Can I F.I.R.E in 8 years?

[F.I.R.E User]

Current Net Worth: $~424K

Yearly Salary: $~70K.

Age: 42, Male, Single, No Kids, No lifetime plan for kid(s).

EF + 6+ Months of Savings: $3K at all times at VIO Bank earning 0.66% APY.

401K: $291,859 at Fidelity.

Roth IRA: $110,791 at Edward Jones.

Taxable Brokerage Account: $3,276 at Vanguard (VTSAX).

ESPP: $4,200. CMCSA.

Fundrise Account: $1,237.

Vehicle Value: ~$12K Blue Book.

Currently Renting. Never had a Mortgage nor ever owned physical property.

Liabilities: $0

Please advice? Any Suggestions?

I will need about $30K-$40K per year in retirement.

 

[RunningBum]

Hard to say. Nobody knows what the market will do in the next 8 years, and we don't know how much you are adding to your retirement funds each year.

Keep saving, and keep that debt at 0. Keep figuring out your retirement spending. Have you included health insurance? How about periodic replacement of cars? Will you be traveling more?

Watch your investment expenses. I know Fidelity and Vanguard are low cost. Edward Jones has a rep here for high expenses. Figure out yourself whether you are really getting any better results through them, good enough to overcome their fees.

If you are looking to retire around age 50, think about how you will fund living expenses before you can tap retirement accounts, which might mean investing more in your taxable account. Or you could withdraw Roth contributions.

If your health is good, I would probably want to have 30x your conservative estimate on retirement expenses. Withdrawing 3.3% + inflation per year should be safe. So that would mean your goal is $1.2M if the $40K living expenses is accurate as your high end estimate. You've got a good start toward that.

Others might say you don't need that much. I'm pretty conservative because once I stopped working I never wanted to go back to work again. Maybe you are in a trade where your skills don't get so obsolete as mine has.

 

[pb4uski]

Probably, depending on what you would receive in Social Security retirement benefits.

How much of your $70k of yearly salary would you save each year over the next 8 years? What is your asset allocation? How much do you expect to receive in Social Security? Are you eligible for a pension?

Have you played around with FIRECalc?

Even if you have "enough" the challenge might be getting penalty free access to that money between 50 and 59 1/2.

 

[F.I.R.E User]

I am adding $19.5K for 401k. Company matches 100% dollar to dollar up to 6%.

I am also adding $6k for Roth IRA.

Yes I did include ACA monthly premium which was about $500 a month.

No periodic replacement of a car.

Traveling more for sure both local and international.

American Funds do have a front load but I am not sure if the ROI is worth it.

Health is good. No major issues. I do hit the gym 3x a week and watch what I eat.

Hard to say. Nobody knows what the market will do in the next 8 years, and we don't know how much you are adding to your retirement funds each year.

Keep saving, and keep that debt at 0. Keep figuring out your retirement spending. Have you included health insurance? How about periodic replacement of cars? Will you be traveling more?

Watch your investment expenses. I know Fidelity and Vanguard are low cost. Edward Jones has a rep here for high expenses. Figure out yourself whether you are really getting any better results through them, good enough to overcome their fees.

If you are looking to retire around age 50, think about how you will fund living expenses before you can tap retirement accounts, which might mean investing more in your taxable account. Or you could withdraw Roth contributions.

If your health is good, I would probably want to have 30x your conservative estimate on retirement expenses. Withdrawing 3.3% + inflation per year should be safe. So that would mean your goal is $1.2M if the $40K living expenses is accurate as your high end estimate. You've got a good start toward that.

Others might say you don't need that much. I'm pretty conservative because once I stopped working I never wanted to go back to work again. Maybe you are in a trade where your skills don't get so obsolete as mine has.

 

[chassis]

Seems like you are in good shape. I wouldn't call FIRE in 8 years a slam dunk for you, but it seems within the realm of what's reasonable.

Your employer's 401k match is a gold mine, an uncommonly high match threshhold. Take full advantage of that.

 

[strobot]

You could leanFIRE right now if you really wanted to.

 

[F.I.R.E User]

Probably, depending on what you would receive in Social Security retirement benefits.

How much of your $70k of yearly salary would you save each year over the next 8 years? What is your asset allocation? How much do you expect to receive in Social Security? Are you eligible for a pension?

Have you played around with FIRECalc?

Even if you have "enough" the challenge might be getting penalty free access to that money between 50 and 59 1/2.

When should you take my SS? It ranges from 62-70.

About the same I am saving now.

Growth and Income. equity funds.

FireCalc is confusing. What #’s do I need to know?

I can get penalty free access from my principal Roth IRA and taxable brokerage account. I can also do a Rule of 55 for 401k as well as a back door mega conversion from 401k to Roth.

 

[F.I.R.E User]

Seems like you are in good shape. I wouldn't call FIRE in 8 years a slam dunk for you, but it seems within the realm of what's reasonable.

Your employer's 401k match is a gold mine, an uncommonly high match threshhold. Take full advantage of that.

I always wanted to retire in my 40’s. So my goal is to do that a day before my 50th birthday.

My FA does actively manage my Roth IRA and 401k at EJ.

Yes, really blessed with the 401k that I have. It was 6% before 2008. They lowered that to 4.5% for few years and now back to 6% but I do put in the max allowed by law which is $19.5k. It also offers True Up benefits.

 

[F.I.R.E User]

You could leanFIRE right now if you really wanted to.

If I move to a country like Portugal or Malaysia?

 

[Koolau]

If I move to a country like Portugal or Malaysia?

Sorry, but the older I get, the less I (personally) favor moving OUS for FIRE. IMHO stay longer at w*rk or move to a lower COL before considering another country for FIRE. Obviously, this is a YMMV situation.

 

[pjigar]

Ditch EJ. That would give you some excess returns AND remove risk from your portfolio. Other than that, I think you can easily swing it if you control your expenses.

 

[Toocold]

Nice job of savings -- above 42% savings rate if you include the match. My advice is at vanguard or fidelity, I would open up a ROTH IRA and put your $6k contributions there. You will also need a bridge.

Whether or not you can retire will be based on market returns. Be careful of healthcare costs. You may pay $500 per month for premiums, but if there is a healthcare incident, you may need to pay the full total out of pocket amount.

 

[pb4uski]

When should you take my SS? It ranges from 62-70.

About the same I am saving now.

Growth and Income. �� equity funds.

FireCalc is confusing. What #’s do I need to know?

I can get penalty free access from my principal Roth IRA and taxable brokerage account. I can also do a Rule of 55 for 401k as well as a back door mega conversion from 401k to Roth.

For a single person of average health, it doesn't matter much, but later is generally better because SS provides COLA-adjusted longevity insurance that is economically attractive. opensocialsecurity.com is a good tool to compare claiming strategies... be sure to go through the Advanced Options.

FIRECalc inputs are in a series of tabs along the top. While the results graph is a bit confusing, the main thing to focus on is the paragraph that precedes the graph and the success factor. Your inputs would be annual spending desired, current portfolio size, time horizon, SS amount and year of SS start, year you will retire and annual savings until retirement.

Until you are 59 1/2 the only thing you can withdraw from your Roth penalty free are contributions or conversions that are 5 years or more old. Also, you can't do rule of 55 for your 401k unless you leave service in the year that you turn 55 and you plan to leave at 50, so that doesn't work.

 

[OldShooter]

... I will need about $30K-$40K per year in retirement.

Inflation is probably your biggest risk, probably bigger than market performance. Over long periods market performance has been pretty reliable. Not so inflation.

Using a laughably low 2%, in 8 years the buying power of your today's $30-40K will be $25-$35K.

Over 40 years, which is probably not an unreasonable planning horizon for you, at 2% the $30-40K will decline to around $13-$18K.

IIRC the long-term inflation rate in the US is 3.11% and the last-40-years rate is around 4.1%.

You can experiment here: Inflation and Consumer Prices Calculator and here: Inflation - Historic Impact on Investments

 

[F.I.R.E User]

Sorry, but the older I get, the less I (personally) favor moving OUS for FIRE. IMHO stay longer at w*rk or move to a lower COL before considering another country for FIRE. Obviously, this is a YMMV situation.

Oh ok.

 

[F.I.R.E User]

Ditch EJ. That would give you some excess returns AND remove risk from your portfolio. Other than that, I think you can easily swing it if you control your expenses.

Where do I transfer my Roth IRA at EJ to?

 

[pb4uski]

The favorites around here seem to be Vanguard, Fidelity and Schwab.

 

[OldShooter]

The favorites around here seem to be Vanguard, Fidelity and Schwab.

+1 We use Schwab, but @F.I.R.E User since you already have an account at VG, I'd suggest that you go there.

Getting it done is easy. VG will have you fill out a form directing Fast Eddie to transfer your assets. Then VG will get it done. No need to ever talk to Eddie again. Eddie will charge you a transfer fee; ask VG if they will cover it for you. Many brokers will.

You can either transfer "in-kind," which just transfers the assets currently in your account or you can direct Eddie to sell everything and give you the cash. From what I hear about Eddie's fees I would suggest taking the in-kind option even if you sell after the assets get to VG.

 

[F.I.R.E User]

For a single person of average health, it doesn't matter much, but later is generally better because SS provides COLA-adjusted longevity insurance that is economically attractive. opensocialsecurity.com is a good tool to compare claiming strategies... be sure to go through the Advanced Options.

FIRECalc inputs are in a series of tabs along the top. While the results graph is a bit confusing, the main thing to focus on is the paragraph that precedes the graph and the success factor. Your inputs would be annual spending desired, current portfolio size, time horizon, SS amount and year of SS start, year you will retire and annual savings until retirement.

Until you are 59 1/2 the only thing you can withdraw from your Roth penalty free are contributions or conversions that are 5 years or more old. Also, you can't do rule of 55 for your 401k unless you leave service in the year that you turn 55 and you plan to leave at 50, so that doesn't work.

So I should be contributing more to my taxable account now?

 

[F.I.R.E User]

Inflation is probably your biggest risk, probably bigger than market performance. Over long periods market performance has been pretty reliable. Not so inflation.

Using a laughably low 2%, in 8 years the buying power of your today's $30-40K will be $25-$35K.

Over 40 years, which is probably not an unreasonable planning horizon for you, at 2% the $30-40K will decline to around $13-$18K.

IIRC the long-term inflation rate in the US is 3.11% and the last-40-years rate is around 4.1%.

You can experiment here: Inflation and Consumer Prices Calculator and here: Inflation - Historic Impact on Investments

I live in low COL area so inflation should not matter much right? There are coupons and bargains for everything nowadays.

 

[F.I.R.E User]

The favorites around here seem to be Vanguard, Fidelity and Schwab.

For what type of accounts?

 

[F.I.R.E User]

+1 We use Schwab, but @F.I.R.E User since you already have an account at VG, I'd suggest that you go there.

Getting it done is easy. VG will have you fill out a form directing Fast Eddie to transfer your assets. Then VG will get it done. No need to ever talk to Eddie again. Eddie will charge you a transfer fee; ask VG if they will cover it for you. Many brokers will.

You can either transfer "in-kind," which just transfers the assets currently in your account or you can direct Eddie to sell everything and give you the cash. From what I hear about Eddie's fees I would suggest taking the in-kind option even if you sell after the assets get to VG.

How does the system sell the funds at EJ and buys at VG?

 

[Go-NoGo]

if you move the funds to CS - ask for the cash bonus offer for opening a new account. You might get as much as $500.

The link below is for a friend referral, but you should ask the agent if you can qualify:
https://www.schwab.com/public/schwab/nn/referred-prospect.html

 

[F.I.R.E User]

if you move the funds to CS - ask for the cash bonus offer for opening a new account. You might get as much as $500.

The link below is for a friend referral, but you should ask the agent if you can qualify:
https://www.schwab.com/public/schwab/nn/referred-prospect.html

Thanks.

 

[pb4uski]

For what type of accounts?

All three, Vanguard, Fidelity and Schwab offer all kinds of accounts... including Roth IRAs that you would be moving from Fast Eddie Jones.

How does the system sell the funds at EJ and buys at VG?

Not sure what you're asking.

But one way to transfer is to sell all funds in the EJ Roth account (convert the total account to cash) and then have the cash transferred to a new Roth IRA at Vanguard, Fidelity or Schwab... then invest the cash in the funds of your choice.

The other way is to transfer the investments in your EJ Roth IRA to your new Vanguard, Fidelity or Schwab IRA "in-kind".... they just transfer the shares from the old custodian to the new custodian.

The new custodian can help you with this and explain your options.