15 years is a long time, but at least it won't be 40...

[El Jacinto]

Hello everyone!

I discovered the FIRE movement a year ago or so and have made a lot of changes since then. I'm starting a little late, as I didn't even graduate college until I was 30 (currently 31). My wife is a teacher, and I am a Tennessee state government auditor. We have a 1 year-old child as well.

Assets
Cash: 14,000
Investments
-Roth IRA: 19,500
-401(k)s: 28,700
-457(b): 11,200
-HSA: 4,800
Home (market): 338,000 (median in my county is $290k)

Liabilities
Home: 311,400 (3.875%)

Net Worth: 104,800

Investments are 100% stocks in index funds.

Income between the two of us is about $100k, and we are investing just shy of $50k per year, though we've only been going at it for a year now.

Since we are both government employees, we don't expect hefty pay raises at any point, and the benefits (of my job in particular) are too good to leave behind. I've toyed with the idea of starting a business on the side, but fear, time constraints, and laziness have prevented me from getting serious about anything.

I don't really have any questions, though I'll always welcome help. I'm mostly just looking for like-minded people to share the journey with. I'm projecting that it'll take 15 years at our current pace to reach a point where we can safely RE.

 

[ckelly78z]

Welcome to the forums, where we embrace the "better late than never" idea. The point is to actually start making the proper moves to ensure a comfortable future, which sounds like you have done.

You may want to look into diversifying your investment portfolio, and start making a plan to pay off debt quicker....glad you are here.

 

[intent]

Congrats on beginning your journey. With that income and savings rate you sound like you're off to a great start.

One small bit of advice, if you stay on pace and you're 46 when you RE, you'll need funds to cover your annual spend until you can access your tax-advantaged accounts. I'm not sure if your $14K cash fits into that bucket, or if that really is cash (i.e., no growth) and it's simply your emergency fund. Of course, if you're planning on downsizing your home equity could help fund the "gap" years as well. I just know from experience that my wife and I plowed money into tax-advantaged accounts and have had to play some catch-up to try to accumulate enough penalty-free money to cover until we're 59.5.

You have plenty of time though and you're definitely on the right track.

 

[street]

I have just one comment and I don't think you are late for the game at all. You will do just fine with a plan and set some goals. You are well on your way to become FIRE.

Great job!

 

[El Jacinto]

Congrats on beginning your journey. With that income and savings rate you sound like you're off to a great start.

One small bit of advice, if you stay on pace and you're 46 when you RE, you'll need funds to cover your annual spend until you can access your tax-advantaged accounts. I'm not sure if your $14K cash fits into that bucket, or if that really is cash (i.e., no growth) and it's simply your emergency fund. Of course, if you're planning on downsizing your home equity could help fund the "gap" years as well. I just know from experience that my wife and I plowed money into tax-advantaged accounts and have had to play some catch-up to try to accumulate enough penalty-free money to cover until we're 59.5.

You have plenty of time though and you're definitely on the right track.

The 457(b) can be accessed penalty-free at any age, as long as I am no longer employed at the same entity. If I were to stay with my current employer for the next 15 years, that account alone would last until my early 60s. If I leave sooner, it should at least provide a buffer so that I can set up a Roth conversion ladder.

 

[HI Bill]

Welcome! 46 isn't late to RE, IMHO! My goal was age 50, but I think 45 to 50 is an ideal range for most... Since a lot of folks start to have health problems at ~47-48 years of age, the earlier, the better! Keep up the $50K in annual investments! But don't forget to live along the way....take some trips, do meaningful things with your family. You never know how long you have on this planet, or how long your health will hold out. Balance in everything!

 

[foxfirev5]

Welcome. IMHO you're doing great. Keep it up and you'll fit right in with some of us. Enough to be comfortable and know when it's enough.

 

[El Jacinto]

Welcome! 46 isn't late to RE, IMHO! My goal was age 50, but I think 45 to 50 is an ideal range for most... Since a lot of folks start to have health problems at ~47-48 years of age, the earlier, the better! Keep up the $50K in annual investments! But don't forget to live along the way....take some trips, do meaningful things with your family. You never know how long you have on this planet, or how long your health will hold out. Balance in everything!

Thanks!

We've started trying to take more trips, paid for by credit card bonuses. However, as we learned last week, it's very difficult to enjoy a vacation with a baby in tow.

We have some hobbies that we enjoy, though the wife does feel...deprived...occasionally. I think that's just because our favorite hobby is going to hockey games, so the off-season gets pretty boring.

 

[Mdlerth]

On the path to become Daddy Warbucks

I'm starting a little late, as I didn't even graduate college until I was 30 (currently 31)...

Income between the two of us is about $100k, and we are investing just shy of $50k per year, though we've only been going at it for a year now...

Since we are both government employees, we don't expect hefty pay raises at any point, and the benefits (of my job in particular) are too good to leave behind. I've toyed with the idea of starting a business on the side, but fear, time constraints, and laziness have prevented me from getting serious about anything.

I don't really have any questions, though I'll always welcome help...

Lemme get this straight. You're scoring 100 large, saving & investing half of it even with your hands full of toddler, and yet your introductory post is awash in apologies?

Leapin' lizards, Sandy! You could be teaching the class!

Welcome to the forum. I look forward to learning from the Master.

 

[Katiek]

Welcome! I agree that you are doing great. Clearly this forum is interested in retirement and values the security that comes with financial independence, but as others have mentioned, don't let those goals get in the way of enjoying the process along the way. You mentioned starting up a side gig, but consider how much time that might take away from your time with your young family. No amount of money can buy back that time.



Clearly you have mastered the main trick which is avoiding lifestyle creep. Keeping your savings rate high and investing consistently over time will pay off nicely over time.

 

[pjigar]

Taking the red pill is the first step. Welcome!

 

[brokrken]

Congrats, looks like a really great start. I would only offer a few things to make sure you consider in your FIRE budget. According you your plan, 2 years into FIRE, your child could be headed off to college. That's no small expense. Also, FIREing so early means that you'll have nearly 20 years of health insurance to cover before Medicare kicks in, which, depending on where you live could be substantial (like $25k/yr for you and DW!).

 

[MarieIG]

I will let you get your financial advise elsewhere. To me, you seem to be doing well.

In light of your title - plan for the future, but live in the present. In other words, don't waste one more minute on regrets for starting late. Enjoy your life and family now.

 

[pb4uski]

You're doing great.... at this point your challenge is to balance saving for retirement and living life... you might get a copy of Quicken Deluxe (or higher) and check out Quicken Lifetime Planner... after you have a solid plan then use quicken to monitor your progress.

Hockey season is on! I went to a good D1 Ivy League scrimmage game just this afternoon. Sparsely attended and we sat at the end behind the goal that the home team shots on in periods 1 and 3... wouldn't you know... of 6 goals scored in the game all 6 were at the opposite end. Still... saw some really good talent.

 

[pb4uski]

.... plan for the future, but live in the present. In other words, don't waste one more minute on regrets for starting late. Enjoy your life and family now.

Amen. I had a great uncle who scrimped and saved his entire working career for his retirement... retired and dropped dead while mowing the lawn less than a year later... sad.

 

[BaseballDad1618]

The 457(b) can be accessed penalty-free at any age, as long as I am no longer employed at the same entity. If I were to stay with my current employer for the next 15 years, that account alone would last until my early 60s. If I leave sooner, it should at least provide a buffer so that I can set up a Roth conversion ladder.

Welcome! I’m a year older at this point and have two kiddos, but it’s fun seeing and reading about your journey thus far and plans looking ahead. As others have posted, college expenses for the little El Jacinto must be thought out and my only other comment is in regards to your 457b comment. I am blessed to be considered a highly compensated employee at our firm and an option for me is to also contribute to a 457b along with our 401k. I really enjoy the aspect of penalty free withdrawals on the 457b but one major aspect with your ER retirement date is those withdrawals are taxed as income immediately upon withdrawal.

Loving your journey thus far, don’t let that lifestyle creep get you! (I fight it everyday) Keep us updated!

 

[rodi]

Most impressive start. I didn't start saving seriously till early/mid 30's and managed to pull the rip-cord at age 52... so it can be done. (Though you are on an earlier retire track than I was.)

One question - since you and your wife both work for government entities... do you have pensions in your future? That can be a nice safety net to your retirement planning.

 

[El Jacinto]

Congrats, looks like a really great start. I would only offer a few things to make sure you consider in your FIRE budget. According you your plan, 2 years into FIRE, your child could be headed off to college. That's no small expense. Also, FIREing so early means that you'll have nearly 20 years of health insurance to cover before Medicare kicks in, which, depending on where you live could be substantial (like $25k/yr for you and DW!).

I'm not sure how we'll handle college or healthcare yet. That's all a long time from now, so I'm sure the political climate and system will change so much that planning now will be pointless.

As far as college goes (if things do not change between now and then), I do not know what our plan is. Our state offers free community college, which will be an expectation. Beyond that, we may assist, but we certainly won't pay 100%. I went to college debt-free via the military, and my wife worked through college and didn't have to take student loans until her final year (student teaching took away the ability to work). I see no reason why I should expect my son to be less resourceful than we were.

Healthcare? We'll cross that bridge when we get to it. We may need additional money to account for it; we may geo-arbitrage; or we may have some form of universal healthcare by then. Under the current system, we could probably keep retirement withdrawals low enough to qualify for ACA subsidies.

Most impressive start. I didn't start saving seriously till early/mid 30's and managed to pull the rip-cord at age 52... so it can be done. (Though you are on an earlier retire track than I was.)

One question - since you and your wife both work for government entities... do you have pensions in your future? That can be a nice safety net to your retirement planning.

Our pensions each get 5% of our salary put into them with a 5 year vesting period. The interest rate appears to be 5%. If we were planning to retire in 15 years, not leave our current jobs, and get raises in line with inflation, the combined balance would be ~$150k at retirement, which is a nice little addition.

It's something we'll look at more closely as we get closer to that point, but I would expect that the annuity payment would be pretty low on that balance for a ~45 year old, and there's currently no lump sum option for the online application.

 

[lordjust]

I'm not sure how we'll handle college or healthcare yet. That's all a long time from now, so I'm sure the political climate and system will change so much that planning now will be pointless.

As far as college goes (if things do not change between now and then), I do not know what our plan is. Our state offers free community college, which will be an expectation. Beyond that, we may assist, but we certainly won't pay 100%. I went to college debt-free via the military, and my wife worked through college and didn't have to take student loans until her final year (student teaching took away the ability to work). I see no reason why I should expect my son to be less resourceful than we were.

Healthcare? We'll cross that bridge when we get to it. We may need additional money to account for it; we may geo-arbitrage; or we may have some form of universal healthcare by then. Under the current system, we could probably keep retirement withdrawals low enough to qualify for ACA subsidies.



Our pensions each get 5% of our salary put into them with a 5 year vesting period. The interest rate appears to be 5%. If we were planning to retire in 15 years, not leave our current jobs, and get raises in line with inflation, the combined balance would be ~$150k at retirement, which is a nice little addition.

It's something we'll look at more closely as we get closer to that point, but I would expect that the annuity payment would be pretty low on that balance for a ~45 year old, and there's currently no lump sum option for the online application.

Your gov pension will only be a "total" of $150k after 15 years? I have friends that have a gov (state) pension and its $100k per year. Am i not understanding?

 

[Timeisprecious]

Welcome to the forums, where we embrace the "better late than never" idea. The point is to actually start making the proper moves to ensure a comfortable future, which sounds like you have done.

You may want to look into diversifying your investment portfolio, and start making a plan to pay off debt quicker....glad you are here.

I agree, and I'm glad you're here as well. Welcome.

 

[El Jacinto]

Your gov pension will only be a "total" of $150k after 15 years? I have friends that have a gov (state) pension and its $100k per year. Am i not understanding?

I'm probably misunderstanding and misrepresenting it. The $150k is the value of all the contributions and interest over our careers, so I'm assuming that will be the NPV at the time we retire. I don't know how the payout works, except that neither of us can start drawing from it until we are 60 years old.

 

[Finance Dave]

Welcome and congrats! You are focused and on the right track. There will be unexpected bumps along the way, so have a rainy day fund just in case...maybe 4-6 months of expenses in a liquid account. Consider diversifying your portfolio a bit more as it grows. For example, do you have any international stock funds? Right now your house diversifies you into real estate...as your NW grows that will become a smaller portion...I like having about 15-25% of our NW in real estate so we have purchased rentals over time. if landlording is not for you, another option is REITs or REIT funds.

Keep on truckin' !!