Hi. I and wife are both 38, both working in IT field as software developers living in HCOL in Colorado. We plan to retire earlier than typical 60 above and maintain our current lifestyle after retirement.
We both put our education first and started our career late (in early 30s). Both have Bachelors in engineering and Masters in a field of computer science. No inheritance and no financial assistance since we were 18. We were full time students and paid whatever we earned for housing. Any leftover was for tuition and used credit cards to pay the remaining tuition. Out of state tuition is expensive. Both of us starting grad school full time during 2008-2009 market immediately after finishing our engineering degrees was not helping in getting scholarships.
After grad school, we both started working within a year. All our income till now went in paying loans, credit cards, building up emergency fund, saving for down payment of house, small wedding.
Bought a house 2 years ago. Refinanced last month to a 15 years loan at 2.875% with 460k(valued at 700k) left on the loan.
Now all that is done, we are going to have a baby in a couple of months. This news suddenly hit us really hard as we do not have any significant savings for retirement. Better late than never. Then COVID happened. Gave us plenty of time to think about what to do and how to.
Have one paid off car and plan to pay off another one this month(16k left on the loan). Plan to keep these cars for at least another 5 years. So, there wont be any car payments for that period. I like working on cars, so unless something major breaks, there wont be any more money put on the cars except maintenance~ 500 a year.
Our current situation combined for both of us:
Income gross: 210k (more income potential by switching jobs, but the current covid situation has us anchored to our stable jobs).
Expense including mortgage calculated average over 2 years: 85k (anticipating it will go up by 15k with the baby coming)
100k in 401k
12k in Roth IRA (just opened this month and maxed it out for both of us)
100k in saving account(excluding 60k is emergency fund account). This is what we are undecided about. We want to use this to invest in taxable accounts but scared to put it all at once in something like a VTSAX, VTIAX, VBTLX (50/40/10) specially in current market. So, will probably start adding in chunks through out a year.
We plan to retire at about 55 or early without any mortgage.
Plan:
- Max out 401k: 19500x2 = 38000 (or whatever the limit for the year)
- Max out Roth IRA: 6000x2 = 12000 (or whatever the limit for the year)
- Max out HSA (only available from wife's employer)
- Open 529 and put 1000 in it every month for our daughter's tuition. = 12000
- Projecting expense at 100k for the year.
- Projecting Savings of ~30k net after all the expenses. This savings will go to taxable accounts VTSAX, VTIAX, VBTLX (50/40/10).
- Tax returns will go straight into paying extra principal in mortgage. Not aggressive but want to reduce the mortgage schedule a little. Just a personal milestone we want to hit.
What do you think? Feasible plan to retire at 55 or faster with the above numbers?
We both put our education first and started our career late (in early 30s). Both have Bachelors in engineering and Masters in a field of computer science. No inheritance and no financial assistance since we were 18. We were full time students and paid whatever we earned for housing. Any leftover was for tuition and used credit cards to pay the remaining tuition. Out of state tuition is expensive. Both of us starting grad school full time during 2008-2009 market immediately after finishing our engineering degrees was not helping in getting scholarships.
After grad school, we both started working within a year. All our income till now went in paying loans, credit cards, building up emergency fund, saving for down payment of house, small wedding.
Bought a house 2 years ago. Refinanced last month to a 15 years loan at 2.875% with 460k(valued at 700k) left on the loan.
Now all that is done, we are going to have a baby in a couple of months. This news suddenly hit us really hard as we do not have any significant savings for retirement. Better late than never. Then COVID happened. Gave us plenty of time to think about what to do and how to.
Have one paid off car and plan to pay off another one this month(16k left on the loan). Plan to keep these cars for at least another 5 years. So, there wont be any car payments for that period. I like working on cars, so unless something major breaks, there wont be any more money put on the cars except maintenance~ 500 a year.
Our current situation combined for both of us:
Income gross: 210k (more income potential by switching jobs, but the current covid situation has us anchored to our stable jobs).
Expense including mortgage calculated average over 2 years: 85k (anticipating it will go up by 15k with the baby coming)
100k in 401k
12k in Roth IRA (just opened this month and maxed it out for both of us)
100k in saving account(excluding 60k is emergency fund account). This is what we are undecided about. We want to use this to invest in taxable accounts but scared to put it all at once in something like a VTSAX, VTIAX, VBTLX (50/40/10) specially in current market. So, will probably start adding in chunks through out a year.
We plan to retire at about 55 or early without any mortgage.
Plan:
- Max out 401k: 19500x2 = 38000 (or whatever the limit for the year)
- Max out Roth IRA: 6000x2 = 12000 (or whatever the limit for the year)
- Max out HSA (only available from wife's employer)
- Open 529 and put 1000 in it every month for our daughter's tuition. = 12000
- Projecting expense at 100k for the year.
- Projecting Savings of ~30k net after all the expenses. This savings will go to taxable accounts VTSAX, VTIAX, VBTLX (50/40/10).
- Tax returns will go straight into paying extra principal in mortgage. Not aggressive but want to reduce the mortgage schedule a little. Just a personal milestone we want to hit.
What do you think? Feasible plan to retire at 55 or faster with the above numbers?