I just wrote this out. I should probably put some real thought into this. Thanks for the links P.O.F.
Objectives: Become FI (but not necessarily retire) before age 50. If I've well and truly won the game by that point, then I'm done playing. I'm not opposed to part time work post-FIRE if I'm really enjoying it.
Risk Tolerance: Fairly high at the moment. It'll edge down a bit over the next decade depending on a few work-related circumstances.
Allocations: 1.5% cash (2 months expenses), 18% bonds, 18% Int'l stocks, 62% domestic stocks. On paper it's supposed to be a 2/20/20/58 spread. TSP G Fund, C Fund, VFWAX, VTSAX. I'm front-loading bonds and domestic stocks through my tax-advantaged accounts right now so that will skew the numbers a bit until the second half of the year. I still don't have a firm grasp of what my international allocation should be so it goes up and down.
Other Notes: If I reach the pension point (20 years US Army) in 6 more years, then I'm done. My pension will cover 95% of the high end of my expenses. If I get passed over (50% chance right now), then I'll start a second career until I reach a 4% SWR of the higher end of my expenses. We'll see where I'm at if I want to quit or downshift to part time work. My current portfolio covers 39% of my FIRE requirement. We're renting now, but we'll buy when we figure out where we'll be after the Army. I want a 15 year mortgage to get it done with quickly, but not cut too deep into the 'stache.
Sounds like a good plan. The pension will be huge if you put in the last 6 years.
Here is my IPS, no link required.The Physician On FIRE Investor Policy Statement
Objective:
◾Retire early, no later than age 54 / empty nest, most likely earlier.
◾Acquire a large cushion, with > 40x annual expenses and > 50% available before 59.5.
Philosophy:
◾Invest in a diverse portfolio of Vanguard Index Funds, keeping expenses low.
◾Accept market returns, rebalancing with monthly investments.
◾Risk tolerance quite high. Anticipate withdrawal rate < 3%.
Asset Allocation
◾60% US Stocks, 20% International, 10% REIT, 10% Bond / Cash.
◾U.S. stocks: Lean toward small and mid-cap value to maximize potential long-term return.
◾International stocks: 50% Developed, 50% Emerging Markets
Other Considerations:
◾Maximize tax deductions via 401(k), 457(b), HSA, donor advised fund. Front load 457(b).
◾Annual backdoor Roth contributions of $5500 each (spouse and I) in January
◾Tax loss harvest when possible, which will require some attention to balances.
◾Fund boys’ 529 accounts (each February & August).
◾Invest in taxable account monthly.
◾Forego monthly taxable deposits to cover large expenses (vehicles, home improvement).
Pre-retirement Considerations:
◾Research health insurance options.
◾Consider part time work as an option to transition to retirement.
◾Consider what’s best for the boys / family.
Drawdown Plan:
◾Set up 457(B) to pay $1000 to $2000/ month.
◾Receive dividends and capital gains as cash transfers to bank account.
◾When cash is needed, sell taxable assets and minimize / optimize capital gains.
◾Attempt to remain in 15% tax bracket to avoid taxes on capital gains (unless tax laws change).
◾Convert 401(k) / IRA to Roth as income / tax bracket allows.
◾Donate appreciated securities to Donor Advised Fund when needed to maintain low tax bracket.
◾At 59.5, evaluate 401(k) / IRA and estimate RMD’s, which kick in age 70.5.
◾Anticipate delaying Social Security to get the maximum benefit, assuming good health.
◾Pay for boys’ college with $2000 to $4000 cash (to obtain tax credits), then tap 529’s.
Retirement Asset Allocation:
◾10 years of expenses in bonds (in 457(B) and 401(K)).
◾Remainder in Equities, maintaining 3:1 US / International Ratio.
◾Consider decreasing REIT holdings to 5%.