Author Topic: Can we retire in 10 years?  (Read 1487 times)

Laura2017

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Can we retire in 10 years?
« on: August 28, 2017, 01:12:25 PM »
Think it's possible to retire in 10 years?

32/34yo
1 child, 3yr. did 529Prepaid. So undergrad is handled. and have like 8k in a regular 529 plan. Don't plan to have another kid.

House is worth 750k, remaining mortgage is 550k. so monthly pmi is 3.5k. (no other debt)

Income - me -140k, SO- 200k, some small additional bonuses.

80k in CDs

15k in savings/checkings

120k in index fund

200k in 401k.

30k from side hustle that would continue after retirement. Would become more like 50k, but unstable.

think we can retire in 10 years? If not, do you have any suggestions on how to make it happen? Our current expenses including mortgage is around 8.2k a month.

slow hand slow plan

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Re: Can we retire in 10 years?
« Reply #1 on: August 28, 2017, 01:48:00 PM »
no one can tell without expenses listed...

Laura2017

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Re: Can we retire in 10 years?
« Reply #2 on: August 28, 2017, 01:59:19 PM »
Average:
Mortgage/tax: $3,523
eating out: $660
grocery: $400
home depot: $100
Medical copays/dentist: $100
Tolls (to get to work): $150
Clothing: $100
Gifts: $75
Haircuts/Salon/Nails: $100
Alcohol: $75
Car Maintenance/Tax: $150 (cars are paid off) will probably purchase an electric one in the next year or two though)
Gas: $200
Travel: $200
Randoms: $300
Utilities: $200
Trash: $32
Internet $60
2 phones: $145
daycare:$ 1,027
Car insurance: $98
home insurance : $111
Personal Prop insurance: $22

JanF

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Re: Can we retire in 10 years?
« Reply #3 on: August 28, 2017, 02:17:10 PM »
Quote
Income - me -140k, SO- 200k, some small additional bonuses.

80k in CDs

15k in savings/checkings

120k in index fund

200k in 401k.

30k from side hustle that would continue after retirement. Would become more like 50k, but unstable.

think we can retire in 10 years? If not, do you have any suggestions on how to make it happen? Our current expenses including mortgage is around 8.2k a month.

Where is your money going? Yearly expense looks like 100K, total income is 370K including side hustle, I'm assuming this is pretax amount and after taxes would be about 270K. That leaves somewhere between 170-270K of unaccounted money.

I'm no expert so I'm not really qualified to give advice but I think getting rid of that mortgage ASAP will help your retirement a lot.

dilinger

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Re: Can we retire in 10 years?
« Reply #4 on: August 28, 2017, 02:29:42 PM »
That's..  a huge number of expenses.  Even without tolls and gas, that's $7500/mo (around $90k/yr).  At that level of spending, you'll need $2.25mil saved up in index funds to retire.

You are earning $370k/yr; let's be generous and call that $300k after taxes.  You'd have to save 75% of that (around $225k) per year in order to retire in 10 years. So - probably not.

However, there are ways to make it possible.  Lower your expenses.  If you can halve them, not only can you save more, you also don't need as much money to retire.  Paying off your mortgage means you only need $1.2mil to retire, and with the amount of money you both make that is well within reach in 10 years.

robartsd

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Re: Can we retire in 10 years?
« Reply #5 on: August 28, 2017, 03:00:38 PM »
So your current out of pocket expenses are about $93-98k annually. You'll reduce this to about $80k eliminating commute tolls and childcare; but your retirement budget also has to add costs for health insurance and taxes (currently deducted from paycheck or paid by employer).

I'll assume about $100k/year is deducted to pay for taxes and employee contribution for benefits. I'll also assume side hussle income was included in the original income ammounts. $340k total income - $100k taxes/deductions - $98k out of pocket expenses = $142k savings.

Adding $142k to your current $320k investment balances each year for 10 years with 6% total annual returns should grow to about $2.4M. If you use $400k to pay off the mortgage at FIRE, you're left with $2M which supports $80k/year under the 4% rule. You certainly seem to be in the ballpark for FIRE in 10 years.

I agree that you should be able to significantly reduce expenses to FIRE much sooner (many here would reduce expenses enough to live on a 30-50k side gig after paying off the house - you could do that in just a year or two).

KungfuRabbit

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Re: Can we retire in 10 years?
« Reply #6 on: August 28, 2017, 03:16:25 PM »
How are you investing going forward?

Based on the numbers that sounds like a 30 year mortgage. You should seriously consider converting it to a 10 year. You can afford the payments, you'd have a lower interest rate, and you'd have a paid off house right about retirement.

If you plan to heavily weight your investments in 401 k / IRA make sure to read up on how to withdraw it before 59 - this site has info on that.

Why would you have CDs..?  The current interest rate is like zero, so your money isn't growing. You should invest in long term index funds or pay off the house if you want to be safe.

So if you play your cards right and the economy does well (or ok) you should be just fine to retire in 10 years. If Trump causes WWIII and crashes the stock market - God help us all.

MDM

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Re: Can we retire in 10 years?
« Reply #7 on: August 28, 2017, 08:34:04 PM »
think we can retire in 10 years? If not, do you have any suggestions on how to make it happen? Our current expenses including mortgage is around 8.2k a month.
If you put your numbers into the relatively simple case study spreadsheet and/or some of the more complex Best and/or Recommended Retirement Calculators, what do the results tell you?

JC Fire

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Re: Can we retire in 10 years?
« Reply #8 on: September 03, 2017, 06:40:12 AM »
I don't follow the expenses. How much of the actual mortgage is taxes and insurance - i.e. What's there after mortgage paid off. Breaking that out - assuming mortgage paid off - and what expenses would be in retirement would help....some lower like commuting, need only one car likely, less eating out probably and others higher like medical

What does fire calc say with 10 year glidepath and $ per year contribution to portfolio - not following what that is either ...assume there are some employer matches too have to consider in the yearly savings number. Ditto comments above on asset allocation - assuming cd is for emergency fund but really need 80k ? Income numbers similar to my situation and do less than half of that. Consider vanguard short term bond fund - 1.8-2% and can write checks in the account if still want a chunk of that in relatively safe liquid account. Also look for small heloc if really need more -usually a 25-50k has unused annual fee of $50-100 which frees up that money to invest in higher yielding investments