Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
38 year old female, with a recent career change, looking for feedback.
Old 05-30-2016, 08:55 PM   #1
Confused about dryer sheets
 
Join Date: May 2016
Posts: 3
38 year old female, with a recent career change, looking for feedback.

Hi Everyone. I'm excited to be here! I am a 38 year old female who recently left a high paying job. I now make 30% less than I did, but I am also happier than I have ever been.

A little about me:

I am extremely debt adverse. The only debt I have is $170,000 on my mortgage. I would like to pay my house off in the next 8 years.

I am also single with no kids.

Here is what I have saved:

$160,000 in combo of 401K/Roth 401K/Roth IRA

$35,000 cash

It is hard for me to find people my age to discuss this with and to gauge where I am. A lot of people I know are only concerned with living in the moment, and do not like talking about retirement at all.

I am 95% invested in stocks.

I know that my savings is currently too low to think about retiring early, but I am looking for advice on where I currently stand. I'm also looking forward to reading different threads to help give me tips on how to get there.

Any feedback is very much appreciated!
__________________

__________________
edenky22 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-30-2016, 09:37 PM   #2
Full time employment: Posting here.
 
Join Date: Apr 2014
Location: Houston
Posts: 639
Welcome to the board edenky. Glad to hear you made the move to a happier situation. It's important to enjoy life. Lots of good folks here can offer you opinions / suggestions on where you stand. Might help to provide a little more data. To start:
(1) Do you have a good handle on how much you spend each year? If so, how much is that?
(2) What % of your new salary do you think you will be setting aside for savings?
(3) What are your assets invested in and do you choose them yourself ?
__________________

__________________
Whisper66 is offline   Reply With Quote
Old 05-30-2016, 10:07 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,972
Your first step should be to track your spending if you don't already. You need to have at least 25X expenses to consider retiring early. Don't focus only on a dollar amount. One person may be at 25X expenses with just $500K while another person my "need" $2M+ to have 25X expenses. The less you spend, the less you need to retire and the sooner you can quit working.
__________________
aaronc879 is offline   Reply With Quote
Old 05-30-2016, 10:25 PM   #4
Confused about dryer sheets
 
Join Date: May 2016
Posts: 3
Quote:
Originally Posted by Whisper66 View Post
Welcome to the board edenky. Glad to hear you made the move to a happier situation. It's important to enjoy life. Lots of good folks here can offer you opinions / suggestions on where you stand. Might help to provide a little more data. To start:
(1) Do you have a good handle on how much you spend each year? If so, how much is that?
(2) What % of your new salary do you think you will be setting aside for savings?
(3) What are your assets invested in and do you choose them yourself ?
Thanks Whisper. I'm excited I have found this boar. To answer your questions:

1) I spend $3000 per month, so $36000 per year.

2) Until I get used to the pay cut, I plan to save 10%. I will adjust accordingly, and I plan to put all raises towards increasing this.

3) Currently, I have all of my money in an S&P index fund. I don't plan to leave it there; it's just where I dumped it when I rolled it over from my employer. I plan to start researching investment options this week and I am hoping that by reading these boards, I can pick up on some tips.

Thanks again for the warm welcome!
__________________
edenky22 is offline   Reply With Quote
Old 05-30-2016, 10:31 PM   #5
Confused about dryer sheets
 
Join Date: May 2016
Posts: 3
Quote:
Originally Posted by aaronc879 View Post
Your first step should be to track your spending if you don't already. You need to have at least 25X expenses to consider retiring early. Don't focus only on a dollar amount. One person may be at 25X expenses with just $500K while another person my "need" $2M+ to have 25X expenses. The less you spend, the less you need to retire and the sooner you can quit working.
Thanks for the tip aaronc87. According to that calculations, I'll need around $900,000. YIKES!!! I have a ways to go.

I do have a question though. Since my house will most likely be paid off prior to me being retiring, I exclude that, correct? If so, then my number comes down to $600,000, which sounds much more doable.
__________________
edenky22 is offline   Reply With Quote
Old 05-30-2016, 10:41 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,896
Hi Edenky,

Welcome to the board. Sounds like a good trade off, your happiness over a higher paying job. Being debt adverse sounds like you'll fit right in here.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is offline   Reply With Quote
Old 05-30-2016, 11:25 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,288
Quote:
Originally Posted by edenky22 View Post
Thanks for the tip aaronc87. According to that calculations, I'll need around $900,000. YIKES!!! I have a ways to go.

I do have a question though. Since my house will most likely be paid off prior to me being retiring, I exclude that, correct? If so, then my number comes down to $600,000, which sounds much more doable.

You will get two answers on this one... but I think most would say not to include your equity, especially if you want to stay there...

However, a paid off house does change your spending and that might make the difference...
__________________
Texas Proud is offline   Reply With Quote
Old 05-31-2016, 05:10 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,972
Quote:
Originally Posted by Texas Proud View Post
You will get two answers on this one... but I think most would say not to include your equity, especially if you want to stay there...

However, a paid off house does change your spending and that might make the difference...
I may be wrong but I think she was saying that since her house will be paid off she can deduct her current mortgage expense when figuring out what she needs for future expenses and savings. I wouldn't include equity in your savings towards the 25X expenses. To the OP, you need to estimate what you expect your expenses to be in retirement and multiply THAT by at least 25. It may be different that your current expenses. Be sure to include big ticket items like a new(er) car, roof, furnace, not just your basic living expenses.
__________________
aaronc879 is offline   Reply With Quote
Old 05-31-2016, 06:18 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,899
I noticed the same thing at your age. People would hear "retirement" and think "eww, old people" and their ears would slam shut.

Atop the good advice you've already received, have you thought about where your health and dental insurance will come from (prior to Medicare) and how you'll pay for that?

Amethyst

Quote:
Originally Posted by edenky22 View Post

It is hard for me to find people my age to discuss this with and to gauge where I am. A lot of people I know are only concerned with living in the moment, and do not like talking about retirement at all.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Old 05-31-2016, 06:28 AM   #10
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,488
Quote:
Originally Posted by Amethyst View Post
I noticed the same thing at your age. People would hear "retirement" and think "eww, old people" and their ears would slam shut.
Hey, not all of us! Some of us 39 year olds think we ARE old people!

Unless you're absolutely positive that you'll never have another mortgage, I would keep that in your expenses. At (y)our age, it's hard to say much of anything with certainty. I usually tell young folks like us in their 30s and 20s that their expenses today may change significantly, particularly those that are single or have no children but might.

The important thing to me is having an idea of what I need to get to, and working towards that. At least now you understand the math problem. Working on the solution is kind of fun, and having even a loose goal to start is probably the most important thing to get rolling. Most people our age are in "I save 10% for retirement" mode, but have no idea if that's good enough... and it's often not. Welcome!
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
nash031 is offline   Reply With Quote
Old 05-31-2016, 06:41 AM   #11
Recycles dryer sheets
 
Join Date: Nov 2014
Posts: 381
Quote:
Originally Posted by edenky22 View Post
Thanks for the tip aaronc87. According to that calculations, I'll need around $900,000. YIKES!!! I have a ways to go.

I do have a question though. Since my house will most likely be paid off prior to me being retiring, I exclude that, correct? If so, then my number comes down to $600,000, which sounds much more doable.
I wouldn't include the mortgage. It affects your savings rate today. Also, don't forget income taxes in the future and medical insurance premiums in the future. And of course, don't forget a couple of other odds and ends such as
1. You won't be saving anymore, so that comes off of your expenses
2. You won't be paying into SS/Medicare anymore, so that also comes off of your expenses.

Good luck!
__________________
big-papa is offline   Reply With Quote
Old 05-31-2016, 07:59 AM   #12
Full time employment: Posting here.
Golden sunsets's Avatar
 
Join Date: Jun 2013
Posts: 746
Edenky; Welcome. Cudos to you for thinking long term. You indicated that you intend to throw all raises at savings to increase your 10%. I would say that this goal is your best approach. Most personal finance books would recommend that at a minimum, one should save 15% of one's salary in order to accumulate enough savings to fund retirement. Does your current employer match any of your 401K contributions? Also as a general rule if I were you I would devote your savings first to your 401K up to the employer match. Then with the remainder fund your Roth IRA. Then switch back to your 401K until you have maxed out your 401K. After that save in after tax accounts. Depending on your mortgage rate, you may not want or need to pay it off early from a financial point of view, as it does provide a tax advantage, however from a psychological point of view if paying it off early, thus freeing up more cash for turbo charging your savings is appealing, you could 1) refinance to a 15 year mortgage( rates are still low), and/or 2) make one additional payment per year. You can pretty painlessly throw the equivalent of an extra payment per year at a mortgage and the number of payments needed to pay off the mortgage will drop pretty dramatically. Example: we paid an extra $100/month on our mortgage on a 15 year mortgage (this amounted to about one extra payment/year) and paid off the loan in 12.5 years, so twelve extra payments all of which went to principle in twelve years saved 30 payments.
__________________
"Luck favors the prepared mind"
Pasteur
Golden sunsets is offline   Reply With Quote
Old 05-31-2016, 08:46 AM   #13
Full time employment: Posting here.
CaliKid's Avatar
 
Join Date: Apr 2016
Location: Cali
Posts: 552
It is admirable that you are thinking like this. Keep up the good work! I would focus on considering each expense you make and if that money should really be saved. The reality is each dollar you don't spend means a simpler lifestyle now which means you expect a simpler lifestyle in retirement... and that much more money having been saved for the unexpected. You are young so I wouldn't rush things. It's good you enjoy your job though!
__________________
______________________
Hoping to get out around September 1, 2022... I hope, I hope, I hope. Until then off to work I go....
CaliKid is offline   Reply With Quote
Old 05-31-2016, 09:03 AM   #14
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by edenky22 View Post
...I know that my savings is currently too low to think about retiring early, but I am looking for advice on where I currently stand...
According to an article by Fidelity, one should have saved 1x of income at 30, 3x at 40, 7x at 55, 10x at 67. Here is the link to the article.

https://www.fidelity.com/viewpoints/...need-to-retire
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-31-2016, 09:10 AM   #15
Full time employment: Posting here.
CaliKid's Avatar
 
Join Date: Apr 2016
Location: Cali
Posts: 552
Quote:
Originally Posted by FIREd_2015 View Post
According to an article by Fidelity, one should have saved 1x of income at 30, 3x at 40, 7x at 55, 10x at 67. Here is the link to the article.

https://www.fidelity.com/viewpoints/...need-to-retire
The problem is that article would still have a person working at 67!
__________________
______________________
Hoping to get out around September 1, 2022... I hope, I hope, I hope. Until then off to work I go....
CaliKid is offline   Reply With Quote
Old 05-31-2016, 09:28 AM   #16
Full time employment: Posting here.
 
Join Date: Apr 2014
Location: Houston
Posts: 639
Edenky22 - Couple thoughts:

(1) General - Great place to start is to read William Berstein's 16 page free PDF booklet "If You Can, How Millennials Can Get Rich Slowly" available from his website. He espouses the simple, DIY style of investing for retirement discussed often on this board. He's also the author of "The Four Pillars of Investing" which is one of my favorites.

(2) Expenses - With $36k per year, you probably have a good handle on expenses but ensure you are tracking them. Many here use Quicken or Moneydance or such tools. Key is to avoid letting lifestyle creep sneak up on you, especially watching and controlling reoccurring expenses (phone bills, cable bills, loans, etc...).

(3) Savings for retirement - Will eventually need to have liquid, investable assets of something in the ballpark of 25x your expected retirement expenses. Very rough rule of thumb based on someone retiring at normal retirement age and living off a withdrawal of 4% of their invested assets each year (4% = 1/25). Seems like a huge number which is why steady savings of 15-20% each year is normally a good goal. More is better but remember not to short change your enjoyment of current years either.

(4) Investments - Keep them simple and low cost. Your index 500 fund is not a bad place to be....wouldn't make any changes until you have fully thought out a plan. First goal is to decide on an asset allocation (%equity vs % bonds/cash). Many opinions on this. I actually kept very high % equity of 85%+ until I was early 50ish. But need to pick something you are comfortable with. For specific investment ideas, keep it simple and low cost. Bernstein's paper/book has some ideas. Also can read the Bogleheads Lazy Portfolios or Scott Burns Couch Potato Cookbook for ideas that fit these goals.

(4) Calculation Tools - It helps to have some tools to get a feel for where you are and how you might meet your goals. The two I like best for someone of your situation are:

Marketwatch's Retirement Planning Tool
Firecalc (heavily used on this board)

You are doing great to think about this now. People here are very helpful with any questions you may have.
__________________
Whisper66 is offline   Reply With Quote
Old 05-31-2016, 09:56 AM   #17
Full time employment: Posting here.
 
Join Date: Jul 2014
Posts: 616
Welcome, not much to add to the info provided above, but I'm glad you found this forum. The information here applies to more than just a goal of retiring early. For many the emphasis is on the "financially independent" and knowing that you are positioned to handle life's ups and downs.
__________________
Katiek is offline   Reply With Quote
Old 05-31-2016, 10:38 AM   #18
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,817
Welcome Edenky22 -

As several have mentioned - understanding your spending is the best way to approach what you need. Spending should be "all in" - so include taxes, health care premiums, etc.

When you retire - some of this changes - medicare and SS contributions go away, but health care premiums often go up.

Understand what pensions (if any) and ss you will have.

As for the paid off house... It is a factor in your net worth - but typically is not included in your investible assets/nest egg.... Unless you plan to sell and rent. However, the expenses of home ownership do need to be included in your expenses (prop taxes, insurance, maintenance, HOA, etc.)

The big key to retirement and retirement saving, to me, was a simple ratio/math
- Reduce your spending so you can save more
- Your reduced spending means you need less savings... so you retire early.

I wish I'd figured this out younger... but didn't get the lightbulb - AHA!!! moment till my mid/late 40's. I'd been saving before that - but hadn't concentrated on reducing spending to allow for a lower retirement number.

Good luck and welcome!!!
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
rodi is offline   Reply With Quote
Old 05-31-2016, 12:19 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,193
Quote:
Originally Posted by edenky22 View Post
1) I spend $3000 per month, so $36000 per year.
What you spend now may or may not be what you spend in retirement.

As you noted in a later post, after you pay off your mortgage, that expense is gone, though you still have taxes. And don't discount the upkeep on an aging house. Chances are that $36K hasn't included a new roof or replaced furnace, but at some point they will come. Figure on some % of the house value for maintenance and repairs. Most years you won't hit that but in the years you do, you'll be way over budget, so I just spread it out.

You may be able to cut commuting and clothing expenses, but with more free time you may wind up spending more on travel or hobbies.

Someone already mentioned health care, which is a big expense for many of us ERs. It's not just the premiums, but also the potential out of pocket with co-pays and before you hit your deductible.

And someday you'll need to replace your car. If you buy a $10K used car every 5 years, that's still $2K/yr you need to budget for the 25x plan to work. Like new cars? You might have to budget more.

The message is, you can't just track every day expenses and figure 25x. I put together a retirement budget and for a couple of years kept adding things I forgot, such as major house and appliance repairs/replacement. Once I finally stopped adding things after awhile, I was satisfied I thought of the likely expenses. I'm sure there will be an unpredicted major expense here or there, which is why I have a buffer.

FWIW, if you're a lot happier at your new job, that's worth the pay cut, IMO.
__________________
RunningBum is offline   Reply With Quote
38 year old female, with a recent career change, looking for feedback.
Old 05-31-2016, 02:36 PM   #20
Full time employment: Posting here.
 
Join Date: Jan 2007
Location: Thousand Oaks
Posts: 839
38 year old female, with a recent career change, looking for feedback.

Quote:
Originally Posted by edenky22 View Post
Thanks for the tip aaronc87. According to that calculations, I'll need around $900,000. YIKES!!! I have a ways to go.

I do have a question though. Since my house will most likely be paid off prior to me being retiring, I exclude that, correct? If so, then my number comes down to $600,000, which sounds much more doable.

Not exactly, look at it from an expenses viewpoint. Once your house is paid off your expenses will go down by whatever amount your yearly mortgage payments were. That does not necessarily equate with lopping off 300k from what you need for your 'number'.

There are many big threads here that you can search for that debate whether one should pay off their mortgage early or not. Since mortgage rates are fairly low these days you may not want to get too gung-ho on paying it off early. Try to strike a balance between building up your retirement savings and paying off the mortgage.

One big argument to not aggressively paying off the mortgage early is that front loaded retirement savings dollars are worth much more than later savings due to the "wonders of compounding".


Sent from my iPad using Early Retirement Forum
__________________

__________________
mh is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
female, 52, want to retire end of year travelnow Hi, I am... 14 12-01-2014 05:23 AM
ER in Chicago and looking for female buddies! LaurenV Hi, I am... 7 01-29-2013 06:49 AM
29 year old female - looking for support and info lilly Hi, I am... 12 01-23-2010 01:36 AM
Maryland Female 31 yrs old new to planning for retirement Newtothis Hi, I am... 7 10-22-2009 07:35 PM
21 Year Old Recent College Graduate!! MrTux Hi, I am... 14 06-19-2009 03:13 PM

 

 
All times are GMT -6. The time now is 04:32 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.