How to fast-track early retirement goal after layoff

[cinfooya]

After 17 years in the Technology Industry, I have just experienced my third and, what I want to be, my final layoff. 

I have been a Mr.M follower for years, inspired to save as much as I possibly can for a life of early retirement.  Since 2011, I have squirrelled away:

•   $244k in various Vanguard index funds (portfolio currently 79% stocks, 21% bonds)
•   $192k in traditional IRA
•   $26k rainy day savings account

Currently I am budgeting a frugal annual cost of living at about $40k, which does include a rolling vacation fund as traveling is very important to me.  I do not currently own a house but have been considering a rental recently as a source of income.

Since the start of my saving efforts, I have seen about 6.7% rate of return which is not currently enough for me to start my retirement life quite yet.  But I REALLLY DO NOT want to go back to the traditional 9-5.  How can I fast-track my early retirement goal to now?

[Lady SA]

I have two thoughts:

1. This would not fast track you to retirement, but if you do not want to go back to a 9-5 job, would you be willing to get a part-time job that at least covers your living expenses ($40k)? You are not at the point where you can live off your investments, but if you can find income and leave your savings alone for the foreseeable future, your investments should grow to the point where eventually you CAN live off them. This is trading off "fast tracking" to early retirement for a less stressful job now.

2. If you want to fully retire sooner, you need to save more (like I said above, you are not at the point where you can generate 40k of passive income off your current savings), which means you still need a job. Retiring sooner means a higher income and more savings, which likely means another 9-5.

I'm not clear on what exactly your goals are or what is most important to you: not having another 9-5 job or retiring as early as you can. That would affect the advice.

[StetsTerhune]

Spend less money.

I used to play a game with my wife when we were working and came home miserable from a long day. "Would you (blank) if it meant you could quit your job right now?"

"blank" being "give up X" "downgrade Y" etc.

You need to ask yourself what you're willing to do to be able to not get a square job again. Would you live in place half the size if it meant you didn't have to go back to work? Would you learn to cook cheaper things? Would you quit drinking? Would you move to a cheaper location?

Obviously I don't know what you're spending money on, but you need to ask yourself what you value in your budget and how that compares with how much you value not going back to work.

[Lady SA]

Since the start of my saving efforts, I have seen about 6.7% rate of return which is not currently enough for me to start my retirement life quite yet.

•   $244k in various Vanguard index funds (portfolio currently 79% stocks, 21% bonds)
•   $192k in traditional IRA
•   $26k rainy day savings account

So, your invested assets are a total of 436k, which is great (I'm not counting the savings account). Your rate of return (6.7%) doesn't really mean anything for the purpose of asking "am I ready to retire?".

If you are set on the 40k ER budget going forward, you actually care about the withdrawal rate and if that is enough to cover your expenses:
40k * 25 (considering a conservative rate of withdrawal of 4%) = $1,000,000

You need a net worth of at least 1 million to sustain 40k per year expenses. You are almost halfway there, but that means you need to either continue with getting another 9-5 job with high pay so you can squirrel away money faster, or take a lower stress job that covers your current expenses so you can be totally hands off of your nest egg until it grows on it's own to 1 million. Hope that makes sense.

So:
1. see what you can cut from the 40k sustainable budget, its much easier to save $850k (yearly expenses of $34k) than it is $1 million ($40k). Your current nest egg gives you a 17k yearly budget, so unless you are willing to more than halve your yearly budget you won't be able to sustain yourself with your current nest egg. You are almost halfway to FI, so congrats!
2. you do need to save more by either actively contributing to your stashe or being completely hands off of it while it grows on its own to the point you need, no touching it. Regardless, this does mean you need some sort of income that at least covers your existing expenses if not more. The more "extra" you bring in, the faster actual financial independence will come.