declines in the market. Due to that and that I have a bigger portfolio now compared to when I was 20 I have focused more on stable high yielding shares.

Regarding your pension fund. In Sweden, every employee has a State monitored mandatory pension scheme which every company is required to pay in to. On top of that you have an individual pension scheme dependent on your employee agreement and what company you work for.

For these pension schemes the effect of retiring early is quite significant. As an example, if I would retire at 68 my pension would amount to approximately 50% of my expected salary when I retire, if I would instead retire at 61 my pension would amount to less than 20% of my expected salary at that time (the calculation is based on a capital growth of around 2% annually). Hence if I would retire even earlier the pension would be extremely low.

My question is; is this not the case in the Netherlands? Of course I understand that your goal is freedom, just wondering if you have to factor this in? (for me, since its a large factor I have to consider that)

Hello Wille

It is correct, here in The Netherlands if you are employed by a company, you have a mandatory pension scheme. I did not take this in consideration. Because I see this as a good extra! At this moment the pension schemes are struggling in The Netherlands. And all kind of actions are taken. By the pension companies as also by the government. So for me it is not sure what kind of money I get when I turn 67 (or maybe 69 if the move the retirement date). Therefore I see my pension scheme as an extra. This will help me to retire earlier. But a precise date I can not give.

Cheers,

Pollie

What about the growth of dividends? Today you get a yield of 3.66% but companies will grow their dividend and you will get a higher yield-on-cost when you’re 50 or even higher when 60.