Anyone else with a 10yr retirement goal with $50-60k post-retirement expenses?

[Fermion]

I am not too concerned with taxes as there are ways to get around those.

This is what I think our portfolio and income might look like:

2016 (first full year retirement)

Big stinky pile of cash $350,000 from sale of house, cars, and possessions we don't need. Invest $320,000 in 2 year, 3 year, 5 year CDs, depending on rates. Keep $30,000 in actual cash.

401K balance $600,000 (stocks)
Roth 401K balance $40,000 (stocks)
IRA balances $75,000 (stocks)
Roth IRA balances $55,000 (stocks)

Taxable investment accounts (stocks) $250,000
Ibonds $50,000

Total investment portfolio about $1,400,000

Taxes in 2016: Dividends from taxable account $5,000, Interest from CDs $8,000, IRA to Roth conversion $9,000, total reportable income $22,000.

total taxes paid 2016 for married couple: $0 (estimated using 2013 tax software)

total money actually available to spend in 2016 $43,000.

ACA MAGI for 2016 $22,000, ACA silver plan cost for couple (45,46): $775/yr

Roth balance increased by $9,000 in 2016.

2017, 2018, 2019, 2020, 2021, 2022, 2023 should be similar. At 2024 or so we may start pulling some of the Roth conversions out (tax free) in order to stay in the 0% tax bracket and cheap healthcare.

#workthesystem (just kidding, I have never tweeted)

[photoguy]

Quote:

Originally Posted by dvalley I'm 39, with $320k of liquid assets. I'm hoping to FI at by 50. I figure I need about $1.2-1.5M so still long ways to go. I'm investing about $3k/mo between my 401k and taxable accounts.

What is your asset allocation? With 36k/year new money, you need about a 7% real return to hit your target in 12 years. This is a better return than most are forecasting for equities.

[chris66]

Quote:

Originally Posted by Fermion I am not too concerned with taxes as there are ways to get around those. #workthesystem (just kidding, I have never tweeted)

Yeah, I have never been that great at minimizing taxes, and it's something I'm planning to learn more about. I expect I'll get a lot of ideas from this forum.

[NgineER]

I am 39 and DW 37. I still w*rk, my wife is SAHM (RE in 2012) with three kids. We hit similar numbers, $580k in Roth/tIRA/401k and $150 in taxable.

Hope to FIRE at 55 with $4MM, because I am worried about the unknown with expenses for kids.
Current expenses is $40k, but with kids ages 6, 4 and 1, I forsee that our expenses will go up significantly with time.
1 year into a 30 year 3.5% $220k mortgage, which (in contrast to myself) I don't plan to retire.
Putting away $59k with company matches 401(k), ESPP, HSA and additional savings (rothIRA and budget category excess).

Hopefully, I'll be more comfortable with retiring sooner with less as I see how costs change over time with my kids growing older.

[dvalley]

Quote:

Originally Posted by photoguy What is your asset allocation? With 36k/year new money, you need about a 7% real return to hit your target in 12 years. This is a better return than most are forecasting for equities.

Sorry I made a slight error earlier. I'm contributing about $48k/yr plus whatever the market returns. My asset allocation in the investment accounts is as follows:

U.S. Stocks 50.93%
Intl Stocks 18.66%
U.S. Bonds 13.61%
Alternatives 9.4%
Intl Bonds 4.24%
Cash 2%
Unclassified 1.17%

In addition, I have about $50k in cash/CDs for emergencies/job-loss etc.

[photoguy]

dvalley -- 48k/year makes your target much more reasonable. At the low end (1.2M) would be a ~4% return and the high end (1.5M) would be ~6%. Your 20% in bonds/cash might be a little bit of a drag (i basically consider them 0% real return for short-term planning).

[dvalley]

Photoguy, thanks for checking into my allocation and for the helpful info I appreciate it.

I believe my AA will change significantly because currently I'm investing in target age based funds in the 401k and Fidelity's Four In One fund (IRA) for simpler management, these are the bigger buckets of my total portfolio. However, all my after-tax investment is now going into VTSAX and will continue to grow and stay that way for another 6 to 7 years. At least that's what I think I should do.

[A Bird In Hand]

Quote:

Originally Posted by dvalley Just curious if anyone else is planning to retire in the next 10-12years with $50-60k post-retirement expenses? What's your strategy, milestones, how's your progress or anything else you want to share/discuss?

I just finished up analyzing our 2013 expenses, and we sorta-kinda fall into that category. Our expenses will drop a huge amount in 6-7 years when the mortgage is paid off. At that time our expenses will be in the $50k-$70k range; $70k if we continue sending the kids to private school, and $50k otherwise.

As far as milestones/goals...

~$750k savings/retirement now
$1MM savings/retirement in 3 years
Pay off mortgage in 6.5 years
$1.5MM savings/retirement in 8 years
Semi-retire/part-time work starting in 7-10 years
Part-time work until we're sick of it and can afford to quit

[dvalley]

^ congrats on the current savings and those are great milestones too. Thanks for sharing!

[JohnDoe]

You guys are all in really good shape. How were you able to build up your taxable account so much?

Til we max out 2 roths and my 401k we don't have much left for taxable account. Perhaps when our house is paid off in a few years we can build the taxable account up. Only 20k in it now.

JD

[Tortoise]

Quote:

Originally Posted by xmanz3 It is very interesting to run across this post since today I was talking to a friend of mine about my retirement strategy. One thing that he mentioned to me since he is already retired, is that you have to consider that there's always a possibility that the market might fall again like in 2008 and a lot of people lost everything or almost everything. Conclusion: Diversify as much as you can to avoid any major issues during retirement.

My wife and I plan to retire in 9 years. Our asset allocation is already at a conservative 50/50 due to fear of the unknown, like 2008. We expect to have $2.4 million in investable assets. Our house is paid off and we have $200k saved in son's college fund.

Edited to add: Yes, JohnDoe, when our house was paid off, we continued to put the equivalent of the mortgage payment into taxable savings every month. (We have always maxed our retirement savings every year.) There was never a change in our lifestyle, so we just save more.

[A Bird In Hand]

Quote:

Originally Posted by JohnDoe You guys are all in really good shape. How were you able to build up your taxable account so much? Til we max out 2 roths and my 401k we don't have much left for taxable account. Perhaps when our house is paid off in a few years we can build the taxable account up. Only 20k in it now.

We don't have a huge amount in our taxable accounts, which is also our emergency fund. Maybe 2 years worth of spending if we cut our budget to the bone. Probably closer to 1 year in reality. We simply don't have any $$ left after maxing out 401k's/Roths, and paying down the mortgage early.

Many in our situation would probably choose to beef up taxable accounts before paying down the mortgage, but...we're not wired that way. Both of us currently like the idea of working part time in pre-retirement, and we can afford that easily enough once the mortgage is paid off.

[Agni]

Hi, I will soon be 40 and this is my goal as well.. retire in the next 10 years. Currently have 470K in 401k and around 190K in taxable. I have a 5 year old son and one of my goals is to save for his college as well. Keeping my fingers crossed and pocket closed

[livingalmostlarge]

Same here a for expenses $60k currently and timeline (we are 34 and 36) but I'd like for us to be FI by DH 45th. He isn't interested in ER but who knows what the future holds and I'm planning 100% FI by his 49th. I SAH for now kids 4 and 1 and maybe 1 more.

$500k retirement
$225k taxable/cash
home equity - at least $350k

Conservatively we need $1.5-$2M liquid assets to generate $60k which includes our mortgage. Paid for house is how i plan on flex in retirement budget. Since we're at $725k, I believe if we double our assets in 7 years we should conserbatively be there before 45. But definitely by DH's 49th in 12.5 years.

See you at the finish line!

[someguy]

Taxable account balance (especially if you can compare it to their tax advantaged) is typically how you can guesstimate how much someone earns. A household with 2 working can typically put about $35K away pre-tax in a 401(k) type plan. So to have a big taxable balance, you need to be making enough to cover that $35K plus living expenses including taxes and still have more to save. Generally, that would be >$80K/year for a two-earner household.

If a dual-income household makes $120K/year combined, they probably have around $68K for living expenses and Roth+taxable savings. If their expenses are $40K/year, that leaves ~$12K/year for Roths and $16K/year taxable.

Of course, military, teachers and the self-employed may have more tax-advantaged opportunities, but you get the idea.

Quote:

Originally Posted by JohnDoe You guys are all in really good shape. How were you able to build up your taxable account so much? Til we max out 2 roths and my 401k we don't have much left for taxable account. Perhaps when our house is paid off in a few years we can build the taxable account up. Only 20k in it now. JD

[SoClose]

Quote:

Originally Posted by Fermion You can do a 72T to get money early or if you have five years expenses of other money in your taxable account you can pipeline your IRA money through a Roth IRA with conversions and then start taking that money out of the Roth after five years with no tax and no penalty.

Ahh, didn't think about using the conversions instead of 72t. Very good idea, I hadn't thought about. I'll have to run my numbers and see if we have enough in Roth's already to make it 5 years.

[SF94111]

I stumbled across this thread - nice to see many around the same age with similar goals.

My wife and I are both 36 with roughly 1.1m between retirement/brokerage accounts (650K/450K). We own a house in CA valued in the 1.0-1.1m range with a current mortgage of 575K and a rental condo valued at 450K with a current mortgage of 270K. I have a goal of paying off the condo by 2022.

We have no kids and don't plan on having any. No debt other than mortgages - school loans are long paid off, and we run our cars into the ground. We love to travel and always have a trip on the horizon to look forward to - we fly coach, stay in B&Bs and normally go with backpacks to give you an idea of style.

We are both in sales with incomes that fluctuate based on the economy - ranges have been 200K-400K combines in the past few years, but it was much lower prior and could return to that quickly. I have an excellent company profit share plan where I can stash 50K of pretax income and my wife has the traditional corporate 401k plan where she gets a tiny bit of match. We max those out every year.

Our current plan would be to retire around 50, sell our current house to cash out the equity and downsize to the condo. I imagine we’ll be conservative and draw down in the 3% range when we get there. I haven’t worked through the calculations yet on likely expenses, but we won’t have a mortgage so there would just be HOA/property taxes, healthcare and other general living expenses prior to spending for travel and other hobbies/entertainment.

[cooch96]

I turn 36 next week and fantasize about ESR in 4+ years when the mortgage is paid off. We're DINK and DW claims to love her job, though it pays min. wage. We currently sit at 300k+, not counting home equity of course. I just max my 401k and Roth and encourage my wife to save a little too. Megacorp matches a bit of the 401k and does profit sharing, so I estimate annual retirement Investment for the two of us is about $34k. Once the mortgage gets paid off, that rate could double but I might be completely burnt out by then. The plan then would be to find a part time job (you know, 40hrs/wk) that pays okay, is low stress and in my field, and is near home. Then work 5-10 more years until enough is squirreled away so we could live off DW salary and investments alone. I don't like to make detailed plans though because predictions are difficult, especially about the future.


Why be normal when you could just be yourself.

[Toocold]

This is my target too, although I don't have a specific timeframe in mind to RE.

Currently early 40s with 2 young kids and $1.7M in investment assets and a paid off house.

[fmzip]

First post here!

I am 48 and hoping to be FIRE'd in 8-10 years

We have $430K in Retirement Accounts, $200K in Taxable accounts.
$30K is left on our mortgage which will be paid off in 4 years, no other debt.
We are saving $6666 per month. We spend $6000 per month.

I'd like to have $80K per year in spending.

Our asset allocation is:

Vanguard Total US Bond Market 22%
Vanguard Hi Yield Corporate Fund 8%
Vanguard Short Term Inflation Protected 8%
Vanguard Total US Stock Market Index 37%
Vanguard Total International Index 19%
Vanguard REIT Index 6%

I think we are on track, not positive though. Just trying to save as much as we can and hope the markets are kind!

This is the first time in my investing life that I've broken free from managed money and have taken the reigns on my investments. Hopefully my asset allocation will get me to goal sooner rather than later.

Our target goals with a 5% return are:

3 years $1,000,000
7 years $1,500,000
10 years $2,000,000

According to the Social Security Benefits, for me at 62 it will be $1800, for the wife $790. As I will fall 4 years short (58) and she will fall two short (60), I assume the benefits will be more like $25K instead of $30K? Either way, that hopefully will cover healthcare or a vacation property somewhere