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Hi, 40 want to retire at 50. Thoughts appreciated.
Old 02-02-2014, 09:47 AM   #1
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Hi, 40 want to retire at 50. Thoughts appreciated.

Hi everyone. I have been reading a lot of posts and information for this site recently and have found it incredibly helpful. So much good information here from all points along the path to Fire that its helped me formalize a plan where before I was doing well at LBYM but didn't have a firm goal in mind. Sharing my personal situation plan below so if anyone has any comment or feedback is certainly welcome. Glad to meet you all!

My personal situation:

  • 40 years old no kids single (actually 40 in a couple months)
  • 200K in 401K: ~65% Domestic Stock, 17% Foreign Stock, 15% Bonds, 5% short term
  • 10K in Roth IRA: currently 100% global stock (ARTRX)
  • 14K in silver commodities (physical silver)
  • ~10K in cash and HSA (Cash is probably a little on the low side, but tax return is upcoming and plan is to liquidate silver in any emergency situation)
  • 175K home value with remaining mortgage 115K that is currently being rented. I relocated 2 years ago and rather than buy another I'm renting the original home and renting locally. Financially its close to a wash but there are some nice tax benefits to the rental. Plan to have this paid off in 12 years or before FIRE.
  • My current annual costs are pretty low at 20-25K annually, but I have been pretty frugal with spending. I plan to sock away at least 25K annually into the Roth IRA and 401K and probably 2-3K more into a brokerage account.

Targeting 44K in constant spending through firecalc gives me 98-99% success rates depending on portfolio performance inputs. This should give me some cushion for added expenses like health coverage and a 10K annual discretionary budget (that will likely not get used every year). I can easily see me downshifting spending when markets are unfavorable and bumping up if desired in good times. Shooting for ~1.1M as an end goal before FIRE.

Thanks for taking the time to read I hope I haven't left anything important out?


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Old 02-02-2014, 10:36 AM   #2
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I was about your age when I go the FIRE bug. I had previously had a vague idea if age 55... but hadn't done the math... At about 40 I realized if I saved aggressively I could make it happen.

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Old 02-02-2014, 11:42 AM   #3
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Welcome to the forum SN01. Your relatively low annual expenses will make it easy for you to retire early. Perhaps your goal should be to reach FI by age 50, and then decide if you feel like working any more. Some people like to quit completely, others find a second career doing something they love part time. Achieving FI gives you the flexibility to do whatever feels right to you. And practicing LBYM will make it easy for you to get there.
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Old 02-03-2014, 06:59 AM   #4
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Originally Posted by SN01 View Post
... Sharing my personal situation plan below so if anyone has any comment or feedback is certainly welcome. ... I hope I haven't left anything important out?
Hi SN,
Don't know how important this is, but maybe something to keep in mind: Social Security bases payments on your 35 highest years of income. Years without income are added in as 0's.
The Big Lebowski: Are you employed, sir?
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Old 02-03-2014, 12:52 PM   #5
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Benefits Planner: How Credits Are Earned
In the year 2014, you must earn $1,200 in covered earnings to get one Social Security or Medicare work credit and $4,800 to get the maximum four credits for the year.
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Old 02-03-2014, 02:26 PM   #6
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You have approx $300K in total assets. $1.1M - $300K = $800K needed to make your goal.

You can do the math, in 10 years you need to increase your assets to be at the goal $1.1M. Assuming you get some rate of return on your invested assets, let's use 6% avg return, that gives about $530K out of your $300K. So you need to make up $570K in additional savings. To get the $570K an approx savings of $40K/year is required.

If you can make that savings amount, then you are able to make your goal. Of course the numbers are all based on avg returns which are never constant. You did not mention your income, so no idea if this is a realistic amount to save.

That's my $.02 you can add to your ER goal.
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Old 02-03-2014, 02:33 PM   #7
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Originally Posted by SN01 View Post
Thanks for taking the time to read I hope I haven't left anything important out?

Welcome to the forum, SN01. Here's are a few questions you may find helpful Some Important Questions to Answer Before Asking - Can I Retire?
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Old 02-03-2014, 05:42 PM   #8
Confused about dryer sheets
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Thanks everyone for the quick responses, much appreciated!

To fill in a couple of the gaps:
Annual income is ~88K
Monthly SS estimates using the SS calculator for RE at 50 assuming similar earnings for the next ten years yield ~$1500 monthly. Going until 62 raises it by $200/month. That is included in the firecalc. I also noticed a big difference in results if I select total market vs fixed portfolio options for AA in firecalc. Which is more realistic? The more conservative approach seems to be the total market, which is closer to most 60/40 AA I've seen here for those that have shared unless i am missing something?

Chevy, thanks for insight. Looking at it that way my $$ goal would be a stretch and likely more like 52 as opposed to 50. Like you said, the next 10 years will tell. The 1.1M does have some safety factor included as 1M still yields 98% on FireCalc. 1.1M gives consistent 100% results.

I have considered a partial ER and work part time at something I enjoy. No specific plan on this right now as it's a ways out. Will keep this in mind moving forward. It's not that I don't like to work, its more that as I get older my time becomes more and more valuable and work takes up a tremendous amount of it... Something enjoyable/part time to support FI success would definitely be on the table. I'n sure I'll meed a more definitive plan than that, but for now that's what I have.

Michael, thanks for the question list, I've run through and although some are ?? given my age and number of unknowns over the next 10-12 years I've taken into account as best I can at this point.

Again, thanks for the comments!
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Old 02-03-2014, 06:33 PM   #9
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Welcome. Glad u r here. Got plenty of good things going for you. IMO think you might want you confirm you annual needs and plan accordingly. Gotta plan for a lot of years so a good size nest egg and planned escalation is important.
Similarly, no kids here and a frugal wife in my case. Still tracked spending for years. Escalated it and worked a few more years for contingency. We shot for 2.5 mm with 65k annual spending.
Considered myself FI at 41 but still my planned to do enough contract work to not pull from saving for another 3.5 years. Just our approach.
Congrats on you options. Sure you will make it work.
Oh, and at our age...might not want to plan on SS. To many unknowns with that.

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