Hello from the Great Lakes - Our ER & FI Plans

[Stashu]

Hi ERers & FIers,

I have been reading this site for a little less than a year now and have learned a lot. I decided to join in hopes that I might be able to give back some day.

I am 54 and DW is 47. My goal is to be prepared to ER at the end of 2022, at age 58 1/2. In this scenario DW would still work 3 - 5 years for insurance, to continue adding to our nest egg and to provide all the income we would need to live on those 3 - 5 years. We're not sure yet if retiring that far apart will work for us, so I may continue w*rking until age 60, at which time DW will be 53, so we can either retire at the same time or within a couple years of each other.

Here's where we are at now:

Zero debt.

Main non-investable assets:

New-build home in 2017: $275,000
Two new vehicles in 2017: $82,000 (and sinking fast)

Investable assets:

HSA: $30,000 (75/25 AA)
Roth IRAs.: $80,000 (75/25 AA)
Cash/CDs: $120,000 (2% - 3%)
IRAs/401Ks: $1,100,000 (75/25 AA)
Total: $1,330,000

We are DINKS and both max out our 401ks, with me in catch-up mode. We also max out our HSA. With company matches, these total $60K/year in contributions. Since downsizing last year and becoming debt free, we save $6K/month cash. So $132K/year is being socked away toward becoming FI.

Our current spend is $60K/year, but we'd like to have $80K/year after taxes once we are both retired.

I think we're on a pretty good trajectory, especially if I stuck it out to 60, but welcome constructive criticism on our plan.

Thank you all for the knowledge you share on this forum.

 

[Golden sunsets]

Hello from the Great Lakes - Our ER & FI Plans

Not knowing what your taxes are or will be I am assuming you’ll need $100,000 per year to net $80,000. That’s $2,500,000 at a 4% SWR. Do you think you can get to $2.5M by the time you and DW are ready to both call it quits?

 

[Rianne]

Welcome Stashu! We lived in MI when FIRE. I miss the Great Lakes! We were recipients of lake effect snow, which I loved! A typical winter had 6+ feet of snow in the backyard. Beautiful powder snow. Of course, the snow plow business was booming, no back breaking shoveling for us.
What do you mean "sinking fast" with new car purchase? Bought with cash I assume.

You have a good plan and we were in a similar financial situation at your age. We stashed more after tax cash to soften the tax burden. No debt is important, but you have to consider healthcare. Many here are in a good position for the ACA, but no telling how long that will last. Plus, you have to keep your income within a certain range to get the ACA subsidies to make HC affordable. Another reason to have after tax cash to get you through. It keeps your income level lower.


We are 60 and have not touched 401K investments or IRA's. Our outside cash and bonds are getting us through to 65, probably when we'll take SS. DH has a consulting gig on the side. Some don't consider us truly FIRED because of that. But he makes his own schedule, works from home, has all the freedom to travel or whatever. It's a vacation compared to the Megacorp world.

You're totally on track. We had a long conversation with our Vanguard advisor at no charge. It helps to get a professional opinion. The calculators available are good but talking out your plans and lifestyle puts everything into perspective.

 

[Stashu]

Not knowing what your taxes are or will be I am assuming you’ll need $100,000 per year to net $80,000. That’s $2,500,000 at a 4% SWR. Do you think you can get to $2.5M by the time you and DW are ready to both call it quits?

I am not sure. Depending on how the markets treat us; it's possible, so we are hopeful. Your assumption is correct. That's the math we're using. We have a lot to learn and have just started getting serious about savings. We are prepared to be flexible, so neither of us gets too bummed out if the shorter timeframe doesn't pan out.

 

[Stashu]

Thank you, Rianne! Yes, sinking fast means bought cash ($107K) and what I listed is current combined values based on info I entered in Intuit Mint. Transportation has been our most frivolous spending category for the 11 years we've been together, but that was the last time for that. We plan to be much more conservative in that category in the years ahead.

Yes, healthcare is a big concern. We will be on our own for that once DW retires. I also plan to start shopping for LTC insurance before long.

I appreciate all the advice and encouragement.

 

[pb4uski]

Unlikely that you will pay $20k in taxes... for MFJ with $100k ordinary income I get less than $9k in Federal income taxes... will likely be lower because some income will be qualified but you may have some state tax too. I suggest that you sketch out your retirement sources of income and do a tax calculation to refine it but 20% is way high.

Also need to factor in SS and any pensions so $2.5m is also likely way too high. Use FIRECalc and put in SS at 75% at a minimum.

 

[Ready2Save]

Hi and welcome! With ZERO investment gains and your current savings rate, you would be sitting at ~$1.9MMish at the end of 2022 and would be more than good to go...especially if your wife is going to work a few more years and her income covers the living expenses. Have you pulled your SS estimates? Some folks don't like to factor that in, but I just take a healthy haircut against it. Congrats - you two are in fantastic shape.

 

[Stashu]

Unlikely that you will pay $20k in taxes... for MFJ with $100k ordinary income I get less than $9k in Federal income taxes... will likely be lower because some income will be qualified but you may have some state tax too. I suggest that you sketch out your retirement sources of income and do a tax calculation to refine it but 20% is way high.

Also need to factor in SS and any pensions so $2.5m is also likely way too high. Use FIRECalc and put in SS at 75% at a minimum.

Thanks, and I hope that is the case. I do need to do the exercise you suggest. I will have a tiny ($200/month) pension (or whatever it's called coming from PBGC) and $2K month SS at 62 (per today's SSA calculation), assuming no raises and I work to age 58 1/2. I am not sure how much DW's SS is projected to be. We still need to use the SSA calculator for hers. I did start getting familiar with FIRECalc and definitely need to spend more time with it.

FWIW, our combined income is currently $260K, with DW coming into prime earning years, so we are really practicing LBYM since the big downsize last year. We had bought a home nearly twice the price of our current one in 2007, and 10 years later still came up about $25K less than we paid when we sold. Thanks to sub-prime lending and the housing-bubble burst, that was our worst financial move together.

 

[Stashu]

Hi and welcome! With ZERO investment gains and your current savings rate, you would be sitting at ~$1.9MMish at the end of 2022 and would be more than good to go...especially if your wife is going to work a few more years and her income covers the living expenses. Have you pulled your SS estimates? Some folks don't like to factor that in, but I just take a healthy haircut against it. Congrats - you two are in fantastic shape.

Thank you. I pulled my SS estimate but we still need to pull DW's. We, too, take a healthy haircut against it. That's probably why we haven't pulled wife's yet.

 

[Ready2Save]

I suggest that you sketch out your retirement sources of income and do a tax calculation to refine it but 20% is way high.

I think this is a great idea given the differing sources of income you will have over the next ~ 15+ years. I see that you have multiple stages....


Stage 1 - both working for next few years
Stage 2 - only DW working for a few years
Stage 3 - Nobody working and Portfolio has to pay 100%
Stage 4 - Your SS & Pension and Portfolio pay the bills
Stage 5 - Both SS's, Pension and Portfolio pay the bills


MS Excel is your friend.

 

[Stashu]

Good morning, all. I have continued reading and learning from all of you and it has been much appreciated. Work stress ended up getting the best of me, so I retired on March 31st of this year at age 56 and I thought I’d post a quick update.

We have since sold the 2017 new build and bought a larger, 20-year-old 2,000 SF all-brick ranch with a finished basement on a couple acres for $415K, and put about $50K into improvements. DW’s master bath remodel alone was $25K (gulp!). Investable assets are up to $1.8M and new home Zestimate is $490K, on which we owe $95K at 2.9%. No other debt and cash/CD’s are up to $170K. Net worth (home equity and investable assets) is now over $2.3M. DW’s take home pay, plus a small pension I am starting in July, will cover our living expenses while she plans to work 5 more years. We are still in accumulation mode in DW’s 401K at ~ $10K/year, plus we are planning to pay the mortgage off from DW’s take home pay over the next 5 years.

Thanks, again, for all the sage advice shared on this forum. I’m a daily reader but just don’t post much.

 

[RobotMom]

Love it! I love hearing about successful retirements. I am six weeks away from joining you and in a similar situation. Mu hubby is 7 years younger than me and will continue to work (at a business he built from the ground up - so it is a lot different than "working for the man"). I look forward to cooking healthy, diverse meals, keeping my house a lot cleaner than I do now, taking walks and getting exercise, reading, and enjoying other hobbies that got left behind as my life got busier. I'm not seeing any downsides and really enjoy reading stories like yours!

 

[pacergal]

Congratulations on your retirement!

 

[Stashu]

Thanks for the kind words RobotMom and pacergal. My plans sound about the same as RobotMom’s. I plan on picking up a lot of the things DW has been doing all along (grocery shopping, cooking, etc.) so she has more free time both during the week and on the weekends. She loves her job and made me promise not to try and get her to retire if I get bored. No argument here!

 

[Ready2Save]

Well done! I am a ways away...maybe 7 years if I am lucky and always enjoy seeing stories like this when folks circle back to update on their status and it is now off to what's next in life...well done, well done.

 

[Stashu]

Well done! I am a ways away...maybe 7 years if I am lucky and always enjoy seeing stories like this when folks circle back to update on their status and it is now off to what's next in life...well done, well done.

I thank you, Ready2Save! I wish you all the best in meeting your target.