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Am I almost there?
Old 09-30-2013, 04:03 PM   #1
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Am I almost there?

Hello!

Long time reader, first time poster.

As I start getting closer to what I believe to be FI, it's becoming harder to believe that I'm almost there. I'm not sure if or when I want to RE, but nevertheless I've been focused for the last several years on FI.

Here's where I currently stand (not including today's market drop due to the government not being able to get their act together):

Age: 33
ANNUAL SPENDING: Approximately $31,000 ($34,000 including mortgage principal)

ASSETS:
Roth IRAs: $97k
Traditional 401ks: $212k
Taxable Accounts (mostly stocks - some kept in cash from time to time): $416k
TOTAL INVESTABLE ASSETS: $725k


EXPENSES NOT INCLUDED ABOVE:
- Newer car: I currently drive a beater with 97,000 miles. It's doing great, but it's been a long time since I've had to purchase a vehicle and pay more in taxes/insurance/car payment/registration. This could add to my expenses.
- Health insurance: Currently 100% covered by employer. ACA may help here.
- Higher rent/mortgage from moving: If I were to decide to RE, I'd likely leave my current area and increase my monthly housing cost by around 500/month
- Travel: I travel a decent amount now, but a lot of it comes from work perks (hotel points, etc). Would need to increase my budget for this -- especially the first few years when I'd like to do more international travel.
- Taxes: My spending level above does not include income taxes. I'd need to pull enough out every year to cover taxes and spending.


ASSETS/INCOME NOT INCLUDED ABOVE:
- House: Zillow says it's worth around $238k, which I believe is accurate +/- $15k. I owe $140k on it. After agent fees, closing costs, etc, I could net ~$75k if I sold it soon (and will probably do so in the next couple of years)
- Social Security: While it's a long way off and probably won't be worth much, I figure I could at least net $5-8k per year after I'm 65.
- Stock purchased in previous employer (private company): There is talk that this company will IPO in the next couple of years, but obviously that's a gamble. I own shares that could be worth anywhere from 0-1M (I was a very early employee). Since it's such an unknown, I don't include it in my assets.
- Stock options in current employer: I'm 1.5 years down in a 5 year vesting period. Likely to IPO in the next couple of years. Price is again unknown, but I estimate that I'll gain somewhere between $50k-250k from this.
- "Side work": I do a bunch of this, mostly teaching. It will dry up some day as laws continue to change that require a PhD to teach, but in the mean time I find it enjoyable, can do it from anywhere, and would likely continue it even if I did RE. In other words, I might not even need to pull everything from savings to hit my spending needs (but would still need to pull at least 75% from there).


I realize that by the 4% SWR standard and Firecalc calculations I'm not there yet. What I'm wondering is whether I'm even close, or dreaming that this is achievable in the next couple of years?

Thanks in advance for any advice!
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Old 09-30-2013, 04:08 PM   #2
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You're certainly doing a fine job.

At a 33k spending level, most calculators would want you to have $200k more in your portfolio (rather than the $725k assets) to make it 50+ years. That being said, if your IPO works out, or the stock options work out, or even if you did part-time work for the next 5 years, you're pretty dang close.
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Old 09-30-2013, 04:10 PM   #3
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Originally Posted by bo_knows View Post
You're certainly doing a fine job.

At a 33k spending level, most calculators would want you to have $200k more in your portfolio (rather than the $725k assets) to make it 50+ years. That being said, if your IPO works out, or the stock options work out, or even if you did part-time work for the next 5 years, you're pretty dang close.
Thanks, bo_knows! As I indicated above, my current spending level probably isn't completely accurate compared to what it would be in retirement (if for no other reason than health insurance + taxes). Do you think that changes the picture considerably?
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Old 09-30-2013, 04:10 PM   #4
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Have you entered your situation in Quicken Lifetime Planner (an intuitive, easy-to-use retirement planner that is included in Quicken Deluxe or higher) or Firecalc?

I think you are doing very well but you probably are not quite there yet - but ceratinly on the right track and worlds ahead of others your age. If the IPO happens at a good price, you should be set.
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Old 09-30-2013, 04:11 PM   #5
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More information would be easier for everyone to help you out. Are you maxing out your 401k each year? How much can you save in a given year? I assume you're a very high earner that is spending very little (to get those balances).

For instance, if you're plunking down $60k/yr in savings, even at 44k/yr spending for 50 years, you have only 5 years more of saving left... max, before you're golden (according to the calculators)
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Old 09-30-2013, 04:14 PM   #6
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Originally Posted by pb4uski View Post
Have you entered your situation in Quicken Lifetime Planner (an intuitive, easy-to-use retirement planner that is included in Quicken Deluxe or higher) or Firecalc?

I think you are doing very well but you probably are not quite there yet - but ceratinly on the right track and worlds ahead of others your age. If the IPO happens at a good price, you should be set.
I've never tried Quicken, but do play with Firecalc from time to time. When I factor in the spending I think I'd have (with health insurance, taxes, etc), Firecalc seems to think I'm still several years away. Trying to figure out if I'm being too pessimistic about how much my spending would go up.
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Old 09-30-2013, 04:16 PM   #7
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Originally Posted by bo_knows View Post
More information would be easier for everyone to help you out. Are you maxing out your 401k each year? How much can you save in a given year? I assume you're a very high earner that is spending very little (to get those balances).

For instance, if you're plunking down $60k/yr in savings, even at 44k/yr spending for 50 years, you have only 5 years more of saving left... max, before you're golden (according to the calculators)
Understood. Yes, my income is fairly high. My primary job will gross around $145k this year. The "side income" I mentioned above will be around another $20k.

I max out 401k every year and also max out Roth IRA (through a backdoor contribution). Rather than make a goal of saving rate I tend to focus on reduced spending and just save whatever's leftover. With that in mind, I'll probably have saved $75k this year (including IRA/401k), and expect to do about the same next year.
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Old 09-30-2013, 07:22 PM   #8
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With that in mind, I'll probably have saved $75k this year (including IRA/401k), and expect to do about the same next year.
At that rate, you've got 3-4 years left before the historical calculators start showing 100% (barring another market meltdown). Congrats again.
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Old 10-01-2013, 05:21 PM   #9
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You're certainly doing nicely in your accumulation/savings process. And really not spending much. You're obviously young and bright. You might consider raising the bar in terms of spending & standard of living goals. Sure, more savings, but hey, you have plenty of time in front of you.
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Old 10-01-2013, 07:39 PM   #10
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You're certainly doing nicely in your accumulation/savings process. And really not spending much. You're obviously young and bright. You might consider raising the bar in terms of spending & standard of living goals. Sure, more savings, but hey, you have plenty of time in front of you.
It's interesting -- although conceptually I know you're right, I find that I don't want for much. I have hobbies that I endulge, I eat out more than I should (although not at particularly pricy places, just places that I like), and I travel more than the average person. The only two areas where I could be more generous to myself are in the international travel and car departments (both mentioned above).

As strange as it is to say, I don't understand how I could spend more than about $15,000 more than I'm spending now.
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Old 10-02-2013, 08:59 AM   #11
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It's interesting -- although conceptually I know you're right, I find that I don't want for much.
For sure, I should have qualified my comment with a big IF, that is... IF this would make you happy (or happier).

You may also find other pleasing ways of dealing with increased wealth, e.g. charitable donations, funding some friends or community projects, etc.

You have a world of possibilities in front of you! This is cool.
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Old 10-03-2013, 05:42 PM   #12
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Originally Posted by bo_knows View Post
At that rate, you've got 3-4 years left before the historical calculators start showing 100% (barring another market meltdown). Congrats again.
Hi
I agree with this. What age were you hoping to retire?
If it were me, and it isn't but I will tell you anyway...LOL, I would work until I had enough to cover what my future actual expenses would be including taxes (which will be lower than what you pay now) and high housing costs.

It would also give you a bit more buffer and an option to see what happens with both your share portfolios.

But I am conservative. It's is hard to wait, we are FI but waiting until next year, I am 38 and DH is 41, due to some extra bits we want to have put away.

I think the last three year have been the hardest as we are so close and so fed up with working crazy hours in our business.

But you are on track and close enough to smell the fumes!!!! YAY.

Sit back and watch your investments grow.
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Old 10-03-2013, 06:07 PM   #13
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Hi
I agree with this. What age were you hoping to retire?
If it were me, and it isn't but I will tell you anyway...LOL, I would work until I had enough to cover what my future actual expenses would be including taxes (which will be lower than what you pay now) and high housing costs.

It would also give you a bit more buffer and an option to see what happens with both your share portfolios.

But I am conservative. It's is hard to wait, we are FI but waiting until next year, I am 38 and DH is 41, due to some extra bits we want to have put away.

I think the last three year have been the hardest as we are so close and so fed up with working crazy hours in our business.

But you are on track and close enough to smell the fumes!!!! YAY.

Sit back and watch your investments grow.
I didn't have a specific date/age in mind (yet). Over the last 6 months, particularly as I've started to see FI become a thing that seems achievable, I've begun to fantasize regularly about calling it quits. Before that I never would have considered it. It's possible that I'm just unhappy in the current job (in fact I can say that with certainty), but it is worth sticking around due to aforementioned stock options.
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Old 10-08-2013, 04:48 AM   #14
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Wow congrats on getting to that stage at such an early age! Did you do it through an investment portfolio at all? [Mode Edit]

I would love to retire early or begin building towards comfortable retirement!

PS. don't worry every one hates their job, so if there are advantages to sticking around it might be a good idea to hold on as long as possible.
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Old 10-26-2013, 02:53 PM   #15
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My situation is largely identical to yours though you are a few years ahead of me, and I don't think I am going to be able to last at this pace until your age. You have done very well so far congrats!
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Old 10-26-2013, 03:40 PM   #16
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1979Dreamer,

Welcome to the forum! You are doing very well for your age. I'd guess you are in the top 1% for your age range. It appears your expenses are very low, which is what I'm guessing has allowed you to save up so much. You are similar to me, in that I don't find much enjoyment from spending a lot on material items or expensive restaurants. I do like to travel, and eat out, but not in a way that costs that much.

I switched to part time work six months ago, and with the extra free time I now have I do find myself spending a bit more. Doing things like fixing up the house now that I have the time to do so, or indulging in a few hobbies that I previously didn't have the time to do. And so I do expect my expenses to go up a bit, but probably not much more than the $15K that you mentioned. So I would think that if you add $15K to your current annual spending, and then let Firecalc tell you how much you need to retire, you should be just fine.

Chances are you will stay in the work force for quite a few more years though, simply because you are so young and have so much time ahead of you to do whatever you want. You've doing fantastic, and life will be very rewarding and enjoyable for you because of all that you have done to get to where you are today. Well done!
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