Hey all,
I was looking for some advice to help my spouse and I meet our goal of retiring early. With our current savings rate/spending/incomes, it looks like we'll be somewhere in the ballpark of 2030. This is pretty conservative because we do expect our incomes to keep growing, which we'll use to move the RE date up.
Additionally, we're planning to start looking for a house next year (which will be another post). How much can we reasonably afford with our budget? Prices are high (for the south) in the area around my work ($400k+), but otherwise commutes from the cheaper suburbs are 1hr+ for a house in the $300k range. Is it reasonable to go for the $400k+ house? We plan to move to a LCOL area at FIRE.
Here is our financial picture:
Liabilities : none
Assets:
$200k in pretax retirement accounts
$20k in Roth IRAs
$15k emergency fund (in Discover online savings at 0.9%)
$70k in taxable investment account (VTSAX) - would like to use this for a house downpayment
Category | Monthly | Comments | Annual |
Salary/Wages for earner #1 | $7,292 | | $87,500 |
Salary/Wages for earner #2 | $7,500 | | $90,000 |
Pretax Health Ins. | $138 | 2 HDHP's | $1,660 |
Pretax Vision/Dental Ins. | $24 | | $293 |
Employer-sponsored HSA | $488 | Employer contributes the rest to max | $5,858 |
FICA base salary/wages | $14,141 | | $169,690 |
|
401(k) / 403(b) / TSP / etc. | $3,000 | At maximum | $36,000 |
Employer Match | $674 | | $8,085 |
Income subject to IRS tax | $11,141 | | $133,690 |
|
Life/LTD Insurance | $63 | | $759 |
Paycheck income before tax | $11,078 | | $132,931 |
|
|
|
|
Federal Total Income | $11,141 | | $133,690 |
|
Federal tax | $1,649 | 2016 rates, MFJ, stand. ded., 2 exempt. | $19,790 |
State/City tax | $628 | Guess, using 6.00% * (AGI - Exempt'n) | $7,535 |
Soc. Sec. | $877 | Assumes 2 earners paying | $10,521 |
Medicare | $205 | | $2,460 |
Total income taxes | $3,359 | | $40,307 |
Income before other expenses | $7,719 | | $92,624 |
|
Monthly Average Expenses: | | | |
Rent | $1,840 | | $22,080 |
Home/Rent Insurance | $20 | | $240 |
Car Insurance | $250 | 3 vehicles, 1 motorcycle | $3,000 |
Car Maintenance, Registration, etc. | $104 | $100/yr for registration, rest DIY maintenance | $1,250 |
Christmas/Holidays | $33 | $400 total | $400 |
Clothing/Shoes | $87 | includes new required work wardrobe - should decrease to ~$200/yr | $1,043 |
Credit card fees | $12 | annual membership fee | $144 |
Dentist | $23 | $70/ea cleaning 2x/yr | $280 |
Donations/Gifts | $53 | weddings, college grads, birthdays | $630 |
Electricity | $103 | | $1,230 |
Entertainment | $600 | includes going/eating out and all activities | $7,200 |
Fuel/Public Transport | $30 | mostly recreational trips | $360 |
Groceries | $344 | 2 people includes alcohol | $4,133 |
Household; Maintenance | $188 | | $2,250 |
Life Insurance | $25 | | $300 |
Parking/Tolls | $16 | | $195 |
Pets | $129 | 1 sick senior cat, 1 healthy cat | $1,553 |
Recycling/Trash | $30 | | $360 |
Subscriptions (paper/magazines/etc.) | $16 | netflix, amazon prime | $192 |
Travel/Vacation | $188 | | $2,250 |
Water/Sewer | $105 | | $1,260 |
Non-mortgage total | $4,992 | | $59,903 |
|
|
Other tax-advantaged investments: | | | |
Roth IRA | $917 | At maximum | $11,000 |
Total Expense | $5,909 | | $70,903 |
Total to invest | $1,810 | | $21,721 |
|
Summary: | | | |
"Gross" income | $14,792 | | $177,500 |
Income taxes | $3,359 | | $40,307 |
After-tax income | $11,433 | | $137,193 |
IRA+401k/403b/TSP/457 (Savers' credit) | $3,917 | | $47,000 |
HSA | $488 | | $5,858 |
Living expenses | $5,218 | | $62,615 |
Additional details:
I walk to work and my husband works from home. We get internet and cell phones paid through my husband's job.
We're planning on selling the motorcycle early next year. Additionally, we plan to sell one of the other cars (180k miles) once it stops being so economical to fix- (soonish? repairs are more frequent now).
Please let me know if you'd like any more detail on a particular category.
Any suggestions welcome!