33 Trying to gauge how much longer to work

[ShieldWolf13]

I am 33 years old living in Charlotte, NC. I have been with my wife since college and we are expecting our first (likely only) child in February. Financial independence has long been a goal of mine, particularly seeing the large role financial constraints played in my family growing up.


Our current approximate stats are:
Checking/Savings accounts $93k
401ks/IRAs $750k
Roth IRAs $100k
After-tax brokerage $210k
I-bonds $20k (just started this year as CPI-U remains elevated)
Home equity $230k


Using a 4% withdrawal rate, this would already have us around $47k in yearly income. Although we make around $300k in total, a lot of my compensation is weighted in Jan/Feb so we will actually be over $50k on the 4% withdrawal assuming the market returns 0%.


We are good on most expenses but not as good as we would need to be if we retired now. We make around $300k together and probably spend close to $100k. There is alot of spending on my side (particularly pre-covid) on going out with friends to sports, concerts, or fancy dinners.


Our current mortgage is around $2.2k making retiring tight at current rates, but it may be beneficial to move to closer to family outside of Columbia, SC later on to both save money and have more childcare help. We live in a great house that is a short walk from the local train station, so moving to the suburbs is not super appealing. Yet, a lot of the reasons for living in Charlotte would vanish if we no longer worked.


I think the biggest concern we would have with early retirement is the health care angle. My wife has some longer term issues and I recently have become aware of some foot issues that will likely involve surgery. Very curious how people's experiences have been with plans on the ACA exchanges.


Neither of us particularly like our jobs, but I make 2x my wife's compensation so it probably would make sense for me to continue working for a bit. I don't think paying $2k a month for childcare is a great idea and I think it would be important to be able to be there for our upcoming child. I worry about the stress for either of us balancing that with our careers for too long.


So the basic question is for any advice or questions that could help sharpen my thinking around next steps. I recognize we are in a great place on a lot of angles and am uncertain how much longer we should be trading our time for money.



Thanks for reading.


-Randy

 

[RetiredHappy]

If your question is whether you can both stop working and I think you know the answer already, which is no. Being so young and with a child to bring up, I would be looking at 1% withdrawal and certainly no more than 2%. There are 3 decades of health insurance to buy before Medicare. Your wife can certainly stop working while you make your $200K a year. How many more years do you need to work, many more... You also need to track your expenses and see how much you actually spend each year. Expenses don't go down in retirement simply because you want to spend less.

 

[Koolau]

Suggestions (not advice):

1) Be absolutely certain you are both on the same page as far as your direction.
2) I think the suggestion for you to continue while DW does the primary child care is probably valid. Read up on the "downsides" of both parents w*rking. I think it might have been Scott Burns and/or Laurence Kotlikoff who had a whole treatise on the cost of both members of a couple w*rking. IIRC it could actually cost money in the long run (the treatise talked about eventual effects upon taking Social Security).
3) Cut the 4% withdrawal rate in half at your age.
4) Consider downsizing and/or moving to LCOL area upon retirement (or earlier.)
5) What RetiredHappy said
6) Don't forget, YMMV.

 

[DrRoy]

Good advice above.

 

[street]

Suggestions (not advice):

1) Be absolutely certain you are both on the same page as far as your direction.
2) I think the suggestion for you to continue while DW does the primary child care is probably valid. Read up on the "downsides" of both parents w*rking. I think it might have been Scott Burns and/or Laurence Kotlikoff who had a whole treatise on the cost of both members of a couple w*rking. IIRC it could actually cost money in the long run (the treatise talked about eventual effects upon taking Social Security).
3) Cut the 4% withdrawal rate in half at your age.
4) Consider downsizing and/or moving to LCOL area upon retirement (or earlier.)
5) What RetiredHappy said
6) Don't forget, YMMV.

Great advise.

 

[Aerides]

I am 33 years old living in Charlotte, NC. I have been with my wife since college and we are expecting our first (likely only) child in February. Financial independence has long been a goal of mine, particularly seeing the large role financial constraints played in my family growing up.

Our current approximate stats are:
Checking/Savings accounts $93k
401ks/IRAs $750k
Roth IRAs $100k
After-tax brokerage $210k
I-bonds $20k (just started this year as CPI-U remains elevated)
Home equity $230k

Using a 4% withdrawal rate, this would already have us around $47k in yearly income. Although we make around $300k in total, a lot of my compensation is weighted in Jan/Feb so we will actually be over $50k on the 4% withdrawal assuming the market returns 0%.

You are 33 with a child on the way, so throw away the idea of the 4% rule - that's designed for a 30 year retirement, someone retiring at 55 or 60, not a 60 or 70 year retirement. And throw away the idea that your expenses will stay anywhere close to $47k once you have a child, and are paying for your family's healthcare. And sometimes you need a new car, or a new roof, or something...every few years there's always something.

And of course, you have over 25 years before you can tap into your 401k bracket, so you need 25 years of expenses covered in the rest.

I would never move primarily for the child care, your parents might not be up to the task, or want it, but having family around is certainly always a net positive. As far as your wife staying home, if she's on board with that, great, but it's probably good to check that she's got the minimum time done in the workplace for SS and Medicare on her own. I think planning for at least you to stay working until ~40 will leave you with a far more robust plan, more realistic expectations of expenses with a child, ensuring college savings are setup, and so on.

And you're 33, so you can't be THAT burned out yet. Plus, you can try other companies/careers with much greater ease at your age than someone over 45.

 

[Going camping]

While I would be uncomfortable leaving the workforce with the amount of untouchable money you have until you're 59.5 along with your current lifestyle spending, I believe you can make preparations to get where you want to be and to be there in a few short years.

Have you read the Root of Good blog? He used to post on this site, but I cannot remember his user name. He retired at 33 and lives in NC with his wife and 3 children. He lives a very frugal life and seems very happy.

Best wishes to you as you move toward FIRE.

 

[pb4uski]

33 yo with only ~$1.2, in liquid assets is way to early to think of retirement or even financial independence. If you want financial independence, you need to keep working and saving.

What probably makes the most sense is for you to keep working and your DW to become a SAHM and take care of kiddo and become CEO of the ShieldWolf household.

[-]A $2.2m home sounds a bit extravagent but [/-]you have very good savings for your age so you must be living within your means... keep it up.

If you don't like your job, look for another one or a different role with your current employer... now is the time as it is an employee's market right now.

Buy a copy of Quicken Deluxe (or higher) and use Quicken Lifetime Planner, devise a plan for financial independence and then use Quicken to monitor your progress.

 

[Koolau]

But just in case we all sound a bit negative, I am impressed with your savings and your drive to be free as early as possible! You and the other young people who listen to us old codgers need to set your own goals and plans. We're glad to critique anything (and do ) but you're the ones in charge of your lives. Don't let us deter you. If you want something badly enough, you will find a way to make it happen.

Keep us posted on your progress. We're here to help (sometimes, me thinks, a bit too much).

 

[RetiredHappy]

A $2.2m home sounds a bit extravagent but you have very good savings for your age so you must be living within your means... keep it up.

OP said mortgage is $2.2K a month, with 230K in home equity.

 

[pb4uski]

OP said mortgage is $2.2K a month, with 230K in home equity.

You are right.... I totally misread it.... edited my post.

 

[pjigar]

Suggestions (not advice):

1) Be absolutely certain you are both on the same page as far as your direction.
2) I think the suggestion for you to continue while DW does the primary child care is probably valid. Read up on the "downsides" of both parents w*rking. I think it might have been Scott Burns and/or Laurence Kotlikoff who had a whole treatise on the cost of both members of a couple w*rking. IIRC it could actually cost money in the long run (the treatise talked about eventual effects upon taking Social Security).
3) Cut the 4% withdrawal rate in half at your age.
4) Consider downsizing and/or moving to LCOL area upon retirement (or earlier.)
5) What RetiredHappy said
6) Don't forget, YMMV.

I was in your boat when I was your age: "Fantasizing" about retirement! Everything Koolau and others said was the path we choose to take. I changed my job and found the one that played off my strengths with a very little stress. DW stopped working to take care of the kids. Life became a lot less stressful after DW stopped working. Expenses kept going up steadily into 40s and stabilized now. Our priorities and interests evolved over time. I could have never been happy if we "retired" when we were "Fantasizing". YMMV. FWIW We are finally going to FIRE at 50.

 

[gotlost33]

Pretty sure healthcare is one of the top concerns for any aspiring early retiree, and the further from Medicare age the bigger the concern. Healthcare costs are likely to keep going up until the US comes up with a long term plan there.

Make sure your wife is onboard with the potential SAHM plan (and ER) as this requires sacrifices from both of you.

Get to know your spend/expenses well - you seem to have enough income to cover readily now, but you want solid data to know what you will need (plus extra) before you decide to shutoff that income stream. IRA/401k balances are looking great, but you've got a lot of years before you can access those dollars without penalty.

 

[Closet_Gamer]

You're off to a great start.

Agree with others that its way too early to think about retirement.

A few thoughts:

1) Get a glass (bottle?) of wine and really stare down the costs of sending a kid to college. Make it a cheap bottle of wine, when you're done you will want to put what you saved on the wine into a college fund.

2) You're young...your primary goal should be to buy yourself options rather than foreclose them. One kid can lead to two. Parents need help. You're starting from a such a strong position, don't accidentally close down option.

3) I'd suggest setting a very specific goal in the future including a target lifestyle, fully analyzed college spending, etc. Focus on 50 perhaps.

4) Never forget that life is to be lived and the unexpected will happen. Enjoy the family. Live well. Give to charity. Be balanced.

My $0.02

Good luck!

 

[pacergal]

.....



We are good on most expenses but not as good as we would need to be if we retired now. We make around $300k together and probably spend close to $100k. There is alot of spending on my side (particularly pre-covid) on going out with friends to sports, concerts, or fancy dinners.







-Randy

....


For a spend of $100,000, you need close to 2 million in savings.
You need to work and save more. Plus, adding children costs money.
Very good advice from others here on the forum.
Review your budget, look at lowering spending now.
Keep you goals ahead of you.
You will get there, but not yet.

 

[Good_Life]

ShieldWolf13 I think you are doing great. I am 38 with three young kids with about $1.4M, but our income is less than half of what you are making. Your income is impressive, and that income directed in the right ways and a kind market (cross fingers) I think you can position yourself to have a nice early retirement. With a new baby coming though your priorities and outlook on life will definitely change (I know mine did).

My wife and I both worked while raising our 3 children who are now all in elementary school. However, my wife works only part time and my job has a lot flexibility in its daily schedule and plenty of PTO, which helps a lot with appointments/activities/sickness etc. If you two both have demanding stressful jobs, there are so many benefits to having one stay at home or finding a job that is PT/more flexibile as others suggested. Its just a better, less stressful environment to raise a child in and any action you can do to help make that happen will benefit everyone's well being.

I would of course also look at your portfolio. We all have different risk tolerances and I don't know how much fixed income you have in your 401(k)/Roth etc. but it look like your portfolio might be more on the conservative side for a person so young.

 

[SnowballCamper]

You're doing great... I'd say let your wife stay home with the kid (if that is what she wants) and sock away half your earnings... live as frugally as you would in retirement for the next ten years, and you'll likely be ready then.

 

[Taxman59]

At my first read, I thought this was my eldest son writing. 31, first child, 2 good incomes, similar housing. He and I have talked some about FIRE, and staying at home (he might and "let" her work!). You will need over $2.5 million with your current spending (don't forget about taxes), and that doesn't include the added costs of a child (think 2 hotel rooms, 2 bedroom condo. an extra plane ticket etc.) plus food, clothing and when they want to head off to college, outside of state schools (and North Carolina has great ones), that is a huge cost. I would hold out until you have about $3.5 million, or you have cut your spending down to a 2-2.5% WR. And these numbers will change with a second child. YMMV

 

[Surewhitey]

Wow, at 31, you're doing great. I was 6 years into my marriage and maybe half of where you are. @50, I'd say maybe...just too many what-ifs at your age. You're making a great salary, so keep at it.

As mentioned, really hone down your expenses for the next couple of years and really understand the baseline of this. We spend less than $50k annually with no debts and are still thinking about it...I couldn't do $100k personally even at 50 & our assets and feel comfortable.

 

[Bigdawg]

and that doesn't include the added costs of a child (think 2 hotel rooms, 2 bedroom condo. an extra plane ticket etc.) YMMV

2 hotel rooms? I'm confused.

 

[Koolau]

2 hotel rooms? I'm confused.

I'm assuming this is a few years down the road. We always had an extra hotel room for the kids when we traveled. YMMV

 

[RetiredHappy]

The beauty of timeshare... we always book a 2BR-2BA villa and cost a fraction of a hotel room, let alone 2 hotel rooms.

 

[ivinsfan]

The beauty of timeshare... we always book a 2BR-2BA villa and cost a fraction of a hotel room, let alone 2 hotel rooms.

I'm starting to think you work for a timeshare company on the side. Last time I looked condos were also priced by size and amount of people you need to sleep. You have zero idea what the hotel rooms cost compared to what you pay. How about staying on topic.

 

[RetiredHappy]

I'm starting to think you work for a timeshare company on the side. Last time I looked condos were also priced by size and amount of people you need to sleep. You have zero idea what the hotel rooms cost compared to what you pay. How about staying on topic.

You are funny. My advice to everyone buying their first couple of timeshare, only buy resale! You can pick up some good ones for just $1.

 

[ivinsfan]

You are funny. My advice to everyone buying their first couple of timeshare, only buy resale! You can pick up some good ones for just $1.

I have a timeshare loving SIL who can literally work the word "timeshare" into any conversation, anywhere.. You run a close second..