41 and spending too much time thinking about FIRE lately!

[Aiming_4_55]

I’ve been lurking for about a month reading a variety of interesting posts. Thank you all for sharing.

I know I’m not FIRE yet, but I want to position myself for it by 55 maybe sooner thus giving me more options. Life is good just want to make it better with more options as I get older.

Family background – Married for 10 years, spouse and I are 41, 2 kids (4 and 3), home is MN but originally from IL, might move back if opportunity presents itself. Family in both locations.

$$ Background – Annual salary of $125k (spend is about 50%), DW is SAHM, Limited debt: Primary residence paid in full (275k value), minivan 5k balance @ 0%, about a year left, 6 month emergency fund of about $25k in MM, live below our means, but a fair budget, enjoy a few vacations a year, dining out 2 – 3 times a week. No other debt.

Investments – Index fund investor but consolidated last few years into Vanguard/Fidelity Target Fund 2035 estimate $900k (40% taxable/50% 401k/10% Roth). I probably should learn to invest better, but like to keep it simple as time is limited. Rental property value $600k with $195k mortgage @ 4.125%, 15 years remaining, monthly positive cash flow about $2400. I perform most of the management. MN 529 plan for the kids about $40k (50% adjust based on age/50% all equities), contributing $500 a month.

Annual Retirement contributions – about $25k (401k, employer contribution, Roth), regular savings about $15-20k estimate.

This year, we completed the adoption of my 3 year. The 4 year old was via IVF, so starting the family was a struggle over 8 years. Prior to marriage and family, career and making $$ was important. I no longer feel that way, took 6 weeks of vacation this year, all away from home!

• Goal – Retire @ 55 or sooner

How do my numbers look in general? To be conservative, I would estimate my expenses/spend in retirement to be about $75k until SS and medicare per year. I feel my wildcard will be cost of healthcare at 55.

Thanks for the feedback!

 

[Coach]

Hi, Aiming_4_55 and welcome to the forum!

You look like you're doing great to me--your family are clearly great savers. But it you run your numbers through FIRECalc (there's a link down below in one of the green bars) you'll get a more informed idea of where you stand.

I'm a fan of targeted investment funds, so your investment choices make sense to me. And I think real estate can be a good way to diversify, so I like the rental property, when you can do most of the managing yourself.

You're working on the kids' education, too. I can't think of a base you haven't covered. You're right about health insurance, but there's lots of time for that to become clearer.

Glad to have you aboard, and looking forward to your future posts.

Coach

 

[plex]

Plugged in your numbers, assuming your rental equity, but not your home equity, as part of your assets ($1.3M in assets), and the other points you mentioned ($75k expenses on average/year), you can retire at 48 with $2.2M in assets. Probably give or take a year depending on things actually work out (like healthcare). I did not count your rental income as perpetual, since i don't know the net positive cash flow, or how long you plan to keep it, so can't really determine how beneficial the rental income is for you. Didn't factor in SS, too far away for it to make a significant difference, though you will be drawing 30-40% of your income from it when you do hit that age most likely.

 

[Aiming_4_55]

Coach - Thanks for the response. I will look at FireCalc, I tried it previously and provided good results for my target. I'm still trying to figure out what I will have at a certain age and what it will be after my estimated annual expenses/spend.

Any opinion on the CNN retirement calculator?

Thanks again.

Hi, Aiming_4_55 and welcome to the forum!

You look like you're doing great to me--your family are clearly great savers. But it you run your numbers through FIRECalc (there's a link down below in one of the green bars) you'll get a more informed idea of where you stand.

I'm a fan of targeted investment funds, so your investment choices make sense to me. And I think real estate can be a good way to diversify, so I like the rental property, when you can do most of the managing yourself.

You're working on the kids' education, too. I can't think of a base you haven't covered. You're right about health insurance, but there's lots of time for that to become clearer.

Glad to have you aboard, and looking forward to your future posts.

Coach

 

[Aiming_4_55]

Plex - Thanks for your response and plugging in my numbers. I appreciate it. What tool did you plug it into?

Being conservative, the $2.4k from rentals is after all expenses, estimated repairs, vacancies ... some cushion for paying me a small management fee too. My thought is to hold it until it becomes a hassle... which I guess 5 - 10 more years or maybe longer. By that time, I hope the value recovers from current conditions. The 600k value is current value, so I hope in 10 years, it would be 1M, but ok it it doesn't as it cashflows very well.

If the numbers work out, 48 would be very nice and gives me more flexibility/options in the future. That's great.

Plugged in your numbers, assuming your rental equity, but not your home equity, as part of your assets ($1.3M in assets), and the other points you mentioned ($75k expenses on average/year), you can retire at 48 with $2.2M in assets. Probably give or take a year depending on things actually work out (like healthcare). I did not count your rental income as perpetual, since i don't know the net positive cash flow, or how long you plan to keep it, so can't really determine how beneficial the rental income is for you. Didn't factor in SS, too far away for it to make a significant difference, though you will be drawing 30-40% of your income from it when you do hit that age most likely.

 

[REWahoo]

Thanks for your response and plugging in my numbers. I appreciate it. What tool did you plug it into?

I suspect it was the financial tool associated with E-R.org: FIRECalc: A different kind of retirement calculator

 

[plex]

I used a spreadsheet that takes into account everything FIREcalc does. Except the spreadsheet called "Generation-X Retirement Calculator" does a better job of determining how long it will take to get to retirement if you are not there yet, rather than just the amount needed. The spreadsheet isn't so useful for determining when you run out of money if you are already in retirement.

If the rental did appreciate significantly in the next 4-5 years, from 600k to 1M, you may be able to retire at 46, if you plan on selling it then, since you will hit 2.2M faster. But, that sort of stuff isn't something to plan on.

 

[Aiming_4_55]

Plex - I'm not counting on extreme appreciation, but some would be nice.

It looks like 3.5% SWR on 2.2M based on your spreadsheet tool. Personally, I've been thinking my magic number would be 3M with a nice college fund for the kids, then I'll be FIRE.

Thanks for your feedback.

I used a spreadsheet that takes into account everything FIREcalc does. Except the spreadsheet called "Generation-X Retirement Calculator" does a better job of determining how long it will take to get to retirement if you are not there yet, rather than just the amount needed. The spreadsheet isn't so useful for determining when you run out of money if you are already in retirement.

If the rental did appreciate significantly in the next 4-5 years, from 600k to 1M, you may be able to retire at 46, if you plan on selling it then, since you will hit 2.2M faster. But, that sort of stuff isn't something to plan on.

 

[ronocnikral]

$$ Background – Annual salary of $125k (spend is about 50%)

How do my numbers look in general? To be conservative, I would estimate my expenses/spend in retirement to be about $75k until SS and medicare per year. I feel my wildcard will be cost of healthcare at 55.

welcome. you do seem to be very well on your way!

out of curiosity, do you spend 50% of net or gross? and what is the $75k spend in retirement based on? you may need to save less money than you think if you can get better handle on the spend (you may need to spend more...). maybe you have done some intense calculations to understand this $75k number, if you have, disregard.

 

[Aiming_4_55]

Thanks for your feedback. The 50% is net. Without a mortgage on my primary residence, we're able to save alot as we try and live a modest lifestyle.

The 75k number is actually on the high side as I factored extra $$ for increased travel/vacations and extra $$ for our kids if they need assistance. They are nice to haves. I really think we can "get by" on $50-60K a year. I respect those that shared their stories and enjoy a quieter life, however when I retire, I will not be stay put.... thus the extra $$. Of course, it'll be reasonable, but I would like to explore many things to better enjoy my time.

welcome. you do seem to be very well on your way!

out of curiosity, do you spend 50% of net or gross? and what is the $75k spend in retirement based on? you may need to save less money than you think if you can get better handle on the spend (you may need to spend more...). maybe you have done some intense calculations to understand this $75k number, if you have, disregard.

 

[ronocnikral]

Thanks for your feedback. The 50% is net. Without a mortgage on my primary residence, we're able to save alot as we try and live a modest lifestyle.

The 75k number is actually on the high side as I factored extra $$ for increased travel/vacations and extra $$ for our kids if they need assistance. They are nice to haves. I really think we can "get by" on $50-60K a year. I respect those that shared their stories and enjoy a quieter life, however when I retire, I will not be stay put.... thus the extra $$. Of course, it'll be reasonable, but I would like to explore many things to better enjoy my time.

I think people in general spend a lot energy in hoarding wealth, and very little concentrating on how it is spent (especially in my generation). The better your understanding of your expenses in retirement will magnify your chances for successfully retiring.

I always suggest to track your spending. DW and I started this year and it is eye opening to see where all the pennies go. It also helps in choosing an amount for my life insurance policy, how much money needs to go into the emergency fund etc. We now have a better understanding on the amount of money we need to survive and the amount we spend on "wants." Sure, you may want to travel and there's nothing wrong with saving for that. But if things don't go the way you plan, can you cut out the travel and still survive? your current spending + your retirement plan --> what you will spend --> what you need to save. You can pencil whip this like most people, but my opinion is the more sound way is to build up from your current spending.

ps, travel doesn't have to be expensive...

 

[Aiming_4_55]

ps, travel doesn't have to be expensive...

I agree that travel doesn't have to be expensive however cost of international flights can be.... domestic travel can be low cost as I enjoy driving. Thx