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

[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]

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]

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]

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.

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]

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

 

[fmzip]

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.

You already have enough saved to retire. A 3% SWR gets you $51K

 

[gauss]

First post here!

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

Uh, just to clarify, SS is not payable under normal circumstances prior to age 62 (unlike some pensions). Perhaps your comment about being short was more a modeling assumption rather than expected cash-flow at your retirement age.

-gauss

 

[fmzip]

Uh, just to clarify, SS is not payable under normal circumstances prior to age 62 (unlike some pensions). Perhaps your comment about being short was more a modeling assumption rather than expected cash-flow at your retirement age.

-gauss

I understand SS isn't payable until 62. What I was suggesting is my benefits currently show that at 62 our SS income would be $30K .

If we retire early, the SS benefit at age 62 will likely be reduced if we haven't hit the 35 year mark of contributing working years. Is that correct?

My $80K/yr retirement goal was based on $2mm in assets. The SS benefit at 62 of $25-30K that I was pointing out would be extra

 

[Milton]

planning to retire in the next 10-12years with $50-60k post-retirement expenses … I figure I need about $1.2-1.5M

You may find that need more capital, especially if you are calculating your expenses in 2014 dollars. But you can fine tune things later, and presumably will be able defer your ER date if necessary.

 

[Totoro]

Just discovered this thread.

I'm roughly in the same category as OP. Total expenses somewhere $25k - $35k (single guy). Saved up about $800k. 34 years old.

Actually easing in to semi-retirement, but not yet. Sort of in OMY mode, but not really. Right now I'm winding down a small business I have with a partner. Probably will go free-lance consulting for a while after that.

The idea is to let the idea of "good chance I still need to work" go once and if I hit $1M (roughly). Would like to hit that within the next 4 years.

The biggest fail-scenarios for that are: wife, children, health failure, losing motivation to work at all and world economy crash (a real one, not like 2008). Most of these fails are under my control, so I'm not too worried

 

[Sea Kayaker]

It took about 10 years to the day for me to pull off my early retirement goal. Back in my early 30's I had figured it would take 15 years, but better than expected raises, early mortgage payoff, great investment returns (started investing in late 2009), no kids, made it happen in 10 years. We have over 50k in dividend income right now, with our expenses at around 30 - 35k annually. With my wife desiring to work a bit longer, there is going to be a fair bit of "buffer" added by the time she joins me in ER.

To be fully transparent, it took two excellent dual incomes and some disciplined LBYM to pull this off in ten years. On many forums (lookin' at you MMM) there appears to be a fair bit of naivety on what it actually takes to do it.

Tomorrow is the first Monday in 24 years that I don't need to be ANYWHERE. Tomorrow I can do ANYTHING.

 

[Greencheese]

It took about 10 years to the day for me to pull off my early retirement goal. Back in my early 30's I had figured it would take 15 years, but better than expected raises, early mortgage payoff, great investment returns (started investing in late 2009), no kids, made it happen in 10 years. We have over 50k in dividend income right now, with our expenses at around 30 - 35k annually. With my wife desiring to work a bit longer, there is going to be a fair bit of "buffer" added by the time she joins me in ER.

To be fully transparent, it took two excellent dual incomes and some disciplined LBYM to pull this off in ten years. On many forums (lookin' at you MMM) there appears to be a fair bit of naivety on what it actually takes to do it.

Tomorrow is the first Monday in 24 years that I don't need to be ANYWHERE. Tomorrow I can do ANYTHING.

What are you talking about? If you just bike everywhere and ditch cable you can easily live on $13k like MMM

 

[Totoro]

Tomorrow is the first Monday in 24 years that I don't need to be ANYWHERE. Tomorrow I can do ANYTHING.

You made it!

Congratz and enjoy the blissful void

 

[daylatedollarshort]

To be fully transparent, it took two excellent dual incomes and some disciplined LBYM to pull this off in ten years. On many forums (lookin' at you MMM) there appears to be a fair bit of naivety on what it actually takes to do it.

It is not just naivety, but also misinformation perpetuated by financial writers selling the dream, not the reality.

In the The Millionaire Next Door and follow up books, which are based on broad market research validated by IRS estate tax data, and not on anecdotal selective postings, by one relatively young and healthy financial writer with a budget that leaves out many necessities or actual expenses, who in reality either went back to work full time or is currently self employed full time, and who amazingly has a largely stock portfolio that goes up even in major down years for the market, most of the households are very frugal as well as have high incomes.

Anyway, enjoy your kayaking.

 

[Live Free]

I'd like to be able to retire in 10 years - we are both 49 - but I'm not sure how realistic that is. We are doing just ok on saving for retirement and I am having a hard time saving more. In 3 years I'd like to adjust that to significantly increase savings by selling our current home and going much cheaper in housing. We are paying a lot to live in this place but I don't want to move until youngest is off to college.

401Ks just over $700K (we are at 65% stock/35% bond mix).
Home equity now about $280K (conservative estimate after realtor fees. This is low ball and I think it is probably at least $50K higher, but I like to assume .)

We did not do well in saving for college for our kids. Wish I could change a lot of decisions I made in my younger years to fix that. We are cash-flowing my older kid in college and so far we have managed to make that work. Two more years. For younger kid we have about $20k saved.

Biggest fear is losing either of our jobs. We are trying to build up our cash reserves, just in case. I never used to worry so much about job security, but I see so many layoffs (including engineers, computer programmers, network engineers, etc!) of folks in their early 50s in our area. Businesses are looking for younger, cheaper employees and also are hiring hb-1 visa computer tech and engineers. I am trying to stay relevant with my skill set and holding my breath we keep the job train rolling down the tracks.

I would love to hang up my working clothes in 2024, but it will take a lot of focus and a lot of luck.