Just turned 30, retire in 40s?

[30RetireIn40s]

Hi all, I recently turned 30 years old, and I'd like to retire in my 40's, preferably as early in my 40's as possible... I'm not sure retire is really the right word. I'd like to work at a simpler pace, possibly for myself or as a contractor part time or something. What I really want is the financial freedom to do that if I so choose.

I save a decent amount of my income, although I don't keep track of exactly what % gets saved. My fiancee (who is 28) also is good about saving, albeit on a smaller income. Both of us being on the same page financially will be a huge plus, I imagine.

ASSETS:
My IRA & 401k: $140,000
My non-retirement stocks: $50,000
Fiancee's IRA & 401k: $6,000
Fiancee's non-retirement stocks: $9,000
Combined cash & equivalents: $20,000
Conservative Home Value: $120,000

DEBT:
Mortgage: $70,000 (13 years remaining at 4.875%)
Credit Card: $2,500

Total assets are therefore approximately $272,500 including home equity or $222,500 without.

We have more revolving debt, but none gets carried over from month to month and is really just our standard expenses. The $2,500 listed is actual debt that I got at 3% interest for life so I took a cash advance and added it to my non-retirement brokerage account. I don't plan to pay off the house early at only 4.875% (tax-deductible) interest. We don't currently have any car payments, but that will probably change soon since her car is starting to act up. Plus, we don't want to save so much that we don't enjoy life. We just try to really consider if spending money will actually bring us any benefit before doing so. Usually the answer is no.


Our combined income is around $110,000 gross but after taxes and 401k contributions and such take home is about $75,000 (it's amazing how much different those 2 numbers are!) On top of that we've been putting about $15,000 a year towards IRAs and non-retirement investments. Assuming we spend everything else that leaves us with around $60,000 in expenses.

Our current annual savings are (approximately & including employer contributions)
My 401k: $16,000
Fiancee 401k: $3,600
My IRA: $5,000
Other stock investments: $7,000
Cash savings: $3,000
TOTAL: $34,600

She isn't currently doing an IRA, she tends to save in her bank account.

Looking at it now it seems pretty good. It doesn't feel like we have to struggle to save, but we're generally frugal: moderate housing that meets our needs but no more, fully paid for cars, etc. We eat out often because it increases our quality of life, etc.


That's quite a lot more info than I was expecting. Any thoughts on me being financially secure at some time in my 40's? My house should be paid off by that time. Kids could also result in a large change in the equation, but we haven't really decided on that yet. A big problem is accessing the large % of money that will be in retirement accounts so early.

[Bestwifeever]

Welcome to the boards. You've done a great job accumulating your nest egg for your age. Have you run your numbers through a retirement calculator, such as FIREcalc (link at bottom of page)?

Several people here are working toward REing at the age you hope to, and they will likely chime in.

You have a good grip on what you have but your total savings rate (including 401K) and actual expenses are vague imho. If you and your fiancee take home $75K/year and put $15K toward your IRA and other nonretirement expenses, where does the remaining $60K go--how much toward mortgage, insurance, taxes, etc., and how much for fun/miscellaneous? Maybe you have plenty for the future car payment and children; maybe you could be saving more; maybe you'll have to cut back your savings when the car payments/kids/home maintenance issues arrive.

[GoodSense]

I don't have much to advise. You seem to be doing pretty good at a young age. You are saving nearly half of your take-home pay, which is impressive. I think you'll find a lot of kindred spirits on this board.

I would say at this rate, especially if you control spending, and save all the raises/bonuses you receive in the future, you are well on track to retire in your 40s. Of course, having kids will complicate the issue, especially if your wife decides to stay home. As has been discussed here at length, while it's important to keep the goal of FIRE in mind, also don't forget to smell the flowers along the way!

Welcome to the board.

[militaryman]

Let's see.... If you project out your 220K (current invested cash) and the 35K/year contributon for 15 years to the age of 45 you should have about 1.2 mil (5% real interest based on 7-8% interest - 2-3% inflation)
1.2 mil would render 48K at 4% swr (which is a high draw for such a young age probably)

You say your expenses are 60K currently with no kids .....

You do not address health insurance question I think.... You would need to have a plan for that

Good Start but not in the bag with your current info. I think -- If you could push down expenses, or delay until around fifty y.o. I think you'd be really close.... (if you can address the health care issue)

Course if you have kids it WILL change things...

[30RetireIn40s]

You are saving nearly half of your take-home pay, which is impressive.

It's not QUITE as impressive as that makes it sound. Technically my net income is higher, all of the 401k money is taken out BEFORE the $75k number I mentioned. In addition, my company has a very good 401k match so not all of that is my money.

actual expenses are vague imho. If you and your fiancee take home $75K/year and put $15K toward your IRA and other nonretirement expenses, where does the remaining $60K go--how much toward mortgage, insurance, taxes, etc., and how much for fun/miscellaneous?

Yeah I definitely don't track that information directly... I know what my fixed costs are, however:

	Monthly	Annual
TOTAL	$1770	$21240
Mortgage	$600	$7200
Phone/Cable/Internet	$225	$2700
Gas&Electric	$250	$3000
CellPhones	$90	$1080
Water	$20	$240
Car Insurance	$80	$960
Home Insurance	$36	$432
Property Tax	$250	$3000
Optional Memberships	$225	$2700

Optional Memberships are things like gym, lawncare, netflix, xbox live, etc that I could definitely do away with but are still fixed costs. The utilities aren't actually fixed but those numbers are pretty close. My fixed costs are really quite low, and could be cut considerably if necessary (which it isn't currently).

That's no where near $60k. It's missing a lot of variables that, while not fixed, have been pretty consistent: gas, pets, typical car maintenance, medical expenses, etc. I approximate I spent about $$7000-$8000 in this category last year. Now I'm up to $29k.

We splurged a lot this year on remodeling and furniture. My records indicate I spent $14,000 on this category. We did all the work ourselves so in retrospect it seems like quite a bargain. We certainly don't expect this level of expenditures every year. Now that's $43k of expenses.

I still haven't put anything in for food, household supplies, eating out, or other forms of entertainment. I don't have those numbers directly, but that's really the only places where the remaining $17k went. Yes we could have spent far less than that, but as long a we meet our savings goals we don't really worry about the rest.

The point of all this is our fixed costs are very low, and we could cut considerably if the circumstances warranted it. Currently we've chosen to just set a realistic savings goal and not sacrifice other things to save more.

I will check out the FIRE calculators you mention.

[ronocnikral]

welcome. you seem to be doing very well! while i'm a few years younger, i have similar numbers and goals. While I might not be able to make the leap when i'm 49, all i can do is stuff as much money as i can into savings now.

emergency savings? i prefer 1 year and will slowly build to 2.