Author Topic: Case Study: Can I retire in 10yrs?  (Read 3973 times)

Mrs. Healthywealth

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Case Study: Can I retire in 10yrs?
« on: December 29, 2014, 01:38:59 PM »
Happy holidays all!
Need some help trying to see if it’s possible for us to “retire” in 10yrs.
I am 36yo, spouse is 40yo.

Income: $110k
Expenses: $3300/mos
•   Rent a 3bdrm home--$1650 in Cali. (3rd bdrm hm office use)
•   CP—Airvoice—$60
•   Groceries: 320
•   Car insurance: $130
•   Car Gas: 160
•   Misc: 205 (Hair, clothes, meds, etc.)
•   Gym: 32
•   Netflix: 8
•   Entertainment: 105
•   Baby stuff—diapers, formula, etc: 200
•   Timeshare (no need to punch me in the face, I do it everytime I talk about it)--$120
•   Electicity--$105
•   Gas: 35
•   Water: 35
•   Internet $54
•   Costco $40
•   Term Life Ins--$25
•   Pet $15
Expected ER Expenses: $3200
•   Added in health care
•   No mortgage hopefully
Assets:
My portfolio is 80/20 mix; I am working on adding 20% foreign equities to my current stock/bond mix. Starting 2014 we max out Roth's, and my 457.

•   Roth’s: VTSX and Vanguard Total bond—Mine $19k, Her’s 19k
•   457—90K mix of large, small, med cap (limited options, but they are low cost, index funds)
•   Spouse 401k: $10k--Target retirement fund (puts away $600/mos--working Part-time)
•   Taxable acct (VTSMX): $13k--$10k is for the house; 3k I’m transferring to a Vanguard 529 (put $300/mos to 
               529)
•   Savings account: 36k--$20k is for house; 16k is ER savings
•   We save $250/mos for vacation and $1000-3000/mos for a house dwnpmt.

Future assets:
•   In 31 yrs: My pension w/ COLA--$2000; My SS--$700
•   In 27yrs: Spouse pension w/ COLA--$200; Spouse SS--$1300
•   Also get 40% med benefits covered
I had planned for us to save an additional 400k in the next 10yrs, to make it a total of $540k saved in Vanguard index funds 8020 (not going to predict what the market will make that # look like in 10yrs).

Liabilities: No debt, and are saving for a house (plan to only get up to a 200k mortgage loan, after putting 20-30% down).


Am I being unrealistic that we can "retire" at this point after 10yrs? I still plan to teach a few courses, and do private practice--which can bring in $30k (I prefer to low ball everything), but not sure if we will get screwed with paying health insurance and taxes. Plus we have 2 newborn babies, we are frugal, but still I don't know how much kids cost.
« Last Edit: December 29, 2014, 07:20:06 PM by Mrs. Healthywealth »

Future Lazy

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Re: Case Study: Can I retire in 10yrs?
« Reply #1 on: December 29, 2014, 01:59:15 PM »
I see you have two newborns. That makes me think your current home size should be 2 bedrooms - one for you, one for tykes.

Extra bedrooms is probably a sign that you need to move, or take up room mates.
http://affordanything.com/2014/09/02/how-i-earned-an-extra-40800-in-two-years/


Posting a full monthly budget would give people a better basis to make suggestions off of. :)

Welcome to the forums!

MDM

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Re: Case Study: Can I retire in 10yrs?
« Reply #2 on: December 29, 2014, 02:03:54 PM »
Need some help trying to see if it’s possible for us to “retire” in 10yrs.
...
Am I being unrealistic that we can "retire" at this point after 10yrs?

Mrs. Healthywealth, welcome to the forums.

Good post with many details.  Not quite enough (e.g., how much in Roth vs. traditional) to give a definitive answer.

Have you tried www.cfiresim.com and/or the How To Write a Reader Case Study spreadsheet?  Both, to varying degrees of detail and accuracy, will help you answer your own question.  Might be worthwhile to try one or both and come back with more questions.

Good luck!

Mrs. Healthywealth

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Re: Case Study: Can I retire in 10yrs?
« Reply #3 on: December 29, 2014, 07:20:49 PM »
Thanks, I just updated the information so it's more detailed. I will read the info you sent over after the 2 crying babies fall asleep :)

mozar

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Re: Case Study: Can I retire in 10yrs?
« Reply #4 on: December 29, 2014, 08:12:38 PM »
So your expenses in retirement will be 3200. 3200*25 equals 800k. Starting with 140k you will need to add $3800 a month for ten years. Calculator: http://www.investor.gov/tools/calculators/compound-interest-calculator#.VKIW0V4CAA

Whether you can retire or not in ten years is up to you.

rmendpara

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Re: Case Study: Can I retire in 10yrs?
« Reply #5 on: December 29, 2014, 08:17:26 PM »
So your expenses in retirement will be 3200. 3200*25 equals 800k. Starting with 140k you will need to add $3800 a month for ten years. Calculator: http://www.investor.gov/tools/calculators/compound-interest-calculator#.VKIW0V4CAA

Whether you can retire or not in ten years is up to you.

Did you mean to multiply 3200 x 12 x 25?

jngreenlee

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Re: Case Study: Can I retire in 10yrs?
« Reply #6 on: December 29, 2014, 08:57:51 PM »
Did you mean to multiply 3200 x 12 x 25?

Possibly not, I think it's a reference to the 4 percent rule:
http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

Mrs. Healthywealth

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Re: Case Study: Can I retire in 10yrs?
« Reply #7 on: December 29, 2014, 09:14:03 PM »
Currently, we invest $2600/mos. to get to $3800 we would need to reallocate $1200 from saving for a house to investing. If we purchased a house it would be out of state, but I am uncertain when we will move. We currently like the house we rent, and like our jobs. Would it be wise to invest the extra $1200 rather than add it on to the $1000 we are already saving for a house.

I was hoping to have a paid off home if we retire early, but if we reallocate funds that may not happen. But even at 46yo I would be doing some income producing work for fun, so we can try to pay it off early.

MDM

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Re: Case Study: Can I retire in 10yrs?
« Reply #8 on: December 29, 2014, 09:24:39 PM »
Quote
Expected ER Expenses: $3200
3200*25 equals 800k
Did you mean to multiply 3200 x 12 x 25?
Possibly not, I think it's a reference to the 4 percent rule:

3200 * 25 = 80000.  80000 * 12 = $960,000, which is indeed the amount one would need to accumulate to support $3200/mo in retirement according to the "4% rule".  If, that is, the $3200/mo included taxes but there is nothing in the OP to indicate that.  Thus one needs more than $960K to handle "$3200 in expenses, plus taxes".

But the OP also indicated pension and SS income are expected to kick in at some point.  In that case the need for a large investment balance decreases.

OP needs to go beyond rules of thumb here.  Cfiresim is probably the best tool.  The case study spreadsheet might (or might not) be useful as a quick approximation.

Mrs. Healthywealth

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Re: Case Study: Can I retire in 10yrs?
« Reply #9 on: December 29, 2014, 09:30:53 PM »
Thanks! 3200 includes taxes.
I will try cfire tmrw, it didn't work on my iPad--seems like a great tool.