10 year countdown realistic?

[Engineered-FIRE]

Hi everyone. Found this forum only more recently, but I've been increasingly stepping into this realm for the last 3-4 years. Like many others, I'm trying to get a pulse on how I'm doing towards ER and if I'm setting myself up adequately towards my goals. Hoping y'all can lend some wisdom!

I'm 35 and have been getting it in my head that I'd like to retire around 45. I want to spend more time of my life with interests and enjoyment over obligations... and w*rk is biggest source of that right now. I have no worries about being be bored in ER.

My j*b either demands seemingly infinite hours (w/ no OT), or if I cap hours ~40-45 then immense stress when I'm only getting a fraction of my responsibilities done (and firefighting b/c of that). Either way, I'm usually fried from it. I like what I do, and many of the people, but it's big corp squeezing and politics nonetheless. Pace is very much so pressing at 100% most time. Good chance I can go PT in current corp at a point in future; has been a mitigation in my head.

I am married, no kid yet but 1 planned soonish. Wife (younger) and I manage our finances fairly independently and split shared things pretty evenly. Both of us are fairly frugal and don't consider ourselves spendy. Wife is a good saver but not ER level, & has lower salary. She does not expect to retire as early as I and won't push for it like I will. As such, I've been doing most ER pre-planning with only my slice of the pie #s. Figures as follows:

Salary 123k gross
- Invest 30-45k yrly + 12k empl contrib, can/will max out 401k/Roth/HSA til ER, trying out mega backdoor roth this year

NW ~400k (excl house)
- Cash 98k, HYSA, clearly let this run away in recent years, still nervous nowadays to invest most of it due to the Rona uncertainty
- 401ks 247k, 85/15 mix recently throttled to 80/20
- Roth 36k, Robo aggressive
- After tax 9k, Robo aggressive
- HSA 12k, aggressive

529 8k
Mortgage -135k

Spending 30-50k yrly on my own, been driven by lots of housework and our wedding in recent past. I've got ~12yrs of my spending data so solid basis for analysis and trends. Live in taxy New England.

I've put in a fairly significant effort into modeling and estimating future costs, but would love some other input.

Accounted for:
-Future child (national avgs + 529 contribs)
-Healthcare (latest national estimates)
-Moving twice (next house more $, older settle to mid)
-Commuter car cycles + maintenance tolerance
-Priv health insurance when wife retires til medicare (assuming going on hers in earliest ER)

Not accounted for:
-LTC (would prefer to self- insure/fund)
-Addtl children (not in our plan but)
-Child dependant past 19
-Drastic lifestyle change (ex. not planned to do 8 yrly vacas vs. current 1-2 avg...but sounds nice )

I don't have any set goals yet for leaving an inheritance, but do want that to at least some degree. Ideally I'd like to live off interest in retirement and pass a trust or something, but not sure how realistic that is given the math and time.

So... wrapping up, final questions:
- How realistic does ER@45 feel? Any strong actions recommended to course correct?
- Any glaring assumptions missed?

Thanks everyone in advance and for reading this long winded babbling

 

[ckelly78z]

A child (or three) will change everything, it's not about the newborn-18 yrs old cost, it is about the assurance that they are taken care of no matter what, with whatever it takes.

Everything you have listed is given a dollar amount, and children can't be put on that list.

 

[The Cosmic Avenger]

A child (or three) will change everything, it's not about the newborn-18 yrs old cost, it is about the assurance that they are taken care of no matter what, with whatever it takes.

Everything you have listed is given a dollar amount, and children can't be put on that list.

I have to agree, it's difficult to quantify all the extras that you wind up paying for with kids. Child care alone can be more than $1K/month for infants, depending on your area's cost of living. But overall, I think you have a decent plan, just know that you definitely will not stick to your plan, it's a guideline. You may overshoot, you may undershoot, the important thing is to keep working at it over time.

 

[Aerides]

10 years is certainly doable, if you continue on a career progression that would be typical for someone already cracking into low 6-figures at 35. But that means not thinking about cutting back hours, instead, leaning in, getting promoted, learning to manipulate the internal politics to your advantage, etc.

If it's a big corp like you say, consider jumping around in lateral moves every 2 to 3 years. You'll learn more, and get some honeymoon periods as you go. Dialing back is appropriate when you're on the other side of the curve, not now.

 

[Engineered-FIRE]

A child (or three) will change everything, it's not about the newborn-18 yrs old cost, it is about the assurance that they are taken care of no matter what, with whatever it takes.

Everything you have listed is given a dollar amount, and children can't be put on that list.

I understand the spirit of your comments, and I agree. I suppose I'd provide the assurance factor by having plenty of room in my plan to provide in extraordinary circumstances, and adjust however req'd if preplanning wasn't enough. Not trying to minimize any emotional importance! Just trying to monetarily plan.

I have to agree, it's difficult to quantify all the extras that you wind up paying for with kids. Child care alone can be more than $1K/month for infants, depending on your area's cost of living. But overall, I think you have a decent plan, just know that you definitely will not stick to your plan, it's a guideline. You may overshoot, you may undershoot, the important thing is to keep working at it over time.

Understood they're a wildcard. To that point, I tried to educate myself on studies that attempted to capture that, ex:

https://www.usda.gov/media/blog/2017/01/13/cost-raising-child
https://www.investopedia.com/articles/personal-finance/090415/cost-raising-child-america.asp

I had also found a worksheet out there that aligned with these high level estimates. I ended up earmarking ~335K incl. 529 contribs through age 0-18. Like you said, may be an under or over, but I certainly didn't want to NOT plan ahead at all for one because of future uncertainty.

 

[Engineered-FIRE]

10 years is certainly doable, if you continue on a career progression that would be typical for someone already cracking into low 6-figures at 35. But that means not thinking about cutting back hours, instead, leaning in, getting promoted, learning to manipulate the internal politics to your advantage, etc.

If it's a big corp like you say, consider jumping around in lateral moves every 2 to 3 years. You'll learn more, and get some honeymoon periods as you go. Dialing back is appropriate when you're on the other side of the curve, not now.

Thanks for the encouraging comment! I'm sure hoping so...

And yea, agreed in large part on the career aspect. I've accepted that I have to keep focus until I'm closer to the goal line. I refuse to be working so much, though, that I won't stay married or have my [future] kid grow up without me noticing

I certainly take on increasing roles and responsibilities, albeit not moving around "enough", and I can do better at getting compensated for it. I feel I've had the company's interests above my own a bit too much, which I'm sure is how they want you to feel to get a good ROI out of you..

 

[JoeWras]

Another engineer here. I started thinking about FIRE about age 35 too. I also shot for age 45. We ended up not having any kids. My cousin retired at 45 so she was my model. Then again, she sold a business for millions.

The upshot: I retired instead at 55. I was not comfortable with it at 45.

I'm doing some calculations in my head, and assuming normal rates of return of 6% or so, you are looking at a NW of maybe $1.5M at 45, maybe $2M depending on your salary and savings.

That's 10 years from now, so that $2M is discounted. I think you could do FIRE, but it will be fairly lean.

I think Aerides gives very sound advice. When I look back at my career, I really hoofed it from 35 to 45 and it paid off. My savings rate went way up, and we burned the mortgage.

At 45, I ran out of steam, and unfortunately, the 2008 crisis hit. You may be hit with a 2008 style crisis like I was. In a 10 year window, there's a good chance you will. After the crisis, Megacorp became a place where promotions were rare. Frankly, I started cruising. The good news is that I had a bit of a life out of work. You'll want to spend time with your kid(s) before they become cranky teenagers too.

During the cruise, they started aggressively laying off. My new goal was 55, so I stuck with it, and had to buckle down a bit. Then one day, freedom! By adding 10 years, we're very confident and although we are not FAT FIRE, we are not lean either.

So, make your plan. Be aggressive now, and consider backup plans should it go south.

 

[SnowballCamper]

FWIW I'd be much more aggressive with your asset allocation. You're at 25% cash. If you need that much for the job loss safety net, then ok. My method was to invest every extra cent (and in retrospect I should have used strictly index funds, but did fine with a soup of other things). Time is on your side if you are fully invested, but it only degrades the cash pile. The earning years make for a natural dollar cost averaging, just buy into your index fund of choice with each paycheck. Not many ten year periods are a net loss, and if you're DCAing each month, you bought into the dips. Good Luck.

 

[Montecfo]

Hi Engineered-Fire,

Congrats on prioritizing FIRE at a young age. Here are my thoughts.

All you can do is have a target and head toward it. My goal was also 45, then 50 then 55 (when I had achieved FIRE). But I hung on hoping for a big payday on my startup company stock. Finally gave up on that and retired at 59. Was also in an infinite hours job but having substantial assets gave me options as it will for you. If anything I probably should have retired at 55.

The flip side is I have far more resources than expected. But I am also older with fewer years to enjoy the not working life. Tradeoffs.

Having kids has been a very enriching experience, beyond FIRE. We were only able to have one. It can be hard to be an only child. We wish we could have had 2 or 3. Kids need not derail FIRE in my opinion as long as you use your frugal smarts and don't spring for private education. They cost more but are well worth it.

As far as your finances, I was 100 percent equities at your stage. You need your money working for you in equities. Stay Fully Invested.

Aiming for FIRE can be highly motivating and satisfying it provides a sense of control when your career is not providing that. "There is Joy in the Journey". Exactly when you do arrive is less important in my view, but don't ease off the gas.

Best of luck.

 

[DrRoy]

A 3rd engineer here (RE'ed @57). I did not go over the details of your financials, but the fact that you have such a detailed grasp over it means that you are on a very good path. Work the plan and see where it takes you.

 

[mystang52]

Nothing wrong with a 10 year target, but a lot can happen during that time. Lifestyle desires may change, more than one kid may come along, etc. Regardless, you sure have a great financial base. Just stay the course, and don't be obsessed with a fixed 10 year target. If you make it, great. If instead you have to ER at 50, that's still pretty darned good. Make sure you enjoy life along the way.

 

[Hermit]

My kids went to private school from 6th grade through high school. I didn't see that coming until it happened. It was the right thing for us as a family to do. I am glad I had the flexibility in my planning to allow it to happen without any feelings that I had to sacrifice an early retirement when we took that path. We still managed to save plenty during those years.

 

[G8tr]

My kids went to private school from 6th grade through high school. I didn't see that coming until it happened. It was the right thing for us as a family to do. I am glad I had the flexibility in my planning to allow it to happen without any feelings that I had to sacrifice an early retirement when we took that path. We still managed to save plenty during those years.

I don't want to detail the thread, but having the financial resources to go private in the event you disagree with how your local public school system is acting (eg change in curriculum or school rezoning) is a good idea if you can afford it. If you don't need it, then you'll have extra money for their college education.

 

[cyber888]

You could double your networth in 10 years to $800K, or even more $900-$1 mil. But as others said, your lifestyle and spending could change. Just keep on saving as you projected and re-assess in 10 years.

With children and all, it's not enough. I think 55 - 58 years old may be more realistic. I always aimed for early 50s but I'm aiming for 59 yrs old now. There will be unforseen expenses along the way, including enjoying life and traveling. I never regret traveling to 30+ countries and spending for it while I was younger.

 

[pacergal]

Welcome to the forum! This is a great place to learn and ask questions.

Sounds like you have a good plan, a reminder that having children can change plans considerably.
How long will you or your wife be home with baby? What if one of you decides to be a stay at home parent? Have you investigated the cost of infant care/child care if you both continue to work? Around here, $1500+ per month is not unusual for infants.

45 sounds early to retire, but many have done it successfully.

 

[teetee]

I doubled my nw from 400k to 800k in last three years with income between 90k-100k (200k increase in 2020 alone). No lottery or inheritance. I think income is the fastest way to accumulate wealth but saving and investing are the key to its growth. Yes kid expense can be uncertain but that takes communication with your spouse on how to save for your future then just dumping money into the childcare without planning. Don't be shy asking support from your relatives either. Many would help to chip in. At least mine did.

I think 45 RE goal is too optimistic considering your ability to save (45k a year is close to 1/3 of your gross, tbh not fast enough for your goal). It also depends on your future earning increase rate and how much you can resist the spending increase with your growing nw. I thought I could maintain the same saving rate and separate it from my nw level but it is not easy. My 'slipping' rate increased. I even subscribed news media earlier this year.

On the career/work front I am going through similar stress level you described from being in a small silicon valley company. I am in bed most of the time on the weekends. Both physical and mental drain keeps me from enjoy life and motivates me to dream about leaving it. It is the race between my steam and annual salary increase. The job is meaningful but it takes too much out of a person. COVID induced house arrest only made it worse since my ability to stick in front of the computer all day increased.

I would always include real estate asset/liability into my net worth calculation.

100k cash is not risky enough of an investment for your age. I kept 15k as my emergency fund and the rest are invested in stock index and I am way older. You are basically forgoing 1/4 of investment return. I would throw the cash into paying off your house and own your house outright before 2022 starts.

 

[dukebound85]

You seem to be in a very similar spot as me as well as a fellow engineer

IA NW = ~410k
NW with properties are about ~790k

Wife and I are 36 with a newborn ad we too hope for a 10 year working life

I am enjoying the journey but hope it was faster many days

 

[RetireeRobert]

You have a plan, just keep working it. Ten years can be doable with some breaks along the was such as cooperative markets. You will need to keep refining your target every few years, so you know if your are nearing "your idea" of what is sufficient for FI, so you can RE.

I notice you list assets of $8k in 529 plan, but say you do not have a kid yet? That is planning ahead! Or is that 529 left over from your own schooling?

I would suggest also keep doing what you can to educate DW and get her on board with your thinking and plans and targets.

 

[ivinsfan]

Your first is using only your numbers you are a couple and will need to consider all assets, all income and total expenses to really get a handle on your numbers?


For example you say your DW makes considerably less then you do. Do you split expenses 50/50 or % wise according to income.


On your net worth listing is that your total new worth or what % of your total. To get solid advice here you need to give the entire picture.

 

[Youngblood]

Engineered-Fire, you have already made great progress and seem to have a good plan in place. I'll echo what others have said, that things can change quickly. For now, just keep working your plan, track your progress, and adapt when necessary.....and run FIRE Calc