Planning to retire in 7 years now

[AreWeThereYet0]

Hi,
Just figured I would do a three year follow up to show how things have progressed.

43 now with no kids and want to retire at 50.

Own house with about 79K left on the mortgage. Value is probably around 240K.
~975K in 401K - max it out yearly
~424K in a gift trust that is parked in a single mutual fund that is doing well.
~15K in a REIT Index fund (Vanguard of course!).
~313K in Roth. Mixture of stocks and mutual stocks. max out yearly.
~243K in non-tax advantaged account with stocks and mutual funds
~About 5K in an HSA
Grand total of all these accounts is a little over 2M. (I am not counting the house in my calculations)
45K emergency fund (some set aside for next car, vacation, etc.)
I make around 97K a year.
Live in the Northeast. No plans to relocate to a much more expensive area.

I really want to retire at 50 and FireCalc says that I will be living off around 90K before taxes if I retire at 50 with 3M. That is totally acceptable to me.

I understand that counting on inheritances is frowned upon here but I am expecting to get an inheritance sometime within the next 2 to 5 years between 200K to 400K, if not more. With that added money I figure I should get able to get there quickly provided we don't have a down market. I am going to also get some additional money from company stock and a pension fund. I feel like I have typed a novel, but I wanted to provide as much information as possible so that you could provide better advice. Thank you.

My significant other is 8 years younger. He will be employed and I am planning on using his health insurance to cover me until Medicare kicks in.

-Are we there yet?

 

[RxMan]

It looks like you have lots of assets for an early retirement. The main number you need to estimate as accurately as possible is your expenses. That will allow you to be confident in your savings. Also keep healthcare expenses and taxes in mind while estimating those expenses. Good luck- you are well on your way to FIRE.

 

[Exchme]

Looks like you are doing a really good job saving and if the economy stays out of the ditch, sounds like you will arrive at the retirement station on schedule and if you get a substantial inheritance, you will get there sooner.

You mentioned Vanguard, so I presume you are aware of the horrible effect of fees and seeking to keep them low.

Presumably you are buying broadly diversified funds, so that you are not taking more risk than you thought.

One small point, if you can still contribute to an HSA, it is actually a better deal in many ways than maxing out the 401k (except for any portion of the 401K contribution that is matched by the company).

Have you looked at the interest rate on the mortgage, personally I would want that paid off before retirement.

You didn't tell us about your asset allocation, but as a 43 year old, it should generally be all or nearly all stocks (or real estate for diversification) as your investing life has 4 decades to go.

Keep up the hard work!

 

[teetee]

Sounds like your assets are invested on the conservative side if your assets need 7 years to get from 2.3M to 3M. That's is like 4% overall annual return without taking compound factor and income into consideration. Whatever you are doing worked so no need to change. With things considered and aggressive portfolio (and without a 60% pullback like 2008-2009 recession), 5M asset worth in 7 yrs from 2M is not too much to ask unless you have 97k in and 90k out each year.

 

[The Cosmic Avenger]

I agree, you're on track, my only concern is that if you're going to start withdrawing in 7 years you will want to have more of a cash cushion, maybe 2-3 years expenses, but then if your SO is still working you will have more flexibility than if you were just living off your withdrawals, too. And the projected 3% withdrawal rate is a smart move for an early retiree as another hedge against a big dip in the markets.

 

[finnski1]

First of all. Congratulations. I think you are doing To get to 2 mil at 43 with a 97k salary is pretty incredible to me. I realize we have seen outsized gains (over 15.2% annually according to my calculations)since March of 2009 but still...


Let's assume you pay roughly 10% effectively in taxes. Now down to about $87k. Then subtract $19500 for 401k and $6000 for roth. You are therefore spending around $62k max, probably less. So in just 7 years if you can spend 90k that's about a 50% increase.This all sounds very good to me.
Better hold on to that health insurance, I mean SO for a while.
Now having said all that. "Past performance is no indicator of future returns" still applies.
I say just keep up the great job you are doing.