Early 50s...what should be my target?

[GarythePunster]

Hi, new to this community and the overall site though not unfamiliar with Herr Mustache (I'm feeling German today.) Short as history as possible, hope this is the right place to put this.:
-- I'm 53, she's 42. No dependents: my daughter is out of college, our cat just died after 18 1/2 happy (and probably very Mustachian) years. We just moved to Bay Area in October after being laid off in New England, wife and I found jobs in Jan/Feb. Love living here. Her job, in social media she likes a lot. I'm in PR, working for an agency, and meh ... it's work, learning a few new things in the social media/data analytics space as I go, so it's not a worthless experience from the happiness perspective. But, yeah, meh on the actual duties/job/company, at least so far.
-- Though SF area is expensive we both are very fortunate -- net income around $370K a year. Taxes will take out nearly half of that. We also tithe 10 percent off our gross income, so we will donate to church and charity this year somewhere near $40K.
-- We're both doing 10% to 401(k), companies match dollar-for-dollar to 3 percent. (Because of my advanced age, I get to do a little more in 401k under the "catchup" rules. No word on whether there is a mustard rule.) IRAs etc are about $400K so far.
-- We rent our house at $6K a month. Yeah pricey, probably could downsize a bit though I do love the house and I've moved the wife three times in last three years and I'm loathe to do that again soon. We have about $90,000 saved that we could use for a house purchase should we want to do that. We don't feel a compelling need to own, though, to be honest, and given that we just moved here and just got new jobs, we are putting that off for a year or two.
-- We have emergency savings of about $50K.
-- We have no debt. One car, a 2003 Audi which we paid cash for when I got a bonus in 2008. It has 160K miles on it. Seems to be doing OK, might need to replace at some point but wife seems happy with it. I walk to train from home and then walk 1.2 miles from train to office. Periodically it seems like we need two cars, but am also thinking ZipCar might be a better option for the one or two times a month I need to either drive to a work function or we have competing demands for car trips. No way am I driving to work every day, which is why I'm thinking Zipcar might be a more Mustachian way to go. I have about $14K saved for a car, though I could just keep that on hold for a while.

I don't see moving out of the Bay Area as an option anytime soon, especially since the wife feels very rewarded in her job right now.   

I guess I'm not looking as much for budget advice -- I have a budget, and it has too much in  travel, restaurants, groceries and those silly sports packages we like too much on the tellyvision -- as much as I am for thoughts and guidance.  I don't feel a need to work at a job until I'm 65, and I'd rather not. My Dad worked hard to build up enough to retire, and then he died at 57. I want personal/financial freedom as early as possible.

What's a realistic number goal? What's a realistic age for me to shoot for? What other thoughts might you have? I appreciate the efforts people go to here in the forum and I'm quite interested in the perspectives of people who are headed in the right direction for their own personal/financial freedom goals. Thank you very much.

Gary

(P.S. I used to freelance for a newspaper in the 1980s, right after college, and they paid me $1 an inch. I guess this post might have been worth something if I monetized it. :-) )

[MDM]

Here's a quick equation - put your numbers into Excel and see what you get....

Time in years to FI = Ln((S + i*E/WR) / (S + i*A)) / Ln(1 + i)

A = Amount currently invested in funds you will draw upon in retirement.
E = Total (including taxes) annual expenses in retirement (today's dollars)
i =  Real return on invested retirement funds, e.g., 3% (conservative - we hope...)
S = Annual amount invested in funds you will draw upon in retirement.
WR = Withdrawal Rate planned for retirement, using Trinity Study definitions (e.g., 4%)

[mveill1]

I am quite impressed with the net income figure. Is this common in the Bay Area? If not, you must be both exceptional individuals so I'm not too worried about you. But being so good at your jobs, perhaps, could introduce complacency on the budgeting side?

I might be totally missing the point, but exactly what sort of thoughts and guidance would be helpful to you? When you say "target", do you mean how much investments you must accumulate to retire?

You state you have a budget, but that you don't require advice on it. But the budget could be your main problem as your savings are abysmal in relation to your income. I am guessing that a previous divorce may have put a dent in your net worth (you refer to "my" daughter - implying a previous marriage). The budget is really the only flex that you have, it determines how much savings you need so I don't think people can help you unless you are willing to discuss it. The "simple math behind early retirement" post explains it all clearly.

Your post doesn't really break it down, but I wouldn't be surprised if you were running a budget at +80% of take-home pay. Let's say that's $150,000. For your savings to last both your and your wife's lifetimes with near-100% certainty then I guess you'd need something like $3m to $4m. Surely that's not what you want to hear.

I suggest reading the "how to write a case study" thread to help you hit all the points that more senior mustachians will need to really help you.

[NICE!]

I might be totally missing the point, but exactly what sort of thoughts and guidance would be helpful to you? When you say "target", do you mean how much investments you must accumulate to retire?

You state you have a budget, but that you don't require advice on it. But the budget could be your main problem as your savings are abysmal in relation to your income. I am guessing that a previous divorce may have put a dent in your net worth (you refer to "my" daughter - implying a previous marriage). The budget is really the only flex that you have, it determines how much savings you need so I don't think people can help you unless you are willing to discuss it. The "simple math behind early retirement" post explains it all clearly.

Your post doesn't really break it down, but I wouldn't be surprised if you were running a budget at +80% of take-home pay. Let's say that's $150,000. For your savings to last both your and your wife's lifetimes with near-100% certainty then I guess you'd need something like $3m to $4m. Surely that's not what you want to hear.

I suggest reading the "how to write a case study" thread to help you hit all the points that more senior mustachians will need to really help you.

Amen. The spending sounds way too high here and OP is completely eliminating it from discussion. I'm sorry, $6k/month rent for 2 people is absurd considering the fact that is higher than the average monthly income of half of America.

[BlueHouse]

Hi Gary,
Welcome to the forum. You sound a bit like me. High income and spending too much of it.  It looks like you have
400k in iras, etc. --does this include all of your retirement including your current 401k?  How is this invested?
90k+14k+50k in...?  Where is this money now?  Invested, or sitting in cash?

If those are your assets, you can live about 3 years on them if your spending is as high as it seems.

It would help to have a breakout of your expenses.  Yes, please do use the case study template. I did it and got a lot of great feedback. I came to these forums late and have already figured out how to shave 14 years off my retirement date. Now I'm working out how to get it even nearer and that's the part that will take adjustments.

I'm still working on figuring out what I actually want so that I can adjust my lifestyle to it. It took a long time for me to absorb that I don't have to be a working stiff if I don't want to. Now I just need to figure out what I DO want to be (traveler, hiker, beach bum, philanthropist, explorer, student, etc).
Good luck!

[Pooja Sharma]

Here's a quick equation - put your numbers into Excel and see what you get....

Time in years to FI = Ln((S + i*E/WR) / (S + i*A)) / Ln(1 + i)

A = Amount currently invested in funds you will draw upon in retirement.
E = Total (including taxes) annual expenses in retirement (today's dollars)
i =  Real return on invested retirement funds, e.g., 3% (conservative - we hope...)
S = Annual amount invested in funds you will draw upon in retirement.
WR = Withdrawal Rate planned for retirement, using Trinity Study definitions (e.g., 4%)

Hey MDM, nicely explained.

Thanks.

[The_path_less_taken]

I assumed the OP meant "target fund" but I've been spending too much time on Vanguard lately.

Perhaps it was more "we're not really saving what we could but hey, we're doin' ok, right?" By this forums main viewpoint...you could save more.

Bottom line, only you can decide that.

But with two new jobs...I'd be fucking terrified if just my housing was 6k a month. Yeah the wife loves her job but you sound like you could walk in a heartbeat: then what?

I sleep best at night when I can pay 100% of everything--for a year--off dividend/rental/side gig income.

Only you know how much risk you are comfortable with.

[Retired To Win]

... I want personal/financial freedom as early as possible...

You will achieve that goal much faster if you target a more reasonable cost of living area than the Bay Area for your retirement.  Just looking at housing, getting out of the Bay Area after you retire should reduce your "target number" by hundreds of thousands of dollars.  So don't go buying a house in the Bay Area, at least for now.  Find a retirement area you would enjoy living in and then work up your target number based on living there, NOT in the Bay Area.  Then see how closer that gets you to being able to pull the trigger.

Good luck.

[2lazy2retire]

Hi, new to this community and the overall site though not unfamiliar with Herr Mustache (I'm feeling German today.) Short as history as possible, hope this is the right place to put this.:
-- I'm 53, she's 42. No dependents: my daughter is out of college, our cat just died after 18 1/2 happy (and probably very Mustachian) years. We just moved to Bay Area in October after being laid off in New England, wife and I found jobs in Jan/Feb. Love living here. Her job, in social media she likes a lot. I'm in PR, working for an agency, and meh ... it's work, learning a few new things in the social media/data analytics space as I go, so it's not a worthless experience from the happiness perspective. But, yeah, meh on the actual duties/job/company, at least so far.
-- Though SF area is expensive we both are very fortunate -- net income around $370K a year. Taxes will take out nearly half of that. We also tithe 10 percent off our gross income, so we will donate to church and charity this year somewhere near $40K.
-- We're both doing 10% to 401(k), companies match dollar-for-dollar to 3 percent. (Because of my advanced age, I get to do a little more in 401k under the "catchup" rules. No word on whether there is a mustard rule.) IRAs etc are about $400K so far.
-- We rent our house at $6K a month. Yeah pricey, probably could downsize a bit though I do love the house and I've moved the wife three times in last three years and I'm loathe to do that again soon. We have about $90,000 saved that we could use for a house purchase should we want to do that. We don't feel a compelling need to own, though, to be honest, and given that we just moved here and just got new jobs, we are putting that off for a year or two.
-- We have emergency savings of about $50K.
-- We have no debt. One car, a 2003 Audi which we paid cash for when I got a bonus in 2008. It has 160K miles on it. Seems to be doing OK, might need to replace at some point but wife seems happy with it. I walk to train from home and then walk 1.2 miles from train to office. Periodically it seems like we need two cars, but am also thinking ZipCar might be a better option for the one or two times a month I need to either drive to a work function or we have competing demands for car trips. No way am I driving to work every day, which is why I'm thinking Zipcar might be a more Mustachian way to go. I have about $14K saved for a car, though I could just keep that on hold for a while.

I don't see moving out of the Bay Area as an option anytime soon, especially since the wife feels very rewarded in her job right now.   

I guess I'm not looking as much for budget advice -- I have a budget, and it has too much in  travel, restaurants, groceries and those silly sports packages we like too much on the tellyvision -- as much as I am for thoughts and guidance.  I don't feel a need to work at a job until I'm 65, and I'd rather not. My Dad worked hard to build up enough to retire, and then he died at 57. I want personal/financial freedom as early as possible.

What's a realistic number goal? What's a realistic age for me to shoot for? What other thoughts might you have? I appreciate the efforts people go to here in the forum and I'm quite interested in the perspectives of people who are headed in the right direction for their own personal/financial freedom goals. Thank you very much.

Gary

(P.S. I used to freelance for a newspaper in the 1980s, right after college, and they paid me $1 an inch. I guess this post might have been worth something if I monetized it. :-) )

You have one of those running around my hair is on fire type emergencies on the spending - at your age and only 500k in total savings the following have to be sorted ASAP

6k a month on rent
40k a year to the church

[GarythePunster]

>>You have one of those running around my hair is on fire type emergencies on the spending - at your age and only 500k in total savings the following have to be sorted ASAP

6k a month on rent
40k a year to the church<<

I realize people have different points of view on the charitable contributions, but we feel commanded to give 10 percent, so as long as our salaries are near $400K a year, our charitable contributions are going to be $40K.

[NICE!]

I realize people have different points of view on the charitable contributions, but we feel commanded to give 10 percent, so as long as our salaries are near $400K a year, our charitable contributions are going to be $40K.

Word, a bunch of us around here give, too. You're gonna need to get that spending in check, though.

[Eric]

I guess I'm not looking as much for budget advice -- I have a budget, and it has too much in  travel, restaurants, groceries and those silly sports packages we like too much on the tellyvision -- as much as I am for thoughts and guidance.  I don't feel a need to work at a job until I'm 65, and I'd rather not. My Dad worked hard to build up enough to retire, and then he died at 57. I want personal/financial freedom as early as possible.

If you truly want personal/financial freedom as early as possible, then you'll have to be willing to make some changes.  Some of these may even feel drastic at first.  But it's amazing how quickly you adapt to the "new normal" of choosing activities that are lower cost over higher cost.  At your income levels, you could be FI in about 2 years if you reigned in the ridiculousness.  Of course, if you don't want to move, don't want to give up this, don't want to change that, then it will take an awful lot longer.

My wife and I also live in the Bay Area.  We travel, go to baseball games, buy lots of craft beer, wine, and whiskey, eat delicious food every day, and spend about $45k per year.  If you spent what we did, you could save $650K in the next 2 years.  Mind blowing to me!

Edit -- or $650K in 4 years if that $370K is gross per year instead of net as stated in the original post.  Still incredible what you could do if you wanted to.

[Argyle]

But your salaries are not $400,000, they're $350,000, or arguably ~$150,000 in takehome pay.  Whether the 10% is on your gross or your net is a subject of argument, I know, but even on the gross, that's $5000 you're not putting into your really very small retirement account.

But the bottom line is that some spending is going to have to change if you want to retire at all, never mind before 65. 

[beltim]

What's a realistic number goal? What's a realistic age for me to shoot for? What other thoughts might you have? I appreciate the efforts people go to here in the forum and I'm quite interested in the perspectives of people who are headed in the right direction for their own personal/financial freedom goals. Thank you very much.

You're only going to get generic answers with generic information.  To really answer your questions, you need to figure out how much you spend and how much you save.  Until then, you'll get a lot of people reading into your text to give suggestions that may or may not be applicable.

That said, here's a base case with very rough estimates assuming you're spending everything that's not going into your 401k (all rounded to the nearest thousand):
$370k gross income. 
$37 k to 401k
$40 k to tithe
~$52k federal income taxes
~$5k Medicare tax
~$15k Social Security taxes
~$24k CA income taxes
That leaves ~$197k for spending.  I'm guessing you don't spend that much, but there's a huge difference between spending half, 3/4, or all of that.  If you do in fact spend $197k per year, then you have a long way to go.  Plugging the appropriate numbers into MDM's formula, you get about 28 years (I think...I haven't used that formula before so I may be making a mistake).

If you spend, say, $150k, but you only need $100k in retirement, the numbers would come out to about 13 years.  That doesn't include Social Security, which may be significant considering you're 53.

[Eric]

But your salaries are not $400,000, they're $350,000, or arguably ~$150,000 in takehome pay.

That said, here's a base case with very rough estimates assuming you're spending everything that's not going into your 401k (all rounded to the nearest thousand):
$370k gross income. 

I'm confused here.  Do you think it's $370K gross?  Because he stated it was net:

-- Though SF area is expensive we both are very fortunate -- net income around $370K a year.

[beltim]

I'm confused here.  Do you think it's $370K gross?  Because he stated it was net:

-- Though SF area is expensive we both are very fortunate -- net income around $370K a year.

I could be wrong, but I took "net" to mean "he and his wife combined" rather than "after tax" since immediately after he said "net income around $370k a year" he said:

Taxes will take out nearly half of that. We also tithe 10 percent off our gross income, so we will donate to church and charity this year somewhere near $40K.

Both of those statements suggest the $370 is pre-tax.

[Eric]

Yeah, you're probably right.  I amend my earlier statement to saving $650K in 4 years instead of 2.  Still pretty mind blowing.

[MDM]

Yeah, you're probably right.  I amend my earlier statement to saving $650K in 4 years instead of 2.  Still pretty mind blowing.

But it's still a good example that terms such as "net" can have different meanings, and why the "how to write a case study" sticky includes

Gross Salary/Wages: Before any deductions
Pre-tax deductions: 401k, HSA, FSA, IRA, insurance, etc. - whatever you have
...
Adjusted Gross Income: This should equal the additions and subtractions above.
Taxes: Federal, state/local, and FICA.  These should be consistent with your AGI and Life Situation.

[beltim]

Yeah, more information is definitely needed.  I probably wouldn't have posted anything except 1) the OP came back to respond to one point; 2) I was curious what the after tax income on a $370k salary in CA was.

[Eric]

Yeah, more information is definitely needed.  I probably wouldn't have posted anything except 1) the OP came back to respond to one point; 2) I was curious what the after tax income on a $370k salary in CA was.

As a CA resident, I'm willing to make the sacrifice and test this as a real life experiment.  For science!  Just tell me where to sign up!  :)

[beltim]

Yeah, more information is definitely needed.  I probably wouldn't have posted anything except 1) the OP came back to respond to one point; 2) I was curious what the after tax income on a $370k salary in CA was.

As a CA resident, I'm willing to make the sacrifice and test this as a real life experiment.  For science!  Just tell me where to sign up!  :)

Don't ask me.  Ask Gary - apparently he knows the right people.  Let me know if I did the math right, though!

[MDM]

Let me know if I did the math right, though!

Copy & paste the table below into cell A1 in a spreadsheet.  You should get 37.7 years for these numbers.

WR	0.04	fraction
S	37000	$/yr
E	150000	$/yr
A	400000	$
i	0.03	fraction
Time to FI	=LN((B2+B5*B3/B1)/(B2+B5*B4))/LN(B5+1)	yr

[GarythePunster]

Thank for the case study advice I will use that and do that.  But in response to earlier posting:
(all rounded to the nearest thousand):
$370k gross income. 
$37 k to 401k
$37 k to tithe
~$69k federal income taxes (earlier said 52, calculating larger based on payroll deduction)
~$5k Medicare tax (correct)
~$15k Social Security taxes (prob right)
~$24k CA income taxes (about right)
That leaves ~$183k (sted 187) for spending IF you don't count health insurance, which is another $4K a year. So $179K?

This is the highest income we've ever had, so I haven't finished work on doing a budget on it. My early work, which clearly needs revising, was adding another $30K to the savings line. Yes, I realize we're fortunate to have these levels of income and to most people here even anywhere close to that level of spending is gob-smacking. And the whole point of even tipping my toe in the water is because I DON"T want or need to spend $179K a year to make sure we're fed, clothed, mostly clean-smelling and fulfilling a good purpose here on Terra Firma. I'm sure I will build a budget that spends less than that. Mostly because, duh, if you want to have any long-term financial freedom we have to do so.

Anyway, thanks for the early work on this with me. I do appreciate it a great deal.

[beltim]

Let me know if I did the math right, though!

Copy & paste the table below into cell A1 in a spreadsheet.  You should get 37.7 years for these numbers.

WR	0.04	fraction
S	37000	$/yr
E	150000	$/yr
A	400000	$
i	0.03	fraction
Time to FI	=LN((B2+B5*B3/B1)/(B2+B5*B4))/LN(B5+1)	yr

Ha!  That's not the math I meant.  Also, I used a higher real return rate - 6% - because I think 3% is way too conservative.

Edit: and other different numbers too. 

[GarythePunster]

And yeah, I said 370K NET income, but duh, it's gross. Sorry about the confusion.

[GarythePunster]

Copy & paste the table below into cell A1 in a spreadsheet.  You should get 37.7 years for these numbers.

WR	0.04	fraction
S	37000	$/yr
E	150000	$/yr
A	400000	$
i	0.03	fraction
Time to FI	=LN((B2+B5*B3/B1)/(B2+B5*B4))/LN(B5+1)	yr

[/quote]

I really don't understand this ... Excel and math, neither in my skillset. :-(

[beltim]

Thank for the case study advice I will use that and do that.  But in response to earlier posting:
(all rounded to the nearest thousand):
$370k gross income. 
$37 k to 401k
$37 k to tithe
~$69k federal income taxes (earlier said 52, calculating larger based on payroll deduction)
~$5k Medicare tax (correct)
~$15k Social Security taxes (prob right)
~$24k CA income taxes (about right)
That leaves ~$183k (sted 187) for spending IF you don't count health insurance, which is another $4K a year. So $179K?

Anyway, thanks for the early work on this with me. I do appreciate it a great deal.

Thanks for responding!  I look forward to seeing a full case study.  And yeah, I definitely made a mistake on the Federal tax.  My estimate should have been $67k.  I'm not quite sure what happened there, probably did something weird on the calculator.

[GarythePunster]

Thanks for responding!  I look forward to seeing a full case study.  And yeah, I definitely made a mistake on the Federal tax.  My estimate should have been $67k.  I'm not quite sure what happened there, probably did something weird on the calculator.

I wish your data was more accurate! :-)

[MDM]

One more estimate.  But more accurate inputs would be even better. :)

Category	Monthly	Comments	Annual
Salary/Wages	$30,833		$370,000
401(k) / 403(b) / TSP / etc.	$3,083	Room to increase?	$37,000
Income subject to IRS tax	$27,750		$333,000
Federal Total Inc.	$27,750		$333,000
Federal tax	$5,280	2015 rates, MFJ, item. ded., 2 exempt.	$63,359
State/City tax	$2,012	Guess, using 7.25% * Fed. AGI	$24,143
Soc. Sec.	$1,225	Assumes 2 earners paying	$14,694
Medicare	$537		$6,445
Total income taxes	$9,053		$108,636
Income before other expenses	$18,697		$224,364
Monthly Expenses:
Rent	$6,000		$72,000
Charitable contributions	$3,083		$37,000
Medical Insurance	$333		$4,000
Miscellaneous	$6,000		$72,000
Non-mortgage total	$15,417		$185,000
Total Expense	$15,417		$185,000
Total to invest	$3,280		$39,364
Summary:
"Gross" income	$30,833		$370,000
Income taxes	$9,053		$108,636
After-tax income	$21,780		$261,364
IRA+401k/403b/TSP/457 (Savers' credit)	$3,083		$37,000
Living expenses	$15,417		$185,000
After-tax investable	$3,280		$39,364
Time to FIRE?:
Time to FIRE	27	years
Safe Withdrawal Rate	4.00%	percent
Real return on tax-deferred investments	5.00%	percent
Real, after tax, return on taxable investments	4.25%	percent
Expected retirement total tax rate	15.00%
Current Savings
Tax-deferred (e.g. trad. IRA/401k)	$400,000
Projected Savings at Retirement
Taxable	$1,923,258
Tax-deferred (e.g. trad. IRA/401k)	$3,516,140
Total projected stash	$5,439,398
Projected Expenses in Retirement
Non-loan, non-work expenses	$185,000
Income taxes	$32,647
Total	$217,647
Stash needed for retirement @4.0% SWR	$5,441,176
	Need $1,779 more.

Filing Status	2	1=S, 2=MFJ
# of earners	2
Total Income	$333,000
Std. Deduct.	$12,600
Act. Deduct.	$60,450
# Exempt.	2
Exemption	$6,400
Taxable	$266,150
Tax	$63,359
Tax after n-r credit	$63,359
# Children <17	0
Child Tax Cred.	$0
EIC	$0
Net Tax	$63,359
Monthly	$5,280
Mtg. Int. (guess)	$0
State tax	$24,143	7.25%
Prop tax	$0
Charity	$37,000
Item. Deduct.	$61,143

[GarythePunster]

MDM monthly tax estimates are kind of low:
Fed: $5800
SocSec: $1916 (though will drop some when I hit the threshold sometime this summer)
Medicare: $448
State+StateSDI: $2100.

I do also get BART (subway) pre-tax deduction of $135 a month. And pre-tax health insurance, as stated, of $336.

[MDM]

MDM monthly tax estimates are kind of low:

Could well be.  Doing "unusual" cases such as this provides some good tests for the case study spreadsheet.

Some questions:

Fed: $5800

Is this what you expect for your total 2015 tax, expressed monthly, or is it the amount being withheld from your pay?  I'm guessing the latter - if so, you might adjust withholding to match your liability better.

SocSec: $1916 (though will drop some when I hit the threshold sometime this summer)

The $14,694/yr is what two earners, each earning $118,500 or more, will pay in 2015.  See http://www.ssa.gov/news/press/factsheets/colafacts2015.html.  In other words, your monthly average will drop after you hit that threshold.

Medicare: $448

That is the 1.45% amount.  Unfortunately you will be hit with another 0.9% on the amount above $250K you earn.

State+StateSDI: $2100.

State I leave to you.  There is too much variation in state laws.

I do also get BART (subway) pre-tax deduction of $135 a month. And pre-tax health insurance, as stated, of $336.

If you would like to refine the numbers, you could enter details in the spreadsheet downloadable from the reader case study sticky.

[GarythePunster]

Fed: $5800

Is this what you expect for your total 2015 tax, expressed monthly, or is it the amount being withheld from your pay?  I'm guessing the latter - if so, you might adjust withholding to match your liability better.

Yes, that's the monthly take home ... TurboTax seemed to suggest we should keep it there, given the lack of mortgage deduction (though we do have high charitable deductions.

SocSec: $1916 (though will drop some when I hit the threshold sometime this summer)

The $14,694/yr is what two earners, each earning $118,500 or more, will pay in 2015.  See http://www.ssa.gov/news/press/factsheets/colafacts2015.html.  In other words, your monthly average will drop after you hit that threshold.

And yes and that "extra" money a month is going to go into savings, assuming I overcome my own stupidity.

Medicare: $448

That is the 1.45% amount.  Unfortunately you will be hit with another 0.9% on the amount above $250K you earn.<<

Thanks Obama! :-)

[ender]

Do either of you have a pension?

[GarythePunster]

Do either of you have a pension?

The wife will, not sure when or how much, because of her new job. I have a small pension from a previous employer that will give me a whopping $200 or so a month at some point in my 60s.

[ender]

Do either of you have a pension?

The wife will, not sure when or how much, because of her new job. I have a small pension from a previous employer that will give me a whopping $200 or so a month at some point in my 60s.

Ok, so neither will be meaningful.


Why aren't both of you maxing out your 401ks? That should end up as 18 + 18 + 6 =  42k/year, and not only 37k.

[GarythePunster]

Ok, so neither will be meaningful.


Why aren't both of you maxing out your 401ks? That should end up as 18 + 18 + 6 =  42k/year, and not only 37k.

Good catch -- yes, I plan to add to the 401(K) to hit the other six in "catchup" contributions that I'm allowed at my advanced age. Wife is not allowed to do so, since she is my "child bride." And any 40+ women reading this will chuckle at that, I hope!

[ender]

Ok, so you should also be doing a Backdoor Roth IRA, as I understand it you could do 5.5 + 5.5 + 1 = 12k into this, as well, and since you're floating in cash this would be trivial.

Do you have access to an HSA through work?

[GarythePunster]

Ok, so you should also be doing a Backdoor Roth IRA, as I understand it you could do 5.5 + 5.5 + 1 = 12k into this, as well, and since you're floating in cash this would be trivial.

Do you have access to an HSA through work?

Thanks, will check into that. My wife might have access to an HSA at her work and we have an old one from my previous job, but my current work does not have one.

[ender]

Thanks, will check into that. My wife might have access to an HSA at her work and we have an old one from my previous job, but my current work does not have one.

Definitely figure out if your wife has an HSA, that's a great tax savings vehicle too. Turns into an IRA at age 65 but can pay any medical expenses pretax for either of you (even if she is the only one covered by it).

[Bardo]

Here's a quick equation - put your numbers into Excel and see what you get....

Time in years to FI = Ln((S + i*E/WR) / (S + i*A)) / Ln(1 + i)

A = Amount currently invested in funds you will draw upon in retirement.
E = Total (including taxes) annual expenses in retirement (today's dollars)
i =  Real return on invested retirement funds, e.g., 3% (conservative - we hope...)
S = Annual amount invested in funds you will draw upon in retirement.
WR = Withdrawal Rate planned for retirement, using Trinity Study definitions (e.g., 4%)

Hey, thanks for posting that formula!
It gave me -2 years.  I seem to have overshot!

[2lazy2retire]

One more estimate.  But more accurate inputs would be even better. :)

Category	Monthly	Comments	Annual
Salary/Wages	$30,833		$370,000
401(k) / 403(b) / TSP / etc.	$3,083	Room to increase?	$37,000
Income subject to IRS tax	$27,750		$333,000
Federal Total Inc.	$27,750		$333,000
Federal tax	$5,280	2015 rates, MFJ, item. ded., 2 exempt.	$63,359
State/City tax	$2,012	Guess, using 7.25% * Fed. AGI	$24,143
Soc. Sec.	$1,225	Assumes 2 earners paying	$14,694
Medicare	$537		$6,445
Total income taxes	$9,053		$108,636
Income before other expenses	$18,697		$224,364
Monthly Expenses:
Rent	$6,000		$72,000
Charitable contributions	$3,083		$37,000
Medical Insurance	$333		$4,000
Miscellaneous	$6,000		$72,000
Non-mortgage total	$15,417		$185,000
Total Expense	$15,417		$185,000
Total to invest	$3,280		$39,364
Summary:
"Gross" income	$30,833		$370,000
Income taxes	$9,053		$108,636
After-tax income	$21,780		$261,364
IRA+401k/403b/TSP/457 (Savers' credit)	$3,083		$37,000
Living expenses	$15,417		$185,000
After-tax investable	$3,280		$39,364
Time to FIRE?:
Time to FIRE	27	years
Safe Withdrawal Rate	4.00%	percent
Real return on tax-deferred investments	5.00%	percent
Real, after tax, return on taxable investments	4.25%	percent
Expected retirement total tax rate	15.00%
Current Savings
Tax-deferred (e.g. trad. IRA/401k)	$400,000
Projected Savings at Retirement
Taxable	$1,923,258
Tax-deferred (e.g. trad. IRA/401k)	$3,516,140
Total projected stash	$5,439,398
Projected Expenses in Retirement
Non-loan, non-work expenses	$185,000
Income taxes	$32,647
Total	$217,647
Stash needed for retirement @4.0% SWR	$5,441,176
	Need $1,779 more.

Filing Status	2	1=S, 2=MFJ
# of earners	2
Total Income	$333,000
Std. Deduct.	$12,600
Act. Deduct.	$60,450
# Exempt.	2
Exemption	$6,400
Taxable	$266,150
Tax	$63,359
Tax after n-r credit	$63,359
# Children <17	0
Child Tax Cred.	$0
EIC	$0
Net Tax	$63,359
Monthly	$5,280
Mtg. Int. (guess)	$0
State tax	$24,143	7.25%
Prop tax	$0
Charity	$37,000
Item. Deduct.	$61,143

Is all of the church money deductible for tax or just the charity part ?

[GarythePunster]

Is all of the church money deductible for tax or just the charity part ?

Not sure I totally understand the question, but I would assume (unless Congress changes the law) that all of the charitable donations -- which are mostly to a local church -- are tax deductible.

[Retired To Win]

Is all of the church money deductible for tax or just the charity part ?

Not sure I totally understand the question, but I would assume (unless Congress changes the law) that all of the charitable donations -- which are mostly to a local church -- are tax deductible.

They should be.  Just make sure you have receipts.  (In our case, the church sends us a quarterly statement showing -- and documenting -- our donations.)

[Kriegsspiel]

Here's a quick equation - put your numbers into Excel and see what you get....

Time in years to FI = Ln((S + i*E/WR) / (S + i*A)) / Ln(1 + i)

A = Amount currently invested in funds you will draw upon in retirement.
E = Total (including taxes) annual expenses in retirement (today's dollars)
i =  Real return on invested retirement funds, e.g., 3% (conservative - we hope...)
S = Annual amount invested in funds you will draw upon in retirement.
WR = Withdrawal Rate planned for retirement, using Trinity Study definitions (e.g., 4%)

I'm getting slightly different numbers. By my calculations, the OP should be targeting a 33 and a half year old.