Hello new to the site, seeking some advice/opinions.

[Thebttmline]

DirtBiker,
In your OP from a couple of years back, you mentioned experts recommending having retirement income around 80% of pre-retirement income - and that you were hoping for more like 100%+ so you would have more for play/travel. I don't think those 80% types of guidelines work well at all for aggressive savers, which it sounds like you are.

Once you are retired, you will no longer be
- funding retirement accounts
- paying FICA tax
- paying down student debt (hopefully)
- paying a mortgage (possibly)
- paying for kid expenses / saving for their college (hopefully)
If those expenses are 1/2 of your income, and they all go away by the time you are retired, then you would need 50% of your current income to have the same disposable income that you have now. i.e. You could live the same lifestyle you are accustomed to on half the income in retirement.

In addition, if your income dropped 50%, you would also be paying a lot less income tax, so that is another expense that while not going away completely, would drop considerably.

You may have some costs that go up (health insurance) and you may travel more / spend more on play than you do now. But regardless, basing your retirement spending upon your current spending that includes all of those items that will go away is not terribly meaningful, IMO.

I'd suggest you take your current gross pay and subtract out those expenses that will be going away. Then add to that $X,000 - your estimate for how much you might want for extra travel, etc. beyond what you do today. Depending on your situation, you may want to increase what you currently spend on health insurance. That type of estimate will likely be closer to the income replacement number you need.

This is the beauty of a Live Below Your Means lifestyle during your working years. You don’t need to replace as much income since you were not using all of it to live your current lifestyle.

 

[dirtbiker]

DirtBiker,
In your OP from a couple of years back, you mentioned experts recommending having retirement income around 80% of pre-retirement income - and that you were hoping for more like 100%+ so you would have more for play/travel. I don't think those 80% types of guidelines work well at all for aggressive savers, which it sounds like you are.

Once you are retired, you will no longer be
- funding retirement accounts
- paying FICA tax
- paying down student debt (hopefully)
- paying a mortgage (possibly)
- paying for kid expenses / saving for their college (hopefully)
If those expenses are 1/2 of your income, and they all go away by the time you are retired, then you would need 50% of your current income to have the same disposable income that you have now. i.e. You could live the same lifestyle you are accustomed to on half the income in retirement.

In addition, if your income dropped 50%, you would also be paying a lot less income tax, so that is another expense that while not going away completely, would drop considerably.

You may have some costs that go up (health insurance) and you may travel more / spend more on play than you do now. But regardless, basing your retirement spending upon your current spending that includes all of those items that will go away is not terribly meaningful, IMO.

I'd suggest you take your current gross pay and subtract out those expenses that will be going away. Then add to that $X,000 - your estimate for how much you might want for extra travel, etc. beyond what you do today. Depending on your situation, you may want to increase what you currently spend on health insurance. That type of estimate will likely be closer to the income replacement number you need.

This is the beauty of a Live Below Your Means lifestyle during your working years. You don’t need to replace as much income since you were not using all of it to live your current lifestyle.

We've been talking about this recently, about how much we actually do need, especially since we'll each have a pension and (maybe) SS. And I absolutely won't retire with debt, unless I'm medically forced to. So I won't have student loans or a mortgage to deal with. We may find that we can retire comfortably on much less than our initial estimates. However, we do still want to be able to retire comfortably with lots of travel. We've both agreed that we're willing to work longer for a more luxurious retirement. So our plan is to keep on aggressively saving, and once we get to the point that we're comfortable retiring, to do so.

 

[dirtbiker]

Update at the two year mark:

I updated a couple of months ago, but figured I'd update at the two year mark, and probably annually. We had a few good investments, some work on student loans, and further home appreciation, so we've actually increased our net worth pretty significantly over these last couple of months.

From 4/2019:
Assets:
My current 401k: $10,000
My old 403B from residency: $25,000
Our brokerage account: $50,000
Her current 403B: $10,000
Her old 401K: $70,000
Her mutual fund: $60,000
Home value: $300,000
Total assets: $525,000

Liabilities:
My student loans: -$440,000
Her student loans: -$70,000
Mortgage: -$220,000
Total liabilities: -$730,000

Total Net Worth: -$205,000


Today 4/2021:
Assets:
My current 401k: $104,000
Her current 403B: $153,000
Our brokerage accounts: $165,000
My Roth: $24,500
Her Roth: $16,000
Home value: $440,000
Hard assets: $30,000
Total assets: $932,500

Liabilities:
My student loans: -$335,000
Her student loans: -$80,000
Mortgage: -$194,000
Total liabilities: -$609,000

Total Net Worth: $323,500

Net worth increase from 4/2019: +$528,500

 

[ut2sua]

We could definitely decrease discretionary spending, but I don't know that either of us really want to. We both spent a lot of time living lean, and know how to, and not having to do that is really nice right now.

OP, you are on the right track. Your thinking is on the right track. You will be fine sooner than you think with a healthy NW 10->15 years from now. IMO, you have done the hard part, don't forget to live a reasonably comfortable life style now (current living is living too, don't give up too much just for RE). You should not worry too much about the negative NW right now. That has been part of your plan right (good plan BTW)? Just continue to contribute and invest wisely and don't jump when the market does its things. You will be in excellent shape. Cheers

 

[socca]

Update at the two year mark:
...

Today 4/2021:
Assets:
My current 401k: $104,000
Her current 403B: $153,000
Our brokerage accounts: $165,000
My Roth: $24,500
Her Roth: $16,000
Home value: $440,000
Hard assets: $30,000
Total assets: $932,500

Liabilities:
My student loans: -$335,000
Her student loans: -$80,000
Mortgage: -$194,000
Total liabilities: -$609,000

Total Net Worth: $323,500

Congrats on an improving balance sheet. However, as you probably know, the other key financial management tool is the profit & loss statement.

FWIW, socca inc. has been profitable for 35 straight years, and its balance sheet reflects this fact. I hope that dirtbiker inc. has similar good luck.

 

[cyber888]

Congrats. Great Progress.

 

[Golden sunsets]

I did not read your earlier posts but you are mistaking your net worth by not including the home value in your assets.

 

[latexman]

I did not read your earlier posts but you are mistaking your net worth by not including the home value in your assets.

Today:
From 4/2019:
Assets:
My current 401k: $88,000
Her current 403B: $139,000
Our brokerage accounts: $153,500
My Roth: $23,500
Her Roth: $15,000
Home value: $380,000
Hard assets: $30,000
Total assets: $830,000

Liabilities:
My student loans: -$400,000
Her student loans: -$80,000
Mortgage: -$195,000
Total liabilities -$675,000

Total Net Worth $155,000

The home value is in there.

 

[dirtbiker]

4.5 YEAR UPDATE:

It has been about two and a half years since I last updated here.

Our current net worth has increased to $700,000. Four and a half years ago we stood at -$205,000. An increase of +$905,000!

We didn't make any particularly smart investments or get any inheritance. This was done by living below our means, paying ourselves first, and consistently putting money toward our student loans. It hasn't been easy, and it's been tempting to cheat and take lavish vacations or buy new vehicles every few years, but we've consistently continued the course, and plan to continue so for the next 15-20 years, give or take, depending on how our savings accumulate.

I don't post all that often on here, but I'll update our progress every so often.

 

[Tetto]

4.5 YEAR UPDATE:

It has been about two and a half years since I last updated here.

Our current net worth has increased to $700,000. Four and a half years ago we stood at -$205,000. An increase of +$905,000!

We didn't make any particularly smart investments or get any inheritance. This was done by living below our means, paying ourselves first, and consistently putting money toward our student loans. It hasn't been easy, and it's been tempting to cheat and take lavish vacations or buy new vehicles every few years, but we've consistently continued the course, and plan to continue so for the next 15-20 years, give or take, depending on how our savings accumulate.

I don't post all that often on here, but I'll update our progress every so often.

Wow! That’s fantastic and a testament to developing a plan and sticking tonit no matter what! Great job and inspirational achievement. Ps- I’m an old dirt biker too; still riding my trusty 92 XR600R.

 

[Figaro]

Excellent work. Was curious - I'm assuming that you've got the kids in college now, how did that tuition plan work for y'all?

Are the students paying their own expenses? Any change in your view of no contribution for graduate school if they will go that direction?

Still looking at other properties or the home renovations have been enough to stay out? What kind of renovations did you do? Expansion or just interiors?

 

[DrRoy]

Very nice progress. Stick with it and you should be fine. BTW, we travel a lot and overall spend 1.5X pre-RE.

 

[dirtbiker]

Wow! That’s fantastic and a testament to developing a plan and sticking tonit no matter what! Great job and inspirational achievement. Ps- I’m an old dirt biker too; still riding my trusty 92 XR600R.

Thank you. The XR600R is a great bike! I guess my screen name really should be 'dualsporter,' as my dirt bike is a WR250R. Not a huge amount of power, but it's taken me all over the continent. I've dipped its tires into three oceans, did the Trans Taiga, the Trans Labrador, the NEBDR, MABDR, lots of long weekend trips on it, and, of course, tons of dirt riding. It's getting a bit long in the tooth, but it still runs (as long as I keep feeding it a steady diet of oil).

 

[dirtbiker]

Excellent work. Was curious - I'm assuming that you've got the kids in college now, how did that tuition plan work for y'all?

Are the students paying their own expenses? Any change in your view of no contribution for graduate school if they will go that direction?

Still looking at other properties or the home renovations have been enough to stay out? What kind of renovations did you do? Expansion or just interiors?

Thank you. My two oldest boys are in college right now, going to the college my wife teaches at. Between the faculty tuition forgiveness and my military benefits, they're going for $0 out of pocket for us, and they actually get a couple thousand dollars back each semester to cover books, spending money, etc. They commute rather than living on campus. They also each have part time jobs that they'll continue at as long as they can keep up with their studies. We won't have the military benefits for my youngest two, so we did end up setting up a 529 account to cover expenses for them that the military benefits are covering for my eldest two.

We broke out of our HOA! We sold our home and bought a house on 40 acres and started an alpaca farm and apiary. We don't expect it will ever make us enough money to even consider quitting our day jobs, but it comes with some great tax benefits, hopefully we'll turn a profit eventually, and we love it. My projects this year have been all outdoor projects - nearly a mile of fencing, a barn addition, chicken coop and covered run, apiary solar electric fence, and a bunch of others. Contrary to the FIRE mentality, we did increase our mortgage (despite moving to a SMALLER house), but we no longer have HOA fees, and this home purchase also made it possible to start our small business (the farm). We did not change our retirement contributions with the move; we just cut back to fund it.

 

[dirtbiker]

Very nice progress. Stick with it and you should be fine. BTW, we travel a lot and overall spend 1.5X pre-RE.

Thank you. Do you spend 1.5x of your pre-retirement expenses or income?

 

[dirtbiker]

Million dollar update:

Are we millionaires yet? Unfortunately not. However, our current net worth is $810k. When I started this thread five years ago, our net worth was -$200k. We've added a million dollars to our net worth!

When I get frustrated with saving, saving, saving, I'll often come back to this thread and look back at it to see the progress we've made.

As always, I'll stop back and update periodically. I'm hoping that the next update will be the true million dollar update. We'll see.

 

[old medic]

Congratulations on your progress.

 

[Rianne]

Million dollar update:

Are we millionaires yet? Unfortunately not. However, our current net worth is $810k. When I started this thread five years ago, our net worth was -$200k. We've added a million dollars to our net worth!

When I get frustrated with saving, saving, saving, I'll often come back to this thread and look back at it to see the progress we've made.

As always, I'll stop back and update periodically. I'm hoping that the next update will be the true million dollar update. We'll see.

$600K in 4 years! Congratulations! Did you adjust spending, and invest wisely? Share your secret.

 

[Ronstar]

Congrats! You’re doing fine. Relax and enjoy the ride. Retirement savings/ planning is a marathon, not a sprint. That said, time flies by and you will get there sooner than you think.

 

[dirtbiker]

$600K in 4 years! Congratulations! Did you adjust spending, and invest wisely? Share your secret.

Thank you. It was actually a $1 mil in five years, not $600k in four years. Initial net worth a was negative $200k in 2019 (I had a mistake in my calculation in the OP, where it said -125K).

I did this by paying myself first and living below our means. We don't have a household budget, besides our income. HOWEVER, I artificially limit our income by funding all retirement accounts before the money ever hits our checking account. Although we don't have a strict defined household budget, we do generally spend wisely, and don't live paycheck to paycheck.

We still have a long way to go, but we're making steady progress toward our goal.

 

[Rianne]

Thank you. It was actually a $1 mil in five years, not $600k in four years. Initial net worth a was negative $200k in 2019 (I had a mistake in my calculation in the OP, where it said -125K).

I did this by paying myself first and living below our means. We don't have a household budget, besides our income. HOWEVER, I artificially limit our income by funding all retirement accounts before the money ever hits our checking account. Although we don't have a strict defined household budget, we do generally spend wisely, and don't live paycheck to paycheck.

We still have a long way to go, but we're making steady progress toward our goal.

Great strategy. During our working years, when a bonus hit it would go directly into investments. When we hit the SS limit that difference went to investments. Our lifestyle didn't suffer. We avoided unnecessary expenses. Our goal was no debt. Once that was reached spending was in our control. House, car maintenance, and unexpected expenses are unavoidable. When we decided to gut our house and make it our own, we had control. Paid in cash. The return on that decision, well according to Zillow it was a good decision. You're young with many years ahead. Congrats!

 

[Montecfo]

Excellent update. You seem to be on a good path.

Remember, the first million is the toughest.

All the best!

 

[pjigar]

I did this by paying myself first and living below our means. We don't have a household budget, besides our income. HOWEVER, I artificially limit our income by funding all retirement accounts before the money ever hits our checking account. Although we don't have a strict defined household budget, we do generally spend wisely, and don't live paycheck to paycheck.

We still have a long way to go, but we're making steady progress toward our goal.

Like others have said, it would be a lot easier from this point forward. First million is the hardest. It was for me. Hitting first million felt like forever: over 12 years if not more. The next million was in a little over 5 years.

"Hiding money" also work for me. A little over half of my paycheck gets taken away into various investment accounts before it hits my checking account.

 

[Closet_Gamer]

Million dollar update:

Are we millionaires yet? Unfortunately not. However, our current net worth is $810k. When I started this thread five years ago, our net worth was -$200k. We've added a million dollars to our net worth!

When I get frustrated with saving, saving, saving, I'll often come back to this thread and look back at it to see the progress we've made.

As always, I'll stop back and update periodically. I'm hoping that the next update will be the true million dollar update. We'll see.

Good job rowing that boat!

Sounds like you're doing it right and seeing the fruits of your efforts. Compounding will really start to kick in as the base gets larger.

Keep going.

 

[target2019]

Thank you. It was actually a $1 mil in five years, not $600k in four years. Initial net worth a was negative $200k in 2019 (I had a mistake in my calculation in the OP, where it said -125K).

I did this by paying myself first and living below our means. We don't have a household budget, besides our income. HOWEVER, I artificially limit our income by funding all retirement accounts before the money ever hits our checking account. Although we don't have a strict defined household budget, we do generally spend wisely, and don't live paycheck to paycheck.

We still have a long way to go, but we're making steady progress toward our goal.

It's good to measure progress along the way. And you're paying into retirement aacounts before income diverts to other uses. You'll be fine. Congrats!