Hi novice hoping to learn

[Windward34]

Morning all I am a 54 year old male located northeast USA. I found this forum early this morning while searching for early retirement options. I am not educated enough in financial planning or understanding the FIRE cal and hoping to learn from others as I read through the posts. Little info I am married , wife is 8 years younger. I really have no idea if early retirement is possible, not great savers we do own a house with mortgage. My only savings is 401k but nothing else substantial. As I read through I will have questions if anyone like to offer some up front advise please go right ahead!

 

[HawkeyeNFO]

Welcome to the site. After a while, you may surprised how the math for FIRE or at least FI works out. It's really not too complicated, but everyone's situation is a little different.

 

[finnski1]

welcome aboard. Lots of great info here to learn from.

 

[REWahoo]

Welcome!

First piece of advice: start tracking your spending.

You don't need to account for every penny but knowing how much you spend each year is essential in knowing when you are in a financial position to retire.

 

[CindyBlue]

Morning all I am a 54 year old male located northeast USA. I found this forum early this morning while searching for early retirement options. I am not educated enough in financial planning or understanding the FIRE cal and hoping to learn from others as I read through the posts. Little info I am married , wife is 8 years younger. I really have no idea if early retirement is possible, not great savers we do own a house with mortgage. My only savings is 401k but nothing else substantial. As I read through I will have questions if anyone like to offer some up front advise please go right ahead!

Welcome the forum! I retired two years ago and the folks on this forum helped me a lot in making the choices and decisions I needed to make in order to be sure I was ready. I lurked for years before I began to post and ask questions, and just reading through the posts really helped.
I agree with REWahoo - if you can track your spending for a year it would really help.
Also - have you put your numbers into FireCalc yet? That was and continues to be a great help for me.

 

[EastWest Gal]

When I joined this forum, I did not track my spending very well. Instead, I went backwards, using credit card statements and bank account records and made a spreadsheet going back 3 years on a monthly basis. It includes everything, from taxes to health insurance to groceries to ATM withdrawals. I go in every couple of months and update it.

 

[skyking1]

Welcome!

First piece of advice: start tracking your spending.

You don't need to account for every penny but knowing how much you spend each year is essential in knowing when you are in a financial position to retire.

Welcome and What he said right there
Start tracking and then looking at ways to cut your spending. There are many ways to do it, those are for other threads. The bottom line is once you examine it and know, you can move the ER date closer.

 

[CindyBlue]

Welcome and What he said right there
Start tracking and then looking at ways to cut your spending. There are many ways to do it, those are for other threads. The bottom line is once you examine it and know, you can move the ER date closer.

I agree - knowing for sure what I was spending made a huge difference in knowing that I really did have enough to retire.

 

[OldShooter]

... if anyone like to offer some up front advice please go right ahead!

OK, I'll bite:

1) There is no magic. Successful investing for retirement is a slow, boring process. Over long periods, returns in the neighborhood of 7% may be seen. "Long" is 5-10 years or more.

2) Without knowing your 401K balance, I'll guess that to retire you will have to do some very aggressive saving. You will probably have to become great savers.

3) Home and home equity assets are pretty much a don't-care. You have to live somewhere. Possible exception is if you live in a very hot market and can sell and relocate into a much cheaper housing market.

4) If you let us know how your 401K is invested, percentages if you don't want to provide numbers, you may get some useful advice.

 

[skyking1]

You have to live somewhere.

That is my sentiment and oldshooter provided the one caveat, Going from hot market/HCOL to lower.
So many people stumble on net worth. Unless you plan on living in a van down by the river, don't sweat the money tied up in a home.
What it represents for us is some of our self insurance for LTC. It's enough that we could rent a studio somewhere with LCOL for quite a while.

 

[pb4uski]

I agree with the notion that home equity isn't relevant since you need to live somewhere, unless one plans to downsize their housing... for example sell the big house that isn't needed anymore and buy a smaller house or condo or rent... so the difference ends up in savings.

Or sell the house and RV full-time. Or sell the house and move to Thailand or some other country with low rental costs.

 

[Windward34]

Great advise thanks all for replying. Was not sure what was appropriate for disclosing values, right now I have just over 1.4 in 401k with heavy high risk stock mix. Last year I did change my mix for contributions to the fidelity mix based on retirement year. But the majority of existing is still stock heavy. I max out my 401k but have not done the over 50 catch up. Back when I was well not to smart I pulled a 401k out that at 30 was 125k which I know today was the worst mistake financially but I can’t change the past!

 

[ivinsfan]

Great advise thanks all for replying. Was not sure what was appropriate for disclosing values, right now I have just over 1.4 in 401k with heavy high risk stock mix. Last year I did change my mix for contributions to the fidelity mix based on retirement year. But the majority of existing is still stock heavy. I max out my 401k but have not done the over 50 catch up. Back when I was well not to smart I pulled a 401k out that at 30 was 125k which I know today was the worst mistake financially but I can’t change the past!

Hello Windward, since we all have different savings and NW it's what you save that's most important..it's what you spend.



Do you know what you spend? Notice I didn't sayyou need a budget, the first thing is to figure out what you are actually spending.

 

[OldShooter]

Well, sir, if you have $1.4M in your 401K I would say that you are "a great saver!"

% in equities is debated here endlessly, but until you are 3-5 years from needing to draw from your savings a high, even 100%, equity allocation is IMO OK. We stayed nearly 100% until a couple of years before we retired.

 

[Windward34]

I can give an educated estimate I have too many bills between house, boat, other things with engines and one CC I need to get straighten out. I understand the house but I have to eliminate the other debt. All in 5-6 per month on average. Summers more, winters less based on our boating lifestyle. Boating is the one that drives the number up but it’s the one thing we enjoy. I’m close to eliminating some of this debt within next 10-12 months I can see this dropping to 4-5 per month.

 

[ivinsfan]

I can give an educated estimate I have too many bills between house, boat, other things with engines and one CC I need to get straighten out. I understand the house but I have to eliminate the other debt. All in 5-6 per month on average. Summers more, winters less based on our boating lifestyle. Boating is the one that drives the number up but it’s the one thing we enjoy. I’m close to eliminating some of this debt within next 10-12 months I can see this dropping to 4-5 per month.

IMO this the first thing you need to square away. You don't need to drop the number you just need to know what the number REALLY is..

 

[NgineER]

I can give an educated estimate I have too many bills between house, boat, other things with engines and one CC I need to get straighten out. I understand the house but I have to eliminate the other debt. All in 5-6 per month on average. Summers more, winters less based on our boating lifestyle. Boating is the one that drives the number up but it’s the one thing we enjoy. I’m close to eliminating some of this debt within next 10-12 months I can see this dropping to 4-5 per month.

Welcome to the community, it is a great place to share and learn.
You have amassed a tidy amount in your 401k. As others have said, knowing how much you spend is key to knowing if you have enough. $1.4M with 60k annual spend is a little light, but if you and your wife can expect SS payments, if you have some amount of pension coming the picture will improve.

Make sure your estimates also includes taxes to better estimate your needs.

 

[Windward34]

I will put everything down in a spreadsheet to find actual. Question Do I include every dollar like dinners out and nominal items like going to the movies, groceries etc?

 

[braumeister]

Just set up categories that make sense to you, and put your spending into those categories. By the end of the year you'll know what your spending is.

For example, some categories might be:

• Taxes
• Groceries (and other things bought at the supermarket)
• Medical
• Hobbies
• Travel
• Dining
• Entertainment

Those are just a few -- you'll be the best judge of how many categories to use and what to call them.

 

[Aerides]

I will put everything down in a spreadsheet to find actual. Question Do I include every dollar like dinners out and nominal items like going to the movies, groceries etc?

Yup. Just pour it all out and plop it down, 2-3 years or more is best to get an average. Daily little things add up. Best to know your "care free every day" total than estimate, and come in way under. You want to know that you can retire and keep your lifestyle.

While you might have lots of different bills, there's a good chance they all get paid out of a lesser number of actual accounts. So pulling all the debits from your checking accounts might be simpler than pulling from 3 credit cards and all the other incoming bills. Checking will find things like taxes and licenses that often don't go on a CC.

 

[OldShooter]

Yes, you should try to account for every dollar but as @braumeister says you can group the spending into reasonably broad categories. "Dinners out" and "movies" might end up in an "entertainment" category. Too broad and you won't know what is in the total, however. So maybe target categories to be no more than 5 or 10% of spending except obvious biggies like mortgage interest.

If you're so inclined, personal finance programs can help. "YNAB" seems to be quite popular. Quicken is good, too, but requires that you pay endlessly. Quicken's owner recently bought the free "Mint" product, which is popular, but they didn't do that because they wanted a product that didn't make them any money. So I would avoid those two.

Edit: Oops! I see YNAB is now a subscription critter. Maybe find something else?

 

[Golden sunsets]

Nailing down your current expenses is the most important thing you can do. Then you need to estimate the cost of lumpy items, like car replacement home maintenance like roofs, furnace, etc., any other big ticket items, e.g. weddings, etc. Then you can start to fine tune by adjusting for debt pay offs, reduced expenses as a result of retirement, increased expenses as a result of new retirement spending and come up with a ballpark new spending number.

 

[SnowballCamper]

I really have no idea if early retirement is possible, not great savers

If doing a rigorous budget is what you need to do to save, then do that. But the most important thing is to save.

Over the years you likely got pay raises, and subsequently just spent the more money because it was there. I'd figure out the mechanism you need to get a big portion of the paycheck going into the 401k to get the maximum match (if not already). Also, max out a Roth IRA, and then get a bigger chunk going into some index funds in a brokerage account every month. Make all the saving automatic so that it's all saved away within a couple days of payday, out of the checking account.

I never really had a budget (still don't), but I saved a lot...in the thousands of dollars per month when working. You'll at least need to save that much (or more) but without sharing a round balance number and rough spending, it's really hard to say...

 

[Bee4]

Ditto on tracking your spending. And when your are just plain frustrated at work come here to know it is ok to feel like you want to throw in the towel.

 

[RobbieB]

I don't go with the "every penny" thing, but you should know what you spent.

Easy for me, everything cycles through my checking account, and I just download the statements and add them up.