Hi, I am new. Just hit 40. FIRE in 7? How am I doing?

njconfused

Confused about dryer sheets
Joined
Feb 23, 2024
Messages
4
Location
New Jersey
Greetings Everyone,

I am 40 years old. My wife is 38. I have two kids aged 8 and 10.

I have been wondering about FI alot lately as I just turned 40. I am hopefully looking to hit FIRE in the next 7 years. The other option is to work in a retail store or something part-time to pay for health care coverage.

My income gross is $192,500.
My wife's income gross is $102,500
Total Income - $295,000

We paid off our mortgage in 2021. Our house is worth about $850,000.(Northern Jersey)

Our savings is broken out as follows:
$213k -Checking/Savings/CDs
$500k- Brokerage Accounts (Mix of Index Etfs and Stocks)
$794k - IRA's and 401ks -Tax Deferred (Index Etfs)

So total assets excluding the house is $1,507,000.

We did not do any 529s for the kids. The plan is to pay for at least $200k towards college for each kid. We plan to take that money from our savings and brokerage accounts.(7 and 9 years from now respectively)

We max out our 401k's. Over the last two years or so we have been trying to add at least $50k each year to the brokerage account. I just started an HSA account so did not include that in the figures above.

Sometimes I just feel burned out to save save save.

How are we doing?
If we wanted our end goal to be at around $3M in 7 years, is that doable?
Even with college expenses coming up?
Even if we do not add additional $50k each year to brokerage?

Our ultimate goal is to have around $100k-$120k in spending money annually. We are not totally against working a part-time job for extra cash to off-set healthcare premiums.

Please let me know how I am doing.

Feel free to roast me as well.

Thank you. Appreciate all your feedback.

njconfused.
 
Sometimes I just feel burned out to save save save.
...
If we wanted our end goal to be at around $3M in 7 years, is that doable?
It is a sure thing in my mind you will get to $3M+ NW at some point (given your income, current NW, and saving rate etc.)
So it will help to ask yourself:
1- Is the 7 year goal that important?
If the answer is a big yes, then you will get all the motivation to save to get to that point.
If the answer is a clear no, then you can fix your "burned out to save" issue. Your NW and $ is there to support a happy life (current and future). Sacrificing too much of the present in order to get to a better future may not be the way to go.
 
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Welcome to the ER forum NJ.

You are doing well, but that does not mean that you will have your desired income in seven years. I would suggest that you reassess periodically, and also - work on destressing and your current quality of life in the meantime.

Below are two useful links.

Some Important Questions to Answer Before Asking - Can I Retire?

FIRECalc
 
Welcome to the forum!
The links that MarieIG posted are great to get a look at where you are now.

There are many folks here who are willing to review budget, etc. and give suggestions, if you are willing to post numbers.

If it were me, I would not retire if you are planning to cash flow college, or at least wait until you had their funded amount in a separate savings.

Savings and LBYM is important, but it is also very important to enjoy life along the way.
 
Just confirming your future contributions --- $50k/yr brokerage + $30k/yr (each) into retirement = $110k/yr?

By my rough math (proper calculators will give you more accuracy), at the $110k/yr contribution rate (37% of gross income), assuming an average 6% return above inflation, you should hit $3M invested right around the 7 year mark. That doesn't account for the cash, but that will apparently get eaten up by college expenses anyway. Minor note: it's not too late to start 529's for them! Doing so could make a significant dent.

So can you do it? Yes, most likely. Even with paying for college? Yes, most likely. Without the extra $50k/yr? That would be tougher, but potentially doable -- the $50k/yr amounts to roughly $500k (including growth) across the 7 years, so without it you'd be closer to the $100k/yr income level long-term. Additionally, I assume you'll want to rely mostly on your brokerage until you hit 59.5 to start using your retirement accounts? Having the beefier brokerage will make that MUCH simpler. Without the extra brokerage contributions, that account grows to ~$750k in 7 years. Pulling $100k/yr (while keeping it invested), that'll last you about 10 years (to ages 57 & 55) -- not quite there, though anything you have in Roth accounts could help you get across the line. But with the extra $50k/yr, the brokerage would be at ~$1.25M, and you could pull $120k/yr for ~15 years (ages 62 & 60) -- perfect! So I recommend that you DO continue with the $50k/yr addition to your brokerage (if you stick with FIRE in 7 years).

What are the plans for your home? Stay in it throughout retirement, or sell & downsize? Your home is a hefty asset that could help your numbers, if downsizing is part of the plan.


The real question (concern?) is your feeling of burnout. Burnout is generally a problem caused by not feeling purpose & productivity & connectedness in life. Are you & your wife both on the same page? How important is the goal of FIRE in 7 years? Do both of you still enjoy your jobs? Do you have meaningful hobbies/pursuits outside of work? Do you have meaningful relationships with friends outside of work? Most important: Why do you want to FIRE? Are you running away from work, or running toward something more meaningful? These are all important self-reflection questions for you and your wife to think through together. I think if you get aligned on WHY you're doing what you're doing, the HOW will become much easier & more purposeful (whether that means "save save save" or "slow down") ... which will ease the feeling of burnout.
 
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How are we doing?
If we wanted our end goal to be at around $3M in 7 years, is that doable?
Even with college expenses coming up?
Even if we do not add additional $50k each year to brokerage

You are doing well. $3M in 7 years depends on the market. I would continue for the 7 years and reassess.
 
I was thinking a little more about your kids' college .... and this might be a bit radical ... But since you've got a large chunk of cash sitting there right now, you might consider super-funding 529s for each of them, then just let it coast until they enter college. You could set it & forget it!

You could open the accounts with 5 years worth of contributions ($90k apiece), which over the next 10 years would grow to roughly $160k (today's dollars). You can't contribute anything else for 5 years after super-funding, but if desired, you could later toss in a little more here and there ... but you really wouldn't need to. The tax-free status of $160k would be nearly equal to $200k of future income. You could basically just set aside most of their college money today, and whatever the 529s don't cover would be a minimal drain from your future assets.

As I said, this would be a more radical step ... but you're technically in a position to do it, and it would mostly alleviate a significant unknown factor from your future calculus.
 
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If you save and invest $96000 every year for 7 years then FireCalc says you have 96% chance of FIRE with $120000 spending (includes taxes). Cutting little too close for my taste. YMMV.

Having said that, did you know you can contribute after-tax money into 401K account? Lot of plans allow it. There are some notable advantages of contributing after-tax money into 401K rather than brokerage.
1. You defer taxes on gain
2. All the after-tax principal contributed can be rolled over to Roth IRA when you leave the company. Some plans allow in-service roll over to Roth IRA. This is what is called mega-backdoor Roth IRA contribution.

FWIW we didn't do 529 for kids. We planned just like you have a large after-tax portfolio by the time they grow up. As it turned out, we throw enough cashflow with the investments now that I don't even have to sell the investments to pay for their collage!
 
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I want to say Thank You all to whom posted great feedback. I think what i have definitely taken from this posting is that my wife and I need to figure out our "why" first. I like the idea of continuing to just do what we are doing and reassess in 7 years. I also like the idea of starting a 529 as well. Also based on some of the feedback, I believe the 7 year goal might be super aggresive. I think 10 years might be more realistic which would put me at 50 and my wife at 48. Even then switching to some part-time work might not be such a bad idea to have less stress on the portfolio. To the comment regarding our home. We plan on staying in our home in retirement. I appreciate all the comments. Will be sure to post updates on the journey. Thank you.
 
I want to say Thank You all to whom posted great feedback. I think what i have definitely taken from this posting is that my wife and I need to figure out our "why" first. I like the idea of continuing to just do what we are doing and reassess in 7 years. I also like the idea of starting a 529 as well. Also based on some of the feedback, I believe the 7 year goal might be super aggresive. I think 10 years might be more realistic which would put me at 50 and my wife at 48. Even then switching to some part-time work might not be such a bad idea to have less stress on the portfolio. To the comment regarding our home. We plan on staying in our home in retirement. I appreciate all the comments. Will be sure to post updates on the journey. Thank you.
I was in a similar boat once upon a time and we came to the same number "retire at 50". I am coming close to 50 now and my job is so steady and easy going, I may just keep working a few more years till DD finish college. I suspect that a lot will change with your life by the time you are 50 so reassess when you get there. Don't sweat, just live life and enjoy time with younger kids.
 
Our savings is broken out as follows:
$213k -Checking/Savings/CDs
$500k- Brokerage Accounts (Mix of Index Etfs and Stocks)
$794k - IRA's and 401ks -Tax Deferred (Index Etfs)

So total assets excluding the house is $1,507,000.

Thank you. Appreciate all your feedback.

njconfused.

Welcome to the forum - you look pretty good for your age! Financially at least :)

You are certainly ahead of where I was at your age. Fire at 7 looks like a stretch, why not shoot for 10 and allow yourself to free up the purse strings a little. I'm just six years out at this point, it was my original plan to go at 55, but then I revised it to 50 (which is doable), but I realize that at 55 I have complete access to my 401k, all options and RSU's are vested on normal schedule and we keep good health insurance for a while longer. My wife had breast cancer three years ago which caused a big scare and we were happy to have access to good doctors and network at that point. I have realized that if I don't save anything for the next six years, I would still hit my target (but my spending would be significantly higher, so I haven't gone off the deep end yet).

The benefit to the 10 year goal is that you can always revise it to make it shorter which would make you happy as opposed to having to extend the 7 year number and having to slog out OMYs.

Having said that, did you know you can contribute after-tax money into 401K account? Lot of plans allow it. There are some notable advantages of contributing after-tax money into 401K rather than brokerage.
1. You defer taxes on gain
I know y know this, but you eliminate taxes on gains, but the gains are held hostage until 59.5 whereas the contributions can be accessed at any time.

We make our contributions in the following order:

Max out traditional 401k (11% of salary-me) +8% match
Max out after-tax 401k (9% of salary-me) mega backdoor Roth
Max out ESPP (10% of salary-me) charitable DFA account.
Max out backdoor Roth (me and spouse at beginning of year)
Any leftovers income and net rents funds brokerage account.

At this point our Roth is slightly higher than our traditional 401k+tIRA's and despite higher contributions + match it will never catch up to the Roth account thanks to compound interest.
 
Does NJ give a tax deduction for 529 contributions? If not, there may be better things to do with that money.
 
You have a good headstart. 40 is when FI dreams come into play.

Dream big but keep your head down, pump your arms and keep going. Run into the wind.

Get to 52ish and you will have good options. If you let up too soon it will be a lean FIRE scenario. Which is fine, but college is expensive. Everything is expensive.

47 is probably too early, because 47-59.5 is a long time. 72T won't be great for that long.
 
Greetings Everyone,

Sometimes I just feel burned out to save save save.

njconfused.

We feel you.

My concern here is all about this particular comment... and the fact that you're already listening to the masses and mentally moving the needle back from 7yrs to 10yrs.

Im not saying the dollars in the spreadsheet aren't important - but they aren't the ONLY thing. Don't forget why you're trying to do this.
Happiness matters today NOT in 7-10yrs!!
 
Greetings Everyone,

I figured I would post an update to my original posting.

I am going to try and update annually every January moving forward.

My age now is 41. My wife is 39.

My income has gone up to $197,000. I also received a $30k bonus in 2024.
My wifes income now is $90,000. She moved into a different role.(Less stressful and better work/life balance)

Update on savings is as follows:

$164k -Checking/Savings/CDs
$768k- Brokerage Accounts (Mix of Index Etfs and Stocks)
$977k - IRA's and 401ks -Tax Deferred (Index Etfs)
$9K - HSA (Index etf- VOO) -We just started this in 2024.

So update in total assets excluding the house is $1,918,000. A big jump from last year of $1,507,000, primarily due to market returns.

The checking/savings/cd number has gone down as we moved some of that into our Brokerage Accounts.

We decided to change it up around mid 2024. Basically in addition to maxing out 401k's and HSA's, we are saving 50% of our take home after tax.

Every month that gets invested in the brokerage account.

Lets see what Mr. Market returns in 2025, but I am happy with the progress thus far.
 
I think you are making a mistake not funding 529's for the kids.
Tax free growth served me and my 2 kids very well. I opened their accounts at ages 6 and 10. When it came time for paying the college bills, their account balances were 2/3 gain and 1/3 contribution.

Your focus on savings is great. Take a look at your 2024 spending and see if that aligns with your future goal of 100-120/yr. Understanding your current spending will help you know if your future spending goals are realistic. FWIW, my goal was about the same as your when I was your age (10 years ago). My wife and I are empty nesters and now spend about 2x that. Things are more expensive now, and we are doing more than we imagined we would.

Understanding your 2024 spending is as easy as:
(Total take home pay) - (annual savings [excluding 401k, pension, etc that are taken from gross pay]) = SPENDING
Add back health care costs and income tax to see if 100 - 120 is realistic.
 
Numbers look good. I would start putting money in a tax free account (RothIRA) if you haven’t already done so. This should save you some money in the long run, because you’ll be paying 15% on your LTCG when you sell from the brokerage account.
 
I think you are making a mistake not funding 529's for the kids. ...
I'm not a big fan of 529s because they presume that kids will attend college and that you will need to pay for it. A couple examples. DS has thus far decided not to attend college so I'm glad that I didn't have tens or hundreds of thousands tied up in a 529 (he is our youngest). DBIL's son, his youngest, ended up getting a full ride scholarship when the time came for college. If he had tens or hundreds of thousands in a 529 that money would be stuck there.

While there are various ways to get overfunded 529 money out, I'm not convinced it is worth the hassle compared to tax-efficient investments in a brokerage account.
 
Numbers look good. I would start putting money in a tax free account (RothIRA) if you haven’t already done so. This should save you some money in the long run, because you’ll be paying 15% on your LTCG when you sell from the brokerage account.
I had the same thought but I think their income is too high to make Roth contributions and their tax rate is probably to high to make Roth conversions wise.
 
I understand @pb4uski 's point about 529's not working if your kids don't got to college. But as the mom of two sons who are both finishing their bachelors this year, that 529 money was great. Tax free growth provided about 1/2 of their total 529 amounts before I moved to a cash basis when they started college. Thank you, Mr. Market!. 529's don't pay for 100% of a kids college expenses but it covers the big ones (tuition, housing/food, books). If you end up not using the 529 money because your kid doesn't go to college or trade school, you can withdraw the principal tax free (already been taxed) and the growth with a small penalty.

My older son had a 'non-linear path' to college... started, bombed out, covid hit, regrouped, and is now a math major at UC Berkeley... I worried he wouldn't go back to college after his disastrous first year... but he did - and I was grateful I had the 529 money to support his education.

Even if you don't do the 529, consider earmarking the money intended for college as not part of the investment nest egg... since it is designated for non-retirement purposes. I never included the 529s in my nest egg or retirement planning... (but did count my contributions of $6k/kid/year as an expense).
 
.... Even if you don't do the 529, consider earmarking the money intended for college as not part of the investment nest egg... since it is designated for non-retirement purposes. I never included the 529s in my nest egg or retirement planning... (but did count my contributions of $6k/kid/year as an expense).
Totally agree. As it turns out we didn't need the taxable account college savings that we had accumulated. DD got a "scholarship"... really just a discount of $x per year from the rack rate tuition to incentivize her to chose the school and stay. We just paid the remainder from cash flow since those were my peak earning years and my bonuses pretty much covered her tuition, room & board, etc and then some. We have savings for DS, but he has decided not to go so far and I doubt that he will. We have let him know that if he decides to that we will fund it. At this point its blended in with everything else, but our retirement is so well funded if he decides to go we can handle it.
 
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