Race to 2024 - please join :)

[Markola]

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Originally Posted by Exit 2024 Congratulations, Markola! Is it investable only? We ourselves joined two comma club as of Friday but it is in total NW, next targets would be to pay off last 50k on mortgage an then get to seven digits in investable

Right, investable. I guess I could add our $100K home equity but I usually leave housing out of it. Congrats on your own progress!

[dvalley]

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Originally Posted by Exit 2024 Update on my number- closed Q3 at 34.2% of target, and finally joined two comma club how all of you are doing? Any progress? Milestones?

Congrats on the two comma club! I'm only half way to the two comma club and still about 33% of the target number. Unfortunately it seems my numbers haven't increased much at all in the last couple of months but it's all part of the long journey.

[DrRoy]

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I think it's possible but of course depends on the market and the job situation. If I can get 8% year over year for the next 9-10 years I'll definitely be FI if not FIREd at which point I can greet people at Walmart for a few years to close any gaps

Folks, I do not mean to be a downer here, but here are my thoughts on future rates of return in the stock market. Based on the S&P 500 with dividends, the historic rates of return over the last several decades has been 10% +/-. My personal experience with investing is about the last 35 years. In that time, corporate earnings, which is much of the basis for stock valuations, have been driven by growth in population, productivity, and particularly the exceptional expansion of the economy of China. From here, all 3 of those drivers are going to be much more muted than they have been going back. That means that equity returns are most likely to be more muted too. For bonds, those 35 years saw a great bull market as interest rates fell from cycle highs to cycle lows, which also cannot be repeated going forward. I think it is prudent to assume future returns will be around 3-4%, not 8%. Just my opinion.

[exnavynuke]

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Originally Posted by DrRoy Folks, I do not mean to be a downer here, but here are my thoughts on future rates of return in the stock market. Based on the S&P 500 with dividends, the historic rates of return over the last several decades has been 10% +/-. My personal experience with investing is about the last 35 years. In that time, corporate earnings, which is much of the basis for stock valuations, have been driven by growth in population, productivity, and particularly the exceptional expansion of the economy of China. From here, all 3 of those drivers are going to be much more muted than they have been going back. That means that equity returns are most likely to be more muted too. For bonds, those 35 years saw a great bull market as interest rates fell from cycle highs to cycle lows, which also cannot be repeated going forward. I think it is prudent to assume future returns will be around 3-4%, not 8%. Just my opinion.

I really hope you're wrong as that would suck for everybody as even a 3% withdrawal rate would not be "safe" in such an environment and you'd likely need a SWR of less than 1%. I don't think that growth of the economy is going to be as muted as you estimate however, as I think a 7% average return will be easily met over the next 40 years and higher is likely.

[Cassius King]

I'm targeting class of 2024 as well. I'll be 50 then and it seems like a good age to jump off the hamster wheel.
I'll be debt free, including home, so that will help. However, I'm not targeting $3m like most. After healthcare, I have near zero expenses other than property taxes and utilities. Should have north of $1-1.5m at that point. All I need is enough income to cover a couple days worth of greens fee's at the local muni, some nice protein to put on the smoker, and some simple trips to the beach and mountains every year. My investments and small pension should be enough for that.
We are going to stay in our current home. Never bought the McMansion. A modest 1500 sq ft, 3 BR, 2.5 bath home. Added a beautiful sunroom on the back and am extremely happy here. This year added a new roof (complete tear off and new wood), siding, shutters, gutters and trim, as well as new furnace and ac unit. Not much left to do but keep putting the $$ away for the next 8 years. I don't have a six figure income, but live well and comfortably. Avoiding an expensive lifestyle and habits goes a long way to financial freedom.

Cheers to my fellow class of 2024 members and may we all exceed our goals earlier than planned!

[Cassius King]

And, I unfortunately agree with DrRoy to an extent. I do expect overall returns to be lower. There will be one off stocks that offer excellent returns (think future tech, ie the next AMZN, AAPL, etc), but with interest rates where they are, a growing divide in have's and have nots, and CEO's making $100m, the trend isn't optimistic. Just don't see the 8+% returns on an annual basis.
Whatever returns there have been in the market over the last several years have been due to very low, non-existent, interest rates. Only place to get yield is in the market with dividends.

[Bimmerbill]

2026 Here unless there is an early out offer (which I hope there will be)!

[FIREmenow]

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Originally Posted by Cassius King And, I unfortunately agree with DrRoy to an extent. I do expect overall returns to be lower. There will be one off stocks that offer excellent returns (think future tech, ie the next AMZN, AAPL, etc), but with interest rates where they are, a growing divide in have's and have nots, and CEO's making $100m, the trend isn't optimistic. Just don't see the 8+% returns on an annual basis. Whatever returns there have been in the market over the last several years have been due to very low, non-existent, interest rates. Only place to get yield is in the market with dividends.

But, wait - Dave Ramsey says I can get 12% on my money.......

[Markola]

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Originally Posted by DrRoy I think it is prudent to assume future returns will be around 3-4%, not 8%. Just my opinion.

On the other hand:
Inflation is historically low, mitigating some of the reduced returns of US stocks, because they don't need to return as much to outpace inflation.

Interest rates are low, supporting higher real estate prices and allowing for investment in capital.

US manufacturing is at an all time high (yes, that's true) thanks to dramatic automation in manufacturing and containerized shipping. US exports and corporate profits are poised to grow once the historically-strong dollar returns to mean or below someday.

Returns abroad could be strong in places that have growing populations and increasing consumption. I'm about 30% international.

Interest rates will likely rise some but the decimation of US bonds keeps not happening. The Vanguard Total Bond Index is up 5%+ for the year - again- which is better than stocks at the moment.

[DrRoy]

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Originally Posted by exnavynuke I really hope you're wrong as that would suck for everybody as even a 3% withdrawal rate would not be "safe" in such an environment and you'd likely need a SWR of less than 1%. I don't think that growth of the economy is going to be as muted as you estimate however, as I think a 7% average return will be easily met over the next 40 years and higher is likely.

It would not bother me to be wrong and returns are higher than my case above. That would be better for me too. However, at this point, I think the arguments hold.

[exnavynuke]

End of 2017 Q1 update:

My VA rating was finalized the end of last year. Between that and my current investments I could theoretically retire now since I could cover all of the "basic necessities" and have some extra spending money. However, I have a lifestyle I'd like to maintain (and maybe improve) and I'm still a ways away from being able to do that. Doing nothing in retirement but sitting at home or going to the grocery store doesn't sound very appealing to me lol.

Firecalc currently gives me a 97% chance of success for a 2023 retirement at my current spending levels and 100% chance in 2024. That drops to a 95% chance in 2024 if I up my spending by another 10%.

I'm starting to do more travel now and I expect I'll want to continue or increase that when I retire. Based on what I've read here that may or may not cost a lot more (currently I generally do 1 week trips that cost me ~$2k each, but I think based on what I'm learning in the travel subforum I can probably do longer vacations more cost effectively once retired).

The savings from not commuting to work etc will likely be completely ate up by more rounds of golf or travel, so I'm still unsure "how much more" to set my expenses as for planning purposes right now, but for now I'm planning for a 10% increase in total spending.

How's everyone else coming along this year?

[Exit 2024]

exnavynuke, thanks for bumping up this thread.
You are doing excellent!!!! fact that you already all set for steady income that will cover "basic necessities" is huge!

We did reasonably good in Q1 of 2017, big news - payed off house and have zero debt now. Markets have been hot during Q1 - that helped to propel us to 37.7% of our FIRE target, expect to cross 40% this year if no any major markets downturns

[NgineER]

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Originally Posted by Exit 2024 exnavynuke, thanks for bumping up this thread. You are doing excellent!!!! fact that you already all set for steady income that will cover "basic necessities" is huge! We did reasonably good in Q1 of 2017, big news - payed off house and have zero debt now. Markets have been hot during Q1 - that helped to propel us to 37.7% of our FIRE target, expect to cross 40% this year if no any major markets downturns

Congratulations on paying off the house!
Now you'll have more money available each paycheck to plow into investments.

I financed my rental property in Q1 and took on more debt. On the other hand I now have ~$150k for down payment for additional properties that are part of my fire plan.

Markets have been good and I now have $.96M invested and ~$200k cash. In total about 38% there.

[YVRRocketSurgery]

Thought I'd join this thread.
I originally was looking to conservatively FIRE at 2027 a number of years ago but have adjusted my target forward to summer 2022.

Personally, I'm hesitant about future returns. I forecast 6% nominal returns for index component of my portfolio, dropping it to 5.5% when in retirement. I feel the numbers are fairly aligned with the annualized returns over the last 20 years of similar model asset allocations I'm trying replicate with a mix of Canadian, US, International, EM, and bond indices. We've obviously encountered some big hits over the last 20 years so I'm fairly comfortable with this being a somewhat conservative expectation.
I'm also assuming 2.5% inflation but do a reality check against our yearly tracked spend and our spend has been fairly in check even with so many things increasing in cost.

Another major component of my portfolio are dividend growth stocks. I'm hoping to use its yield to create a growing floor for my retirement income.

The returns overall have been great the last number of years but I worry we're due for a bear market and what that will temporarily do to my numbers. But what's also given me more confidence to move up my target FIRE date is how quickly the floor from my dividend yield is growing, though I'm not oblivious to the fact that dividends can and have been cut.

--

Regarding paying off your mortgage, that's a such a great thing to allow you to redirect so much cash flow to savings and accelerate your portfolio. That was my experience.
However, I've read a few comments from folks where they've decided to focus their cash flow on savings and investments instead of paying off their mortgage due to the low rate environment we're in. I'm sure they've done extremely well with the market returns over the last few years. It's an interesting debate around taking advantage of market conditions, risk tolerance, etc.

[tulak]

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Originally Posted by YVRRocketSurgery The returns overall have been great the last number of years but I worry we're due for a bear market and what that will temporarily do to my numbers. But what's also given me more confidence to move up my target FIRE date is how quickly the floor from my dividend yield is growing, though I'm not oblivious to the fact that dividends can and have been cut.

In ten years on this forum, one thing I've realized is the following:

If the markets are going down, there is worry about future performance.

If the markets are going up, there is worry about future performance.

When aren't we worried about future performance?

[YVRRocketSurgery]

It might be false security but I think there are periods where the markets have been in an overall rising trend and even though corrections have occurred, the feeling is that they are healthy because the markets needed to take a short breather before continuing to climb.

On one hand, trends that seem are out of the norm worry me because I expect them to revert back to the mean. On the other hand, I don't fight the fact that things can stay seemingly weird for long periods.

[Markola]

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Originally Posted by tulak In ten years on this forum, one thing I've realized is the following: If the markets are going down, there is worry about future performance. If the markets are going up, there is worry about future performance. When aren't we worried about future performance?

It's been said, "The markets climb a wall of worry." But there are no guarantees in life, so you pays your money and you takes your choice.

[dvalley]

I have three targets below and as of Q1-2017:

I'm at 34% of my original $1.5M cash+invetments target
I'm at 36% of my lower end (but quite reasonable) $1.4M cash+invetments target
I'm at 41% of my doable (but not ideal) cash+invetments $1.25M target
All these give me approx $48-50k annual budget with 3.5% to 4% SWR.

Also, the target numbers assume a paid for house. Luckily my equity in the current house is approx $300k which should buy me a retirement house in a LCOLA when the time comes.

[Sniggle]

I just ran Firecalc, and it says I could retire in 2024 (age 60..yea not young, but young at heart). I would have to eat a little bit more of my savings in the 1st 2 years before megacorp $30K pension kicked in at 62, but the success rate estimated is 100% :-)

Still too far out for me, but nice to know that I could if I really could not stand another 2 years of work.

(My cards: $1,375,000 401K, $160,000 Roth, $10000 HSA, $20K military pension at 60, $30 K megacorp pension at 62)

[dvalley]

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Originally Posted by Sniggle I just ran Firecalc, and it says I could retire in 2024 (age 60..yea not young, but young at heart). I would have to eat a little bit more of my savings in the 1st 2 years before megacorp $30K pension kicked in at 62, but the success rate estimated is 100% :-) Still too far out for me, but nice to know that I could if I really could not stand another 2 years of work. (My cards: $1,375,000 401K, $160,000 Roth, $10000 HSA, $20K military pension at 60, $30 K megacorp pension at 62)

I don't know what your planned spending is...but with those numbers I'd be done now if I structure the savings to be accessible now.