Debt free for 50th Birthday, and planning FIRE

[convergent]

My DW and I will both be turning 50 within the month, and we just completed paying off our mortgage this month and are now totally debt free. Our youngest is 15 and I'm shooting for FIRE when she's done with school... so around 57 or so. We have about $600K in various 401K, pension, and ROTH IRAs at this point and will be aggressively pushing that up. We should be able to pull about $150K out by downsizing our house when the kids are all out of it and we don't need 5 bedrooms any longer.

So we are setting at about $750K now and I'm looking forward to learning from the experts on here about how to maximize things preparing for FIRE. I believe we'll need to get that to about double. As long as my current job holds out, I think we can dump about $40K in annually, and about half the funds are in equity investments that should return well. We've been focused on the mortgage for a while and can now switch gears and focus on FIRE planning.

 

[Sarah in SC]

Congrats on the mortgage payoff! I remember all too well the months leading up to the payoff of our mortage to become debt free and we even had a mortgage burning party to celebrate.

 

[Sue J]

Congratulations on the debt freedom and solid plan for retirement. Being debt free when DH retired gave us a real sense of peace and control over our expenses.

 

[Danmar]

Congrats!! being debt free is a great feeling and gives you much more flexibility and peace of mind going into ER.

 

[Nords]

So we are setting at about $750K now and I'm looking forward to learning from the experts on here about how to maximize things preparing for FIRE. I believe we'll need to get that to about double.

If you haven't already done so then you'll need to figure out what you'll be spending in ER. Then you can run your assets & expenses through FIRECalc.

Doubling your money in seven years requires a minimum average annual return of 10% over a relatively short time. This is so optimistic as to border on unrealistic.

 

[East Texas]

Rule of 72 - to double your money it's time X interest rate. If those two numbers equal 72, you'll double your money.
18 years X 4%
12 years X 6%
9 years X 8%

 

[Danmar]

If you haven't already done so then you'll need to figure out what you'll be spending in ER. Then you can run your assets & expenses through FIRECalc.

Doubling your money in seven years requires a minimum average annual return of 10% over a relatively short time. This is so optimistic as to border on unrealistic.

I think he said he was able to save a further $40k per year and that would help him get to the figure($1.5million) he felt he needed. that would reduce the return required to around 5% I think.

 

[convergent]

If you haven't already done so then you'll need to figure out what you'll be spending in ER. Then you can run your assets & expenses through FIRECalc.

Doubling your money in seven years requires a minimum average annual return of 10% over a relatively short time. This is so optimistic as to border on unrealistic.

Thanks for the tip. I will be definitely doing that over the coming months. I am at the point in this that you might call the "wild guess" phase. My projection for needed funds to retire, my projected retirement expenses, projected FIRE date, etc... are all very rough, so I have some work to do and thus the reason for joining this forum.

One point of clarification. I'm not needing to double my money from investments. I am planning to contribute a significant percentage of my income as well. As long as my job situation is steady, I should be able to contribute about $40K per year into retirement funds... which for the first year is about 5% of my retirement portfolio. As I learn more and work this into a more substantive plan, things like whether we should downsize our house earlier or not will become clearer.

 

[chinaco]

Welcome. Congratulations on getting out of debt.

You should develop a full financial plan that covers all your expenses including medical.

If you have a pension coming that will help, especially with SS and Medicare cuts looming large in the Congress.

 

[mh]

As others have mentioned, I feel one needs a very clear idea of what your expenses are going to be. And then work from there.

Since I was able to, I did the primitive method of putting exactly 20k in a checking account for 2 six month periods ( i had guestimated i needed 35k a year ) and
then observed where i stood after a year after paying for everything from that account.

That worked well for me. I'm now pretty confident i know what my base expenses are annually. I admit there are a lot of things in my environment that make this work well for me:

- I'm mortgage free already

- I'm not going to move some place with radically more expensive taxes
(pretty hard to do when you are in so. cal.)

- I'm not suddenly going to have 3 less kids (or three more kids) to support in the future.

But even if you're not much like me, i think it's still a good sanity check beyond
trying to calculate an detailed itemized budget and I didn't have to do a lot of work to
make it happen.

 

[obgyn65]

Congratulations on being debt free.

 

[FreeAtLast]

The mortgage payoff is for sure the gateway into retirement. Well done!