Hi Everyone, first post but have been lurking for a couple years on these forums.
For a quick background, I am turning 42 soon, DW is 43. We have 2 kids, ages 12 and 6. Our financial picture and info is listed a bit further below in the post, but here is the crux of where I am coming from:
Ever since I came out of college 20 years ago and started my first job, I had the goal in the back of my head that it would be nice to step away early from the working world and have options to be free and do other things with my time. I thus always made sure I saved and contributed to available retirement plans when I could from the start to put me in a (hopefully) good position later on. I joined my current Megacorp 14 years ago and although things went well for the first 10 years or so, I am pretty much over the whole corporate thing at this point to be quite frank. The politics, bureaucracy, hierarchies, and overall grind at times is just not aligned with how I want to spend every working day of my life for the next 20 years. I think I could hang on another 5-10 years if absolutely needed, maybe even jump to another company to change scenery and get some new life, but ultimately my goal is that I want to be done with the corporate world and having to work by my early 50’s. This would allow me to be free to do what I want, which may still entail working part-time but it would be doing something I enjoy to stay engaged and also could provide some side income, but I would not depend on it financially as it is assumed it would be at much lower wage.
My wife thinks this is a mid-life crisis but I’ve been giving this real thought for several years, however the urgency and planning has certainly accelerated once I hit 40, combined with COVID realities, my waning motivation at work, and the stock market returns of the past few years. Over the past 1-2 years I've done a lot of reading and listening on all things ER, Investing, and Personal Finance to gain knowledge, and now really trying to put pen to paper to seriously assess and gauge what options there are regarding ER plans for me.
My wife is a teacher and loves it, she has no intention to ER. I have her estimated retire date at 60. If I were to leave my job in the future, assumption is that me and the kids would get on her school’s heath insurance plan.
We live in the Midwest, so COL is fairly low/reasonable.
Here is an overview of our financial picture
Combined Annual Income: ~$200K annually
Me: $155k-ish – mostly salary and bonuses
DW: $45k-ish - salary
~$400K Home Value w/ $150K mortgage, have about 13yrs left on 15yr note @ 2.625%.
Net Worth is ~$2.4M which includes the $250K in our home as mentioned above. No other RE.
Investments: $1.925M
401k (Me): $575K
Pension - Cash Value (Me): $100K
403b (DW): $40K (30K Tax-Def; 10K Roth)
IRA’s: $235K ($200K; DW: 35K)
Roth IRA’s: $305K ( $195K; DW $110K)
HSA: $35K
Taxable Brokerage Accounts: $635K
85% of the investments across these accounts are in equities (70% is US / 15% is Int’l), and are mostly held in broad index & mutual funds with a smaller portion allocated to individual stocks
10% is then Fixed Income, mostly a mix of bonds including the Pension which is held in treasuries
5% is in alternative investments, mainly REITS and a little smattering of commodities and crypto (~1%)
In addition to the Investments listed above, we also have ~$50K in cash (emergency) and two 529 plans for our boys, which have a combined $100K (70K for the 12yo and 30K for the 6yo) and are mostly in target date funds tied to their college starting dates.
We currently max out both the 401k and the 403b. Company matches me ~$5K/year on the 401k and I get about $10K annually into the pension plan. We have been eligible for Roth IRAs and have maxed out the $12K combined the last several years, but will hit the MAGI limit probably in the next year or so and will just move those contributions over to taxable brokerage savings, or may look at backdoor Roth options. I also started maxing out our HSA at ~$7K/yr the other year and now pay most medical expenses out of pocket. On average everything comes out to $60k-70k in annual contributions each year in total to our investment accounts.
Assuming my wife works to 60, she would also be eligible for a small pension from her current employer which would be maybe $8K/yr.
The main plan has been to stick it out until my youngest graduates high school, which would be in 12 years and put me at 54. This would also coincide with our mortgage being paid off. I would then plan on pulling from the taxable brokerage account to supplement any income to meet all of our living expense requirements, and then once the 59.5 threshold is hit, we could then start drawing from the Tax-Deferred accounts as necessary.
However, given my recent deteriorating sentiment towards work as well as how well the markets have done the past couple years, I’m now wondering if I can accelerate that to 50, which seems a much more attractive target and much more motivating to me on all fronts.
I’ve run many projection calculators on our investments, including FireCalc, and even gone over numbers with a financial advisor and most outputs show no issues for the mid-50’s ER, however achieving a higher probability on the age 50 target can vary based on how conservative I am with the investment returns and living expense estimates.
Our living expenses run $80-100K the last few years excluding savings. I feel our standard of living is fairly muted and under control. We have no debt other than the mortgage. We do have our spending splurges, mostly eating out frequently, enjoying a nice vacation every other year, and a couple hobbies, but otherwise we don’t spend lavishly. I do like to change up my car every couple years with something lightly used, but this is always cash paid and bucketed/saved separately. My wife also drives something newer but we usually keep that for 5+ years. We also really like our current home and plan on staying here for awhile so have made several capital improvements, with some more planned, but those are always discretionary.
The (later) ER date at 54 coincides with the youngest going off to college and the mortgage being paid off, so I assume our expenses would go down at that point but I like to plan conservatively and account for a contingency, so still assuming we would need about $90k/year. Part of this is because we do have one wildcard which is that my oldest has ASD and some learning challenges. Although he is mainstreamed and doing fairly well in school, his future is a question mark in terms of how much financial support he may need getting on his feet and even afterwards as an adult. My wife and I have no questions that he will be able to hold a job and work for a living, but his earning potential may have limitations. No issues with the youngest, he is in kindergarten and ready to conquer the world, may already be smarter than me ?
So what am I missing here or where else do I need to look? Are there items I’m not giving consideration to? The projections I run on our investments are pretty conservative as I usually put them in the 5-7% annual return range. I could assume the $1.9M today at a conservative 5% return per annum, even if I didn’t add another penny to it after this year, would be close to $3M when I turn 50. If I continue contributions and add another $0.5M to that over the next 8 years, or even longer if I go to mid-50’s, that adds more cushion and I could be north of $4M by then. I see all these things on paper and spreadsheets and they look good, but something still feels off and unrealistic about it.
Any help, insights, or words of wisdom is appreciated!
Thanks,
Ace
For a quick background, I am turning 42 soon, DW is 43. We have 2 kids, ages 12 and 6. Our financial picture and info is listed a bit further below in the post, but here is the crux of where I am coming from:
Ever since I came out of college 20 years ago and started my first job, I had the goal in the back of my head that it would be nice to step away early from the working world and have options to be free and do other things with my time. I thus always made sure I saved and contributed to available retirement plans when I could from the start to put me in a (hopefully) good position later on. I joined my current Megacorp 14 years ago and although things went well for the first 10 years or so, I am pretty much over the whole corporate thing at this point to be quite frank. The politics, bureaucracy, hierarchies, and overall grind at times is just not aligned with how I want to spend every working day of my life for the next 20 years. I think I could hang on another 5-10 years if absolutely needed, maybe even jump to another company to change scenery and get some new life, but ultimately my goal is that I want to be done with the corporate world and having to work by my early 50’s. This would allow me to be free to do what I want, which may still entail working part-time but it would be doing something I enjoy to stay engaged and also could provide some side income, but I would not depend on it financially as it is assumed it would be at much lower wage.
My wife thinks this is a mid-life crisis but I’ve been giving this real thought for several years, however the urgency and planning has certainly accelerated once I hit 40, combined with COVID realities, my waning motivation at work, and the stock market returns of the past few years. Over the past 1-2 years I've done a lot of reading and listening on all things ER, Investing, and Personal Finance to gain knowledge, and now really trying to put pen to paper to seriously assess and gauge what options there are regarding ER plans for me.
My wife is a teacher and loves it, she has no intention to ER. I have her estimated retire date at 60. If I were to leave my job in the future, assumption is that me and the kids would get on her school’s heath insurance plan.
We live in the Midwest, so COL is fairly low/reasonable.
Here is an overview of our financial picture
Combined Annual Income: ~$200K annually
Me: $155k-ish – mostly salary and bonuses
DW: $45k-ish - salary
~$400K Home Value w/ $150K mortgage, have about 13yrs left on 15yr note @ 2.625%.
Net Worth is ~$2.4M which includes the $250K in our home as mentioned above. No other RE.
Investments: $1.925M
401k (Me): $575K
Pension - Cash Value (Me): $100K
403b (DW): $40K (30K Tax-Def; 10K Roth)
IRA’s: $235K ($200K; DW: 35K)
Roth IRA’s: $305K ( $195K; DW $110K)
HSA: $35K
Taxable Brokerage Accounts: $635K
85% of the investments across these accounts are in equities (70% is US / 15% is Int’l), and are mostly held in broad index & mutual funds with a smaller portion allocated to individual stocks
10% is then Fixed Income, mostly a mix of bonds including the Pension which is held in treasuries
5% is in alternative investments, mainly REITS and a little smattering of commodities and crypto (~1%)
In addition to the Investments listed above, we also have ~$50K in cash (emergency) and two 529 plans for our boys, which have a combined $100K (70K for the 12yo and 30K for the 6yo) and are mostly in target date funds tied to their college starting dates.
We currently max out both the 401k and the 403b. Company matches me ~$5K/year on the 401k and I get about $10K annually into the pension plan. We have been eligible for Roth IRAs and have maxed out the $12K combined the last several years, but will hit the MAGI limit probably in the next year or so and will just move those contributions over to taxable brokerage savings, or may look at backdoor Roth options. I also started maxing out our HSA at ~$7K/yr the other year and now pay most medical expenses out of pocket. On average everything comes out to $60k-70k in annual contributions each year in total to our investment accounts.
Assuming my wife works to 60, she would also be eligible for a small pension from her current employer which would be maybe $8K/yr.
The main plan has been to stick it out until my youngest graduates high school, which would be in 12 years and put me at 54. This would also coincide with our mortgage being paid off. I would then plan on pulling from the taxable brokerage account to supplement any income to meet all of our living expense requirements, and then once the 59.5 threshold is hit, we could then start drawing from the Tax-Deferred accounts as necessary.
However, given my recent deteriorating sentiment towards work as well as how well the markets have done the past couple years, I’m now wondering if I can accelerate that to 50, which seems a much more attractive target and much more motivating to me on all fronts.
I’ve run many projection calculators on our investments, including FireCalc, and even gone over numbers with a financial advisor and most outputs show no issues for the mid-50’s ER, however achieving a higher probability on the age 50 target can vary based on how conservative I am with the investment returns and living expense estimates.
Our living expenses run $80-100K the last few years excluding savings. I feel our standard of living is fairly muted and under control. We have no debt other than the mortgage. We do have our spending splurges, mostly eating out frequently, enjoying a nice vacation every other year, and a couple hobbies, but otherwise we don’t spend lavishly. I do like to change up my car every couple years with something lightly used, but this is always cash paid and bucketed/saved separately. My wife also drives something newer but we usually keep that for 5+ years. We also really like our current home and plan on staying here for awhile so have made several capital improvements, with some more planned, but those are always discretionary.
The (later) ER date at 54 coincides with the youngest going off to college and the mortgage being paid off, so I assume our expenses would go down at that point but I like to plan conservatively and account for a contingency, so still assuming we would need about $90k/year. Part of this is because we do have one wildcard which is that my oldest has ASD and some learning challenges. Although he is mainstreamed and doing fairly well in school, his future is a question mark in terms of how much financial support he may need getting on his feet and even afterwards as an adult. My wife and I have no questions that he will be able to hold a job and work for a living, but his earning potential may have limitations. No issues with the youngest, he is in kindergarten and ready to conquer the world, may already be smarter than me ?
So what am I missing here or where else do I need to look? Are there items I’m not giving consideration to? The projections I run on our investments are pretty conservative as I usually put them in the 5-7% annual return range. I could assume the $1.9M today at a conservative 5% return per annum, even if I didn’t add another penny to it after this year, would be close to $3M when I turn 50. If I continue contributions and add another $0.5M to that over the next 8 years, or even longer if I go to mid-50’s, that adds more cushion and I could be north of $4M by then. I see all these things on paper and spreadsheets and they look good, but something still feels off and unrealistic about it.
Any help, insights, or words of wisdom is appreciated!
Thanks,
Ace
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