Plan for Exit 2024

[tbis]

Another "intended" 2024 retiree here, but as fate would have it I have sort of, maybe, possibly gone the other direction...I took a "package" in early December. I won't lie though, it has been a rollercoaster watching my Firecalc score going from an "on the lower edge of comfort" 94% to a "UGH!" 78% after the first month and now back to 92% today. LOADS of uncertainty right now.
64% chance I'm back in the workforce before the end of the year, but we'll see!

 

[Exit 2024]

madman, you may also want to check out this thread

https://www.early-retirement.org/forums/f30/race-to-2024-please-join-81680.html

tbis, life happens but I am really rooting for you to not return to the workforce, hope everything will work out by end of the year and you can continue your FIRE journey!

 

[Exit 2024]

Q1 2023 update

- We finished Q1 at $2,273k, 75.8% of the original target, booked green quarter with +$111k but we still did not recover our our highs, so I consider it to be rather yellow.

- Cash position is still red as we had some large expenses related to heath issue in the close family, had to help out. Also continue to assist child with student loans while they are at 0%.

- Amazingly, I was not capped for 401k contributions although I do fall under HCE definition and was 100% sure that employer will limit me to 6% of payroll as they did many times before. Usually it was around mid of February but we ended March already and no cap yet. Curious what changed.

- Due to inflation and very red 2022 we are seriously looking at postponing FIRE till 2025-2026, will see how it goes

- We have 5Qs (?) to go...

 

[Exit 2024]

Actuals without RE vs High and Low targets.

Slowly recovering and somewhat closing gaps to both target lines but still
Below Low target by $396K
Below High target by $580k

Added linear projection based on Q1 results, of cause it will not go exactly this way every Q, just wanted to see where we could fall in case out NW growth will keep around that pace. As you can see: 6-12 months behind and that is probably too optimistic. We will keep going

Image is clickable

 

[tbis]

madman, you may also want to check out this thread

https://www.early-retirement.org/forums/f30/race-to-2024-please-join-81680.html

tbis, life happens but I am really rooting for you to not return to the workforce, hope everything will work out by end of the year and you can continue your FIRE journey!

Thanks Exit 2024 It is sort of crazy how close my numbers are to yours (like within a $100K or so). Every quarter is its own rollercoaster that's for sure. Rooting for you too!

 

[Exit 2024]

Thanks Exit 2024 It is sort of crazy how close my numbers are to yours (like within a $100K or so). Every quarter is its own rollercoaster that's for sure. Rooting for you too!

Interesting that you was able to retired with about the same NW numbers, if I may ask what is you spend per year? I would guess less than our $90k original target

 

[tbis]

Interesting that you was able to retired with about the same NW numbers, if I may ask what is you spend per year? I would guess less than our $90k original target

Our spend is much higher actually - $148K per year (includes taxes). Of course there are a lot of nuances as follows:


Funds - $2.4M - not including home equity (I can't sell some of the equity so I ignore it...and assume it will be used for long term care at some point if need be). I missed your fund total include some equity.

Salary - I took a package in December, so am still drawing a salary through early August.

Ages - I think you are 53 or 54 now. I am 56 and my severance pay stops right before I turn 57....so I have a couple years on your target age. However, the bigger delta is my wife...she is 65! Neither of us has a pension, but we plan to start drawing SS when she turns 70 and I turn 62. So we get that healthy shot of income starting in 5 years. Without this, we would be nowhere near being able to retire on our planned spend.

Biggest risks right now for us (like most I suppose) are inflation and the market. If it takes another big leg down...I'm back to work.

 

[Exit 2024]

Thanks for detailed explanation,tbis, it all make sense actually.

We do count RE in total NW, although it not only our house, it is also includes small condo that child was living in while in the college and now it is rented out.

Both REs counted at purchase price. Currently Zillow shows 2 of them worth $250k more but I do not see the point to count that amount in NW and as far as setting up FIRE targets - both were not counted from the beginning anyways.
Originally, when I started this thread, I included RE equity just to show that our extra mortgage payments were not just spending, we have been reducing debt and adding to the overall NW.

 

[The Cosmic Avenger]

tbis, including RE in your NW, especially a primary residence, is as contentious a topic here as the "best" age to start taking Social Security! Since I use Fidelity Full View, I have it set up to show me both total NW and total investable/liquid assets at the top. I figure that when we retire, if we want to move it would be good to include our home value in our total NW, as we could spend more or less than our current home would fetch, but for our withdrawal rate I always use our investable assets.

 

[madman]

Great thread!

madman, you may also want to check out this thread

https://www.early-retirement.org/forums/f30/race-to-2024-please-join-81680.html

tbis, life happens but I am really rooting for you to not return to the workforce, hope everything will work out by end of the year and you can continue your FIRE journey!

Read the thread, great to see the long term goals coming together! Seems like several of us are in a similar place money wise. Minus home equity and kids college money I am around $2.4M active investments. I want to get closer to $3M to pull the trigger next year but market has been tricky. Seems like as soon as it is up it pulls back and NW stays about the same. I think in April 2024 I might go to part time (20 hours per week consulting my replacement) for a year or two since market returns are less than I was expecting for past 3 years. Either way, expect to semi-fire in a year and spend more time on a beach vs office.

 

[Exit 2024]

I hear you, madman
We have about the same goal as you of $2.7-3M investments before we pull the trigger, and also stuck at current levels. I still expect some additional market downturn though before it will go higher, if I am right - our FIRE date will shift to 2025-26.

 

[madman]

I hear you, madman
We have about the same goal as you of $2.7-3M investments before we pull the trigger, and also stuck at current levels. I still expect some additional market downturn though before it will go higher, if I am right - our FIRE date will shift to 2025-26.

I am expecting a downturn as well. Last year I thought it would happen by now, but thinking end of this year or early next year. With current inflation and interest rates people are finally pulling back on spending but will take awhile for the economy and market to feel it and react. For now, I am still holding stocks and buying more so will be interesting to see how next 12 months plays out. My plan now instead of retiring April 2024 is to go down to 20 hours a week consulting with a 50% pay cut which I will pitch to my boss. Let's see how the next 12 months play out with the market.

 

[DesertSolitaire]

Exit, thank you for posting this thread. What a wonderful amount of information to digest. Much appreciated for the Quarterly postings and commentary. Rooting for you to retire sooner than your estimation.

 

[Exit 2024]

Q2 2023 update

- We finished Q2 at all time high of $2,413k, 80.4% of the original target, booked green quarter with +$140k and +$251K YTD thanks to the market run up in the June.

- Cash position is still red but we are closing that gap slowly.

- My 401k contributions got capped for HCE, will be trying to bump up our after tax savings after we fund our Roth IRAs for this year.

- Due to inflation and very red 2022 we are definitely behind, to retire in 4 Qs as we planned originally is out of the questions right now, will see if 6 Qs will get us to the finish line, that still can put us into the class of 2024

- We have 6Qs (?) to go...

 

[Exit 2024]

Actuals without RE vs High and Low targets.

Slowly recovering and somewhat closing gaps to both target lines but still
Below Low target by $327K
Below High target by $534k

Added linear projection based on last 3 quarters results, of cause it will not go exactly this way every Q, just wanted to see where we could fall in case we will be able to keep that pace.

Image is clickable

 

[Love This Community]

Nice update exit! If you can push through 6 more Q,s that’ll help while staying in the class of 2024. Will be watching if you will be a victim of OMY syndrome or not [emoji3]

 

[Exit 2024]

Nice update exit! If you can push through 6 more Q,s that’ll help while staying in the class of 2024. Will be watching if you will be a victim of OMY syndrome or not [emoji3]

Thanks LTC, I am curious myself as OMY constantly on my mind already, I even changed avatar to get myself focused on the finish line more than on the road to it

 

[LateToFIRE]

Thanks LTC, I am curious myself as OMY constantly on my mind already, I even changed avatar to get myself focused on the finish line more than on the road to it

Don't let OMY syndrome kick in. I had targeted mid-50's for RE, now looking like early 60's. The upside is more time for portfolio to grow (and my confidence level along with it), the downside of course, is the opportunity cost (shorter remaining lifespan). As the many stories I've read on this forum have made the point clear - we never know how much time we've got left.

One way I would rationalize pulling the trigger in a down market, which probably what we'll have over the 12 months, is that SOR risk is reduced vs if you RE'd at a market peak.

 

[Exchme]

I didn't read the whole thread, but don't forget to increase your spending estimates by inflation. It was forgettable when it was running 1-2%/year but it's front and center these days.

 

[LateToFIRE]

I didn't read the whole thread, but don't forget to increase your spending estimates by inflation. It was forgettable when it was running 1-2%/year but it's front and center these days.

Fair point, but would also encourage OP to check out the work of Ty Bernicke on retirement spending - in a nutshell, retiree spending tends to decline significantly with age (until you get to the LTC phase). Maybe this is a bit less applicable to early retirees (more active years), but gave me a whole new perspective on how to think about budgeting for inflation. Can confirm, I observed this decline in spending in both own family and in-laws - once folks hit about 75, seems like the last thing they want to do is spend money, even if they've got plenty of it.

EDIT: Example, my MIL was a real Millionaire Next Door character. In her 80's we'd take her shopping to get her out of the house. If she found a one dollar coffee mug on sale at Walmart she was happier than a clam. $3,000 Big screen TV - she'd ask (because we handled her finances by that time) - "Can I afford this?. And we'd go "yes ma, you can afford ten of um if you want." Then she'd go, nawww, my old TV is just fine.

 

[madatrub]

Q2 2023 update

- We finished Q2 at all time high of $2,413k, 80.4% of the original target, booked green quarter with +$140k and +$251K YTD thanks to the market run up in the June.

- Cash position is still red but we are closing that gap slowly.

- My 401k contributions got capped for HCE, will be trying to bump up our after tax savings after we fund our Roth IRAs for this year.

- Due to inflation and very red 2022 we are definitely behind, to retire in 4 Qs as we planned originally is out of the questions right now, will see if 6 Qs will get us to the finish line, that still can put us into the class of 2024

- We have 6Qs (?) to go...

Thanks for this thread. Was wild going back through when you originally started it until now.

Out of curiosity, you managed a pretty good roth, was that through 401k or did you backdoor conversions through the years? Also nice shifts in HSA balance over the years, i noticed from 2020 to 2023 you grew HSA from 130 to 197. Max contribution is only 22k in those 3 years for a family. Was the delta all capital gains?

 

[Exit 2024]

Don't let OMY syndrome kick in. I had targeted mid-50's for RE, now looking like early 60's. The upside is more time for portfolio to grow (and my confidence level along with it), the downside of course, is the opportunity cost (shorter remaining lifespan). As the many stories I've read on this forum have made the point clear - we never know how much time we've got left.

One way I would rationalize pulling the trigger in a down market, which probably what we'll have over the 12 months, is that SOR risk is reduced vs if you RE'd at a market peak.

Thanks, LateToFIRE, I am having the same thoughts that are circular in some way:
-OMY on one hand will let us to accumulate more and have shorter timeframe before we claim SS, it is better for portfolio sustainability
-on other hand shorter period of healthy years that will allow us to travel intensively - push against of OMY,
-but to do that travel we do need a bigger and more stable nest egg in the current inflationary environment and that again justifies OMY

Thank you for suggestion to read Ty Bernicke, I will definitely check it out, may be that will give me better confidence in spending more in earlier years for travel at expense of less spending later in life.

 

[Exit 2024]

I didn't read the whole thread, but don't forget to increase your spending estimates by inflation. It was forgettable when it was running 1-2%/year but it's front and center these days.

Thanks, Exchme, you are correct to point inflation, it is constantly on my mind and that is why I started to track against 2 targets, "low" - original from the first post and "high" - to account for increased spending due to increased costs.

 

[Exit 2024]

Thanks for this thread. Was wild going back through when you originally started it until now.

Out of curiosity, you managed a pretty good roth, was that through 401k or did you backdoor conversions through the years? Also nice shifts in HSA balance over the years, i noticed from 2020 to 2023 you grew HSA from 130 to 197. Max contribution is only 22k in those 3 years for a family. Was the delta all capital gains?

Thanks, madatrub it also looks crazy to me to read my first post here and see where we have been just 8 years ago and where we are now.

About your questions:

ROTHs - never did 401k Roths as we already have a sizable tax bite every year, so maxing out pretax 401k only. All our Roth IRA contributions since 2010 go through the "backdoor" we maxing out them every year, it requires to file additional tax form but whole process is very simple and uneventful, we use Vanguard.
I also have 2 older Roths from the times when we have been eligible to contribute directly (2005-2009), back then I used those accounts to buy individual stock and tried to trade As you can imagine I was not very good at that and eventually just left couple position in each to sit and grow on its own. Both accounts had total $22k contributions and grew up to $205k as of end of Q2. I just got lucky I guess to have almost 10 fold gain - still holding those stocks

HSAs - I got that question pretty often - how we amassed such amount in such type of accounts. Short answer - we started to contribute in 2006, first year when it was offered by our employers and since then have been maxing out every year and never took anything out. Almost whole amount is invested into the single ETF and you are correct - growth between 2020 and 2023 is partially due to contributions and rest is capital gains plus reinvested dividends. Nothing fancy here

 

[madatrub]

Thanks, madatrub it also looks crazy to me to read my first post here and see where we have been just 8 years ago and where we are now.

About your questions:

ROTHs - never did 401k Roths as we already have a sizable tax bite every year, so maxing out pretax 401k only. All our Roth IRA contributions since 2010 go through the "backdoor" we maxing out them every year, it requires to file additional tax form but whole process is very simple and uneventful, we use Vanguard.
I also have 2 older Roths from the times when we have been eligible to contribute directly (2005-2009), back then I used those accounts to buy individual stock and tried to trade As you can imagine I was not very good at that and eventually just left couple position in each to sit and grow on its own. Both accounts had total $22k contributions and grew up to $205k as of end of Q2. I just got lucky I guess to have almost 10 fold gain - still holding those stocks

HSAs - I got that question pretty often - how we amassed such amount in such type of accounts. Short answer - we started to contribute in 2006, first year when it was offered by our employers and since then have been maxing out every year and never took anything out. Almost whole amount is invested into the single ETF and you are correct - growth between 2020 and 2023 is partially due to contributions and rest is capital gains plus reinvested dividends. Nothing fancy here

Thanks. Your case is intriguing to me because I'm about 5 years behind you (age wise, you'll be retiring soon, I still have 9 years left), so it gives me a good thing to compare with. We've been doing backdoor conversions with Roth, and will continue until our retirement.

For our HSAs, we still have some work to do lol.