5 years to go..max!

[2029FIREaway]

Hello,

Admired this site and posts here. Been on Bogleheads more, but like/want to get more perspective here too.

Ages: 45 & 47. Kids: 15 & 13.
Aggressive goal: FIRE in two years.
More realistic goal: FIRE in five years.
Challenge: we’ll both want to retire together.
Liquid retirement assets: total: around $3.3M (80/20, stock/bond)
850k taxable brokerage. Roughly $2.4M in 401k & Roth.

529s: around $270k.
Expense: $190k. Private school ends next year, expenses should come down to $150k.

No debt. House in CA Bay Area. Not going to sell.

Adding roughly $100k in retirement accounts a year. Perhaps 10-20k to taxable.

Life goals: summer of 2026 off. Big summer with elder son graduating. Summer 2029 second son graduates. Really want to be done that year when I’ll be 50.

Thanks! Lmk what I’m missing.

 

[FLSUnFIRE]

The usual advice of run through FIRECalc. Looks good on the surface. At two years run the numbers, take your pulse, and decide.


Are the 529s enough and will you provide other financial support while the kids are in school/launching careers? Make sure those potential costs are factored.

 

[2029FIREaway]

Thanks for the response! 529s may be enough for 2-3 years of private college. If public it should be enough.

Good q about supporting them while they launch. Not sure how to factor that. Any tips? Cheers!

 

[HarveyS]

Do your expenses include income tax and medical premiums?

 

[2029FIREaway]

Thanks for the question Harvey.
Honest answer is No. I think I’d need to add $20k for health insurance and $20k for taxes. So back up to $190k ish a year.

Your thoughts?

Our fixed home costs are about $20k a year. $13k property tax + 7k allocation for all house bills (2k insurance, $2k pge, $2k trash and water).

Our grocery costs: likely $2k a month. = $24k a year.

Car costs: insurance plus maintainance ($3k + $2k) = $5k a year.

Other fixed costs (life insurance, plus other house bills, cleaning, pets etc). = $20k a year. Padding this number as I’m sure I’m missing things.

So my ballpark non discretionary costs = $50-60k a year?

Discretionary costs (travel, restaurants, wine, entertainment etc) = $50-80k a year. This could be a big range year on year (and has been!).

Taking the high numbers I’m already at $60k + $80k = $140-$150k. This is roughly our spend today minus private school tuition (using my bank spend analysis).

Then add health insurance and taxes and we’re in the $180 to $200k a year estimate for early retirement years.

 

[anothercog]

Hello from across the Bay (Peninsula). Looks like our timelines are aligned. As I was walking during this gorgeous sunny day, I had an epiphany on when I'll retire. I'll give my notice right after I receive my bonus in Nov 2027 and exit before my kids' spring break in March 2028. A few months shy of my 58th birthday.

Don't forget to factor in lumpy expenses like car and roof replacements, kids' weddings, etc. Your taxable account is going to need to last you about 10 years until you can start tapping your 401k/IRA so you're going to need to at least double what you have now in your taxable account.

 

[2029FIREaway]

Hello from across the Bay (Peninsula). Looks like our timelines are aligned. As I was walking during this gorgeous sunny day, I had an epiphany on when I'll retire. I'll give my notice right after I receive my bonus in Nov 2027 and exit before my kids' spring break in March 2028. A few months shy of my 58th birthday.

Don't forget to factor in lumpy expenses like car and roof replacements, kids' weddings, etc. Your taxable account is going to need to last you about 10 years until you can start tapping your 401k/IRA so you're going to need to at least double what you have now in your taxable account.

Definitely a beautiful day in our Bay Area!
Agreed, I need to plan for double in taxable to get me thru 10 pre 401k years.
That is an aggressive target! But, a goal I need to strive for.

 

[2029FIREaway]

To add:
- in 5 years time, my wife will be 53 & 7 years from 401k penalty free age (59.5). So isn’t the math 7 years of expenses in taxable that I need?

- also, we are both past second bell curve for SS. My PIA higher.
Plan is to take my wife’s SS at age 62 and my SS later between 66-70. Conservative estimate: $2k for wife at 62. $4k for me at 68.

I’m wondering how to plan finances where we don’t feel strained financially between 50-60 and then be flush with more money than we need past age 60. How could I model this better?

 

[NgineER]

Welcome to the forum!
You lump Roth and 401k together, they are very different and should definitely be in separate buckets for your accounting. Your Roth dollars are much more valuable than your 401k dollars.


You look pretty good from a brokerage perspective, how much is company stock vs. diversified?

Finally, it is a common misconception that your 401k dollars are inaccessible until 59.5, not at all, there are Roth laddering and 72t strategies that IMO should be employed, especially with a skewed brokerage, traditional 401k balance.

Ok, the last final…. I’m also a big proponent of after tax 401k contributions aka mega backdoor rollover if your 401k allows for them. Another way to fund your Roth IRA and have tax free growth. Contributions are accessible whenever and any growth is tax and penalty free after 59.5

 

[RetiredHappy]

When I looked at your first post, it struck me that you don't have enough taxable money saved.

We retired at 53 (me) and 67 (spouse). We blew through $1M in taxable money in the first 5 years when it was planned to cover 9 years. Poor discipline in spending as it was not a budgeting issue. I am 61 now and still burning through about $60K in taxable money a year until I start SS and also when Medicare kicks in. We live on about $240K a year including taxes. For a few years we spent about $300K a year when we did a ton of cruises.

We have been paying full freight for my private off exchange health insurance since 55. We got by with subsidized ACA plan for 1 year when I was 54. My current Silver plan costs $1300 per month.

If you pull your money from ROTH, it will not affect your income, i.e. ACA subsidies. But if you were to do 72t, it will affect your income and ACA subsidies.

You will likely to get subsidies with ACA plans since you have a small amount in taxable which won't throw out much dividends and capital gains.

 

[Closet_Gamer]

You are about 5 years younger than us and in many ways similar to where we were at that age.

+1 to the advice above.

I will add this ... triple check those college costs and your desires for supporting the kids' educations. There are lots of paths through the forest and lots of approaches to sharing the load of educational costs with the kids. There is also the reality that people plan and God laughs.

Our experience: We intended to support two kids through four years of private school. When the time came we had very detailed and deliberate conversations with them about the money they had to work with, the likelihood they would want a graduate degree, and built a model of after-college living expenses, earnings potential and what it would mean to have debt. I highly recommend doing this. It was hugely grounding for them.

Net result 1: they both went to out-of-state public universities, got good merit scholarships ($110k between them) and have been diligent about managing their expenses. DD1 decided to go straight into a pharmacy doctorate program (she will graduate debt free). DD2 is getting an engineering degree and will have money left for grad school.

Net result 2: Combined, we will have provided about $510k of support vs. an original plan of $475k. The increases were driven by higher rental costs and we decided to provide a little more since DD1 was going for a doctorate. We've never provided $1 of "fun money" or paid for a spring break. The $510k was all tuition, fees, room/board, and a computer each. Not included in this is the cost of a safe car for each of them.

When your kids start college things will be much more expensive than when mine started. College inflation has continued over the years and doesn't seem poised to slow down. Rental costs are brutal even if they share places with friends.

Hope that's helpful!

 

[2029FIREaway]

Thanks! I’ll try to address the points below:

Split between Roth and 401k for the $2.4M is roughly: 600k (Roth) and $1.8M ( grad 401k). Roth has been accumulated via backdoor over 10+ years and MBDR from our employers last 2-3 years.

I don’t hold any company stock. I sell as soon as any vests.

How would you balance withdrawals across the various accounts in early retirement? Something I haven’t put much thought into…

Thank you for your input and help!

Welcome to the forum!
You lump Roth and 401k together, they are very different and should definitely be in separate buckets for your accounting. Your Roth dollars are much more valuable than your 401k dollars.


You look pretty good from a brokerage perspective, how much is company stock vs. diversified?

Finally, it is a common misconception that your 401k dollars are inaccessible until 59.5, not at all, there are Roth laddering and 72t strategies that IMO should be employed, especially with a skewed brokerage, traditional 401k balance.

Ok, the last final…. I’m also a big proponent of after tax 401k contributions aka mega backdoor rollover if your 401k allows for them. Another way to fund your Roth IRA and have tax free growth. Contributions are accessible whenever and any growth is tax and penalty free after 59.5

 

[2029FIREaway]

This is very helpful experience shared. I thank you. I could be in a similar situation so need to think about this carefully. The only lever/change I can think of is to reduce retirement savings and increase taxable. Just not sure if that’s a good idea…

When I looked at your first post, it struck me that you don't have enough taxable money saved.

We retired at 53 (me) and 67 (spouse). We blew through $1M in taxable money in the first 5 years when it was planned to cover 9 years. Poor discipline in spending as it was not a budgeting issue. I am 61 now and still burning through about $60K in taxable money a year until I start SS and also when Medicare kicks in. We live on about $240K a year including taxes. For a few years we spent about $300K a year when we did a ton of cruises.

We have been paying full freight for my private off exchange health insurance since 55. We got by with subsidized ACA plan for 1 year when I was 54. My current Silver plan costs $1300 per month.

If you pull your money from ROTH, it will not affect your income, i.e. ACA subsidies. But if you were to do 72t, it will affect your income and ACA subsidies.

You will likely to get subsidies with ACA plans since you have a small amount in taxable which won't throw out much dividends and capital gains.

 

[2029FIREaway]

This is sage advice for sure. Thank you.
I really am worried about how much college will cost overall.
It could be the item that forces me not to retire at 50. That would be sad.
Should I change something now? What would you do in my situation? Save more in taxable accounts?

You are about 5 years younger than us and in many ways similar to where we were at that age.

+1 to the advice above.

I will add this ... triple check those college costs and your desires for supporting the kids' educations. There are lots of paths through the forest and lots of approaches to sharing the load of educational costs with the kids. There is also the reality that people plan and God laughs.

Our experience: We intended to support two kids through four years of private school. When the time came we had very detailed and deliberate conversations with them about the money they had to work with, the likelihood they would want a graduate degree, and built a model of after-college living expenses, earnings potential and what it would mean to have debt. I highly recommend doing this. It was hugely grounding for them.

Net result 1: they both went to out-of-state public universities, got good merit scholarships ($110k between them) and have been diligent about managing their expenses. DD1 decided to go straight into a pharmacy doctorate program (she will graduate debt free). DD2 is getting an engineering degree and will have money left for grad school.

Net result 2: Combined, we will have provided about $510k of support vs. an original plan of $475k. The increases were driven by higher rental costs and we decided to provide a little more since DD1 was going for a doctorate. We've never provided $1 of "fun money" or paid for a spring break. The $510k was all tuition, fees, room/board, and a computer each. Not included in this is the cost of a safe car for each of them.

When your kids start college things will be much more expensive than when mine started. College inflation has continued over the years and doesn't seem poised to slow down. Rental costs are brutal even if they share places with friends.

Hope that's helpful!

 

[HI Bill]

If 2029FIREaway retires at 50, then I see the need to do 72t withdrawals. This will also help reduce overall taxes as part of the income will be taxable at age 50, instead of using up all the brokerage $ first, where only a portion is taxable. Hopefully, they can get the total invested assets to $4M+ by then. On the right path!

 

[2029FIREaway]

If 2029FIREaway retires at 50, then I see the need to do 72t withdrawals. This will also help reduce overall taxes as part of the income will be taxable at age 50, instead of using up all the brokerage $ first, where only a portion is taxable. Hopefully, they can get the total invested assets to $4M+ by then. On the right path!

Thank you Bill!

I know 72T is one of the trickier paths. Is there a guide on how to do this while balancing taxable balance etc? Anything along these lines would be good reading for me. Cheers!

 

[HI Bill]

I know 72T is one of the trickier paths. Is there a guide on how to do this while balancing taxable balance etc?

This is one of the better resources that describes the potential plans, withdrawal calculations, pitfalls, and penalties (if you don't follow all the rules perfectly). Note that you don't have to use 72t for all of your tax-deferred accounts, you can just do one.

https://72tnet.com/

 

[2029FIREaway]

This is one of the better resources that describes the potential plans, withdrawal calculations, pitfalls, and penalties (if you don't follow all the rules perfectly). Note that you don't have to use 72t for all of your tax-deferred accounts, you can just do one.

https://72tnet.com/

Excellent, thanks for the link Bill!

 

[Closet_Gamer]

This is sage advice for sure. Thank you.
I really am worried about how much college will cost overall.
It could be the item that forces me not to retire at 50. That would be sad.
Should I change something now? What would you do in my situation? Save more in taxable accounts?

I would get very detailed on what this will cost and how much of the burden you want the kids to carry vs. you. I think its very hard for kids to pay their own college to the extent we did when we were younger ... college inflation has just gapped away from what kids can earn in high school & working while going to college.

You don't live in PA so you can't use this plan but their published semester cost schedule is useful. The PA Guaranteed Savings Plan maintains a rate card of what college costs in baskets of different types of schools.

https://www.pa529.com/pdf/gsp/2023-24-Rate-Card.pdf

When planning, what we did was look at the schedule for a semester cost. In the current schedule, they show a semester of four year private school costing $19,981. Two kids @ 8 semesters/kid = 16 * $19,981 = $319,696.

Now you add 40% for room/board.

$319,696 * 1.4 = $447,574.

That presumes they both get in-and-out in four years.

So based on their basket of schools they use to estimate the cost of a private university, you'd need to have $448k if they both left right now and you wanted to cover it all. We put that in the plan and updated it every year. We kept saving for college until we closed the gap to zero.

Of course:
1 - college gets more expensive due to inflation. We assumed a 3.5% inflation rate for planning purposes and we came pretty close.

2 - this does not account for scholarships/merit aid or your kids contributing along the way or them taking loans. That is a full freight number.

My suggestion is to get very specific about what you will/will not spend.

If what you currently have + growth gets you there, winner-winner. If not, I'd put it into whatever 529 gives you the best tax benefits but keeps costs low.

And when the time comes to start looking for colleges, be VERY honest with your kids about all this. If they are mature enough to go to college, they are mature involve to own how $200k+ will be invested in their future.

As you say, this is an item that can derail/delay your retirement plan. Big ticket item that has a lot of practical and emotional implications. An important one to get right. If your kid says they want to go to Harvard and you don't think you would actually say no or burden them with huge college debt, then you need to deal with that before you retire.

My $0.02. Happy to provide more if useful.

 

[NgineER]

Seems like you have a good strategy and are utilizing all vehicles to put away money. As far as balancing your withdrawals, I was just saying that you shouldn’t put it all into a tIRA and let it grow for another decade before withdrawing anything but brokerage accounts. That would skew your tax situation a lot vs having steady withdrawals to minimize or even out taxes for the long run.

Nice work on getting to an enviable position of being able to FIRE at 50!

 

[2029FIREaway]

I would get very detailed on what this will cost and how much of the burden you want the kids to carry vs. you. I think its very hard for kids to pay their own college to the extent we did when we were younger ... college inflation has just gapped away from what kids can earn in high school & working while going to college.

You don't live in PA so you can't use this plan but their published semester cost schedule is useful. The PA Guaranteed Savings Plan maintains a rate card of what college costs in baskets of different types of schools.

https://www.pa529.com/pdf/gsp/2023-24-Rate-Card.pdf

When planning, what we did was look at the schedule for a semester cost. In the current schedule, they show a semester of four year private school costing $19,981. Two kids @ 8 semesters/kid = 16 * $19,981 = $319,696.

Now you add 40% for room/board.

$319,696 * 1.4 = $447,574.

That presumes they both get in-and-out in four years.

So based on their basket of schools they use to estimate the cost of a private university, you'd need to have $448k if they both left right now and you wanted to cover it all. We put that in the plan and updated it every year. We kept saving for college until we closed the gap to zero.

Of course:
1 - college gets more expensive due to inflation. We assumed a 3.5% inflation rate for planning purposes and we came pretty close.

2 - this does not account for scholarships/merit aid or your kids contributing along the way or them taking loans. That is a full freight number.

My suggestion is to get very specific about what you will/will not spend.

If what you currently have + growth gets you there, winner-winner. If not, I'd put it into whatever 529 gives you the best tax benefits but keeps costs low.

And when the time comes to start looking for colleges, be VERY honest with your kids about all this. If they are mature enough to go to college, they are mature involve to own how $200k+ will be invested in their future.

As you say, this is an item that can derail/delay your retirement plan. Big ticket item that has a lot of practical and emotional implications. An important one to get right. If your kid says they want to go to Harvard and you don't think you would actually say no or burden them with huge college debt, then you need to deal with that before you retire.

My $0.02. Happy to provide more if useful.

Thank you! Great points and links on the college front.
Much appreciate the offer for more info. I’ll digest, discuss with the family and reach out to you if needed. Cheers!

 

[2029FIREaway]

Seems like you have a good strategy and are utilizing all vehicles to put away money. As far as balancing your withdrawals, I was just saying that you shouldn’t put it all into a tIRA and let it grow for another decade before withdrawing anything but brokerage accounts. That would skew your tax situation a lot vs having steady withdrawals to minimize or even out taxes for the long run.

Nice work on getting to an enviable position of being able to FIRE at 50!

Great points. Roth conversions are in my plan once income is low/zero.

I really appreciate your positive thoughts about being on track!
It’s a tough, long and persistent path needed to retire early. I see that with all the experience I’ve seen from folks who have successfully retired early.

Monday mornings are getting hard to get motivated about!!

 

[RetiredHappy]

When I used to work for Mega Corp, in the last year or so, every morning I would say aloud to myself "Another day, another dollar!" That was motivating enough for me.

Then we both took a voluntary early separation package and started our own company. That was a grind and we did it for 8 years. My husband said, we are selling the business and retiring. We did that and were out in 3 months. That was 8 years ago and we have been golfing 4 to 5 days a week, traveling 3 months in a year since then. Life is good!

 

[2029FIREaway]

When I used to work for Mega Corp, in the last year or so, every morning I would say aloud to myself "Another day, another dollar!" That was motivating enough for me.

Then we both took a voluntary early separation package and started our own company. That was a grind and we did it for 8 years. My husband said, we are selling the business and retiring. We did that and were out in 3 months. That was 8 years ago and we have been golfing 4 to 5 days a week, traveling 3 months in a year since then. Life is good!

Haha. Love this. Motivational to hear how much fun y’all are having

Btw, my motto to whoever will listen is ‘another day, another half dollar!’
(Gotta factor taxes )

 

[Bigdawg]

Covered in other threads but basically many ways to NOT pay full boat for college. #1. Not legally bound to pay for children's college. #2. Have them take as many college credits while still in HS. I had one semester under my belt when I graduated HS. And it was free. #3. CC/junior college or cheaper state school for first 2 years. #4. ROTC or enlist in military (Air Force/Coast Guard) and then use GI bill for free college. #4. Go to college part time while working. #5. Look at the trades. My EE DSIL is upset because he has HS grads fresh out of HS coming to work for him (union) making 80K+ starting salary. He wishes he would have gone that route instead of currently being over 100K in student loan debt while only making $120k/yr.