Plan for Exit 2024

[Exit 2024]

Crazy but looks we made all our losses back and a little bit more compare to our Jan 1 number of $1,737k. We are still below our all time high of $1,800k that we hit on February 19, but getting close. Will be interesting to see how Q2 will finish. Just short one month to go...

And hear we are, just one week later crossed our all time high and closed Friday at $1,808k, all looks too unreal considering what is going on in this country and economy overall.

 

[Exit 2024]

Q2 2020 update

- We finished Q2 at $1,787k, that is plus $202k since Q1 and only +50k YTD.
- Investable assets went up a lot due to market gains, but we also kept adding to those accounts regularly
- Increased cash position was due to suspended monthly payments for student loans, child is still unemployed and we appreciate all the government help that was provided there
- Our asset allocation is at 30/70 bonds/stocks right now and I changed all new contributions in 401k to go 100% to Bond funds again. Our target allocation is 35/65.
- We still have both our jobs and continue to work from home although our state and city was not hit hard by the virus. Thankful for both - ability to work and being in relatively safe area of the country
- Overall it was very good quarter, we could not hold above $1.8M, but got very close to it.

- We have 16 Qs to go... time will tell...

 

[Exit 2024]

Just realized that tomorrow will be 5 years since my opening introduction post in this thread, wow, time do fly
Reading through that post and seeing where we are today is almost unbelievable...
Comparing our finance picture from 7/31/2015 to 7/31/2020:

Biggest news - we doubled our NW just in 5 years
We doubled our investments also
We paid off all RE
Saved additional $100k cash

Very busy 5 years and we have 4 more to go till end of July 2024 - that is when we plan our Exit.

I was trying to see if we keep the same pace - will we get to our $3M number on time or not. Of cause there are no guarantees from the market and last 5 years have been bull run there. Job situations also not certain and child still has no job.
We did and will continue to do what we should and just hope that all things will fall into place at the end ...

Here is my rough calculations using CAGR and Reverse CAGR calculators from https://cagrcalculator.net/:

Total NET Worth:
Starting value $912k
Ending value $1,862k
Period 5 years
CAGR -15.34% including additional savings

Starting value $1,862k
CAGR -15.34%
Period 4 years
Ending NW value $3,295k with target of $3M

NET Worth excluding RE, will add cash at the end at today's level:
Starting investment value $652k
Ending investment value $1,395k
Period 5 years
CAGR -16.43% including additional savings

Starting investment value $1,395k
CAGR -16.43%
Period 4 years
Ending investment value $2,563k plus $142k cash
Ending NW value $2,705k with target of $2.7M

So far looks like we are on track, will return to that post in August of 2024 to see how we did ...

 

[flyingaway]

Congratulations. It looks like you are on the right track.
We may exit text year. If not, our next exit year will be 2024.

 

[Standard Staples]

Awesome look back and tremendous results. I think most of us would gladly take CAGR's in the teens, especially spread across the whole portfolio.

I have no doubts you're going to make it.

 

[Exit 2024]

Thank you both, flyingaway and Standard Staples

 

[Exit 2024]

Q3 2020 update

- We finished Q3 at $1,912k, that is plus $125k for last three months and we are getting close to $2M mark, would be interesting to see if we can reach it in Q4.
- Investable assets went up a lot due to market gains plus we kept adding new money to our $401ks and HSAs
- Increased cash position again, no monthly payments for student loans but we might pay lump sum toward them at the end of 0% interest period
- Child is still unemployed - it is getting a little unsettling
- Our asset allocation is at 65/35 - right on target when adding our cash position to the fixed income assets
- Overall we are happy with the progress, end of July was at $1,945k - our all time high, hope to get back to it and above very soon

- one thing that we keep thinking about is to get us some type of countdown to FIRE "award", mostly for fun, but can not come up with exactly what it could be.

Thought to buy 10 bottles of wine - to open one with each additional 100k NW growth. But we like completely different types, may need to buy 2 for each milestone.
Thought about some good chocolate boxes - but not sure if any will survive up to 4 years and not go bad.
May be there are something else that we can use, any suggestions will be appreciated.

Still have some time to think as idea was to start it after we cross $2M mark.

- We have 15 Qs to go...

 

[brokrken]

Great progress, Exit! One thing I thought about doing as sort of a countdown was to give back a little. So, something like every $100k NW growth, at the next meal out, we leave a $100 tip. We frequent many local places so it would be great to help those folks and there is just something fun and ironic about celebrating a wealth milestone by giving away money.

 

[Exit 2024]

Great progress, Exit! One thing I thought about doing as sort of a countdown was to give back a little. So, something like every $100k NW growth, at the next meal out, we leave a $100 tip. We frequent many local places so it would be great to help those folks and there is just something fun and ironic about celebrating a wealth milestone by giving away money.

That is a great idea !!! Will definitely consider it Thank you !

 

[Exit 2024]

Q4 2020 update

- We finished Q4 and full 2020 at $2,028k, YEY!!! that is plus $116k for last three months and +$291k for the year, now each of us can claim membership in "two comma club", right?
- Investable assets went up a lot due to market gains plus we kept adding new money to our $401ks and HSAs
- Cash position went down as we finally upgraded one of the cars and paid off one of the student loans for our daughter. Despite those big spendings we still crossed $2M mark - kind of crazy but not complaining
- Child is finally employed that is temporary job but with decent pay and opportunity to become long term employment after 6 months, so she should be able to afford payments on her student loans and now officially off our payroll
- Our asset allocation is at 67/33 - little bit off 65/35 target but I do not plan to re-balance until we hit 70/30, all new money still go into bonds.
- In 2020 I had very little of RSU vested, thanks for that I will be just under the limit for HCE for 2021 and plan to max out my 401k
- NW target for 2020 according to our 2024 path was $1,860k, we exceeded it by healthy $168k margin
- Original target for 2021 was $2,118k, we are just $90k away. I do not count on market continuing to go up at the same pace as last 2 years, but still hope that we can meet and exceed 2021 target.
- Overall looking back at 2020 - for us it was not that bad a all, we were able to keep our jobs, market gave us opportunity to buy in at some lower prices, everyone in our family and close friends stayed healthy, very thankful for all of that and looking forward to 2021

- We have 14 Qs to go...

 

[The Cosmic Avenger]

Q4 2020 update

- We finished Q4 and full 2020 at $2,028k, YEY!!! that is plus $116k for last three months and +$291k for the year, now each of us can claim membership in "two comma club", right?

Congrats! My favorite part of passing that point was using the word "multimillionaire" to describe our collective assets...just in my head, of course! But it has a nice ring to it, doesn't it?

 

[Exit 2024]

Congrats! My favorite part of passing that point was using the word "multimillionaire" to describe our collective assets...just in my head, of course! But it has a nice ring to it, doesn't it?

LOL, did not think about it that way but now that you mentioned - I can not agree more

 

[Love This Community]

Congratulations on you progress exit. Great to see the plan taking shape with end in sight. I will be following your treaded path though I am more concentrated in stocks. I do not have a back door Roth and that is something I wish to explore. Any recommendations on good reads regarding this or if there are any income limits for contributing to BDRoth.

 

[RxMan]

Congrats on your progress. You are well on your way to your goals!

 

[Exit 2024]

I do not have a back door Roth and that is something I wish to explore. Any recommendations on good reads regarding this or if there are any income limits for contributing to BDRoth.

For me most useful was post by Finance Buff in his blog, it actually not that complicated after you did it first time, here is the link
https://thefinancebuff.com/the-backdoor-roth-ira-a-complete-how-to.html

 

[Love This Community]

For me most useful was post by Finance Buff in his blog, it actually not that complicated after you did it first time, here is the link

https://thefinancebuff.com/the-backdoor-roth-ira-a-complete-how-to.html

Thanks a lot exit. I think I will do my first back door Roth this year.

 

[Exit 2024]

Updated our year end chart where I plot actuals vs 2024 path vs 2028 path.

Have a question: with only 3.5 years to go I am starting questioning my current strategy to load all tax advantaged account first, and then only what left is going either to cash or to taxable. If we both FIRE in the middle of 2024, at age of 55.5 and 55, we will not have normal access to tax advantaged accounts for about 4 years.
I see 3 options:

1. Save total about 360-400k in cash and taxable invested mostly in bond funds as time frame is rather short,
that will require to focus on saving about $5k/month till FIRE. that is doable but will increase our taxes, and we already paying a lot

2. Change nothing and after leaving current employer at FIRE access 401ks without penalties using rule of 55.
Is that available for all 401ks and just IRS rule?
That is most preferable option but I am a little nervous as not sure if our 401ks will allow that, searched both 401k documents and IRS.gov for answer but still not completely sure if that is a rule for all or needs to be allowed by particular 401k. Ours do not mention that rule in the plan documents.

3. Use rule 72t, less preferable option as it is looks way too complicated.

Is there any other options that I am not considering?
Would appreciate any suggestions on how to cover 4 years or FIRE before we turn 59.5, Looks like we need to start working on it this year.

 

[brokrken]

Exit,

On your point #2, this is plan specific. Some allow it and some don't. A quick call to the plan administrator should get you an answer. I am in a similar situation, although will be younger and therefore have really started to plow money into our taxable accounts. If we go, as expected, I'll be 48 and DW will be 53, so we need 6 years of cash to get DW to 59.5

 

[NgineER]

3. Use rule 72t, less preferable option as it is looks way too complicated.

Is there any other options that I am not considering?
Would appreciate any suggestions on how to cover 4 years or FIRE before we turn 59.5, Looks like we need to start working on it this year.

Do you have any Roth accounts with enough contributions to carry you for five years? If so, then start a Roth conversion ladder, it is pretty straight forward...

 

[The Cosmic Avenger]

Right, as brokrken said, you'll need to check with your plan(s), as they are allowed but not obligated to use the rule of 55. I am planning on drawing before 55, and our taxable investments probably couldn't get us to 55, so I am planning on a 72t plan to fund our basic, necessary costs, then draw from taxable investments (and possibly Roths, but I'm trying to leave those for last) for entertainment and travel and such, as that's more discretionary spending.

 

[Exit 2024]

Do you have any Roth accounts with enough contributions to carry you for five years? If so, then start a Roth conversion ladder, it is pretty straight forward...

I am not sure that I am getting it, how do I access Roth before 59.5? We do have enough money overall there but very little of that are contributions, majority are conversions from non-deductible IRA as our income have been above contribution limit for many years already, and I am under impressions that conversions will carry penalties same ways as earnings, am I wrong?

Looked up in Quicken our Roth IRAs structure:
$22k - contributions, can take those out any time
$124k - conversions from non-deductible IRA (back door Roth), do I have to pay penalties to take it out before 59.5?
$236k-gains, can not take out without penalties

Also what I can covert to Roth? 401ks are not accessible, and we do not have any traditional IRAs.
Also we are trying to minimize taxes, conversions would not be any better then just saving cash by reducing 401k contributions, at least I do not see any extra benefits.
I may be missing a point here

 

[Exit 2024]

brokrken, The Cosmic Avenger, thanks for details on rule 55, that is what I was afraid of, sure will try to contact 401k providers.

 

[The Cosmic Avenger]

I have to run, Exit 2024, but I thought that gains can be withdrawn any time without penalties, the principal has to stay in for 5 years to avoid a penalty. All my contributions have been after taxes, so I'm not expecting to have trouble with that, but if your contributions were NON-deductible, that means you already paid taxes on the income, therefore there is no complication; the complication only comes up when you deduct for contributions, IIRC.

 

[NgineER]

I am not sure that I am getting it, how do I access Roth before 59.5? We do have enough money overall there but very little of that are contributions, majority are conversions from non-deductible IRA as our income have been above contribution limit for many years already, and I am under impressions that conversions will carry penalties same ways as earnings, am I wrong?

Looked up in Quicken our Roth IRAs structure:
$22k - contributions, can take those out any time
$124k - conversions from non-deductible IRA (back door Roth), do I have to pay penalties to take it out before 59.5?
$236k-gains, can not take out without penalties

Also what I can covert to Roth? 401ks are not accessible, and we do not have any traditional IRAs.
Also we are trying to minimize taxes, conversions would not be any better then just saving cash by reducing 401k contributions, at least I do not see any extra benefits.
I may be missing a point here

I believe the conversions are subject to the five year rule, but that the conversion amounts can be withdrawn without penalty after five years.

401ks can be rolled over to IRAs, either partial amounts or the full amount and then you can convert from the IRA to a Roth IRA.

 

[Exit 2024]

I believe the conversions are subject to the five year rule, but that the conversion amounts can be withdrawn without penalty after five years.

401ks can be rolled over to IRAs, either partial amounts or the full amount and then you can convert from the IRA to a Roth IRA.

Thanks, NgineER, for clarifications.
I need to look more closely at tax treatment of conversions, that may add good chunk to our cash and carry us over those 4 years.