38 year old dad looking toward ER ..

[irik5170]

Hello All .. just found this forum and I am excited to have opinions of others looking to accomplish the same goals as I would like to some day. I am a 38 year old dad of 3 girls , married to a 47 year old woman, we own our home outright (no mortgage) and my taxes are under $2,000 a year. I own my own small business which makes almost $60,000 a year , my wife recently got a job making about $40,000 a year. I contribute to my IRA ($4,000) a year and Im getting my wife to start this year also. We have about $150,000 in savings (CD's)and my IRA is worth about $55,000. My business is worth about $120,000 and is also paid for. the only debt we have is a car loan of $450 a month. The value of my home is very debate-able right now with the current housing market , but conservatively it is worth about $350,000. I also purchased 4 year state College plans for all 3 of my girls , which is also paid for. .. I know a lot of info ... BUT My question to any one of you guys or gals is .. with the way Im going with saving and trying to almost debt free , would you think Im on the right track to retire early ? Like at 55 ?
I have worked very hard and busted my butt to get where Im at .. and i know hard work pays off .. just wondering when ?? HA HA .. many more years to go .. just trying to prepare early .. to enjoy life..

 

[FinanceDude]

Hello All .. just found this forum and I am excited to have opinions of others looking to accomplish the same goals as I would like to some day. I am a 38 year old dad of 3 girls , married to a 47 year old woman, we own our home outright (no mortgage) and my taxes are under $2,000 a year. I own my own small business which makes almost $60,000 a year , my wife recently got a job making about $40,000 a year. I contribute to my IRA ($4,000) a year and Im getting my wife to start this year also. We have about $150,000 in savings (CD's)and my IRA is worth about $55,000. My business is worth about $120,000 and is also paid for. the only debt we have is a car loan of $450 a month. The value of my home is very debate-able right now with the current housing market , but conservatively it is worth about $350,000. I also purchased 4 year state College plans for all 3 of my girls , which is also paid for. .. I know a lot of info ... BUT My question to any one of you guys or gals is .. with the way Im going with saving and trying to almost debt free , would you think Im on the right track to retire early ? Like at 55 ?
I have worked very hard and busted my butt to get where Im at .. and i know hard work pays off .. just wondering when ?? HA HA .. many more years to go .. just trying to prepare early .. to enjoy life..

Congrats.........sounds like you're on the right path. As far as numbers, take a look at FIRE-Calc,it's our superduty software to help answer some of your questions.

Just couple quick points? Do you have a SEP IRA or something set up for your business? You could put away a lot in that if you're self-employed.

How big is your cash reserve?

 

[RetireeRobert]

Greetings. You are at the right place for an interest in ER

The biggest determinant of getting to ER is PERSERVERENCE!

You have already started. You have already got college pegged for your three girls. Nice going. You are debt free except for the car. Nice going, maybe you can pay ahead on the car and get rid of that debt too.

You are already on the way with retirement savings, and now yu have got your wife started. Other poster mentioned perhaps Sep-IRA, and another idea is Keogh Plan for self-employed. Either would let you stash away more tax -deferred each year for retirement than just plan IRA.

So, you have a good start. All you have to do is perservere, stick it out, keep stashing the money away for retirement, LBYM along the way, and you WILL get there.

 

[FUEGO]

consider asset allocation - is $150,000 in CD's the appropriate place for you to have your money for long term growth. Or is that a cash reserve in case the business hits hard times?

 

[irik5170]

I guess you would call it rainy day money .. and I will settle for 5% growth while knowing the money will always be there in CD's (FDIC INSURED) .. it could also be my cash reserve if the business has problems .. in this economy you never know !

 

[aaronc879]

Having your mortgage paid off in full is a big thing but that means that you now need to catch up on your savings. If your wife has access to a 401k then she should be maxing it out. Even if she's able to max that out at $15,500 you should still look into those tax deferred plans for self-employed people that were mentioned earlier as well as a taxable account perhaps at Vanguard. You have a long way to go but if you get started right a way and put things on automatic then you should be fine. When I say automatic I mean when you set up your accounts, have the money automatically taken out of your paycheck or checking account so you don't have to think about it it just happens. Good luck.

 

[FUEGO]

I'm making some assumptions, but you are probably not making anything in real terms on your CD's after you factor in taxes and inflation. That may be ok as long as it is a cash reserve to support you and your family during rough periods in your business. Small business owners typically need a larger cash reserve than w-2 employees since economic downturns can disproportionately impact business owners cash flow.

 

[FinanceDude]

I guess you would call it rainy day money .. and I will settle for 5% growth while knowing the money will always be there in CD's (FDIC INSURED) .. it could also be my cash reserve if the business has problems .. in this economy you never know !

Don't count on 5% going forward..........

 

[mountaintosea]

... BUT My question to any one of you guys or gals is .. with the way Im going with saving and trying to almost debt free , would you think Im on the right track to retire early ? Like at 55 ? ..

My answer would be yes. You are planning for it. Your wife is planning for it. My guess is that you will be able to retire sooner than you think. Many on this board retired sooner than they originally intended. I think having this board as a quasi support group helps people focus more on their goals. I think a lot of us are/were surrounded by co-workers or naysayers who consume their entire income and then some every month!

 

[Rambler]

Welcome.

You still have a few things to figure out. For example, do you know what you want to do when you punch out? How much money do you think you will need for living expenses...figure it out in today's dollars then use a spreadsheet or calculator and your best guess at inflation to figure what that will be in 17 years. Consider how long you will live after that (did your parents/grandparents live long healthy lives, etc). Plug that into FIREcalc, along with your estimate of how much you will be able to set aside by then.

As an example, if you are able to live on 60k pre-tax, you will need 108k pre-tax in 17 years to accomplish the same spending level as today, if you assume 3.5% inflation. If you assumed you needed to plan to live to age 90, and wanted at least a 90+% chance of success based on FIREcalc's monte carlo methodology, you would need approx 2.7m in assets earmarked for retirement. Note that 108k is 4% of 2.7m, which is the SWR that is common to many on this forum (not me...I'm a little more conservative).

So, the ball is back in your court...how much do you need to spend based on your tastes and preferences, and how are you going to fund it?

Good luck, and hope to hear more from you.

Rambler