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you have motivated me...
Old 11-11-2014, 05:52 PM   #1
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you have motivated me...

... to do what i can to move up my retirement date.

i'm 46, and have been practicing law for 18 years. my initial plan was to work 40 years, and retire in 2036. (11/12/36, to be exact, as i started working on 11/12/96.) however, the last few months i've been perusing this site and in reading some of your stories, have been compelled to "up the ante" so to speak.

i have maybe $100k in home equity, roughly $230k in retirement savings (401k, IRA, roth) and am maxing out my employer-sponsored 401k plan. in fact, i'm contributing roughly $2,000 a month, which means i'm maxing it out in a little under 9 months. hopefully i'll be able to add a little more each year. it's rough math, but the model i'm using gives me $1,000 of monthly income for about every $350k saved. i was initially aiming for about $2.25M of retirement assets as the goal. of course, it'd be nice if SS is still around (and in its current form) when i am able to take advantage of it. also, i should get a nice inheritance from my mother/stepfather, though hopefully that's a long ways off.

i'm married with 3 kids, with the youngest being just a little over a year old. of course, this means she'll be getting out of college at about the same time i was planning on clocking out, but -- barring any huge surprises or setbacks -- hopefully i'll be able to get out early. looking through these threads, i know it's at least possible.

and even if i don't retire "early," at least i have something to shoot for. i just want to have enough time to enjoy the fruits of my labor, and be healthy/active enough to take advantage.

anyway, thanks for the inspiration.
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Old 11-11-2014, 06:05 PM   #2
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Welcome to the forum, and we're always happy to answer any questions. Retirement only works of course if you want to retire. Some people truly enjoy their jobs and have no thoughts of retirement.

Others, like me, liked my job but there is a beginning and an end to everything and to me a career was one of them and now I'm in a different phase.

So it all comes down to "Where do you want to be when, and what is your plan to get there?"
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Old 11-11-2014, 10:46 PM   #3
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At this point, make your goal to be FI. Once you accomplish that you can make a decision whether RE is for you.

I suggest you get a copy of Quicken Deluxe or higher and run your situation through Quicken Lifetime Planner.
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Old 11-11-2014, 10:58 PM   #4
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Great that you are maxing your 401K, but please check how you are doing it, because if your employer offers matching , sometimes the matching is per contribution period/pay period.
Meaning if you don't stretch your contributions over the entire year, you won't get the full match and will leave free $$ on the table.
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Old 11-12-2014, 01:36 PM   #5
Confused about dryer sheets
 
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thanks for the replies.

sunset - my employer matches (3%) at years's end, so i'm good there.

it's a little difficult coming up with a budget in terms of what i'll need when i retire, as it seems the vast majority of my expenses (mortgage, car, 529's, feeding/clothing/providing for kids) will no longer be applicable at that time.

Quote:
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So it all comes down to "Where do you want to be when, and what is your plan to get there?"
excellent question, and exactly the way i approach it. my job (litigation) is based on conflict and is extremely adversarial in nature, which has really compelled me to make whatever plans and provisions i can to RE. while i don't necessarily hate my job, i can't see myself doing this for the rest of my life.

and it's not until you start really exploring what it will take to retire that you realize just how few people plan properly, or even think about it. i set aside a lot more each year than many people who are making significantly more than i am. some of them have no desire to retire (ever), which i don't understand, but to each his own.
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Old 11-12-2014, 01:43 PM   #6
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Most important thing is to educate yourself. ER in all its dimensions is an entirely different world. As you've found, this forum is an excellent resource to start in an ER direction. The Bogleheads forum is invaluable as are many of the financial blogs (Wade Pfau, Dirk Cotten, Michael Kitces, and others you'll find mentioned here). Lots of people don't, but I do like Scott Burns. I also like Mr. Money Moustache because of his radical philosophy towards spending (as in less).
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Old 11-12-2014, 01:52 PM   #7
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I also like Mr. Money Moustache because of his radical philosophy towards spending (as in less).
Spending less is a radical approach? I suppose that, in the context of the norms of our broader society, it is. Your comment only serves as a reminder of how relatively unusual many of us in here must be, if spending less is seen as a radical approach. It was second nature to my parents (who were born in the 1920's).
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Old 11-12-2014, 02:04 PM   #8
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Spending less is a radical approach? I suppose that, in the context of the norms of our broader society, it is. Your comment only serves as a reminder of how relatively unusual many of us in here must be, if spending less is seen as a radical approach. It was second nature to my parents (who were born in the 1920's).
Well I was being brief, Major, if not lazy . What I meant and should have made clearer is that MMM has his detractors and many do consider his personal LYBM approach radical. While my approach is not his, some of his ideas have saved me money while influencing my thinking to be even more frugal than I already am (if that's possible). Even Wade Pfau has admitted that MMM introduced him to Republic Wireless and FreedomPop.
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Old 11-12-2014, 02:40 PM   #9
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wwmustaine - Welcome aboard. I'm an attorney as well. I'm not too far ahead of you, having just started seriously thinking about FIRE a few months ago. Lots of good advice on this site. I would also recommend Can I Retire Yet? - Save More - Invest Smarter - Retire Sooner. Also a great resource. I'm 44 and find that now that I have a FIRE plan, although still a decade away, my bad days are more tolerable! The worst that can happen is you'll wind up more financially secure.
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Old 11-12-2014, 03:23 PM   #10
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I had an employer that paid/matched at year's end. But that is not the same as basing the match the on pay period contributions.
So not wanting to but you should check with HR or your employee handbook exactly how they calculate the 3% match.

There is not really an advantage to pre-filling a 401K early in the year, except for your last year of employment (or being fired) , as it will take some time to get a new job, and even then some places have waiting periods before you can join the 401K plan.
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Old 11-12-2014, 03:29 PM   #11
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Originally Posted by wwhmustaine View Post
it's a little difficult coming up with a budget in terms of what i'll need when i retire, as it seems the vast majority of my expenses (mortgage, car, 529's, feeding/clothing/providing for kids) will no longer be applicable at that time.
From what you said about your youngest being age 1 - you probably still have to consider retirement expenses if you plan on retiring early... I can relate since I retired earlier this year at age 53 - and have 2 middle schoolers.

There seem to be two approaches to figuring out what budget/spending you'll need in retirement. Top down, or bottom up.

Bottom up has you track your spending closely and create a budget based on expected spending.

Top Down has you take your income, and subtract out the things that won't apply in retirement and add back in additional expenses. These subtracted things are things like: 401k contributions, SS taxes, Medicare taxes, any after tax savings you were making. (In retirement your typically withdrawing, rather than adding to savings unless you have a pension style income stream.) You add in things like increased health insurance costs, possibly increased travel budget.

I used the top down approach. I included 529/college contributions in my budget since I don't have the full amount set aside yet. (Although I'm getting close).

Make sure you include taxes and increased health insurance in any budget you come up with.
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you have motivated me...
Old 11-12-2014, 03:42 PM   #12
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you have motivated me...

Welcome! One thing I recommend is for people to get a good solid understanding of investment - especially in the area of cost. Perhaps I misunderstood your post, but it seems your employer matches 3% of your contribution? One could consider the cost of that 401k as well, as well as the returns, then compare the total returns with those of a low cost fund, such as those at Vanguard. I'm not offering advice here, but suggesting one do the math for comparison purposes. It's possible you'll find the total costs involved with your 401k offset the 3% advantages. Or not. But it's worth running the numbers.

Yes, I'm a Boglehead lol. Costs deteriorate returns.

Morningstar offers a free investment classroom which is the equivalent of a college education - possibly graduate level. You sign up for their free account. It's broken down into one hundred and seventy two 5 or 10 minute easy lessons. When completed, you WILL understand investing. You'll have to put up with a daily request to upgrade to their premium membership, lol, but they're not obnoxious about it. Vanguard has something similar.

I'll post the MS link - they kind of bury it in their website. I found it by accident.


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Old 11-12-2014, 03:44 PM   #13
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The link:


http://www.morningstar.com/cover/Classroom.html



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Old 11-13-2014, 02:00 PM   #14
Confused about dryer sheets
 
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i’ve definitely taken steps to cut down on spending, but as a practical matter, with 3 kids and a wife who doesn’t work, it’s hard to do. you can always cut back, but not at the expense of some practical necessities that my family enjoys/depends on. hopefully when my youngest starts school my wife will return to work. that would definitely help.

sunset – my thinking for maxing out early is that in the last 3 months of the year, i’ll be able to contribute to other iras. this year, however, i couldn’t start contributing to the 401k until april because i had to work here a year before being allowed to do so.

rodi – i tend to use the bottom up approach, and have closely tracked my spending over the last few years. (it was then that i realized just how much my kids eat. wow.)

seraphim – my employer matches 3% of my salary. i’ve run the numbers on the cost of the 401k, and frankly, the 1% seems to be worth it at this point, as the company (raymond james) has a reputation as a good “stock picker.”
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Old 11-13-2014, 02:08 PM   #15
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So not wanting to but you should check with HR or your employee handbook exactly how they calculate the 3% match.

There is not really an advantage to pre-filling a 401K early in the year, except for your last year of employment (or being fired) , as it will take some time to get a new job, and even then some places have waiting periods before you can join the 401K plan.
Agree with your first point but not the second. If he put it all in at the first of the year it has a year to grow.

Other thing to look into is a "back door IRA". If your plan allows, and you can fund it, I would certainly do it. Look into Roth IRA as well if your plan isn't a Roth 401K. The mixed retirement account types will be very useful to RE.
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