My wife and I are planning to retire early...Jan 2031. I will be 55, she will be 52. I'm currently 43, she is 40.
The reason we want to retire early is we are both fed up of working 9-5 basically, and more importantly, we got the Airstream bug and want to buy a rig and travel full time. There are several couples we've talked to that do it comfortably currently for about $2k/month (in current dollars). We would be selling our house and not having a home base at all. Scary, right? :)
The main issue is ... we got a really late start on saving and investing.
*WE ARE NOW MAXING ALL THE FOLLOWING ACCOUNTS*
She has been saving in a 457b (she's been contributing $50/pay period) and 401k (she has 250% employer match fixed at 7%) for about 8 years and has about $30k in them total. I have only been in my 401k a year, and at about $5,800 with 3% employer match (maxed). We have also just started Roth IRAs, and an HSA (she's the only one with insurance, so it's capped at $3,500/year). We'll also have social security (hopefully it's still there by then). I assume we'll need to pull Roth contributions until we hit 59 1/2, then hit social security at 62, then the 401ks after that?
We make about $8k/month total, or something like $96k/year.
The good thing is we only spend $3,000/mo. (mortgage/auto/groceries/utilities/bills)
What is a good basic investment strategy considering we really need to get after it? How aggressive currently and how would you change it over the next 12 years as retirement approaches?
I figure we'll have $1,058,427 plus SS at the time of retirement (double-check my math). We hope to spend $30-35k a year in retirement (very frugal).
CHECKLIST (Short-Term)
1. Make sure we've cut spending as much as possible and maximized earnings/savings.
2. Make sure we are invested and diversified properly considering risk and retirement in Jan 2031.
3. Ensure management/hidden fees on investments are low as possible.
4. Develop a post-retirement spending plan for greatest efficiency.
5. Get estimates of potential/probable balances in each fund on Jan 2031.
6. Refinance house (Worth closing costs?) vs. paying extra $500/mo beginning in 18 months vs. investing that $500.
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Husband
MassMutual 401k - $6,500 (Vanguard Institutional Target Retirement 2030/2045 Fund) (50/50)
Vanguard Roth IRA - $960 (85s/15b) Vanguard Target Retirement 2040
M1 Roth IRA - $5,050 (VTI(65%)/BSV(15%)/VXUS(10%)/VNQ(5%)/VYM(5%))
Wife
Nationwide 457 - $13,300 (PRGFX(50%)/WFDDX(35%)/NWSIX(15%))
TCDRS 401k - $19,739.68 -- CAN'T CHANGE ANYTHING - (7% contribution, 250% match)
Vanguard Roth IRA - $960 (85s/15b) Vanguard Target Retirement 2040
M1 Roth IRA - $5,050 (VTI65%/BSV15%/VXUS10$/VNQ5%/VYM5%)
HSA w/Lively - $292 (not currently invested. $3/mo. when is good to invest?)
Emergency Fund
$30,000 @2% Money Market
Mortgage
$75k @ 5.88%. $1,102/mo - 14yrs left - REFI? (709 and 746 FICOs currently)
Set to be paid off 05/01/2032 (Want to pay off before retirement and sell it - need to pay extra?)
Loan a mount was $109,518...Value is $144k market.
Auto Loan
$14,703 @ 2.99% $574.84/mo. 36 month loan
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Which accounts to draw from and when? Leave balances and jump to the next account when an age is reached, or deplete account fully before moving on? Any advantages?
Husband - currently 43, will be 55:
1st - 401k - IRS Rule of 55, pull without penalty at retirement.
2nd - Roth IRA - contributions only tax-free, at 59.5, then pull earnings.
6th - Social Security - 67
Wife - currently 40, will be 52:
3rd - 401k - IRS Rule of 55, she'll have to wait 3 years after quitting work.
4th - 457b - No penalty for early withdrawal, must begin taking at 70.5
5th - Roth IRA - contributions only tax-free, at 59.5 pull earnings.
7th - Social Security - 67