$13 Million Goal for Early Retirement (am I crazy?)

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cmublitz
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by cmublitz »

I agree, that is an impressive increase!

Also, I didn't see if anyone else mentioned this, but you're holding VTSAX in both taxable and your IRA. Doesn't this make it more difficult to tax loss harvest without running into a wash sale?
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MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

All contributions are listed under the "Contributions" heading, which appear to total ~50K. As a result ~127K of the gain from last year is market return/re-investing dividends.

As far as holding VTSAX in both taxable and my IRA interfering with tax loss harvesting, I will be the first to admit that I am guilty of not watching my portfolio carefully enough to be aware of when tax loss harvesting opportunities arise. Even if I was aware, inertia might prevent me from taking action if the amount of the harvest was to be small.

Thanks!
MaxSave :sharebeer
chuppi
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by chuppi »

Suppose you amass 12million and you retire at age 50. Lets say you stick to around 120K annual expense or a little more. If your portfolio grows 3% over the next 20years, you will end up with 17million at age 70.
Even if you retire with 5million, you will be with almost 6million in assets after 20years of spending 120K annually.

It is very important to get to a realistic number and add some buffer to avoid accumulating more than required. Lot of things can change and you may have to keep adjusting until you have clarity.
WhiteMaxima
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by WhiteMaxima »

if you live in venezuela, you could turn 1k to 13 mil in weeks. norminal money is just a number. Actually any paper money or stock is just a number. A good measure of wealth is long can your saving can support your lifestyle in a happy, satisfation and healthy way. If you believe this, you can live happier than Bill G and Warren B.
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David Jay
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by David Jay »

For a simple rule-of-thumb, consider 2.5% withdrawal rate to be a "perpetual" portfolio, i.e. you can retire at 29 and live to 100. So for early retirement at any age you can use that multiplier. The withdrawal percentage gets higher as you retire later, 4% at age 65.

Work it back. You don't need anywhere as much as your title suggests.
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SimplicityNow
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by SimplicityNow »

Congrats on your accomplishment.

I see nothing wrong with your goal of finding joy in the simple, low cost but gratifying activities that living a frugal lifestyle brings to the fore.

If it gives you pleasure to save more then spend and accumulate past the point that others feel is unnecessary, then go for it.

Good luck in your quest.
elbryn1000
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by elbryn1000 »

MaxSave wrote: His 401k (Fidelity as new administrator):
Target Date Fund (55% US Equities, 30% International, 15% Real Estate) (0.12%) - $300K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $22K
Total Stock Market (VTSAX) - $49K
Target Date 2050 (VFIFX) - $10K
Target Date 2055 (VFFVX) - $18K
Target Date 2060 (VTTSX) - $29K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $108K

Her 403b at Vanguard:
Vanguard 500 (VFINX) - $176K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FDENX) (0.64%) - $70K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.09%) - $97K
just something i've noticed with helping my parents out who have fidelity in that the freedom funds seem to have a high expense ratio versus the individual total funds themselves.

the wife's 401a in FDENX with .64% expense could be cut down if you look at FTBFX for bonds, FSTVX for us total stock and FTIPX for total international. fidelity's total bond is also more expensive than vanguard's. you can fill your bonds in the vanguard side at .15% expense, and fill us based total market in fidelity at .045%. granted its not a huge change but .3% over 200k is still $600 yearly for a few hours of spreadsheet work and re-balancing yearly.

alternatively, there's also stacked windsor, sp500, and varying vanguard lifecycle date funds. if you were to decide on a core asset allocation, you could reduce the different funds and complexity by using the funds that dont have active contributions as static fund holders.
sambb
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by sambb »

SimplicityNow wrote:Congrats on your accomplishment.

I see nothing wrong with your goal of finding joy in the simple, low cost but gratifying activities that living a frugal lifestyle brings to the fore.

If it gives you pleasure to save more then spend and accumulate past the point that others feel is unnecessary, then go for it.

Good luck in your quest.

+1 - if you want or need 13M, then go for it. Let us know how it turns out. Warren buffet couldve stopped a long time ago also.
tim1999
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by tim1999 »

For someone in their mid 30s I think I've done pretty decently financially in life. I read threads on here with people my age posting numbers well above mine, but then get to the part where they are IT-type workers in California, and I breathe a sigh of relief because I work in an old economy industry in a LCOL/MCOL area, and it is not a fair comparison. Then I read this thread and felt like I was way behind! :shock: Congratulations to the OP though.
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MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

I appreciate all the well-wishes and encouragement. My goal with the continued update of this thread is to share my journey towards FI and create a record of how my perceptions of money/retirement/etc, and forum response to those perceptions, change over time. I hope no one feels diminished by reading what I have accomplished in the way of saving, as no two people are the same and everyone's circumstances are different. I am very fortunate to be where I currently am financially and will never argue to the contrary!

Recently, I have begun to think about retirement more in terms of the age of my children, especially after reading articles that point out that once your children leave for college you have already spent 99% of the time you will ever spend with them for the duration of your life.

As a result, I have been notionally considering retiring at the end of 2029. That would put me at age 44, my oldest child would be mid-way through her Junior year of high school, and we should have hopefully amassed enough assets by then to support us for the duration.

Obviously a lot can happen/change between now and then, but I haven't seen too many people on here express retirement in terms of their children's life events, as opposed to a specific age or asset total. I thought it was an interesting idea to share.

Thanks!
MaxSave :sharebeer
Lafder
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Lafder »

MaxSave,
I am enjoying watching the progression of your savings and thinking on retiring. I am 49 now. I think we hit 100k around the time we were just over 30 yo. It will be a milestone to have 2 commas in your accounts!! The compounding interest really builds. You will get there soon!

I think it is wonderful you and your wife met young and had similar savings ideas. What wisdom to start low cost Roths so young. I hope to do the same for my kids when they get their first W2 jobs (the accountant I use discouraged me from counting cash jobs for them to start Roths).

As far as your thoughts on retiring when your daughter is in high school.......by then most teens want little to do with their parents :) By midschool it effected my daughter. I treasure our time together now. But I am consistently her second choice if an offer to hang out with a friend comes up. I suspect you will find your teenagers are not interested in a lot of family time. I am just adding that by high school your kids may be past the family time you are envisioning, so make the most of the time with your kids now that you do have the control of what they do :)

You already seem to be doing a great job of quality time with your family.

I would max post tax 401k and the mega back door Roth option, even if it meant dipping into your savings to pay ongoing expenses. Roth space is precious. My husband's take home pay is currently zero to max his megabackdoor option.

If you can and want to retire at a young age, go for it :) Looking forward to hearing if that is what you do.

I forwarded your original post to a friend when you first posted it who also thought they "needed" more than 10 million to retire. It was helpful for them to read through to also realize that was a much higher amount than either of you realistically "need"

lafder
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MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

It has been around a year since I last posted in this thread, so I thought I would provide an update for all those who are interested. My overall goal is to continue saving for an early retirement by living below our means while simultaneously living a fulfilling life. Though I am no longer shooting for the $13 Million goal mentioned in the title, I still hope to have a sizable sum by the time I decide to retire.

As of now, I am targeting "retirement" at the end of 2029, age 44, though I expect to reach FI long before then. In the past year, I have come to appreciate more and more the stability, flexibility, and low stress nature of my job through discussions with my friends and peers.

I am a year older and wiser, though my investments have continued to "stay the course".

I have been listening to the "ChooseFI" podcast, which I find to be informational and entertaining when it comes to thinking and discussing FI. Some of the concepts explored on the podcast, such as Tax Gain Harvesting and prioritizing Tax-Deferred accounts in conjunction with a Roth Conversion ladder, have made me question whether continuing to utilize a Roth 401k and Roth IRAs are truly the best option. In general, I have not spent as much time on "tax-optimization" for the present, or the future, as I probably should.

I also think I am going to venture into the Travel Rewards game to subsidize some of our increased traveling (we went to Disney World a couple times this year, kids are able to get more benefit from traveling/exploring as they grow).

General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 24% Federal, 4% State

State of Residence: Ohio

Age: 33, wife 33, 2 children under age 6

Annual Living Expenses = ~38K

I am an engineer. Wife has enjoyed the past 3 years working inside the home in order to take care of children. She still may or may not return to full or part time work in the near or distant future, no rush, entirely her decision.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $28K
Total International (VTIAX) - $23K

His 401k (Fidelity as administrator):
Target Date Fund (55% US Equities, 30% International, 15% Real Estate) (0.12%) - $349K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $27K
Total Stock Market (VTSAX) - $56K
Target Date 2050 (VFIFX) - $11K
Target Date 2055 (VFFVX) - $20K
Target Date 2060 (VTTSX) - $31K
Target Date 2065 (VLXVX) - $11K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $129K

Her 403b at Vanguard:
Vanguard 500 (VFINX) - $200K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FDENX) (0.64%) - $76K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.09%) - $106K

HSA (paying for current expenses out of pocket and saving receipts):
$10K cash at HSA bank
$23K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator

Also currently accruing a pension from my employer

Total of All Accounts Together = $1.1MM

Last Year Total of All Accounts Together = $942K

Past Year Gain = $158K

529 Accounts Total = $37K

Contributions

New annual Contributions
$18.5K (max out) his 401k (plus 3% employer match) (plus additional ~$9K for Mega Backdoor Roth contributions)
$5.5K (max out) his Roth IRA
$5.5K (max out) her Roth IRA
$8K taxable
$6.9K HSA
$4K 529

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
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Darth Xanadu
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Darth Xanadu »

MaxSave wrote: Mon Jul 09, 2018 9:24 am HSA (paying for current expenses out of pocket and saving receipts):
$10K cash at HSA bank
$23K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
I'm curious, if you are cash-flowing healthcare expenses, why do you have $10k in cash in your HSA? I'm not knocking the decision, but trying to understand it because I go back and forth on my HSA allocations all the time. My view is since I have good emergency fund I invested pretty much all my HSA. I think I can avoid fees if I keep $3k in cash but it's only a couple bucks a month so I don't bother.
TSWNY
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by TSWNY »

Just out of curiosity, what is your rational for your Roth account? 4 target date funds, the S&P and TSM?
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sergeant
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by sergeant »

Thank you for the update.
For the ashes of his fathers, And the temples of his gods. | Pensions= 2X yearly expenses. Portfolio= 40X yearly expenses.
randomwalkdownbogle
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by randomwalkdownbogle »

TSWNY wrote: Mon Jul 09, 2018 11:10 am Just out of curiosity, what is your rational for your Roth account? 4 target date funds, the S&P and TSM?
+1 I was curious about this as well. Kudos on being in such a great position.
Leesbro63
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Leesbro63 »

Darth Xanadu wrote: Mon Jul 09, 2018 11:09 am
MaxSave wrote: Mon Jul 09, 2018 9:24 am HSA (paying for current expenses out of pocket and saving receipts):
$10K cash at HSA bank
$23K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
I'm curious, if you are cash-flowing healthcare expenses, why do you have $10k in cash in your HSA? I'm not knocking the decision, but trying to understand it because I go back and forth on my HSA allocations all the time. My view is since I have good emergency fund I invested pretty much all my HSA. I think I can avoid fees if I keep $3k in cash but it's only a couple bucks a month so I don't bother.
I’m not the poster you are addressing this to, but: Putting money into an HSA and paying for out of pocket healthcare costs with other money (cash flow), if you can, is generally a great idea. It effectively turns the HSA into an additional Roth IRA.
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Darth Xanadu
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Darth Xanadu »

Leesbro63 wrote: Mon Jul 09, 2018 1:44 pm
Darth Xanadu wrote: Mon Jul 09, 2018 11:09 am
MaxSave wrote: Mon Jul 09, 2018 9:24 am HSA (paying for current expenses out of pocket and saving receipts):
$10K cash at HSA bank
$23K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
I'm curious, if you are cash-flowing healthcare expenses, why do you have $10k in cash in your HSA? I'm not knocking the decision, but trying to understand it because I go back and forth on my HSA allocations all the time. My view is since I have good emergency fund I invested pretty much all my HSA. I think I can avoid fees if I keep $3k in cash but it's only a couple bucks a month so I don't bother.
I’m not the poster you are addressing this to, but: Putting money into an HSA and paying for out of pocket healthcare costs with other money (cash flow), if you can, is generally a great idea. It effectively turns the HSA into an additional Roth IRA.
I don't disagree, but you wouldn't have a $10k cash position in your Roth IRA, why would you in your HSA?
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knpstr
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by knpstr »

For $13,000,000 you may want to dump those target date funds that hold bonds. You'll want to go 100% equities.

$730,000 with $41,000 contributions at @10% ~ $7,200,000
Need about 13.7% returns to get to $13,000,000

So why not go for it!? I'd suggest 100% equities and "hope" for $13M. Maybe you'll "only" have $6M but still not bad and $6M still easily handles $120,000 per year (only 2% withdrawal rate).

Even at $6M and 2% withdrawal rates you should still end up with 8 digits by the time it is all said in done so long as you make into your 80s. You may be a bit "crazy" but why not try? With how much you already have and that savings rate you are going to be okay no matter what.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
terran
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by terran »

MaxSave wrote: Mon Jul 09, 2018 9:24 am Target Date 2050 (VFIFX) - $11K
Target Date 2055 (VFFVX) - $20K
Target Date 2060 (VTTSX) - $31K
Target Date 2065 (VLXVX) - $11K
Good to see you keep coming back to update!

Curious: why the mix of target date funds? By by math the weighted average of your investment there is approximately equal to a single 2058 fund, so why not 2055 or 2060 with all of it and call it a day? Or just come up with an overall asset allocation for all your investments and do a 3 or fund portfolio across all your accounts?
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MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

To answer the question regarding having $10K cash in my HSA, there are a few reasons for this:
  • The $10K is split between two accounts at HSA bank (me and wife), and $5K is the minimum amount per account one must possess to avoid being assessed monthly fees
  • These accounts were created when both my wife and I had poor access to HSA investing from our employers, with the prior goal being to invest all HSA funds once we had the $5K minimum (which is essentially what we are doing now, since my HSA switched to Fidelity and I am 100% invested within that account)
  • The $10K in cash serves as a "medical emergency fund" in the event we have a medical occurrence we are not able to cash-flow in the short term
  • This $10K in cash could serve as the first bucket of HSA money we use to pay ourselves back from previously covered expenses should a major non-medical expense arise
As far as my Roth IRA asset mix, also a few reasons:
  • One of the two non-Target Date funds was rolled over from a previous American Funds (fees!!!) holding at a local bank where I created my Roth IRA as a youth (did not know about Vanguard) and I wanted to keep this money segregated in case "something went awry" with the transfer
  • The other non-Target Date fund is where I dump my Mega Backdoor Roth IRA from my 401K every year, again segregated in case "something goes awry" with the whole Mega Backdoor process
  • I always purchase the latest date Target Date fund, since I want to maintain an aggressive allocation as I expect this Roth to outlive me and be passed onto my heirs, and hopefully a mixed Target Date allocation will create a "glide path" into slightly more conservative holdings as I age
I hope those points make sense...they may be more psychological than mathematical, but they work for me.

I am interested to see in the coming months how my cash flow changes with the decision to send my oldest daughter to a private Montessori school for a year before she starts Kindergarten. This will represent a +$8K adjustment in our annual living expenses.

Thanks!
MaxSave :sharebeer
PFInterest
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by PFInterest »

MaxSave wrote: Wed Jul 11, 2018 8:56 am To answer the question regarding having $10K cash in my HSA, there are a few reasons for this:
  • The $10K is split between two accounts at HSA bank (me and wife), and $5K is the minimum amount per account one must possess to avoid being assessed monthly fees
  • These accounts were created when both my wife and I had poor access to HSA investing from our employers, with the prior goal being to invest all HSA funds once we had the $5K minimum (which is essentially what we are doing now, since my HSA switched to Fidelity and I am 100% invested within that account)
  • The $10K in cash serves as a "medical emergency fund" in the event we have a medical occurrence we are not able to cash-flow in the short term
  • This $10K in cash could serve as the first bucket of HSA money we use to pay ourselves back from previously covered expenses should a major non-medical expense arise
As far as my Roth IRA asset mix, also a few reasons:
  • One of the two non-Target Date funds was rolled over from a previous American Funds (fees!!!) holding at a local bank where I created my Roth IRA as a youth (did not know about Vanguard) and I wanted to keep this money segregated in case "something went awry" with the transfer
  • The other non-Target Date fund is where I dump my Mega Backdoor Roth IRA from my 401K every year, again segregated in case "something goes awry" with the whole Mega Backdoor process
  • I always purchase the latest date Target Date fund, since I want to maintain an aggressive allocation as I expect this Roth to outlive me and be passed onto my heirs, and hopefully a mixed Target Date allocation will create a "glide path" into slightly more conservative holdings as I age
I hope those points make sense...they may be more psychological than mathematical, but they work for me.

I am interested to see in the coming months how my cash flow changes with the decision to send my oldest daughter to a private Montessori school for a year before she starts Kindergarten. This will represent a +$8K adjustment in our annual living expenses.

Thanks!
MaxSave :sharebeer
Ty for the update. I'm curious why you have not chosen to abandon the TDF yet. It seems the simplicity and cost do not fit your plan or level of knowledge.
TSWNY
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by TSWNY »

You went with 4 target date funds to give yourself a better glide path? That's the whole purpose of having one single target date fund.
terran
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by terran »

MaxSave wrote: Wed Jul 11, 2018 8:56 am
  • I always purchase the latest date Target Date fund, since I want to maintain an aggressive allocation as I expect this Roth to outlive me and be passed onto my heirs, and hopefully a mixed Target Date allocation will create a "glide path" into slightly more conservative holdings as I age
Fair enough. Although, in that case, why not exchange the entire balance into the newest target date fund? There are not tax consequences to exchanging funds in an IRA. Also note that all of the target date funds are pretty much the same until they start their glide path. 2050 and 2065 (your furthest spread) are 89.82% and 89.83% stock respectively, so virtually identical. It's not until you look at the 2040 fund (so 22 years out) that you see a difference and even that is still at 85.24% stock. So really, you should pick the fund with a date about 20 years after you want your portfolio to start gliding, because before that they're all pretty much the same, so all you're really doing is varying when they'll start gliding.
wrongfunds
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by wrongfunds »

If not $13M, what your current goal?
indexonlyplease
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by indexonlyplease »

Louis Winthorpe III wrote: Tue Aug 04, 2015 11:16 am You haven't explained how you're going to grow your portfolio from $700,000 to $12 or $13 million. That's going to be very difficult to do.
Yes please tell. I would like to know how to grow a portfolio from 700k to 13 mil in 20 years. I am all ears.
EnthusiasticLearner
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by EnthusiasticLearner »

As a serial saver who started at an early age and met a spouse at 27 who also saved an alarming rate in 100% equities, I can say these unicorn matches do exist! Unfortunately, we 1. were using only taxed space not ROTHS or otherwise taxed advantaged; 2. subsequently lost $150k on house following a dual job loss in our 30s (an equally unicorn-like perfect storm), so we are merely "on track" now. I buy your numbers, OP, but $13M is just silly (for early retirement). Retire now if you want, retire early even, but $13M AND retire early? No.
WanderingDoc
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by WanderingDoc »

WhiteMaxima wrote: Mon Jul 31, 2017 1:28 pm if you live in venezuela, you could turn 1k to 13 mil in weeks. norminal money is just a number. Actually any paper money or stock is just a number. A good measure of wealth is long can your saving can support your lifestyle in a happy, satisfation and healthy way. If you believe this, you can live happier than Bill G and Warren B.
What if I just want to be happier than Warren G? :)
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.
mmcmonster
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by mmcmonster »

toto238 wrote: Tue Aug 04, 2015 2:20 pm You may be overestimating how much travel you want to do. Travel is awesome and fun. But traveling ALL THE TIME is exhausting! You'll likely find that budgeting $10,000 a month to expenses is WAY too much. For $10,000, you would go on a 30-day cruise for two.
I've been thinking about this, as I hope to semi-retire in five or six years (at age 52 or 53), and retire five years after that. (Provided I can get my kids through college and into good careers afterwards, I've got enough money to win the game.)

I'd like to travel to the point of immersion a couple times a year. Spend 2-3 months in London, a couple months in San Francisco, and the rest of the year back home. Maybe the following year pick a couple other cities to immerse in. Since these are essentially short term rentals rather than hotel visits we'd use an airbnb-sort of site rather than a hotel room. That would also give us access to a kitchen and laundry so it won't be nearly as expensive as hotel rooms.

$10k a month during travel times would be nice. Pay for the room and food and some nice tickets to various shows and such.

On our travels now (we're doing a lot more traveling the last 2-3 years and plan to keep it up), we'll spend just a few days in a city and rush through to see all the site. It's great, but exhausting. I know immersion is also going to be exhausting, but I'm thinking that we'll find a few cities that we love and will gravitate back to years later.
AlwaysWannaLearn
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by AlwaysWannaLearn »

.....
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MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

It has been around a year since I last posted in this thread, so I thought I would provide an update for all those who are interested. My overall goal is to continue saving for an early retirement by living below our means while simultaneously living a fulfilling life. Though I am no longer shooting for the $13 Million goal mentioned in the title, I still hope to have a sizable sum by the time I decide to retire.

As of now, I am still targeting "retirement" at the end of 2029, age 44, though I expect to reach FI long before then. I continue to appreciate more and more the stability, flexibility, and low stress nature of my job through discussions with my friends and peers.

I believe the flexibility aspect of my current position is a highly undervalued trait that everyone considering taking a position should explore, especially if they have children. For instance, if my children have an activity in the middle of a scheduled "work day", I am free to disappear for a few hours w/o fear of being reprimanded. If my wife says "I am taking the kids to X location today, you should come with", no big deal, I just work some additional time in the evening, or on a day when the kids don't have anything going on. This flexibility reaps huge benefits in my interactions with my kids, wife, extended family, and even the teachers/coaches/etc. that interact with my children for various activities. I am always surprised how often I hear "it is wonderful you are able to be here today!". It seems being trapped in a role with limited to no flexibility, with a micromanaging boss checking in on you every hour, is the primary complaint I hear when chatting with friends, or reading various "FI blogs" in which people "can't wait to quit their jobs". I encourage everyone who is in a role of limited flexibility to seek out alternatives, or explore how much flexibility might be available in their current role if they are willing to give it a try.

I am a year older and wiser, though my investments have continued to "stay the course".

My foray into Travel Rewards over the past year has been a success, though I am currently just stockpiling points and have not yet attempted any redemption.

I also finally cracked the 6 figure income level this year, so that has been a nice addition!

General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 4.6% State

State of Residence: Ohio

Age: 34, wife 34, 2 children under age 7

Annual Living Expenses = ~35K (expenses were on average down this past year, less trips and oldest child starting free public school :D, I expect this number to increase over time as kids get older and can gain additional value out of traveling)

I am an engineer. Wife has enjoyed the past 4 years working inside the home in order to take care of children. She still may or may not return to full or part time work in the near or distant future, no rush, entirely her decision.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $35K
Total International (VTIAX) - $27K

His 401k (Fidelity as administrator - I have never mentioned previously, but ~85% of the balance is in Roth 401K (became available shortly after I started) and I am debate-ably continuing to do Roth 401K contributions...despite creeping up in the tax brackets):
Target Date Fund (55% US Equities, 35% International, 10% Bonds) (0.05%) - $395K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $35K
Total Stock Market (VTSAX) - $62K
Target Date 2050 (VFIFX) - $12K
Target Date 2055 (VFFVX) - $21K
Target Date 2060 (VTTSX) - $33K
Target Date 2065 (VLXVX) - $15K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $142K

Her 403b at Vanguard:
Vanguard 500 (VFIAX - Admiral shares made available this year!) - $221K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FNSDX) (0.65%) - $79K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.06%) - $113K

HSA (paying for current expenses out of pocket and saving receipts - abandoned HSA Bank for Fidelity at the beginning of 2019):
$38K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
$6K invested in Fidelity ZERO Total Market Index (FZROX) with Fidelity as administrator

Also currently accruing a pension from my employer

Total of All Accounts Together = $1.23MM

Last Year Total of All Accounts Together = $1.1MM

Past Year Gain = $130K

529 Accounts Total = $45K

Contributions

New annual Contributions
$19K (max out) his 401k (plus 3% employer match) (plus additional ~$10K for Mega Backdoor Roth contributions)
$6K (max out) his Roth IRA
$6K (max out) her Roth IRA
$9K taxable
$7K HSA
$4K 529

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
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winterfan
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by winterfan »

I just read this thread from the beginning. I"m impressed with your progress and your young start. When I started working 25+ years ago, I had the foresight to start investing in a 401K plan, but when I switched jobs, I took my 401K money and instead of putting it in an IRA, I went on vacation! :oops: Oh well, I got serious a couple years later.
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sergeant
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by sergeant »

Thanks for the update. Keep plugging along. It is nice to hear that your job makes quality family time a priority. We need more information to guide you on the Roth or Traditional decision. You mention a pension, how much will that provide when you retire? I think right now Roth is your best option.
For the ashes of his fathers, And the temples of his gods. | Pensions= 2X yearly expenses. Portfolio= 40X yearly expenses.
just1question
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by just1question »

I haven't read through the entire thread, just kind of jumped to the end, so maybe this has already been covered. But be careful about extrapolating the returns you have seen over the past 10 years going forward. I started investing in the early-to-mid 1990s. The market was very hot. I even got in on an IPO, albeit a small position. I was figuring out how many more years of 20% returns I needed to reach one million. Then, the 2000 dotcom bubble burst, and those plans were shot to hell. Built it up again, and boom 2008 financial crisis hits. I kept saving, and never sold off in an attempt to time the market (although I admit I was tempted many times). My point is, stay the course and keep plugging away, but don't assume that current returns will continue indefinitely when you set your goals.

And by the way, unless you live an extraordinary lavish lifestyle or have a top 1% paying job, yes you are crazy for setting $13 million as your goal.
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by bradpevans »

just1question wrote: Fri Jul 12, 2019 3:59 pm I haven't read through the entire thread, just kind of jumped to the end, so maybe this has already been covered. But be careful about extrapolating the returns you have seen over the past 10 years going forward. I started investing in the early-to-mid 1990s. The market was very hot. I even got in on an IPO, albeit a small position. I was figuring out how many more years of 20% returns I needed to reach one million. Then, the 2000 dotcom bubble burst, and those plans were shot to hell. Built it up again, and boom 2008 financial crisis hits. I kept saving, and never sold off in an attempt to time the market (although I admit I was tempted many times). My point is, stay the course and keep plugging away, but don't assume that current returns will continue indefinitely when you set your goals.

And by the way, unless you live an extraordinary lavish lifestyle or have a top 1% paying job, yes you are crazy for setting $13 million as your goal.
All of this is true...but I would add that so longs as you are continuing to add new money, the sequence of returns does NOT matter.

Keep plowing those paychecks into retirement accounts ... once you start de-cumulating then sequence is a huge piece of the story
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Wiggums »

Keep up the good work. Thanks for the update.
"I started with nothing and I still have most of it left."
Topic Author
MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

I continue to favor Roth investments since my wife isn't currently working outside the home and thus our combined income continues to grant us access to Roth. I also like the flexibility Roth provides down the road with contribution withdraws (since I am eyeing retiring "early") as well as possibly passing the accounts along after death. I am aware of the "Roth Conversion Ladder" strategy by early retirees, and how it can result in 0% tax paid, but given that I don't know how early I truly intend to retire, I have neglected that strategy for now.

One thing I rarely see mentioned as an advantage for Roth is the case in which the market has enormous gains (multiples/magnitudes), and thus one's gains represent severely more than contributions. Having not to pay taxes on said gains has to be hugely advantageous. Thinking this way also makes we wonder why more people don't "take shots" in their Roths (especially if the annual contribution represents a small amount of their overall portfolio) by making investments that have a chance to 10X, 100X, etc. for which no gains tax would be owed. Maybe people do this and just don't discuss it...or maybe gamblers do not make a large percentage of the forums posting population :D

Thanks!
MaxSave :sharebeer
Leesbro63
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Leesbro63 »

MaxSave wrote: Tue Jul 16, 2019 9:04 am I continue to favor Roth investments since my wife isn't currently working outside the home and thus our combined income continues to grant us access to Roth. I also like the flexibility Roth provides down the road with contribution withdraws (since I am eyeing retiring "early") as well as possibly passing the accounts along after death. I am aware of the "Roth Conversion Ladder" strategy by early retirees, and how it can result in 0% tax paid, but given that I don't know how early I truly intend to retire, I have neglected that strategy for now.

One thing I rarely see mentioned as an advantage for Roth is the case in which the market has enormous gains (multiples/magnitudes), and thus one's gains represent severely more than contributions. Having not to pay taxes on said gains has to be hugely advantageous. Thinking this way also makes we wonder why more people don't "take shots" in their Roths (especially if the annual contribution represents a small amount of their overall portfolio) by making investments that have a chance to 10X, 100X, etc. for which no gains tax would be owed. Maybe people do this and just don't discuss it...or maybe gamblers do not make a large percentage of the forums posting population :D

Thanks!
MaxSave :sharebeer
I guess the answer to your question is this: if I really thought I could hit investing grand slams, I’d do it even without the tax free Roth advantage.
visualguy
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by visualguy »

bradpevans wrote: Fri Jul 12, 2019 4:48 pm once you start de-cumulating then sequence is a huge piece of the story
Historically, sequence of returns has been a problem for high withdrawal rates, but not for the normal SWRs that people talk about here... Maybe the future will be different, but the big concern with sequence of returns has always seemed very questionable to me for anyone who is staying within historical SWRs...
bradpevans
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by bradpevans »

visualguy wrote: Tue Jul 16, 2019 4:49 pm
bradpevans wrote: Fri Jul 12, 2019 4:48 pm once you start de-cumulating then sequence is a huge piece of the story
Historically, sequence of returns has been a problem for high withdrawal rates, but not for the normal SWRs that people talk about here... Maybe the future will be different, but the big concern with sequence of returns has always seemed very questionable to me for anyone who is staying within historical SWRs...
the lower the SWR the less the sequence matters for sure. and most with large accumulated dollar amounts *also* have the ability to moderate their yearly spend if deemed necessary.

negative returns early in retirement hurt ... but that's not the same as running out of money
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MaxSave
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by MaxSave »

It has been around a year since I last posted in this thread, so I thought I would provide an update for all those who are interested. My overall goal is to continue saving for an early retirement by living below our means while simultaneously living a fulfilling life. Though I am no longer shooting for the $13 Million goal mentioned in the title, I still hope to have a sizable sum by the time I decide to retire.

As of now, I am still targeting "retirement" at the end of 2029, age 44, though I expect to reach FI long before then. I continue to appreciate more and more the stability, flexibility, and low stress nature of my job, especially in light of recent events with the COVID-19 pandemic.

I have been fortunate to be able to work from home since the beginning of the pandemic in the middle of March and have not had to return to the office since (and have no plans to do so in the near future). More time at home has meant more time with my wife and kids, daily walks, at home fitness routines, and the availability to “tag in” to help with the kids’ at home learning whenever the situation dictates. I have been able to flex my work schedule, even more so than I mentioned last year, by working early mornings, even on weekends, to make sure I am “getting my hours in” when my family is otherwise occupied. All this is to say, I have realized even more how fortunate I am to be in my current position, and am in no hurry to quit my job, despite our current savings goals.

The pandemic, above all else, has made me realize that the future truly is uncertain. Whether it comes to future travel plans, your children’s education, expected time with loved ones that gets cut short, or even your investments, all you can do is make the best plan with the information you have at the moment, and go from there.

I am a year older and wiser, though my investments have continued to "stay the course", despite the daily volatility the pandemic has induced.

My foray into Travel Rewards over the past couple years has been a success, though I am currently just stockpiling points and have not yet attempted any redemption (we had a redemption planned for a hotel in NYC this summer…needless to say, that was canceled).

Working from home has enabled me to put in a ton of paid overtime, so that has been a nice addition!

General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 4.6% State

State of Residence: Ohio

Age: 35, wife 35, 2 children under age 8

Annual Living Expenses = ~30K (expenses were on average down this past year (especially in the last 4 months), I expect this number to increase over time as kids get older and can gain additional value out of traveling/the pandemic comes to an end)

I am an engineer. Wife has enjoyed the past 5 years working inside the home in order to take care of children. She still may or may not return to full or part time work in the near or distant future, no rush, entirely her decision.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $43K
Total International (VTIAX) - $31K

His 401k (Fidelity as administrator - ~85% of the balance is in Roth 401K (became available shortly after I started) and I am debate-ably continuing to do Roth 401K contributions...despite creeping up in the tax brackets):
Target Date Fund (55% US Equities, 35% International, 10% Bonds) (0.05%) - $460K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $45K
Total Stock Market (VTSAX) - $67K
Target Date 2050 (VFIFX) - $12K
Target Date 2055 (VFFVX) - $22K
Target Date 2060 (VTTSX) - $35K
Target Date 2065 (VLXVX) - $26K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $154K

Her 403b at Vanguard:
Vanguard 500 (VFIAX) - $242K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FNSDX) (0.65%) - $84K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.06%) - $117K

HSA (paying for current expenses out of pocket and saving receipts):
$50K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
$6K invested in Fidelity ZERO Total Market Index (FZROX) with Fidelity as administrator

Also currently accruing a pension from my employer

Total of All Accounts Together = $1.4MM

Last Year Total of All Accounts Together = $1.23MM

Past Year Gain = $170K

529 Accounts Total = $53K

Contributions

New annual Contributions
$19.5K (max out) his 401k (plus 3% employer match) (plus additional ~$15K for Mega Backdoor Roth contributions)
$6K (max out) his Roth IRA
$6K (max out) her Roth IRA
$9K taxable
$7.1K HSA
$5K 529

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
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sergeant
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by sergeant »

Thanks for the update. I'm glad 13 million is no longer the goal because it is not gonna happen. My only advice would be to simplify. There is no need to have 4 different Target Date funds in the same account. Just pick the one closest to your desired AA. I would go Target Date in every account (even taxable) cause simplicity is my goal. Good luck and hope to see your update next year.
For the ashes of his fathers, And the temples of his gods. | Pensions= 2X yearly expenses. Portfolio= 40X yearly expenses.
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White Coat Investor
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by White Coat Investor »

MaxSave wrote: Tue Aug 04, 2015 11:09 am General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 25% Federal, 5% State

State of Residence: Ohio

Age: 30, wife 30, 2 children under age 3

Annual Living Expenses = ~30K

I am an engineer. Wife recently stopped working outside the home in order to take care of children. She may or may not return to full or part time work in the near or distant future.

I was fortunate enough to discover this forum at a young age, so I developed good investment/spending/etc habits early on. I embrace the fact that time is on my side and usually do not check my investments more than once a year, aside from insuring that transactions have processed correctly.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $11K
Total International (VTIAX) - $11K

His 401k:
Target Date Fund (55% US Equities, 30% International, 15% Real Estate) (0.12%) - $225K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $10K
Total Stock Market (VTSAX) - $40K
Target Date 2050 (VFIFX) - $10K
Target Date 2055 (VFFVX) - $15K
Target Date 2060 (VTTSX) - $20K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $90K

Her 403b at Vanguard:
Vanguard 500 (VFINX) - $150K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FDENX) (0.64%) - $60K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.21%) - $80K

HSA with HSA Bank (paying for current expenses out of pocket and saving receipts) - $10K

Also currently accruing a pension from my employer

Total of All Accounts Together = $730K

529 Accounts Total = $10K

Contributions

New annual Contributions
$18K (max out) his 401k (plus 3% employer match) (plus additional ~$7K for Mega Backdoor Roth contributions)
$5.5K (max out) his Roth IRA
$5.5K (max out) her Roth IRA
$6K taxable
$6K HSA
$3K 529

Questions:

1. My goal is to retire by age 50. Based on the information above and my current contribution levels, do you think this is possible?

2. In my mind, I have "my number" set at $13 million. This is for the following reasons:
  • If I count my portfolio value as $12 million (reason mentioned below) I could draw ~1% of my portfolio per year and have ~10K per month to spend in retirement however I liked. This would facilitate my wife/children/family enjoying our early retirement through travel/hobbies/etc without having to worry about overspending.

    I could use the remaining $1 million as a sort of "endowment" and use the gains for philanthropic purposes. I would plan to leave this amount invested in equities (such as VTSAX) to assist with growth. In my mind I have thought I would take half the gains from this fund each year and leave them invested to help with exponential growth. The other half I would divide into two sums, one of which could be divided across several charities/causes of my choosing, the other of which could be used for "familial charity" (helping family members with major expenses as we see fit, nieces/nephews college costs, etc).

    Overall, this total portfolio would set up my children and grandchildren to receive sizable inherited wealth. I would make my best attempt to educate them on the Boglehead mindset to help ensure the wealth would be managed/used correctly.
Based on this...am I crazy for even thinking/entertaining/considering this? Regardless, do you think I can possibly make it to $13 million by age 50?

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
As others have mentioned, the 1% is an issue. Spend some time on that. A 3% withdrawal plan is very conservative, especially for someone who doesn't retire until 50.

I agree your portfolio would set up your children and grandchildren to receive sizable inherited wealth.

Now, let's turn to whether $13M is reasonable or not. You're 30. You have $730K. You want that to grow to $13M in 20 years but only plan to add $41K to it each year.

A simple future value style financial calculation would suggestion that you need to earn:

=RATE(20,-41000,-730000,13000000) = 13.64%

No, I don't think that's reasonable. I don't think you'll get to $13M unless your income goes up dramatically, your savings rate goes up dramatically, and/or you work longer. But as I mentioned earlier, that's probably fine since you likely don't need $13M to reach all of your financial goals.

Good luck and congrats on a great start. You're far wealthier than I was at 30.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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White Coat Investor
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by White Coat Investor »

MaxSave wrote: Fri Jul 12, 2019 9:43 am It has been around a year since I last posted in this thread, so I thought I would provide an update for all those who are interested. My overall goal is to continue saving for an early retirement by living below our means while simultaneously living a fulfilling life. Though I am no longer shooting for the $13 Million goal mentioned in the title, I still hope to have a sizable sum by the time I decide to retire.

As of now, I am still targeting "retirement" at the end of 2029, age 44, though I expect to reach FI long before then. I continue to appreciate more and more the stability, flexibility, and low stress nature of my job through discussions with my friends and peers.

I believe the flexibility aspect of my current position is a highly undervalued trait that everyone considering taking a position should explore, especially if they have children. For instance, if my children have an activity in the middle of a scheduled "work day", I am free to disappear for a few hours w/o fear of being reprimanded. If my wife says "I am taking the kids to X location today, you should come with", no big deal, I just work some additional time in the evening, or on a day when the kids don't have anything going on. This flexibility reaps huge benefits in my interactions with my kids, wife, extended family, and even the teachers/coaches/etc. that interact with my children for various activities. I am always surprised how often I hear "it is wonderful you are able to be here today!". It seems being trapped in a role with limited to no flexibility, with a micromanaging boss checking in on you every hour, is the primary complaint I hear when chatting with friends, or reading various "FI blogs" in which people "can't wait to quit their jobs". I encourage everyone who is in a role of limited flexibility to seek out alternatives, or explore how much flexibility might be available in their current role if they are willing to give it a try.

I am a year older and wiser, though my investments have continued to "stay the course".

My foray into Travel Rewards over the past year has been a success, though I am currently just stockpiling points and have not yet attempted any redemption.

I also finally cracked the 6 figure income level this year, so that has been a nice addition!

General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 4.6% State

State of Residence: Ohio

Age: 34, wife 34, 2 children under age 7

Annual Living Expenses = ~35K (expenses were on average down this past year, less trips and oldest child starting free public school :D, I expect this number to increase over time as kids get older and can gain additional value out of traveling)

I am an engineer. Wife has enjoyed the past 4 years working inside the home in order to take care of children. She still may or may not return to full or part time work in the near or distant future, no rush, entirely her decision.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $35K
Total International (VTIAX) - $27K

His 401k (Fidelity as administrator - I have never mentioned previously, but ~85% of the balance is in Roth 401K (became available shortly after I started) and I am debate-ably continuing to do Roth 401K contributions...despite creeping up in the tax brackets):
Target Date Fund (55% US Equities, 35% International, 10% Bonds) (0.05%) - $395K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $35K
Total Stock Market (VTSAX) - $62K
Target Date 2050 (VFIFX) - $12K
Target Date 2055 (VFFVX) - $21K
Target Date 2060 (VTTSX) - $33K
Target Date 2065 (VLXVX) - $15K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $142K

Her 403b at Vanguard:
Vanguard 500 (VFIAX - Admiral shares made available this year!) - $221K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FNSDX) (0.65%) - $79K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.06%) - $113K

HSA (paying for current expenses out of pocket and saving receipts - abandoned HSA Bank for Fidelity at the beginning of 2019):
$38K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
$6K invested in Fidelity ZERO Total Market Index (FZROX) with Fidelity as administrator

Also currently accruing a pension from my employer

Total of All Accounts Together = $1.23MM

Last Year Total of All Accounts Together = $1.1MM

Past Year Gain = $130K

529 Accounts Total = $45K

Contributions

New annual Contributions
$19K (max out) his 401k (plus 3% employer match) (plus additional ~$10K for Mega Backdoor Roth contributions)
$6K (max out) his Roth IRA
$6K (max out) her Roth IRA
$9K taxable
$7K HSA
$4K 529

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
Fun to see the progress. Didn't realize it was a zombie post with my last reply.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
babystep
Posts: 763
Joined: Tue Apr 09, 2019 9:44 am

Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by babystep »

MaxSave wrote: Fri Jul 17, 2020 3:21 pm It has been around a year since I last posted in this thread, so I thought I would provide an update for all those who are interested. My overall goal is to continue saving for an early retirement by living below our means while simultaneously living a fulfilling life. Though I am no longer shooting for the $13 Million goal mentioned in the title, I still hope to have a sizable sum by the time I decide to retire.

As of now, I am still targeting "retirement" at the end of 2029, age 44, though I expect to reach FI long before then. I continue to appreciate more and more the stability, flexibility, and low stress nature of my job, especially in light of recent events with the COVID-19 pandemic.

I have been fortunate to be able to work from home since the beginning of the pandemic in the middle of March and have not had to return to the office since (and have no plans to do so in the near future). More time at home has meant more time with my wife and kids, daily walks, at home fitness routines, and the availability to “tag in” to help with the kids’ at home learning whenever the situation dictates. I have been able to flex my work schedule, even more so than I mentioned last year, by working early mornings, even on weekends, to make sure I am “getting my hours in” when my family is otherwise occupied. All this is to say, I have realized even more how fortunate I am to be in my current position, and am in no hurry to quit my job, despite our current savings goals.

The pandemic, above all else, has made me realize that the future truly is uncertain. Whether it comes to future travel plans, your children’s education, expected time with loved ones that gets cut short, or even your investments, all you can do is make the best plan with the information you have at the moment, and go from there.

I am a year older and wiser, though my investments have continued to "stay the course", despite the daily volatility the pandemic has induced.

My foray into Travel Rewards over the past couple years has been a success, though I am currently just stockpiling points and have not yet attempted any redemption (we had a redemption planned for a hotel in NYC this summer…needless to say, that was canceled).

Working from home has enabled me to put in a ton of paid overtime, so that has been a nice addition!

General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 22% Federal, 4.6% State

State of Residence: Ohio

Age: 35, wife 35, 2 children under age 8

Annual Living Expenses = ~30K (expenses were on average down this past year (especially in the last 4 months), I expect this number to increase over time as kids get older and can gain additional value out of traveling/the pandemic comes to an end)

I am an engineer. Wife has enjoyed the past 5 years working inside the home in order to take care of children. She still may or may not return to full or part time work in the near or distant future, no rush, entirely her decision.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $43K
Total International (VTIAX) - $31K

His 401k (Fidelity as administrator - ~85% of the balance is in Roth 401K (became available shortly after I started) and I am debate-ably continuing to do Roth 401K contributions...despite creeping up in the tax brackets):
Target Date Fund (55% US Equities, 35% International, 10% Bonds) (0.05%) - $460K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $45K
Total Stock Market (VTSAX) - $67K
Target Date 2050 (VFIFX) - $12K
Target Date 2055 (VFFVX) - $22K
Target Date 2060 (VTTSX) - $35K
Target Date 2065 (VLXVX) - $26K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $154K

Her 403b at Vanguard:
Vanguard 500 (VFIAX) - $242K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FNSDX) (0.65%) - $84K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.06%) - $117K

HSA (paying for current expenses out of pocket and saving receipts):
$50K invested in Fidelity Total Market Index (FSTVX) with Fidelity as administrator
$6K invested in Fidelity ZERO Total Market Index (FZROX) with Fidelity as administrator

Also currently accruing a pension from my employer

Total of All Accounts Together = $1.4MM

Last Year Total of All Accounts Together = $1.23MM

Past Year Gain = $170K

529 Accounts Total = $53K

Contributions

New annual Contributions
$19.5K (max out) his 401k (plus 3% employer match) (plus additional ~$15K for Mega Backdoor Roth contributions)
$6K (max out) his Roth IRA
$6K (max out) her Roth IRA
$9K taxable
$7.1K HSA
$5K 529

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
You are doing great.

VWNAX expense ratio is 0.26% costing about $400 per year to you. Replace with VTSAX?

I would suggest reconsidering the target date funds since you have been a longtime member and seems to know well. e.g. the cost is about 150 per year in your Roth IRA. It is also not efficient to put bonds in the Roth IRA. Please see
https://www.bogleheads.org/wiki/Tax-eff ... _placement
RocketShipTech
Posts: 679
Joined: Sat Jun 13, 2020 10:08 pm

Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by RocketShipTech »

It looks like you are already FI? Why not just quit your job now.
smitcat
Posts: 13227
Joined: Mon Nov 07, 2016 9:51 am

Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by smitcat »

MaxSave wrote: Tue Aug 04, 2015 11:09 am General

Emergency funds: Three to six months of expenses - Savings account earning ~1% interest

Debt: None, House paid off (no mortgage)

Tax Filing Status: Married Filing Jointly

Tax Rate: 25% Federal, 5% State

State of Residence: Ohio

Age: 30, wife 30, 2 children under age 3

Annual Living Expenses = ~30K

I am an engineer. Wife recently stopped working outside the home in order to take care of children. She may or may not return to full or part time work in the near or distant future.

I was fortunate enough to discover this forum at a young age, so I developed good investment/spending/etc habits early on. I embrace the fact that time is on my side and usually do not check my investments more than once a year, aside from insuring that transactions have processed correctly.

Current retirement assets

Taxable:
Total Stock Market (VTSAX) - $11K
Total International (VTIAX) - $11K

His 401k:
Target Date Fund (55% US Equities, 30% International, 15% Real Estate) (0.12%) - $225K

His Roth IRA at Vanguard:
Vanguard 500 (VFIAX) - $10K
Total Stock Market (VTSAX) - $40K
Target Date 2050 (VFIFX) - $10K
Target Date 2055 (VFFVX) - $15K
Target Date 2060 (VTTSX) - $20K

Her Roth IRA at Vanguard:
Windsor II (VWNAX) - $90K

Her 403b at Vanguard:
Vanguard 500 (VFINX) - $150K

Her 401a at Fidelity:
Fidelity Freedom K 2055 Fund (FDENX) (0.64%) - $60K

Her 457 (deferred compensation):
Target Date Fund (50% US Equities, 30% International, 20% Real Estate/Other) (0.21%) - $80K

HSA with HSA Bank (paying for current expenses out of pocket and saving receipts) - $10K

Also currently accruing a pension from my employer

Total of All Accounts Together = $730K

529 Accounts Total = $10K

Contributions

New annual Contributions
$18K (max out) his 401k (plus 3% employer match) (plus additional ~$7K for Mega Backdoor Roth contributions)
$5.5K (max out) his Roth IRA
$5.5K (max out) her Roth IRA
$6K taxable
$6K HSA
$3K 529

Questions:

1. My goal is to retire by age 50. Based on the information above and my current contribution levels, do you think this is possible?

2. In my mind, I have "my number" set at $13 million. This is for the following reasons:
  • If I count my portfolio value as $12 million (reason mentioned below) I could draw ~1% of my portfolio per year and have ~10K per month to spend in retirement however I liked. This would facilitate my wife/children/family enjoying our early retirement through travel/hobbies/etc without having to worry about overspending.

    I could use the remaining $1 million as a sort of "endowment" and use the gains for philanthropic purposes. I would plan to leave this amount invested in equities (such as VTSAX) to assist with growth. In my mind I have thought I would take half the gains from this fund each year and leave them invested to help with exponential growth. The other half I would divide into two sums, one of which could be divided across several charities/causes of my choosing, the other of which could be used for "familial charity" (helping family members with major expenses as we see fit, nieces/nephews college costs, etc).

    Overall, this total portfolio would set up my children and grandchildren to receive sizable inherited wealth. I would make my best attempt to educate them on the Boglehead mindset to help ensure the wealth would be managed/used correctly.
Based on this...am I crazy for even thinking/entertaining/considering this? Regardless, do you think I can possibly make it to $13 million by age 50?

I appreciate any and all input! Anything from criticism to praise is welcomed.

Thanks!
MaxSave :sharebeer
Congratulations on the series of updates - your diligent savings and performance has consistently paid off these past 5 years. I am very curious how you ended up in the situation that began with this initial post.
- how did you end up with a fully paid off home by 30?
- how did you guys pay off college costs prior to 30?
- how did your wife place $380K in retirement accounts before 30?
- how did you accumulate the total account value of $730K by 30?
Cousin Eddie
Posts: 216
Joined: Fri Dec 25, 2015 10:27 am

Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Cousin Eddie »

Congrats on your 5 year portfolio mark, it's really impressive that you and your wife have diligently saved since teenagers to accumulate so much at your age. You should be extremely proud for the both of you!

You've almost doubled the size of your 2015 portfolio, so now you just need to double it 3 more times and you will be close to 13 million at age 50! Of course the doubling will get progressively harder since returns will matter much more than contributions. The rule of 72 says around 15% will get you there, a bit less for the added contributions. I know that's no longer your goal but hey, dreams have to start somewhere.

I think you have a fair shot at doubling again in the next 5 years, it's the final two doublings that would take a huge amount of luck.

Good luck!
w3ldon
Posts: 46
Joined: Thu Jul 09, 2020 9:06 am

Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by w3ldon »

Thanks for this thread, I am around your age and starting lower but with salary bump coming up (resident).

It is of course being nitpicky, but the lack of simplicity in the portfolio would really bother me. The mixed 'glide path' of the target date funds makes no sense being divided as such. If you want the TSM and S&P500 funds in the Roth IRA as separate bins, just put all the target date funds in VTI. Then put 20% or so in total bond market in tax-deferred space (or long term treasury would be best based on suggestions I've seen on this forum).

It just does not seem in line with your diligence in savings and yearly posts here to have such a needlessly complex portfolio where you are inevitably paying higher expenses to have a mixed-bag glidepath that you would need to do annoying calculations to see what your overall AA is...

The Freedom Fund from fidelity seems like room for improvement as well -- is there anyway to just put this in index funds? You clearly look at things in detail every year, why not balance it yourself and save the expenses since you are clearly keeping an eye on things?

Summary: if possible put 10% in long-term treasury now in tax-deferred space (up to 20% by age 40 maybe?), convert all others to TSM or S&P 500. International if desired. I think this will make a measurable difference for you in terms of expenses by retirement.
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willthrill81
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by willthrill81 »

RocketShipTech wrote: Fri Jul 17, 2020 9:35 pm It looks like you are already FI? Why not just quit your job now.
Even though they've been spending only $30k annually, that number could go up significantly, especially as the kids get older. And once he quits his job, they will have to pay for healthcare insurance, which won't be cheap. Also, I don't know if the $30k includes income taxes. Overall, I'd say that they probably need to plan for spending at least $50k, and assuming 3% withdrawals, that works out to $1.67 million, not too much more than they already have. So even so, he definitely shouldn't have to wait another nine years to retire.
The Sensible Steward
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