Case Study:Thought I was doing well but it's not enough - can I retire by 45?

[Daisyedwards800]

Life Situation: Single 37/F, no dependents, NYC.  Planning on having kids soon with long-term partner.

Gross Salary/Wages: $132,000 + $6,600 employer 401k match.  Bonus $2,000 a year.
Pre-Tax deductions:  $19,500 next year in 401k.  FSA is $400 a year. 
Dental:  $300 a year
Life Insurance: $80 a year
LTD:  $700 a year
Medical: $1600 a year
Vision: $70 a year
Transit Pre-Tax:  $6,360 a year

Adjusted Gross Income:  $105,000
Taxes: Federal, state/local, and FICA. 
Medicare:  ~ $1750 a year
Federal Income Tax:  $17,000-20,000 a year
Ny Paid Family Leave Tax:  $125 a year
NY Income Tax:  $6200 a year
SS:  $7500 a year

Current expenses:
Rent:  $1,950 (rent stabilized 2 bedroom)
Student Loan at 2.2%: $67
Internet:  $75
Cricket:  $57
Electric/Gas:  $60
Metrocard:  $120
Train tickets (visit boyfriend and family): $200
Car Insurance: $50
Gas:  $25
Miscellaneous Transportation (like Uber):  $50-100
Spotify/Hulu: $14
Netflix: $9
Donations to ACLU and other:  $15
Food, Drinks and Fun:  ? $500-1000?
Orange Theory (8 classes a month): $114
Gym:  $21
Miscellaneous:  $150


Assets:  $312,000 in retirement funds (401k/IRA)
Car:  $1,500
Cash:  $5,200
Liabilities: Student Loans, Original balance $75,000, 2.2% on the one left (other loans as part of this were up to 6.7%), 30 years, and $67 per month
Current balance = $11,600
Specific Question(s): Can I retire at 45? What would I need to do to accomplish this?

[frugal_c]

At the end of the day how much are you saving right now per year?  I think it's around $40k with just a quick look.   Retiring at 45 is slightly aggressive for your current spend but very doable if you can cut your bills a bit.

If you can get 7% returns you would have close to 900k at 45 with current spend.  You would probably need to move to cut expenses but if you can get by on 3k a month once you retire.  It looks like you don't spend much more than that right now so yes, definitely possible.

Keep it up. You are already frugal you just need to control the fun money.  The rest is up to the market.

[jeroly]

So I see about $4k in spending a month and net-of-taxes-and-401k-and-other-withholding income of $5k a month, but basically no after-tax savings. That doesn’t really add up. Are you leaving off other post tax, non retirement accounts, or have you actually been spending additional dollars say on car payments and insurance?

Edited to add: maybe it’s all been going to student debt pay down?

[RWTL]

Post to follow

[BicycleB]

Probably not at your current spending rate.

Guessing that your expenses are at the high end of the ranges given, you appear to be spending about 48k and saving or investing 48k to 50k. A 50% spend rate usually suggests 17 years from zero to FI in standard Mustache calculations. Your case might take a little longer because of higher taxes than Mustachian default - state tax, plus possibly some federal income tax due to tax bracket. To retire less than 8 years from now, you'd want to have a little over 9 years' worth of stash right now.

9 years x 50k = 450k. Adding some appreciation you'd have gained, about 550k current stash minimum I'd guess.

Your stash doesn't appear close:
312,500
    5,200
---------
317,700
-11,600
---------
306,100

I'm guessing 12 years from now rather than 8, unless your spending drops.

Also you're relying on rent control. Might be great, but if something happened to it, you'll have to find equally cheap housing. Are you willing to move after FIRE if something happens to your apartment? As in, move to some cheaper city if need be?

To get a better sense, detail your expenses more precisely and do a year by year projection of savings and investment returns; see how long it takes you to get to 25 x annual spending. Realize that the math is easier to make FI calculations with if you break it down Mustache style, where "income" is after taxes but includes the investments deducted from your paycheck, and expenses include any paycheck deductions that are paying for things such as medical premiums. Then work out actual taxes at your planned retirement income, and adjust your date so that they are paid for too.

[waltworks]

That food/drinks/fun category is killing you, likewise the Orange Theory fitness classes - you have a gym membership, go use it instead.

Kids are going to cause financial havoc even if you're super frugal and smart about it. You've also waited long enough that resorting to ($$$) fertility treatments to get pregnant is a distinct possibility.

So no, you probably can't, barring a major lifestyle change.

-W

[Daisyedwards800]

That food/drinks/fun category is killing you, likewise the Orange Theory fitness classes - you have a gym membership, go use it instead.

Kids are going to cause financial havoc even if you're super frugal and smart about it. You've also waited long enough that resorting to ($$$) fertility treatments to get pregnant is a distinct possibility.

So no, you probably can't, barring a major lifestyle change.

-W

Had to wait - and even now it's dicey to have kids and take time off with my career :/  There is definitely a motherhood penalty.

[BicycleB]

$12k annual rental income and keeping the "Food, Drinks and Fun" category to $500 instead of "500-1000?" would probably put you close to being on track to the FI at 45 target, assuming no other changes (kids are a change though).

Broadly, you seem to be in the normal category of having choices. With the usual result that you can probably do anything you want, but not everything you want.

[Cassie]

Why 2 threads on the same topic?

[Cassie]

Thanks that makes sense.

[Daisyedwards800]

Why 2 threads on the same topic?

They kept telling me to make a case study, although I think the original answers work for me!

[wellactually]

Daisy, I think you've got a fairly good handle on what expenses you can cut and acknowledge that some of the things you spend money on are choices you are okay with even if it means the 7 year timeline doesn't fit.

The real crux is that you've got some huge unknowns that make these calculations very very hard to predict with a high level of accuracy.

You and your partner need to decide what your long-term plans are for housing, especially if you get pregnant and have a child together. Will you continue living separately? You've made it clear that you living at the house outside the city would be extremely difficult. You'll have to figure out what the plan will be going forward and how those costs will be split. If he sold (or rented out) his place and moved in with you, that would really help clean this up.

You'll need to consider how childcare will affect your budget and how that cost will be split. I'm in a MCOL area and daycare for an infant is $220-280/week here at centers and spots are limited. Everything I've heard about NYC childcare options is a nightmare. It sounds like you have at least a few years you'll be needing care of some kind for some amount of children before your partner retires.

Hopefully you will be able to get pregnant exactly when you want and you certainly don't need to assume it will be difficult. But as I'm sure you know, it doesn't get easier over time at this point, especially as it sounds like you want multiple children. My experience with infertility was extremely expensive as you'd expect, but the amount of decisions you have to make is surprising. I've frequently remarked that infertility involves a lot more game theory than people realize. Again, I don't think you should assume it will be difficult, but you cannot assume it won't right now either. And if you're ready for it and clearly feel the relationship is strong enough for it, my non-financial advice is to go for it now.

Basically, I think it's going to be another year or two before you know for with any good level of accuracy what your expenses will be, thus how quickly you can save and how much you need saved. And you also have a lot of decisions looming out there with your partner that no case study will answer for you.