I got a raise! And not just a cost-of-living increase of 2%, but a REAL raise of 4%! I’m assuming that’s just on my base salary so I’m going from $90,000 base to $93,600 with a guaranteed $10,000 target bonus and $600 for my cell phone. Without any stretch bonuses I’m up to $104,200!
For fun when I heard I was getting a raise, but didn’t know the amount I calculated all the possibilities. After confirming with my boss that it was more than inflation (2%) I went through all the possibilities:a 3, 4 or 5% raise and explored what would happened if it was applied to just my base or my base+target bonus. I then calculated how my new take home would be effected if I recieved the same amount of stretch bonus as I did in 2017. It was so much fun 🙂 . I love sketching these things out.
So where do we stand now? This raise currently only gives me $814 more dollars after tax according to 2017 tax rates. That is because last year I got $2,593 in additional stretch bonuses. However, if I receive at least as much stretch bonus as last year my salary would be $106,793 and I would take home $2,909 more than last year. This would allow me to invest almost $68,000 this year instead of the $65,000 that is my goal. As a result my time to retirement would now be:
7% Returns: December 15, 2020 (Previously estimated February 1, 2021)
8% Returns: November 10, 2020 (Previously estimated December 25, 2020)
10% Returns*: September 15, 2020
* I’ve started calculating 10% returns after I learned that this is the number Mr. 1500 used to guess his 1500 days to retirement. Perhaps he did that because he has a lot of individual tech stocks, but it is an interesting and optimistic thought experiment. He retired in less than 1500 days by the way so I guess 10% wasn’t optimistic enough 🙂 .
I’m solidly in 2020 now! That’s amazing. 2021 is now a year of full retirement instead of my last year working!!! This seemingly small raise knocked a month and a half off my retirement! 1.5 months of my life back. That’s awesome. We’ll see how this new tax plan effects my final investment number as well.
Another interesting thought experiment is thinking about receiving a 4% raise every year. According to my boss that is the current staff plan. If that’s the case my salary will grow like so (assuming I get the same amount of stretch bonus):
2018: $106,793
2019: $110,537
2020: $114,430
Which will change my retirement date to:
7% Returns: November 6, 2020 (Above estimated December 15, 2020)
8% Returns: October 9, 2020 (Above estimated November 10, 2020)
10% Returns: August 14, 2020
That 8% return projection is dangerously close to my Stretch Goal of retiring before October 5, 2020 when I’m still 30….It’s looking more and more plausible every day. I’m excited to see what happens and PUMPED about my first real raise ever!!!