If they're young, I must be a baby...

[btbrors]

I've been reading everything I can on RE since I stumbled on the Retire Early Home Page a week ago....

I see others who posted as young... and I think I might be the baby... I just turned 24. I downloaded the calculators and it looks like I can retire in 10-11 years, if I continue to invest 37.8% of our income... shouldn't be a problem, fiancee follows all my money "rules."
I'm so excited, I ran out and got all the books everyone mentioned (at the library of course!)

I just wanted to say hi and I'm ready to learn anything and everything about RE from all of you!

What we are doing now if you have any advice:
Max out my 401k each year
Max out Fiance's 403b each year
Max out Fiance's 457 plan each year
Max out both of our Roth's each year
Contribute additional to my investment club for fun
Funding two 529's for possible future children....

We also spend about 2500/mo on mortgage and school loans all between 3-4.125%

This leaves us with plenty of money for expenses. I've considered saving more... but not sure I want to.

Look forward to all your insight!
Becky

PS The wedding is in Sept. but my parents are paying for it, so we should be okay there.

[Telly]

Hi!

I admire your attitude, and don't wish to offend you... but... at your age you have most of your life ahead of you. Marriage, and all of its plusses and minuses that may come with it. Children, the joys, the expenses to exist that come with them. Bigger house, College (theirs!). Who knows what else. The unexpected will happen, that's for sure

Trying not to sound negative, but realistic - nothing lasts forever. A great job with high income and good working conditions can evaporate with the economy, a merger or buyout, change of some executive, relocation, etc. etc. And all the savings and plans into the future can take a big hit.

I'm trying to leave this on a positive note, uh, help me out here, folks! :P

Thanks Telly,

Don't worry I don't take it as negative. I love my job and I'm not in any rush. I just want to sock away as much as I can while I'm young and able... and before kids and all the unexpected, that way some day if I get the urge to RE, I'll be a step ahead of myself.

But until then, I just want to learn as much as I can about investing and setting goals!

Becky

[dory36]

btbrors -- welcome! (And don't worry about being too young. I bet most of us, and certainly I, would have retired in our 30s if we'd planned better. In my case, I spent too much until I was in my early 40s, so I was delayed to my early 50s.)

One thing that seemed to be mostly missing from your plan was after-tax savings/investments. Your investment club may be it, but the percentage going there wasn't clear from your message.

The before tax savings/investments, IRAs, 401ks, etc., are useful, and you can tap them when you retire at whatever age, but the constraints on using those funds are fairly strict. I suggest having a substantial percentage of your retirement funds in after-tax accounts.

I'd be interested in others' suggestions, but I'd suggest that about half your assets be outside the IRA/401k realm. Part of this will be home and so forth, but a good part needs to be readily convertible to cash. At least in our case, we've tried to set up our fixed expenses to match our IRA withdrawals, and keep our variable "fun" expenses to those funds available from our after tax savings/investments, which are available at our discretion.

Dory36

[MRGALT2U]

I fugure if I had gotten the ER bug very early, I could have retired completely in my later 40s, even with 3 kids.
Alas, I was "livin' large' right until the idea took root.
On the other hand, I had a lot of fun in those days.
ER necessarily left my first wife
behind, but it saved my life. So, it was the right way to go even with all the trauma it left in my wake.

[BigMoneyJim]

Becky, congrats on starting so early! I started contributing 15% to my 401(k) when I was 21, but I didn't start learning how and why I should invest it until I was older, and only when I was 30 did I find REHP and start to realize the possibilities.

Hopefully you and your fiance have already discussed your money rules and your ER desires. I've never been married, but from reading what other ER's have said the spouse can greatly help or hinder the cause.

[bongo2]

Becky, I wish you the best, but to be honest with you I think that 10-11 year number is very optimistic. Not that it can’t be done, but I did the exact same thing 7 years ago, and I’m still thinking 10-11 years today. Unfortunately, there are many things along the way to derail those plans. In my case it was kids, a bear market, and I underestimated the amount that we would want to increase our standard of living over time.

I like tax-sheltered plans, but I would be very hesitant to contribute to a 529 plan in your situation. If you are serious about being retired in even 20 years then you will be counting on financial aid to get your future kids through college. It’s not clear how 529’s will be counted in the aid formulas that far down the road. If you are going to put the money in stocks, then they are largely tax-deferred anyway, and the capital gains are taxed favorably. Think about it this way, 25% tax on a 2% dividend rate is 0.5%. This is virtually the difference between a 0.6% expense ratio 529 plan, and a 0.2% expense ratio vanguard fund.

Still, keep up the good work, and, even if you don't retire at 35, you'll have a lot more financial security, and you may retire at 45 instead of the usual 65 (or maybe you'll pull it off, what do I know?). I wouldn't underestimate the value of financial security. Having a couple years salary in the bank helps a lot with any job troubles.