Want to be FIRE'ed in 2027

[SD_2019]

Greeting everyone, being reading the posts for long time finally want to post and introduce myself. Was planning to just take a year off in 2019 but decided to FIRE for a later date instead. Currently 43 year old living in southern cal
Now plan to FIRE in 10 years when I'm 53, DW is one year younger.

Here is the current financials:

Total portfolio (not including primary home) is $2.1M. AA:cash 17%, bond 10%, stock 73% in mixed ira and taxable account

Annual expense with mortgage is $120k.
Goal is to get to about $5M to $6M at time of retirement.
We are currently saving about $9k each month by max out the 401Ks as well as after tax accounts.

Planned expenses during retirement is $130k/year.

 

[eastnortheast]

Seems like you are well on your way. I am guessing that if you run the numbers, the target date may be much earlier than 2027.

 

[SD_2019]

I'm hoping it will be earlier too, I have coworker/friend who is around that age now so I'm looking at him as my future self and adjusting accordingly.

 

[Whisper66]

Work 10 yrs if you'd like but recognize you could retire earlier if you want.

For example, I ran a very quick Firecalc run using:
- you both retire in 10 yrs with 5 million in liquid assets at retirement with no significant liabilities
- you receive NO social security, pensions income nor any inheritances
- you both live to 95 yrs old (small chance but possible)
- you spend $130k per year

Firecalc results:
- 100% success rate that your money outlasts you
- could increase spending to $257,000 and have a 95.7% success rate
- could have only $2.33M in liquid assets at retirement and have 95.7% success rate.

You guys are in great financial position to do what you wish with your time.

 

[SD_2019]

Thanks. I will run firecal to see, btw is there an app or mobile version of the firecal?

 

[Whisper66]

No, no mobile version. Online free program is www.firecalc.com. Has good help screens and reasonable default values. I find it easy to understand and use.

 

[SD_2019]

Ok look like I can moved the date from 2027 to 2025 without any issue. I will fine tune the numbers in firecalc and track my progress here. I'm starting to track my expenses in more details now on.

 

[SD_2019]

I guess if we move to a COLA location like TX, or FL, we can basically retire today. Just a thought...

 

[FlaGator]

I guess if we move to a COLA location like TX, or FL, we can basically retire today. Just a thought...

Maybe.....

Have to look at your resources on a taxable acct/tax deferred basis. There are a lot of years to cover before you can tap IRA/401k.

The earlier you want to go, the more you need to have in taxable (non-tax advantaged) accounts. So, load up your taxable accounts after taking full advantage of the tax-deferred 401K/IRA options. Don't let a low match rate deter you. Still the best deal around.

Also wouldn't sweat paying off the mortgage in the meantime, unless your interest deduction drops to the point there's no benefit to itemize. Put the extra money in your taxable account instead.

This approach worked for me, YMMV

 

[SD_2019]

All excellent points, really appreciated. My tax deferred is about 1/3 of the total investments. Currently, we are getting hit by AMT pretty much each year, so I look at mortgage once a while. So far I still leaning toward continuing stock investment by max out the deferred (our co doesn't even match) and taxable accounts.

Good thing that I had started max contribution since my first day at work, and that was 20 years ago.

 

[SD_2019]

So after running FIRECALC, it seems to make sense to payoff the mortgage at time of retirement, also I need to add about 6k each for health insurance, so the cost of living is about 81K after mortgage is paid off. The goal for me is to get the portfolio to about 2.9M for FIRE. I plan to do that by 2020.

 

[exnavynuke]

So after running FIRECALC, it seems to make sense to payoff the mortgage at time of retirement, also I need to add about 6k each for health insurance, so the cost of living is about 81K after mortgage is paid off. The goal for me is to get the portfolio to about 2.9M for FIRE. I plan to do that by 2020.

Fire by 2020 now, not 2027? That sounds better to me

 

[Ready]

That is a lot of wealth to have saved up by 43 years old! Keep up the great work. I don't think you need to work ten more years but if you enjoy your work then good for you.

 

[Hexanova]

Total portfolio (not including primary home) is $2.1M. AA:cash 17%, bond 10%, stock 73% in mixed ira and taxable account

Goal is to get to about $5M to $6M at time of retirement.
We are currently saving about $9k each month by max out the 401Ks as well as after tax accounts.

Planned expenses during retirement is $130k/year.

You are sitting pretty good...in other words, about better than 98% of Americans, so big congrats!

My question is, do you really need $5-$6 million? It sounds like you live well within your means and plan to do so going forward. In a lot of my calculations I've found that working longer to accumulate beyond a certain $$ figure almost doesn't seem worth it. Caveat: unless you plan on living a lifestyle much higher than pre-retirement, or plan to leave a large inheritance. The RMD (and those taxes) on large IRA balances when you hit 70.5 is one of the things that worries me when that time hits. Still, it's a good problem to have.

 

[SD_2019]

I don't. Originally I thought I needed that much to retire but ppl here point out the right amount so I'm adjusting to a much earlier date.

 

[Blue Collar Guy]

Work 10 yrs if you'd like but recognize you could retire earlier if you want.

For example, I ran a very quick Firecalc run using:
- you both retire in 10 yrs with 5 million in liquid assets at retirement with no significant liabilities
- you receive NO social security, pensions income nor any inheritances
- you both live to 95 yrs old (small chance but possible)
- you spend $130k per year

Firecalc results:
- 100% success rate that your money outlasts you
- could increase spending to $257,000 and have a 95.7% success rate
- could have only $2.33M in liquid assets at retirement and have 95.7% success rate.

You guys are in great financial position to do what you wish with your time.

wow, that was awesome. wish i knew u before i worked 5 years too long,

 

[Whisper66]

wow, that was awesome. wish i knew u before i worked 5 years too long,

Thanks for that. The knowledge and people on this board were instrumental in giving me confidence to take my own early retirement. I'm trying to "pay it forward" by taking the time to pass a little of what I've learned onto others. I find by participating in these discussions, I can sometimes help others a bit but also I continue to pick up useful tidbits for myself. It's a great group here.

 

[SD_2019]

It really is! I find myself checking the posts almost daily.

 

[Whisper66]

So after running FIRECALC.....The goal for me is to get the portfolio to about 2.9M for FIRE. I plan to do that by 2020.

Nice! Two other thoughts come to mind that may be worth considering in your situation.

One is to ensure you are contributing all you can to all tax preferenced accounts each year. I think you are allowed something like $18k to a 401k (if you have one in your company) plus 5.5k to either a Roth OR traditional IRA account. (1st link below).

The other thought is to consider how to minimize your lifetime spend on federal taxes. (This has the effect of maximizing how much of your money you can keep for your use.) This is a challenging question since your future income on which you are taxed will change with social security coming in at some time and then when you are 70.5 yrs old, you have required minimum distributions from traditional IRAs which also count as income. Maybe you also get a pension sometime. So it would be nice to fund and spend money from your various accounts (taxable, tax deferred - 401k/IRA, and tax exempt - Roth) in ways that keeps your taxable income relatively low over your lifetime. Answering how to do that is a function of a second program many here use .... https://i-orp.com/ .

You have a relatively large amount of assets and a substantial part of that in a tax deferred traditional IRA (or 401k) account. It MIGHT make sense to yearly convert (note: "convert" is different than "contribution") some of the tax deferred assets in the IRA account into tax exempt savings in a Roth account. Money you convert into a Roth (but not their earnings) can be withdrawn anytime after 5 yrs of the conversion without penalty. That is an advantage over an IRA/401K where you incur a heavy penalty if withdrawn early. Also Roth accounts are not subject to Required Minimum Distributions at 70.5 yrs old like IRA's are. I-ORP will suggest if Roth conversions are appropriate as well as how much to pull from each type of account (taxable, tax deferred, tax exempt) each year to pay for living expense while minimizing lifetime taxes.

Bottom line is it may be worth getting familar with I-ORP and run your own situations to determine if there is something gained by how to manage your various accounts. Some links for more details provided below.

How much can I contribute:
https://www.google.com/search?q=can+i+contribute+to+a+401k+and+an+ira&ie=utf-8&oe=utf-8

Roth vs Traditional IRAs:
Traditional IRA vs. Roth IRA: Understand the Differences | RothIRA.com

Roth Conversion Rules:
Roth IRA Conversion Rules | Can You Convert from a Traditional IRA?

When can I withdraw Roth Contributions:
Distributions After a Roth IRA Conversion - Fairmark.com Fairmark.com

 

[SD_2019]

Yes. I have been max out my 401k contribution since first year I had full time job, and even for the last 12 years without company matching so I'm very proud of myself for doing that.

On the topic of tax, it's probably one of the most time consuming one for me. My thinking during retirement is to minimize regular income to keep in the lower tax brackets while withdrawing from long term capital gains. I don't have any pension. I haven't done too much research on Roth conversion so I need to learn more.

ER had been kind of a distance dream until I saw this forum, now is within reach. Kind of humbling to think consider we had only thousand bucks outside of 401k/iRAs 13 years ago.

 

[SD_2019]

Quick update after year and half. Total portfolio is $2.4M. AA cash 5%, Muni 6%, stock (S&P500, international index funds) 89%. New savings will go to CD and Bonds to bring AA back a bit.

 

[SD_2019]

update after three years! Total portfolio is $4.3M. AA cash 5%, Muni 13%, stock (S&P500, international index funds) 82%. Plan to ER oct or nov 2021. Only two months to go.

 

[Love This Community]

Congratulations on your FI. Great progress is the last 3 years. Enjoy your freedom.

 

[Bryan Barnfellow]

Fantastic! Congrats. Keep us updated as you get to the finish line.

-BB

 

[Extra Medium]

Way to go! Congratulations.