32/31 years old...when to FIRE?

[ponyboy]

I just recently found this forum and im loving it. I was always a fan of bogleheads but an entire site dedicated to early retirement is like a dream come true!

Im 32...my wife is 31...heres our situation...

Taxable accounts: $64,000
Roths - $136,000
401ks - $250,000
Cash - $152,000

Total: $600,000

We plan on buying a home in 2 years...it will cost $210,000...thats the reason we have so much cash at the moment. My goal when I was 30 was to have a house paid completely off by the time I hit 40 years old...or to have a million in investments/cash. Not sure if we'll make a million...so I may just aim for paying off house.

We've been maxing 401s/Roths for many years...hopefully we can do so for years to come. Assuming so...when do you think we can retire? My goal when I was 26 was to retire by 52 or 53 years old. I dont really understand the firecalc application so im wondering if anyone could give me some tips or advice to make sure we can get out at around 52 years old. (or sooner for that matter.)

 

[Senator]

Avoid having kids.
Pay off the mortgage as soon as you can.
Stay healthy.

 

[Whisper66]

Tips?

Spend the time to understand firecalc. It is relatively simple. If you have specific questions about it, you will find folks here very helpful.

Track your spending somehow so you get a good handle and control in your yearly expenses. People here use various tools like simple spreadsheets, Quicken, Mint or others.

Keep saving what you can and still enjoy your life.

Using info from the above run firecalc to see what savings you need to retire at 52 with a reasonable chance of success ( I'd use 90 % or higher at your young age). Remember that while working a large chunk of your money goes to taxes and social security. That's the major change in before and after retirement expenses.

Don't overwork a goal to retire early. There's a lot more to life than working toward retirement.


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[MikeWillRetire]

I'm impressed that you have $600k at age 31, and you only want a house that costs $210k. That's a good indication that you are probably on the right track....unless you inherited the $600k and work in a cover band.

 

[ponyboy]

I'm impressed that you have $600k at age 31, and you only want a house that costs $210k. That's a good indication that you are probably on the right track....unless you inherited the $600k and work in a cover band.

It would have been easier/quicker if we inherited it. Thats how much wife and I have saved total, not just me.

My accounts total $384,000. She makes up the rest.

We do plan on trying to have a child next year. That will probably slow down our savings/investments. Although we will be moving from the metro DC to a LCOL area which will help. $210k doesnt buy you jack in this money pit of a tri state area.

 

[EastWest Gal]

There's more to life than accumulating money. Have the baby. Expect your stress level to go up with lack of sleep and illnesses. We only had one, but he got me into skiing and riding roller coasters. It's mostly been fun.


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[nash031]

You're off to a fantastic start, far better than I was six years ago!

- Get a detailed understanding of your spending - where your money goes, how much of it goes there, and where you can cut back. It doesn't matter how much you save. It matters how much you save relative to how much you spend. $600K saved while spending $300K/yr isn't terrific. $600K saved while spending $50K/yr is halfway to the general rule of thumb minimum for what you'd need to punch out (depending on who you listen to).

- Ignore arbitrary goals. $1MM at a certain age just ends up being a moving goalpost. You'll get there, but you need to know where that is relative to what you need to retire. That goes back to understanding your spending. On this, I had various goals at certain ages, but it turns out they're completely meaningless now even though I am ahead of them. They were arbitrary... Now, I know I need $X.XM minimum to be truly FI and consider retiring, so I'm much more focused on getting to that number... the rest are relatively meaningless. There are a few threads here about people talking about how it felt to get to $1MM. Most say they might've had a glass of bubbly, but in the grand scheme is was just a little bit closer to the goal (and they probably bounced back and forth between six and seven figures a few times with the market anyway!).

- Consider holding on to your mortgage. You're likely to get a better rate of return on your investments than you're going to pay interest on your mortgage. If you get a mortgage at 2.85%, and you can earn 4% real, you're making money by not paying it down early. Further, a $1500k/month payment may be a significant hit right now, but over 15 or 30 years, that hit becomes less as inflation continues - your payment doesn't increase (assuming a fixed rate) but your gross income should. It's not a "mistake" per se to pay down a mortgage early, but it's often not optimal. YMMV... lots of people just like the feeling of being debt free... I'm aiming for FI before I worry about paying our mortgage down.

 

[aaronc879]

Agree with Nash. You say nothing about your expenses. Your expenses are just as important as your savings. I could retire now at age 36 if I had $600K while many others wouldn't consider retirement without $2M+. You need to figure out how much you'll want to spend every year in retirement then multiply that by at least 25, 33-40 for those who are more conservative.

 

[ronocnikral]

I'm a fellow 32 yo and I'd like to say you've done well. As others have said, when you can retire depends not only on savings, but also what you spend.

The most important thing I've learned on this forum in the last 5 years is to enjoy life. Being first to the finish line may or may not be interesting or fun for you, and leave you gasping for breath. We're on round 3 of pushing out a kid, and I wouldn't trade them for anything.

 

[ponyboy]

Ive been tracking our expenses in quicken for almost 2 years now...end of this year will make it 2 years of tracked expenses. Our expenses were approx $35,000/last year, looking very similar this year as well. That includes $13,000 in rent alone. Thats our biggest expense. Travel is our 2nd biggest expense. That was approx $8500 last year. We like to splurge on travel. I certainly dont feel like we ever go without. If we want something we buy it. We're just not the kind of people who need flashy stuff.

Guess we have a ways to go. I think by age 50-52 we should be in really really good shape to hang it up.

 

[Closet_Gamer]

Tips:

Save, save, save.

Know your target and baseline savings/investing path to get there -- then get ahead of that curve every chance you get.

Take calculated risks to create step function improvements. A solid financial footing creates risk capacity. Use it, but use it wisely.

Pay off the house or don't. We did, I'm happy we did, but both paths are viable. There are only about 5000 old threads hacking out the pros/cons of that decision!

Enjoy the kid(s). Don't under-estimate college and get started on that early. Value experiences with them at least as highly as any financial goal you're dragging around with you. I value the shared memories with my kids 100x more than the reward of hitting my FIRE milestones (not FIRE'd yet...hopefully 5-10 years depending on my choices)

Good luck. You're off to a huge start!

 

[nash031]

Ive been tracking our expenses in quicken for almost 2 years now...end of this year will make it 2 years of tracked expenses. Our expenses were approx $35,000/last year, looking very similar this year as well. That includes $13,000 in rent alone. Thats our biggest expense. Travel is our 2nd biggest expense. That was approx $8500 last year. We like to splurge on travel. I certainly dont feel like we ever go without. If we want something we buy it. We're just not the kind of people who need flashy stuff.

Guess we have a ways to go. I think by age 50-52 we should be in really really good shape to hang it up.

If this is really true, you could be done before 40. General minimum rule of thumb some use is 25x expenses to retire. Now, that's a thirty year retirement so many would urge a general 30 or 33x expenses as a baseline. That puts you well over halfway there in either case.

I would just caution against those numbers right now... Chances are your spending will go up, and especially if you have kids as you know.

You're off to a great start!

 

[YeahNo]

We are slightly older than you (33 and 34) and have slightly more than you (850k). To get to the point that you and I are in we had to plan and optimize. My advice to you is to keep on doing what you are doing. Keep that head down working, grinding it out. That is the phase you and I are in. There aren't any magical time warp loopholes to get us there faster as we are already as efficient as possible. Head down and work.