36/38 Trying to Balance Now vs Later

[aj44]

My wife and I both got serious about saving 7 years ago, not that we didn't save anything in our 20's but really hit the accelerator at 30. The last couple of years we have been trying to balance living in the now versus early retirement. My wife is a fed so won't have full retirement benefits until 57 so it would be difficult walking away from all of those benefits and retiring before then. Here are our numbers:

Age: 36/38

Kids: None

State: IL

Housing: Currently Rent at $1750 per month (no desire to buy again until retirement, personal choice)

Debt: none

Retirement Location: TBD

Desired Retirement age: 55/57

Net Worth 915k (715k retirement accounts, 200k taxable accounts)

Income: 265k/year (includes two salaries, dividends and interest)

Expenses: 78k (38k bills, 40k discretionary)

Yearly Savings: 137k (62k retirement accounts which also includes employer contributions, 75k taxable accounts)

Asset Allocation: 83% stock, 17% bonds (120 minus age)

Wife's job is extremely safe, mine is pretty safe.


At this point with our savings trajectory I know we can easily retire by 55/57 however the temptation will also be there to retire earlier and forego a lot of benefits. We do want to do a lot of traveling at retirement so I can definitely see our expenses potentially increasing. We have increased our discretionary spending the past couple of years to go on more vacations and to enjoy more things in life. The main reason for joining this site is I want to read others stories to stay motivated, I don't have any specific questions at this point and look forward to reading the threads.

 

[exnavynuke]

At your current rate of savings, you'd need ~2.5M to have a 3% withdrawal rate in order to cover your current expenses. Quick math tells me that without any investment growth, you're current savings rate will put you around 3.5M at 55/57. As such, I'm guessing if nothing changes between now and then, you may want to consider moving that retirement date up some

 

[DrRoy]

You look to be in pretty good shape. How early to go is something that you have time to consider.

 

[socca]

Welcome!

Your post stimulated me to do take a look at my 2017 budget with respect to the rent vs own question. My housing budget (house is paid off) shows $10.4k / year, which includes property taxes, homeowner's insurance, HOA fee, allocation to reserves for A/C replacement, roof replacement, and misc repairs/replacement (total $5.5k / yr - a healthy sum).

A comparable house to rent in my area is ~$2k / mo or $24k / yr.

So, on a comparable cash flow basis I'd be hemorrhaging about ~13k / yr if I chose to rent - ouch!

I'm not claiming that your decision to rent is wrong, since this is a lifestyle decision as well as a financial decision. However, it's always useful to keep an eye on the numbers.

Good luck!

P.S. Of course, I'm ignoring any income / appreciation I might get from the money I otherwise spent on the house, so my analysis is not quite apples-to-apples.

 

[FIREmenow]

P.S. Of course, I'm ignoring any income / appreciation I might get from the money I otherwise spent on the house, so my analysis is not quite apples-to-apples.

A good summary here: Renting vs. Buying: The True Cost of Home Ownership - Can I Retire Yet?