33 & Hoping to FIRE in 3 Years

[mf567]

I'm 33, single, living in CT, and I’d like to stop working full time in 3 years. I’ve been chasing my “FIRE Number” based on 4% for as long as I can remember, but now struggling with the mechanics of actually doing it.

Financial info: Just recently surpassed a $1M net worth for the first time;

• Home is valued at $525k and I own it outright with no mortgage
• $300k 401k balance
• $200k Cash
• I save approximately $110k annually after taxes (230k salary and 20k in annual living expenses.
• I add another $10k year to my Roth 401k and have approximately $10k matched by my employer in a Traditional.
• I would ideally like to continue working in 3 years, but just find 4-6 month contract positions during these cold new England winters and enjoy my summers.

I have a Masters of Science in Data Analytics so I’m pretty comfortable running various financial scenarios. And while I’ve done my fair share of investing, including options trading, I’ve always been very conservative with investments. Most of the work I’ve done to get this far has been cutting expenses and funding “sweat equity investments” like my graduate degree or building my home myself. I like to have cash on hand for those investments when the opportunities arise. Cash also helps me sleep better at night.

I’d love to hear how others who are fairly conservative would use $500k in cash to earn 4% annually. An allocation of stocks/bonds? Actively managed by yourself or a financial advisor? Any extra consideration for when markets are already trading at all-time highs? I like the idea of annuities with an inflation rider in theory, but I hear those get eroded by fees and are often hard to find non-lifetime but still long term ones available to someone my age.

 

[OK EE]

Net worth is a pretty useless number because it includes your primary residence so unless you plan on living in a cardboard box you can't count your house as a retirement asset.

I would make sure you nail down your budget. Rough numbers you can take your last years after tax pay and subtract whatever you saved in after tax accounts and that's your current spend level. Remember that once you're no longer employed you need to account for health care. That can vary wildly, but as a young single person I would assume at least 10K/yr.

You do not want to use "cash" to grow 4%. Money market/high yield savings will marginally protect against inflation but won't grow. You need to be invested in equities. If you want to be conservative I would recommend a 60/40 asset split 60% equities 40% cash equivalents (bonds, etc). I would invest the equities in a broad market fund that diversifies both across company size and location. Vanguards VT is the easy button here.

 

[NgineER]

Welcome to the forum and the two-comma club!

First off, is there a typo in your spend? I see your savings of $110k, salary $230k and 20k in living expenses, is there a leading "1" missing in your living expenses.

If you are comfortable with finding consulting gigs, I say go for it.

 

[mf567]

No missing 1. The $110k savings is after-taxes. Monthly expenses total $1,831. $650 is property taxes. Next biggest item is Groceries which is fairly low; I hunt, fish, garden. Installed solar last year and burn firewood so utilities total about $40/month. I include a few hundred dollars in a bucket for discretionary spending, that frankly rarely gets touched.

 

[NgineER]

So where is the $100k that is missing going? Or is your salary $130k and not $230k?

 

[pb4uski]

Where in CT of all places, can a home worth $525k pay only $625 in property taxes? Perhaps a very rural part of CT?

 

[engineernerd]

Welcome to the forums, mf! You sound like an interesting guy.

Have you tested out our favorite retirement calculator, FIRECalc? There's a link at the top, next to "MEMBERS". It has a fair amount of text in each of the seven input tabs, I recommend reading all of that carefully so you understand what it's doing and don't make input errors (especially important when numbers can have either a positive or a negative sign!).

There's one thing the text doesn't explain very well (IMHO): you need to include your best estimate of future taxes in your expenses total, FIRECalc does not attempt to estimate or calculate what you will pay in taxes.

There is a "sticky" post in the Early Retirement FAQs thread that I/we also generally recommend new forum members read: Some Important Questions to Answer Before Asking - Can I Retire?

Do you have a plan for health insurance in retirement, prior to Medicare eligibility at age 65?

Have you decided at what age you'd be willing to risk running out of money? If you retire at age 36 you could have to fund a very long retirement. Bill Bengen's 4% rule is for a 30-year retirement.

And do you have a handle on what your Social Security benefits might be if you retire in 3 years? Be careful about estimates that assume you will continue to earn until you claim.

 

[Calico]

No missing 1. The $110k savings is after-taxes. Monthly expenses total $1,831. $650 is property taxes. Next biggest item is Groceries which is fairly low; I hunt, fish, garden. Installed solar last year and burn firewood so utilities total about $40/month. I include a few hundred dollars in a bucket for discretionary spending, that frankly rarely gets touched.

Where in CT of all places, can a home worth $525k pay only $625 in property taxes? Perhaps a very rural part of CT?

I understood the OP's post to mean that real estate taxes were $650/month. I could be wrong.

 

[Gumby]

Where in CT of all places, can a home worth $525k pay only $625 in property taxes? Perhaps a very rural part of CT?

Way up in Litchfield County, which is quite rural, the mill rates are the lowest; about 11 mills in some towns. In Connecticut, the assessed value is 70% of the appraised value (re-appraisal is done every 5 years). So a recently appraised home valued at $525k would be assessed at $367.5K. And at 11 mills, that would be $4043 in annual property tax. So only $337 per month.

If I do the math in reverse - He pays $650 per month ($7800 per year) property tax on an assessed value of $367.5k, so that's a rate of 21.2 mills, which greatly expands the number of towns he could live in.

See 2025-2026 FY Connecticut Property Tax Rates by Town | CT Town Property Taxes

 

[pb4uski]

I understood the OP's post to mean that real estate taxes were $650/month. I could be wrong.

Ah, $650/mo.... I can see that. My bad.

 

[MarieIG]

Welcome to the ER Forum.

Two links that many have found helpful with their retirement planning process are Frequently Asked Questions (noted above) and FireCalc.

Yes, annuities such as SPIAs paying income your 30's, in particular with a yearly step-up. You may wish to investigate MYGA options.

MarieIG

 

[Aerides]

For 33 you are doing well financially. But that's very young. What do you expect or want for a relationship/marriage/kids? Totally understand if that's a pass, but hopefully not one that's driven purely from finances.

Being retired is going to give you a very different life than your peers, as they will all be working and you won't. You'll have flexibility that they can't, and some friendships will take different paths, so a partner is nice to go through life with (especially later on if not tomorrow).

 

[GoBirds]

Somebody else mentioned this but I would also encourage you to shift your mindset away from net worth and think in terms of invested assets and cash

 

[mf567]

Boy, I didn't realize how much I forgot to include in that intro. For the sake of clarification, 1) I did mean $650 monthly in property taxes, 2) the $230k salary is pre-tax, the $110k savings is after taxes & 401k contributions, 3) I have considered Health Insurance. When I left my full-time job in 2024 and consulted, I paid approximately $500/month for health insurance without qualifying for any subsidies.

I intend to continue working in retirement. When I consulted in 2024, I did so at an hourly rate of $160. Instead of stocks/bonds and low cost index funds, I'm looking for ideas on alternative ways to leverage $500k in assets 3 years from now, into annual income of $20k, just so that I don't have to worry if there's longer-than-expected gaps between consulting gigs.

For instance, I sometimes employ an options trading strategy that probably has a fancy name like Straddle or Strangle that I don't know...I call it Buy-Write-Put. Buy an underlying security at say, $145. Sell a Call option at $150 1 period out (could be 1 month, or any amount of time). Buy a Put Option at $140 3x as far out (giving you time to sell 2 more calls if the first/second isn't exercised). If the underlying security goes up you make money, if it stays flat you make money, if it goes down you break even. Gains & Losses are capped. Only way to lose money is for the underlying security to fall dramatically before the first call expires. It's a great way to make 2-4% but WOW it's a lot of work finding securities with an attractive spread if you don't have an automated Market Data Terminal feed with options pricing. I assume this is how hedge funds work? But the data feeds are cost prohibitive with only $500k in investable assets.

Anyway, those are the kind of interesting ideas I was hoping folks here might have to share; finance, real estate, any alternative to investing in markets already trading at all-time highs.

 

[pacergal]

Being in your 30s, you potentially have 50+ years for retirement purposes, I would expect to withdraw less than 4% of your 500k to start.
So definitely consider needing to work a bit more to add to your savings.
Make sure your budget is very accurate and you have accounted for all the extras that crop up along with the usual ongoing replacements (car, roof, furnace, water heater, etc) that go along with life.
Best of luck to you.

 

[chemEguy]

That’s a long retirement for that level of portfolio. I wouldn’t personally be comfortable with it.

 

[Koolau]

So sorry we "all" sound so negative. When "we" speak of Early Retirement most of us are thinking mind 40s to mid 50s. Having said that, there's no hard and fast rule. But "retiring" at 36 is pretty Early, even by "Early Retirement" standards.

With that out of the way, you've heard folks mention the negatives of your situation (can't use the 4% rule 'cause you'll likely need a 50 to 60 year retirement) etc. But it sounds like what you're really doing (rather than actually retiring) is w*rking on your own terms. I'd never have felt comfortable doing that but it's a different world than when I was your age. There are all kinds of gig w*rk out there and it sounds like you're comfortable with going that route (or consulting).

So getting back to a "guaranteed" $20K/year back-stop: Yeah, you could likely find a CD or other savings vehicle to get 4% on $500K but that doesn't address inflation. You might look into a TIPS ladder. Someone mentioned MYGAs which are sort of a CD equivalent offered by an insurance company (pick a reasonably well rated company and understand their withdrawal rules).

I'm thinking you're better off just picking a good asset allocation (maybe 50:50 to 70:30) and building a $20K emergency fund.

You can bounce all kinds of ideas off this group. Just be advised, most of us didn't do it your way. But I'm intrigued.

Welcome to the forum. Please keep us up to date on your plans.

 

[TickTock]

Yes, annuities such as SPIAs paying income your 30's, in particular with a yearly step-up. You may wish to investigate MYGA options.

At age 33, I'd advise staying away from MYGAs due to the 10% withdrawal penalty for age <59.5 .

I'm not sure you can do a SPIA at age 33. Immediateannuities.com goes down to age 40. For a 40 yo male in CT, a SPIA with no step-up yields 6.5%.

 

[livingalmostlarge]

Biggest problem is are you sure you won't get married or have kids? Or your expenses won't expand? Life changes a lot I feel before 45 in a blink of an eye. Fall in love and now you have two