Ten yrs and done??

[tmob]

Greetings to all. I've been lurking, learning and plotting our great escape from the w**k force. I'm 30 and the wife is 27. Our goal is to be FI with the option of ER in about 10yrs. Here is where we stand:

Things we have going for us:
- We have $53k in various accounts (roths, savings, checking)
- We earn a combined $90-$95k (depending on overtime)
- Being in the Air Force reserves gives us affordable health insurance.
- Working on getting reserve pension up to $1k/mo in retirement (age *60)
- DW working to get her pension up to $1k/mo in retirement (age 60)

Things working against us:
- Total debt of $192,000 including mountains of student loans, mortgage, car loan etc.
- Neither of us have j*bs that match 401k. (So we dont have one)
- No pension from mega corp for me.
- DW will not get SS
- We want to have eventually have kids. (Hopefully the plan will not be sabatoged)

So far I calculate that once debt free we can live comfortably on $2,000/month. So the plan is to save between $600k and $720k. I will continue with the AF until they kick me out so that takes care of healthcare plus a few extra thousand in our pockets a yr.

If we do decide to ER then we can rest easy knowing that we have the pensions awaiting us at 60. Hopefully our plan works but I wanted to say hi to the forum and I hope to contribute from here on.

 

[pb4uski]

$2,000 a month living expenses doesn't sound like a lot even with health care taken care of. Have you provided for periodic car replacements, major home repairs (new roof for example), etc? Travel?

But if that is realistic for the lifestyle you have/want in retirement, you're probably looking pretty good.

 

[SRyan]

To add in on pb4uski's list, does the $2k take into account property taxes? Mine will continue to haunt me well after I pay off my mortgage up until the day I die or get locked away in a nursing home!

 

[tmob]

Thanks for replying. Property taxes are included into the figures. Cost of living is fairly low where we live. Even if we ER in 10yrs, I still plan on earning money with the reserves. Our house was built in 2003 but I can see us trying to replace the roof, car (which we keep for more than 10yrs), appliances etc. before we hang it up.

What I think might wreck our plans are:

- less than desired market returns
- long term layoff/injury
- kids
- property taxes/ inflation

 

[Surewhitey]

I would say kids will be the biggest (but best) problem you will have. 20-22 years and $10k annually average cost not counting college Imo...

After we got past $100k and DD got married 6 yrs ago, we felt comfortable with taking the plunge at 41 & 47.

We were growing our NE at $100k annually for the last 5 years to get to our #... We are paying $3600 annually for HD ins plan, fyi..

 

[YoungSaver]

I will continue with the A[ir ]F[orce] until they kick me out

So you don't plan to retire early?

 

[tmob]

I guess you are right and that I would not be fully ER. I will still be employed for 1 weekend a month and 2 weeks a year. I'll still take it.

 

[Birchwood]

kids are the biggest unkown. If you only have one, he or she will occupy about 18 years of your life, granted he is gone off your roof at 18.
There are several estimates of what it cost to raise a kid. They're within
100Ks-200Ks. College expenses always inflate with time.
Good luck.

 

[lemming]

Inflation? That $2,000 is going to become 3,200 then 4,500 and more.
When I started saving in the 70's I did not plan on $4 a gallon gas..or milk.
How are you going to pay off that debt in 10 years?

 

[plex]

I'd definitely increase that number by $200k per kid, also not accounting for inflation at all, which will increase the amount needed by 1.5x. So bare minimum, with one kid, I would say 1.1M. 14-15 years should do it, you have to do a LOT of part time to make up for the gap otherwise if you retire at 10, you would likely be working part time almost all the way to 60.

 

[LRDave]

WRT to kids: There can be significant expenses that you never anticpated and budgeted for - SIGNIFICANT. You can come up with a pretty a decent cost estimate if everything's just as you would like it to be as a parent. Let's say you come up with a decent budget estimate - if you are going to have 2 children (just for example), I would total the budget estimate for the two and multiply by 1.5.

 

[Nords]

Greetings to all. I've been lurking, learning and plotting our great escape from the w**k force. I'm 30 and the wife is 27. Our goal is to be FI with the option of ER in about 10yrs. Here is where we stand:
- Being in the Air Force reserves gives us affordable health insurance.
- Working on getting reserve pension up to $1k/mo in retirement (age *60)
- We want to have eventually have kids. (Hopefully the plan will not be sabatoged)
I will continue with the AF until they kick me out so that takes care of healthcare plus a few extra thousand in our pockets a yr.
If we do decide to ER then we can rest easy knowing that we have the pensions awaiting us at 60. Hopefully our plan works but I wanted to say hi to the forum and I hope to contribute from here on.

Depending on where you want to work, you might be able to pick up quite a few extra paychecks from the AF in your 30s-50s. For example, Oahu's Pacific Command (PACOM) has over a third of its active-duty billets filled by Reservists of all the services.

If nothing else, you have a pretty good guarantee of deferred annuities kicking in at age 60, so if you can live on that amount (and Social Security) then you only have to manage your own savings & investments to get you to that finish line.

You'd want to keep an eye on the military's annual pay tables to forecast what you draw at age 60 is what you expect. I keep wondering if they're going to boost the over-30 pay rates, which could have the unintended consequence of boosting Reserve retirements.
Calculating a Reserve retirement | Military Retirement & Financial Independence

 

[tmob]

Thanks to everyone or the replies/advice. (Nords I purchased your book awhile ago and enjoyed it.)

While our expenses (outside of debt payments) come up to around $2k/month, we still would like to fully fund 1 roth IRA each year. So rounding up we would basically need $2,500/month.

Once we reach our financial goal of $600k-$720k then we will concentrate on paying off the rest of our debt. With the aid of the dividends/interest earned from our savings, it will not take us long to finish off our debt.

In ER we feel the need to have some form of employment. For me it would be the reserves. If we are in need of cash, there are plenty of options for a reservist to earn money. For DW we need to research what could be simple employment for the semi retiree. We need our money to survive inflation and last for 20yrs until our pensions kick in.

Now to make this happen in 10yrs..........

 

[Nords]

Thanks to everyone or the replies/advice. (Nords I purchased your book awhile ago and enjoyed it.)

Thanks!

Let me know if you want to share advice or your story for the 2nd edition...

 

[G-95]

I think u should invest your $53k someplace else. Make your $ works for you... You will get ER faster than focusing on saving your incomes. I'm sure that inflation will be high and will get higher in the future, especially when our govt keeps printing $$$ out of thin air.

 

[YoungSaver]

While our expenses (outside of debt payments) come up to around $2k/month, we still would like to fully fund 1 roth IRA each year. So rounding up we would basically need $2,500/month.

<snip>

We need our money to survive inflation and last for 20yrs until our pensions kick in.

I'm a little confused here. What is the rest of your plan?

So you want to contribute the max to an IRA that you can't touch until you're 60. You have a pension that starts when you're 60. You want to retire at 40. You have 200k in debt and 50k in savings. You're shooting for 600-700k in savings.

You need money to live between the ages of 40 and 60. So you are planning to use you're combined salary of 95k to save an additional 550-650k dollars in the next 10 years? It seems like a pretty tough goal at your current income level. You're already spending $2000 a month for living, so that cuts out 24k and taxes will eat another 18k or so. So now you're down to 53k a year (actually 47k due to Roth IRA).

What's your plan on saving the money? Investment account?

 

[tmob]

Well we hope to have a [-]bull market[/-] miracle happen regarding stocks. We currently max out our Roth IRA's with the hope of continuing to fully fund 1 IRA account in semi-ER. We are on track to save over 30k this yr. Ideally if we can reach the $600k-$720k finish line then we can semi-ER.

We currently invest in individual stocks that either pay dividends or we believe will move upward. We both plan to bring in some kind of low income during semi-ER. For example: In ER working for the reserves I will bring in an additional $7k a year by working the bare minimum. We dont know what DW might bring in. Nor do we understand how retirees are taxed. (more DD is necessary.)

If I undestand the law correctly, I can serve until I'm 52yrs old (33yrs of service). We can then dip into our $600k principle if necessary in order for us to hang on 8yrs until I reach 60. By then we should have been contributing to 1 IRA for 30yrs + we have our COLA'd pensions of $2k/mo.

(The principle from the other Roth IRA would've been withdrawn when I turn 40 (10yrs from now) to reach our ER goal but the interest would remain for 30yrs. w/ no contributions. But we should have that too come full Retirement time.)

I really appreciate all the comments and NORDS yes I would be honored if my story made it into your next edition. My story is still unfolding and a lot may change.

 

[Nords]

I really appreciate all the comments and NORDS yes I would be honored if my story made it into your next edition. My story is still unfolding and a lot may change.

Thanks, keep us posted!