35, just passed $1 million and re-assessing our plan

Yugugelizer

Confused about dryer sheets
Joined
Jun 9, 2024
Messages
2
Location
Texas
Hi everyone,

I'm a long-time follower (5+ years), and have really enjoyed the tips and seeing how others are thinking about retirement, celebrating milestones, etc. I feel a little guilty, but I have never posted previously (just registered today).

My wife and I (37 and 35) live in Texas and have 2 kids (17 and 6). We have been diligently saving and recently passed $1.1 million in cash and investments. Over the past 10+ years, our goal has been to retire around 55, but now that our plan is becoming more real, we are taking a harder look and reconsidering our options.

Current Stats*:
  • Annual Income, net of 401K and tax: Salary $190K, Bonus ~$30-50K and Company Stock ~$70K (3-year vest)
  • Annual Expenses: $142K, including $15-20K for travel and $10K for kids UTMAs. ~$20-30K increase next year for college.
  • Annual Savings: $5-10K CDs, $55K 401K (including match), $40K Taxable Investment and ~$70K in Company Stock
  • Balances: Cash/CDs $100K, Taxable Investments $350K, Roth IRA $160K, Traditional IRA $180K and 401K $310K
*Discrepancies between annual savings and balances are due to increase in compensation (salary increase of ~30% in the last 2 years and have only vested in 33% of annual Company Stock as grants accumulate).

Current Retirement Goal:
I'm not sure if this is common but, since hitting $1 million, we have been daydreaming about retirement much more often. With our net income and investments higher than we had initially planned at this age, we now hope to retire in 10-15 years when we are 45-50 (our youngest will be in college between these dates). Our focus has previously been on saving, but now that our planned date has moved up 5-10 years we are trying to shift our focus to what our needs/wants will be in retirement.

We do not spend a lot on things, but enjoy experiences (travel, eating out, etc.) and we hope to continue, or increase our ability, to do these things in retirement - we would like to have a few 1-2 week trips, one 2-3 month trip in a low cost area (in the US or abroad) and one family trip. From a day-to-day, we are pretty simple: relax and enjoy coffee in the mornings, exercise, cook, read, spend time with friends/family and find more time to volunteer.

From 45-50 we are planning for the following:*
  • Cash and Investments: $3.7-5.6 million (90% Stock and $10% Cash (~2-3 years))
  • Annual Expenses: $120-180K, including $15-25K for annual family trip and $10K for kids.
*Amount in today's dollars. Assumptions: 8% investment earnings, 3% inflation, 4% withdraw rate and 15% tax rate.

Considerations:
Below are a few things that have been top of mind:
  • How to decide what is the right time/amount?
    • Anyone that is/has been in a similar situation?
    • A significant amount of spending is discretionary (travel) and can be adjusted as needed.
  • Any current retirees in a situation similar to our hopeful retirement? I often read that people overestimate what they will need in retirement. How did/do you think about this.
 
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You’re off to a great start! That 4% withdrawal rate is high for retiring so young. Remember you may have a longer retirement than most and the 4% rule is based on a 30 year retirement. I suggest you meet with a Certified Financial Planner to consider future financial goals. This is not a Financial Advisor, a title for sales people.
Don’t forget to plan for end of life contingencies such as assisted living or a nursing home. Each can be very expensive and can drain accounts rapidly.
Estate planning is another item to consider for both of you, if you don’t already have one. A minimum of a Will/Trust for each of you, financial and health POAs, and Living Wills.
Who will take care of your minor kids should something happen to both of you? Find a good Estate Planning attorney to help you with this.

You’re doing great, but it’s time to get some professional help.
 
I don’t see why OP needs professional help. They seem to be doing fine on their own.

As for OP’s questions, there are many threads here that cover these topics. Most people here over save because they are conservative and don’t want to run out of money. It’s hard to know how much to save, since we don’t know how long we’ll be around and I suspect over saving is unavoidable for most of us. Tough problem to have.

My approach - not yet retired - is to have a minimum portfolio size if SHTF. Basically enough to cover the essentials, but I might have to forgo vacations, eating out, etc.

The other part of my plan is to know how much I spend now, with vacations, eating out, etc, and make sure I get 100% success rate in Firecalc for that amount.

So odds are I will have over saved when I stop working. If we end up hitting a sequence that is worst than the worst case in Firecalc, then I’ll fallback to spending on only the essentials.

I’m also using TIPS to deal with SORR. Now is a good time to lock rates, with the real yield around 2%. I buy enough TIPS to provide base income for each year I plan to retire, with around a 6-8 year ladder. Everything else I invest in equities.
 
Welcome to the FIRE Forums. You are most welcome. It appears you have a very good start to your plan. Be sure to check back often. Best luck.
 
You are doing great! No need for a professional help IMO.

Most here got their status the old fashion way. Save, save and save and live below your means.

Your success will be an asset for any young people that visit this site. Please continue to be a face on ER.
 
Agree that OP is doing well and not in critical need of a CFP.
It's probably a good idea to wait until the six YO is at least IN college so that you have a good idea what the remaining cost of that adventure will be.
So another 12-15 years of employment in that case.

That also gives you lots of time to think about what your desired income in retirement would be, including lots of discretionary things...
 
Welcome to the forum.
I would suggest you try our site supported retirement calculator (Firecalc). Input your numbers including your estimated taxes and social security and let us know the results if you wish.
Many folks on this site including me can assist in any Firecalc questions.
 
Welcome to the forum.
I would suggest you try our site supported retirement calculator (Firecalc). Input your numbers including your estimated taxes and social security and let us know the results if you wish.
Many folks on this site including me can assist in any Firecalc questions.
I second the idea of trying FIRECalc. It's pretty easy, yet thorough and comprehensive. Good luck going forward.
 
We are not FIREed yet. But we were in the similar financial footing (inflation adjusted) when we were your age. My experience is that the portfolio growth tapered off as I aged to late 40s. I am suspecting multiple factors: savings didn't move the needle as much as when the portfolio was small, "life" inflated with growing children, etc.

My suggestion is not to go ahead of yourself (been there, done that). Keep it real and keep the life inflation in-check. Evaluate annually but don't project into the future. Use lower WR for any FIRE date before you are 60.

We have decided to loosen the purse strings and delay RE past 55 but we should be FI before 55. YMMV.
 
I second the idea of trying FIRECalc. It's pretty easy, yet thorough and comprehensive. Good luck going forward.
Problem with FIREcalc right now is, he's talking at least ten years down the road.
Might be worth learning how it works, using speculative numbers for 2035 or thereabouts...
 
Problem with FIREcalc right now is, he's talking at least ten years down the road.
Might be worth learning how it works, using speculative numbers for 2035 or thereabouts...
I will second that! I have been running FireCalc for over 15 years and my FIRE age has varied from 46-56 based on then current saving/spending/portfolio/history. Now we are kind of stable at FIRE age of 50 since a last few years. My experience is anecdotal proof that the future view is smokey from far but things start to come into focus closer to the finish line. FireCalc is a great tool for backtesting (which is the purpose of this tool) but can't tell you the future with any accuracy what so ever (as expected). So in my experience, FireCalc can tell you a range of possibilities over time but only looking in the rear view mirror.

PS: I saved all key variables for my FireCalc runs over the years in to a spreadsheet every year so I know the history of the results accurately.
 
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Problem with FIREcalc right now is, he's talking at least ten years down the road.
Might be worth learning how it works, using speculative numbers for 2035 or thereabouts...
Yes, definitely "play" with it and don't make any hard decisions based on FIRECalc (or ANY financial calculator.)

And do NOT forget to enjoy the ride on the way to FIRE.
 
Welcome to the forum. It looks like you are well on your way.
Suggestions:
Run Firecalc, and re run once a year or so
Do meet with estate lawyer, make sure you both have wills, guardianship for kids while under 18, POA, healthcare POA and advanced directives. You often don't think about those things while you are busy raising kids and working, but they are needed.
A one time visit with a fee only CFP might give you some input you haven't considered, and/or confirm you are in the right direction.
Continue to monitor spending and watch for budget creep.
As Dashman stated 4% may be high when you could have 40+ years in retirement.

Best of Luck to you! Keep us posted and hope to hear more from you on your journey.
 
Welcome!
Full disclosure, not retired, but am 43 with similar savings/spending/ER age as well.
To answer your questions:
"How to decide what is the right amount?"
Every calculator I have ran leads me to a withdrawal rate of 3.5-3.8% so take your expenses (including taxes) and divide by a number there-in.
Check out ficalc. I don't know how accurate it is, but so early on accuracy isn't needed. It's a guide.

"How to decide what is the right time?"
That's entirely different. I personally am hoping to settle into a part time, low stress position so that I won't mind continuing to w*rk. However, I want to be ready in case my body gives up.
"Man plans, God laughs"

"A significant amount of spending is discretionary (travel) and can be adjusted as needed."
be realistic with yourself. Will you actually? We tried cutting a family vacation from the budget this year. It was not well received.

"I often read that people overestimate what they will need in retirement. "
Many people die before they even reach retirement. Difficult to consider, but fact. You can risk over saving and never living to enjoy it, or risk out living your savings. There is a middle area where the risk of either is lower. Aim there. Check out richbrokedead

"How did/do you think about this."
I think you're doing great. If you're in a position to ER or reduce to PT before 6yo is in college, do so. They are only young once and highschool is busy.
 
You’re off to a great start! That 4% withdrawal rate is high for retiring so young. Remember you may have a longer retirement than most and the 4% rule is based on a 30 year retirement. I suggest you meet with a Certified Financial Planner to consider future financial goals. This is not a Financial Advisor, a title for sales people.
Don’t forget to plan for end of life contingencies such as assisted living or a nursing home. Each can be very expensive and can drain accounts rapidly.
Estate planning is another item to consider for both of you, if you don’t already have one. A minimum of a Will/Trust for each of you, financial and health POAs, and Living Wills.
Who will take care of your minor kids should something happen to both of you? Find a good Estate Planning attorney to help you with this.

You’re doing great, but it’s time to get some professional help.
 
I wouldn’t be looking into a CFP yet unless it just for an estate plan. It’s probably too early to have to. Maybe every 5 yrs meet with one for a fee only check up.
 
Thanks for the feedback, I will definite check out FireCalc! I see it come up all the time, but haven’t used it.

I know we have a long way to go, and we will need to be flexible along the way. We have been so focused on the saving side but, for some reason passing $1 million, and being (hopefully) 10-15 years out, has made me feel behind on the retirement planning side.
 
Mostly due to travel, we typically spend 1.6X/yr what we did before RE.
 
Congrats on your success in careers, earnings, and especially, savings and investing! The standard answer as to know the "right time/amount" is "when you have enough and you've had enough".

If you continue on your current trajectory, you're likely to hit your FIRE $ goal around age 50 if you are fully diversified in your investments. If you continue investing at your current rate, and your company stock continues at its current value or higher, you could easily hit $5M by age 50. As soon as you can, diversify your company stock so it's not a high percentage of your net worth. Losing your job and having company stock crater would be catastrophic for your plans.

My original ER goal was 50, but I waited to 55 due to being slightly underfunded. From a health perspective, 50 would have been a more ideal time to ER, as I had more stamina and could travel and dive more than I could at 55 and more health problems started cropping up, despite good diet and exercise (not to mention lost travel due to the COVID shutdowns).

Good luck!
 
Hi everyone,

I'm a long-time follower (5+ years), and have really enjoyed the tips and seeing how others are thinking about retirement, celebrating milestones, etc. I feel a little guilty, but I have never posted previously (just registered today).

My wife and I (37 and 35) live in Texas and have 2 kids (17 and 6). We have been diligently saving and recently passed $1.1 million in cash and investments. Over the past 10+ years, our goal has been to retire around 55, but now that our plan is becoming more real, we are taking a harder look and reconsidering our options.

Current Stats*:
  • Annual Income, net of 401K and tax: Salary $190K, Bonus ~$30-50K and Company Stock ~$70K (3-year vest)
  • Annual Expenses: $142K, including $15-20K for travel and $10K for kids UTMAs. ~$20-30K increase next year for college.
  • Annual Savings: $5-10K CDs, $55K 401K (including match), $40K Taxable Investment and ~$70K in Company Stock
  • Balances: Cash/CDs $100K, Taxable Investments $350K, Roth IRA $160K, Traditional IRA $180K and 401K $310K
*Discrepancies between annual savings and balances are due to increase in compensation (salary increase of ~30% in the last 2 years and have only vested in 33% of annual Company Stock as grants accumulate).

Current Retirement Goal:
I'm not sure if this is common but, since hitting $1 million, we have been daydreaming about retirement much more often. With our net income and investments higher than we had initially planned at this age, we now hope to retire in 10-15 years when we are 45-50 (our youngest will be in college between these dates). Our focus has previously been on saving, but now that our planned date has moved up 5-10 years we are trying to shift our focus to what our needs/wants will be in retirement.

We do not spend a lot on things, but enjoy experiences (travel, eating out, etc.) and we hope to continue, or increase our ability, to do these things in retirement - we would like to have a few 1-2 week trips, one 2-3 month trip in a low cost area (in the US or abroad) and one family trip. From a day-to-day, we are pretty simple: relax and enjoy coffee in the mornings, exercise, cook, read, spend time with friends/family and find more time to volunteer.

From 45-50 we are planning for the following:*
  • Cash and Investments: $3.7-5.6 million (90% Stock and $10% Cash (~2-3 years))
  • Annual Expenses: $120-180K, including $15-25K for annual family trip and $10K for kids.
*Amount in today's dollars. Assumptions: 8% investment earnings, 3% inflation, 4% withdraw rate and 15% tax rate.

Considerations:
Below are a few things that have been top of mind:
  • How to decide what is the right time/amount?
    • Anyone that is/has been in a similar situation?
    • A significant amount of spending is discretionary (travel) and can be adjusted as needed.
  • Any current retirees in a situation similar to our hopeful retirement? I often read that people overestimate what they will need in retirement. How did/do you think about this.
Our numbers, age and attitude are similar. I can even see DW starting to daydream about retirement which is a far cry from her original stance of "good luck at FIRE!".


I am pretty demotivated, considering we made what 50k in the market in the past few days it's been way more fun watching the money grow then doing actual work... but alas my grind it and hustle to death attitude always prevails so I am still getting things done.

I have definitely been enjoying life more. Spending more money on vacations. But like you I find myself thinking, geez, if my investments double in the next 5 years, and double again 5 after that, plus all the contributions we keep making... there is no way we would ever need to work a day past 50.

That actual reality of seeing the money compounding so quickly has definitely got us chatting more about retirement plans. Do we keep the house, sell it? Where do we want to travel to? I am guessing for ER's in the forum a good bunch enjoyed FIRE but I also have seen lots of stories of other life circumstances causing the FIRE season to get rained in a bit.

It is harder to find joy in the grinds of office work and politics. I work in IT consulting, and honestly I enjoy coaching my son's baseball game more than I enjoy work.
 
You are doing great! No need for a professional help IMO.

Most here got their status the old fashion way. Save, save and save and live below your means.

Your success will be an asset for any young people that visit this site. Please continue to be a face on ER.
+1 to street's remarks. Continue to contribute here, don't be shy. It's worth the "investment".

You don't get to 1MM at 40 by accident. Save, save, save! Once you start putting 70 to 100k into the markets a year, the compounding really starts to work it's magic.

Definitely reach down and help the young dreamer's along the journey. I will do the same. One thing that REALLY helped us was paying ourselves first, automatically contributing to the investments, and not being afraid to know how to one off contribute when windfalls, raises and extra income came in.
 
Oh, one other thing to note... try to balance your current vs projected future taxes. I LOVE Roth, Roth 401k, Solo Roth 401k, HSA and 529 for this reason. 28% of our assets are in taxable, which is great, but I continue to do mega backdoor roth conversions to get us to a lower amount of taxable. One thing prohibiting this is a large sum in DW 403b due to her career longevity with the same employer. If she leaves her employer, we could roll that over, and potentially do another backdoor roth conversion on *most of our remaining taxable assets.

This will be a tell to the real guru's who will chime in and say, make sure you start saving in your broker account. We will, we will. The final phase of our accumulation involves heavy broker and roth contributions into Solo Roth 401k
 
OP, congrats on hitting that first $1M! It compounds wildly from there. We are on a very similar glide path in all facets of the ER goal. Keep your foot on the gas as long as you can for the next 5-7 years. That early money does the heavy lifting. We (more I than my wife since she stays home with kids) constantly dream about having the freedom to make work optional or slow the work pace. At your rate, it's a lot closer than you might realize.

Good luck on the endeavor and keep posting your progress!
 
I think you are doing great and it seems that you have a well thought out plan. You can do FIRE with your plan. I'll highlight a few cautions/observations from my chair:
1. You say that you do not spend a lot today. I disagree. $10k/month if the UTMA is taken out. That's OK, but own it.
2. Where is the savings in 529 accounts? You are paying for college with taxable gains. Put some $ in a 529 for kid #2 - use UTMA $ for this, or put additional savings there. 75% of my kids tuition was paid for with the gains from their 529 accounts saving about $25k.
3. Have you considered medical in your future budget?
4. Show me the money! Maybe I missed something...
Using midpoints:
Income (net of 401k&tax) 190+40+70 = 300
Expenses 142
Savings (net of 401k) 7.5+40+70 = 117.5
Income - Expenses - Savings = Missing money
300 - 142 - 117.5 = 40.5
 
Congratulations.

It is not clear what your definition of "stock" is in your portfolio.

When considering FI when you are highly leveraged in equities (I am) you need to figure out if you can survive comfortably with a severe market correction. If you're comfortable with that then you will be fine and figure out what to do in the event of a severe correction.
 
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