My math says you have 30X so might can retire now. If you can get pension or SS it makes it even easier.Hi again,
I thought I would follow up with the Boglehead community to give an update on our progress towards early retirement and ask for input on how we can pull it off considering our financial situation.
Our original post was in May 2021: viewtopic.php?t=348900
UPDATE:
A little about us :
He: 44, engineer $195k/yr
She: 44, engineer, $90k/yr. She went part-time (30 hrs) in Aug 2022
Kid: 6yo
additional income: We are generously gifted $34k/yr from my parents, which seems to be highly likely to continue. But not included in SWR calcs along with any potential inheritance.
Annual Expenses: In 2022, $84k and in 2023, we are tracking to spend the same. Our expenses went way down when the kid started kindergarten (no more daycare) and the house was paid off in early 2022.
Assets:
Taxable - stocks/bonds/cash: $1.57M
Tax deferred retirement accounts - stocks/bonds: $1.89M
Primary home in San Antonio, TX: $1.1M
Total investible net worth: $3.46M
No debt
Questions:
I am less interested in whether we can retire early, but rather hearing ideas on how to best do it, assuming annual expenses in retirement to be $110k (adding fluff for some travel and healthcare). We already feel like we live pretty extravagantly at our current spend rate.
1) Up until now, I have considered early retirement planning being achieved in two steps. First, having our taxable accounts fund our lifestyle until 59.5. Then, bankroll the rest of our life with our retirement accounts. So I am simply performing two sequential models (in FireCalc, etc): now to 59.5, then 59.5 - 95 years old. Is this a valid way of looking at it? Am I missing something notable or over-simplifying things?
2) I discussed in my original thread about fear of the unknown and adding copious amounts of buffer to hedge any unforeseen circumstances or misfortune. So I am interested in having a backup plan in case we need to access our retirement accounts before hitting retirement age. I have researched SEPP in the event that risk actually happens. Is this a good backup plan? Do bogleheads see this as an effective tool for this purpose? Or is just taking the 10% penalty more appropriate in this case? This would only play out if we were too stubborn to go get a job or unable to work for some reason.
I really appreciate all the thoughtful banter on this forum. Over the years, I have learned a great deal about more than just personal finance from this community. Thank you all for that.
I'd appreciate any thoughts y'all may have.
Cheers,
Grifin
Perhaps analyze when you both have enough working years for social security near maximization.
Your tax deferred accounts might grow enough to make RMDs at 70 change your tax situation. I would not get hung up on things now, just be aware it might be easy to pull some out earlier than 70.
Fear of unknown a legit fear for us. Pulling an initial chunk out of IRA/401K to purchase an annuity to carry us to age 70 max social security helped. Now a 2nd annuity to meet all base expenses helps more. Works a bit like SEPP. Still have a lot in tax deferred and Roths.
I think you are getting too into the nitty gritty too far away from retirement. Chill out.
I'd advocate learning about withdrawal methods and decide which one makes sense for you. Initially we chose VPW with 2 yr emergency fund to handle down years. https://www.bogleheads.org/wiki/Withdrawal_methods
You have plenty and money coming in. Why not push up the return with maximum stocks?
You might have too much. What about in 15 years if you have double, triple, or more money? Say you end up with 10M and your plan calls for spending/withdrawing 5% in a high stock VPW portfolio (5% is about where we are at) That will be 500,000 per year. Do you really picture spending that much then? Why not spend it now, or spend more of it now? I bet you never have to save another dime.
I say add more fluff now and later.
Good work!
Statistics: Posted by 4nursebee — Fri Mar 01, 2024 3:29 am — Replies 27 — Views 6647