Early planning stages - What should I know to start the FIRE path?

[BMEPhDinCO]

Hi all,

I'm sure this has been asked in some way before, so feel free to point me to another thread...

That said, I'm trying to sooth myself and one way to do so is imagine what the future has left...

I am starting the "real" job search as I finish my PhD in BME - no facepunches, I wanted the degree, I like having the trifecta, it's my choice, blah blah.  But engr will give me a pretty high starting salary and allow for a faster FI.  Plus, I like solving problems.

As I job hunt, how should I look for benefit packages that would be best for early retirement?  401k, Roth401k, etc? HSAs?  My plan was:

1. Contribute $18k to a 401k and have DH do the same for a 403b or whatever the university offers (for $36k)
2. Contribute $11k to a our Roth IRAs ($5.5k each)

This then gives us around $4k per month to live off of... but doing this means we'll be FI in 15 years - when I'm around 47 and DH is around 46.  That said, DH plans on working if he can until he's very old (70??) as a uni professor or similar.  I don't know what I want yet, just that I want options free of financial need.  BTW, this FI = $4k per month still - if I bump up the living standard, then I could keep going to 50 and get about $6-6.5k per month (ie, if DH keeps working, perhaps we would want a larger amount available for after he stops that equals that amount we got used to).

Either way I go (smaller or larger amount needed), how do I best position that money so we CAN access it without penalties whenever we choose once I RE?  I tried searching online and it looks like, AT BEST, you can start taking out of the 401k at 55 - but most likely it's really 59.5.  Either of these leaves us only able to use the Roth for 5-12 years.   

Thoughts? Directions to look? Other tips on job benefits to negotiate out of the gate?

[ShortInSeattle]

Employers generally offer the same benefits and retirement plans to all of their employees. Unless you are a CEO, benefits are typically not negotiable by a job candidate. Certainly you can compare offers and packages between companies, but it makes more sense to do that when you've got them in hand.

I'd look for a high starting salary, growth potential (career), a community you want to live in, and enjoyable work.  401(k) versus IRA should be way secondary to those considerations. Don't let the tail wag the dog.

My 2 cents....  Good luck!

[Monkey Uncle]

Although I don't have the links handy, there are numerous threads on here related to accessing qualified retirement accounts early.  Search for Roth pipeline, substantially equal partial payments (SEPP), 72t rule.  In a nutshell, SEPP allows you to start pulling funds out at any age, in equal payments that are based on your life expectancy.  You will owe regular income taxes on the withdrawals.  The Roth pipeline involves rolling your 401k to a traditional IRA, then converting a little at a time to a Roth IRA.  You will owe regular income taxes on the conversions, unless you can keep them low enough to fit within your standard deduction and exemptions.  The converted amounts (but not subsequent earnings) can be withdrawn tax-free and penalty-free after a 5 year waiting period (so you need another source of cash for the first 5 years).

[humblefi]

Congratulations on your PhD. And equally important is your maturity in thinking about FI so early in life!

If I were you, I would start looking at small startup companies in your field. If you can make some money via startups earlier on in your career, it can give an awesome boost to your FI. Early on in life, when commitments are less, startups are a great option. Not to mention that your learning will be accelerated in a big way. But of course, there will be risk...since DH is in a college based job, you have some security.

If not, I would ask for a good starting bonus from a big company. The reason is that you can kick start your FI...refer to this: http://finance.yahoo.com/news/every-25-old-america-see-200000319.html.

In addition, I would define what FI means to you in a bit more detail. For example, http://humblefi.com/category/financial-independence/financial-independence-to-me/ gives you some examples. This would help devise an attack plan using both your and your DH's career and life plans.

[Exflyboy]

Congratulations on finishing your PhD.

The best thing you can do is search for the highest salary offer in the lowest COL area, of course those two requirements are mutually exclusive.. You are not going to find silicon Valley wages in the mid West.

Besides which the higher the salary the more punitive the tax structure becomes.. especially in Kalifornia. My guess is you will find a job at about $80k in Portland Oregon which even though it has State income tax is not too punative (no sales tax here).

The company I worked for had large factories in Hillsboro (West of Portland) and Chandler Arizona. When I trying to get technicians to move from Arizona (no income tax) to Oregon I was told the higher salary didn't cover what they lost in paying more taxes.. Although that was somewhat annecdotal evidence.

Bottom line is a lower salary with lower taxes might work out to be the same.

Of course you will be maxing out your 401k (I hope) which will wipe $18k off your taxable income, so that helps.. Do the same with a Tradional IRA although you might not get a tax deduction if your salary is too high.. in which case just buy a Roth IRA instead.

Engineering is a great career (I am a PE in Oregon with 30 years experience).. Petrochemical engineering pays the most, but the oil over production glut may even that out eventually if the price stays low for a long time.

All the best to your saving plans

[Retired To Win]

Congratulations on finishing your PhD.

The best thing you can do is search for the highest salary offer in the lowest COL area, of course those two requirements are mutually exclusive.. You are not going to find silicon Valley wages in the mid West...

This is still something really worth trying to accomplish.  In your shoes, I would look for the best NET balance between salary and core cost of living (housing, taxes and insurance premiums) in an area I could see myself enjoying for a long time.

[arizonawildcats]

As I job hunt, how should I look for benefit packages that would be best for early retirement?  401k, Roth401k, etc? HSAs?  My plan was:

1. Contribute $18k to a 401k and have DH do the same for a 403b or whatever the university offers (for $36k)
2. Contribute $11k to a our Roth IRAs ($5.5k each)

The 401k and Roth IRA's are an excellent place to start.  As you receive raises in the future, allocate at least half of the increase to funding taxable investments.   It's very helpful to have the contributions payroll deducted or automatically deducted from your checking account.   You won't miss the money. 

There are some employers that may offer strong bonus potential.   This is a excellent way to hyper-save by investing the full bonus amounts.