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

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

Post by MaxSave » 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

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

Post by KyleAAA » Tue Aug 04, 2015 11:13 am

$13 million is far more than you need. Why limit yourself to 1% of your portfolio? You could easily triple that withdrawal rate with practically no risk. $5 million is a more reasonable goal: $4 million at 3% = $120k per year, leaving you an extra million for the endowment.

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

Post by Louis Winthorpe III » 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.

bigred77
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by bigred77 » Tue Aug 04, 2015 11:20 am

Just keep doin what your doin and re-evaluate things in 5 years. You would need really great returns to hit that $13M mark by age 50.

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

Post by Grt2bOutdoors » Tue Aug 04, 2015 11:23 am

Louis Winthorpe III wrote: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.


+1. The OP is not realistic, visions of grandeur only become reality when you have a concrete plan and even then, there is zero guarantee.
I've known successful businessfolk who've worked a lifetime, investing good money and still, never attained $12 or $13 million, they did however have a very enjoyable life. Short of you winning the lottery, the OP would need to invest a significant sum of money with all the winds of fortune favoring you, to reach that number. Or, you can reach it tomorrow, if you take a long plane ride to Zimbabwe, where money inflates by the thousands literally overnight. :P It just won't be worth anything if you try to spend it here in the U.S.A. :)
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billern
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by billern » Tue Aug 04, 2015 11:27 am

Your income does not seem to be high enough to reach your goal. Your annual spending is not high enough to need nearly that amount of assets to support retirement.

The other thing to keep in mind (that I see comments on this board regarding) is that people who are frugal in the accumulation phase have a hard time increasing spending in retirement. Setting a high retirement asset goal based upon the idea that spending will increase in retirement may not be realistic.

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

Post by Veni Vidi Decessi » Tue Aug 04, 2015 11:28 am

Rough Calculations:

Starting at 700K, and assuming a 5% return, you'd need to contribute ~370K/yr to reach $13 million.

At your current savings rate (~56k), you'd need a return of ~14%/yr to reach 13 million. That sounds very optimistic.

OTOH, if you get 5% (real return, might also be optimistic) over the next 20 years at your current savings rate, you'd hit ~$3.5 million at age 50. 3.4% of that would give you your 120K, but no extra.

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

Post by Dutch » Tue Aug 04, 2015 11:29 am

huh what?

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

Post by staythecourse » Tue Aug 04, 2015 11:29 am

You living on an engineer's salary minus saving 40-50k minus taxes. Doing that for the next 20 years why would you think you need that much money? If you are LBYM for 50 yrs of your life (at that time) what makes you think you will even want to spend that much money per month. It isn't like a bell will go off in your head and will say "Yes today and from now one I will spend as much as I can". You behavior will be set (including spending habits) at that age. I am sure neuroplasticity will/ had set in so changing your behavior at that time will be difficult. If that does happen you will end up with a wad of money on your death for nothing. Giving all that money to your children is not a good idea. You don't mention any altruistic act you are considering either.

The reasonable action would be to spend a bit more money now to have a more complete life. If you say you already do then why do you want more money in 20 yrs?

No offense, it seems you need to game plan better and more maturely. The post sounds like you are running a race by yourself with no one timing it except you.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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

Post by whatusername? » Tue Aug 04, 2015 11:30 am

That would have to be some really wicked inflation coming down the pike, assuming your target is in nominal dollars. I'd also hate to see the kind of risk that would generate the returns you'd need based on your current balance and contribution levels.

I don't think crazy is the right word...I think you have unrealistic expectations of your current plan. Which means your can either adjust your expectations or adjust the plan to make it reasonable.

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

Post by staythecourse » Tue Aug 04, 2015 11:30 am

Veni Vidi Decessi wrote:Rough Calculations:

Starting at 700K, and assuming a 5% return, you'd need to contribute ~370K/yr to reach $13 million.

At your current savings rate (~56k), you'd need a return of ~14%/yr to reach 13 million. That sounds very optimistic.

OTOH, if you get 5% (real return, might also be optimistic) over the next 20 years at your current savings rate, you'd hit ~$3.5 million at age 50. 3.4% of that would give you your 120K, but no extra.


I was a bit surprised an engineer, the OP, did not run through some simple calculations to realize his/ her goal is not feasible. I think this should help him/ her to better adjust their expectations.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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

Post by Random Poster » Tue Aug 04, 2015 11:34 am

I'm befuddled how your account balances are what they are, considering your age (and your wife's age).

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

Post by yellowgirl » Tue Aug 04, 2015 11:42 am

Wow, you guys are doing very well. How did you save so much?

730K - 22K (taxable accounts) = 708K

I am assuming that you guys graduated college at 22 so that 8 years to make real money. Your retirement accounts minus taxable accounts is 708K/8 years = $88,500 a year at age 22 for both of you. How did you do it?
Last edited by yellowgirl on Tue Aug 04, 2015 11:47 am, edited 1 time in total.

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greg24
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by greg24 » Tue Aug 04, 2015 11:44 am

Your goal is not likely to be achievable, but there doesn't appear to be any need for such a high goal. I'd continue saving like crazy and revisit in 10 years. Life throws lots of curveballs at you.

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

Post by TheGipper » Tue Aug 04, 2015 11:48 am

The real problem with the great majority of online calculators is the overestimation of average annual rate of return on investments. You see numbers ranging from 6-12%, but in my opinion these are all optimistic when one considers almost no one holds 100% equities, fund and/or advisor costs are not factored in, inflation is often not well factored in, market volatility slightly further decreasing annualized returns, as well as other factors.

I would pencil in 4-5% on these and plan for worst case 3% over long run. Unless there's some major brute force savings or planned windfall going on, its going to be damn hard to get from here to 13 million by 50!!!

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

Post by cmublitz » Tue Aug 04, 2015 11:48 am

That is some diligent saving so far! Like others have mentioned though, the $13 million end figure isn't realistic without significantly increasing the saving amount, crazy high inflation, or excessively lucky investing returns. More realistic is ~$6million if you can keep it up for another 20 years.

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

Post by surfstar » Tue Aug 04, 2015 11:53 am

Your wife was able to stash away a lot of funds very early in seemingly gov't based plans - well done! (I'd love to hear details)

Aim for 5M and you guys will have plenty [for expenses] still, and a much more realistic chance of hitting that goal.

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

Post by protagonist » Tue Aug 04, 2015 11:56 am

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?

If you need $13 million to retire, you would need a LOT of luck.

2.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?


Yes, you are crazy for even thinking this. Nobody needs $13 million. You can live better than the vast majority of Americans on a tenth of that. You will likely destroy your youth (and possibly your family) by postponing joy. And you might have a heart attack at 49.

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

Post by Rupert » Tue Aug 04, 2015 12:02 pm

Why in the world are you saving so much money? See another recent post entitled "Priorities" and adjust your lifestyle accordingly. And why would you want to retire at 50? For every post I see on this forum about retiring at 50 there's another post by a 69-year-old stating that he/she wants to work until 80. If you retire at 50, what will you do with the final 40 years of your life? That's a lot of time to fill. I'd be bored out of my mind without some kind of work.

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

Post by TomatoTomahto » Tue Aug 04, 2015 12:26 pm

Maybe I had better load up on TIPS :twisted:

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

Post by Sents » Tue Aug 04, 2015 12:34 pm

Your best chances of having $13 million will be to open a successful business or become a high level executive at a fortune 500 company. Otherwise, even if you are a very successful professional earning 300-500K/year, you will still have a very difficult time saving $13 million. Perhaps you plan to receive a couple million dollar inheritance down-the-line?
Don't only practice your art, but force your way into its secrets. For it and knowledge can raise men to the divine. | L. Beethoven

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

Post by matjen » Tue Aug 04, 2015 12:36 pm

I disagree with many of the replies above. I think 13 million is very doable by 50*

*I am assuming 4% real returns and an 11 million dollar inheritance in my calculations though.... :P
Last edited by matjen on Tue Aug 04, 2015 12:48 pm, edited 1 time in total.
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by Grt2bOutdoors » Tue Aug 04, 2015 12:38 pm

Sents wrote:Your best chances of having $13 million will be to open a successful business or become a high level executive at a fortune 500 company. Otherwise, even if you are a very successful professional earning 300-500K/year, you will still have a very difficult time saving $13 million. Perhaps you plan to receive a couple million dollar inheritance down-the-line?


Or he could pick up some oil leases sitting over the Utica shale in Ohio, wait for oil to come back up in price and reap the rewards ----> but this could also backfire, and he could lose his entire speculation on it.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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

Post by randomguy » Tue Aug 04, 2015 12:41 pm

So you live on 30k/yr for the 20 years when you have kids and when the kids leave and you retire you are going to up the spending to 120k/yr? Seems unlikely to me:) As far as leaving legacies, see what a mere 5 million with 120k of spending does when you have another 40 years til you die.

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

Post by dicejam » Tue Aug 04, 2015 12:45 pm

Random Poster wrote:I'm befuddled how your account balances are what they are, considering your age (and your wife's age).


+1. My exact thoughts!! has the OP been working for 10+ years and contributing max to 401k? similarly how does one get to have more than 50-60k in Roth if contributing at max for as many year? am i missing something?

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

Post by Grt2bOutdoors » Tue Aug 04, 2015 12:48 pm

dicejam wrote:
Random Poster wrote:I'm befuddled how your account balances are what they are, considering your age (and your wife's age).


+1. My exact thoughts!! has the OP been working for 10+ years and contributing max to 401k? similarly how does one get to have more than 50-60k in Roth if contributing at max for as many year? am i missing something?


Could be by holding individual stock (lottery ticket), could be by inheritance, or dumb luck - was in cash prior to 2008, then went all-in in 2009 to ride the tide up in the market. The same applies for a fully paid off home in just 8 short years.....something doesn't add up here.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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

Post by LAlearning » Tue Aug 04, 2015 12:53 pm

you live on 30k/yr for a family of 4 and you want 13 million? to answer the title, yes, you are crazy.
I know nothing!

new2bogle
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by new2bogle » Tue Aug 04, 2015 12:58 pm

yellowgirl wrote:Wow, you guys are doing very well. How did you save so much?

730K - 22K (taxable accounts) = 708K

I am assuming that you guys graduated college at 22 so that 8 years to make real money. Your retirement accounts minus taxable accounts is 708K/8 years = $88,500 a year at age 22 for both of you. How did you do it?


Plus a paid off house.

It's either inheritance or shenanigans.

toto238
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by toto238 » Tue Aug 04, 2015 12:59 pm

Wait... Your annual living expenses are $30k. Using the standard 4% rule, you need $750k to retire. Using the 3% rule, you need $1mil to retire. Using the 2% rule, you need $1.5mil to retire.

Where in the heck are you getting a number like $13mil from?

Ok let's say you want to spend $10k a month. That's $120k per year. Using different withdrawal rates you would need:

4%: $3mil
3%: $4mil
2%: $6mil

There is absolutely no reason whatsoever that you should need anywhere close to $13mil for your purposes.

But seriously if $13million is your goal, then based off the $44,000 per year you're putting away, you would need to get a return of 13-14% per year to hit that in 20 years. Absolutely ridiculous. A 5% return gives you $3.4mil which is more than enough to retire on and have $120k per year. Also much more realistic. A 6% return gives you $4mil.

So can you save enough to meet your goals? Yes. But your goals are not $13mil. That number is absolutely ridiculous and unrealistic. You have a better chance of hitting that number by age 50 by taking your full $730k and betting it all on one spin of the roulette wheel.

toto238
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by toto238 » Tue Aug 04, 2015 1:00 pm

LAlearning wrote:you live on 30k/yr for a family of 4 and you want 13 million? to answer the title, yes, you are crazy.


$30k/$13mil is a withdrawal rate of 0.23%. Absolutely ridiculous.

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

Post by randomguy » Tue Aug 04, 2015 1:07 pm

dicejam wrote:
Random Poster wrote:I'm befuddled how your account balances are what they are, considering your age (and your wife's age).


+1. My exact thoughts!! has the OP been working for 10+ years and contributing max to 401k? similarly how does one get to have more than 50-60k in Roth if contributing at max for as many year? am i missing something?


Investment returns:) 5k/yr between 2009-2014 gives you like 50k depsite only investing 30k. I have north of a 100k in a ROTH and I didn't even contribute for the years between 2002-~2008 (MAGI to high and no back door roth option until the law changed).

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

Post by randomguy » Tue Aug 04, 2015 1:08 pm

toto238 wrote:
LAlearning wrote:you live on 30k/yr for a family of 4 and you want 13 million? to answer the title, yes, you are crazy.


$30k/$13mil is a withdrawal rate of 0.23%. Absolutely ridiculous.


He isn't spending 30k in retirement. He is spending 120k. 1% goes from absolutely ridiculous to just plan ridiculous:)

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

Post by surfstar » Tue Aug 04, 2015 1:13 pm

Even with an inheritance (could explain Roth), the employer plan amounts seem way too high.

A weird troll?

Started professional work at 18 and immediately maxed out all retirement accounts?

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

Post by Grt2bOutdoors » Tue Aug 04, 2015 1:17 pm

surfstar wrote:Even with an inheritance (could explain Roth), the employer plan amounts seem way too high.

A weird troll?

Started professional work at 18 and immediately maxed out all retirement accounts?


How many engineers graduated from college at age 18? The math doesn't compute.
Then again, maybe the OP is a train engineer, not an engineer in the traditional sense.
Last edited by Grt2bOutdoors on Tue Aug 04, 2015 1:17 pm, edited 1 time in total.
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grettman
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by grettman » Tue Aug 04, 2015 1:17 pm

surfstar wrote:A weird troll?


Posted 3 things over a year ago and now this -- and with detail. I don't think he is a troll but he has some " 'splainin to do "

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

Post by Hyperion » Tue Aug 04, 2015 1:22 pm

Well I don't think it's that hard to upspend from 30K to 120K when travel is factored into the equation. 90K doesn't buy you that many luxury vacations to exotic places with first class airplane tickets. A couple of weeks in the best resorts can run 50K easy.

The OP did seem to have saved a lot over a very short time. But one should also notice that he said annual spending is 30K. He never mentioned actual income levels, which could be far above 30K+stated contributions.

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

Post by celia » Tue Aug 04, 2015 1:42 pm

OP, Say you had 13 million. By spending 120K a year, you could afford to live off of it for 108 years even if the assets stopped growing. As long as it grew over 1% a year, you could afford to live forever.
You could live off of it for 433,333 years if you only spent 30k a year and the assets never grew. (Do you plan to invent "a longevity" serum/machine/organ?)

Seriously, I assume you are taking hyper-inflation into account. That is very hard to plan for. What most of us do is to just use today's dollars to look at the assets we have and today's dollar for estimating living expenses. Both will tend to go up the same no matter what inflation is as long as you are not top-heavy in cash or bonds.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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

Post by MaxSave » Tue Aug 04, 2015 2:01 pm

Thank you for all the replies! I really appreciate it! There was a good mix of insight, reality, and humor :D

Reading these replies has allowed me to realize that a $13 million goal is unrealistic, likely unachievable, and most of all, completely unnecessary.

I had used a few online calculators in the past, but they all gave such wildly varying results that I didn't know which answers to believe. In addition, I have never discussed this "goal" with anyone else, so all I had was my own distorted view that I needed to amass a huge pile of money in order to safely enjoy retirement with an ultra conservative withdraw rate of 1%. As I recently turned 30, I thought it would be a good idea to compile my first detailed post as a sanity check regarding my overall saving and investing.

Though I do expect our annual expenses to increase as the kids grow, I would also anticipate spending more in retirement than we do now, mainly as a function of travel. It does not seem like it would be difficult to spend a significant amount if we desire to travel the globe. However, I also realize that I can not merely flip a switch to go from "saving" to "spending" mode overnight.

Overall, it sounds as if most agree my current savings are on track, or ahead of the curve for my age, and that I just need to reign in my expectations of what my ultimate portfolio balance will be upon entering retirement. It sounds like $4 - $6 million is a more realistic goal, which would give us more than enough to enjoy retirement and still be able to donate to various charitable causes.

Also, instead of having the goal of retiring by age 50, I should have stated it as being FI by age 50, with the option to continuing working in my current career, or a different one of my choosing, at that point.

For those who inquired how I have achieved the savings we have amassed thus far, I was lucky in several regards. I don't necessarily feel like I need to explain myself to those speculating I am fabricating details, but if this outline helps someone else reach their savings aspirations, I am happy to oblige:

    I discovered Vanguard mutual funds when looking where to invest my first Roth contribution at age 16

    I have been maxing out my Roth since age 16 through part time jobs/summer internships before I began full time work ~7 years ago

    My wife has been maxing out her Roth since age 16 through part time jobs/summer internships/grad assistant-ships before she began full time work ~5 years ago

    Both my wife and I received full rides to a large public state university, we took what was meant to be our "college savings" and invested it in taxable in 2004 upon high school graduation

    I discovered Bogleheads just before starting my career in the summer of 2008 and decided I wanted to max out my 401K that year, despite only working half a year (lived off of wife's assistant-ship salary), so I was contributing massive amounts (for a recent college grad) during the 2008 crash

    My wife worked at a large public state university and had access to a 401a (forced 10% pay employee contribution coupled with 14% pay employer contribution), 403b, and 457, which we maxed as much as was mathematically possible (she earned $0 taxable income for her entire 5 year career - we lived off of my salary)

    Cashed out taxable "college savings" and bought a modest house in Ohio before kids were born

    I have access to the Mega Backdoor Roth through my employer 401k, which I have used to get a few extra thousand into my Roth each year
I think that covers it. As I mentioned, I had a fair amount of luck along the way, especially with regard to when I happened to start my career and subsequent 401k savings. Otherwise, I think being diligent and making smart decisions financially played a big part.

For those who mentioned that I may be saving too much/living on too little, I think that is a matter of opinion. We do not feel like we are sacrificing anything by saving this much annually. We do not currently budget our monthly expenses, nor do we feel like we are for want for anything. We do not stress over saving/investing, nor is my job particularly stressful.

These days, most of our recreational time is spent playing/teaching/raising our children. We are lucky that most of our extended family is local, so we have a lot of family get togethers. Other than that, we like being outdoors, going for walks/running/etc. I suppose our most expensive habit is indulging in a satellite TV subscription. I also like to play poker (extra income!) and drink beer.

Thanks again for all of the advice/encouragement, criticism, and everything in between.

MaxSave :sharebeer

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

Post by HomerJ » Tue Aug 04, 2015 2:13 pm

protagonist wrote:Yes, you are crazy for even thinking this. Nobody needs $13 million. You can live better than the vast majority of Americans on a tenth of that. You will likely destroy your youth (and possibly your family) by postponing joy. And you might have a heart attack at 49.


This.

For 30-year olds, you guys are doing exceptionally well... And I mean exceptionally... You must be in the top 0.01% of 30-year olds with that kind of portfolio...

With that great start, you could save nothing from now on, and easily retire with $4 million at 60.... Or keep saving $20k a year, and retire with $3.5 million at 50.

The point is, you've won... You can spend a little more NOW, and enjoy life NOW, and then at 50, stop working, and continue that same enjoyable lifestyle...

I don't think it's a very good idea to live at 30k a year for the next 20 years, and then suddenly jump to $120k a year in retirement...

Wouldn't you rather move through a $60k-$80k lifestyle over the next 20 years and then $90k in retirement?

bigred77
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by bigred77 » Tue Aug 04, 2015 2:18 pm

HomerJ wrote:
protagonist wrote:Yes, you are crazy for even thinking this. Nobody needs $13 million. You can live better than the vast majority of Americans on a tenth of that. You will likely destroy your youth (and possibly your family) by postponing joy. And you might have a heart attack at 49.


This.

For 30-year olds, you guys are doing exceptionally well... And I mean exceptionally... You must be in the top 0.01% of 30-year olds with that kind of portfolio...

With that great start, you could save nothing from now on, and easily retire with $4 million at 60.... Or keep saving $20k a year, and retire with $3.5 million at 50.

The point is, you've won... You can spend a little more NOW, and enjoy life NOW, and then at 50, stop working, and continue that same enjoyable lifestyle...

I don't think it's a very good idea to live at 30k a year for the next 20 years, and then suddenly jump to $120k a year in retirement...

Wouldn't you rather move through a $60k-$80k lifestyle over the next 20 years and then $90k in retirement?


Kudos indeed. I'm also 30. I am pretty far ahead of the game myself, even by Boglehead standards, and you have put me to shame :( .

I also recommend you research "consumption smoothing" and learn to ease up on the reins a little bit, provided you find it increases your quality of life.

toto238
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by toto238 » Tue Aug 04, 2015 2:20 pm

MaxSave wrote:Though I do expect our annual expenses to increase as the kids grow, I would also anticipate spending more in retirement than we do now, mainly as a function of travel. It does not seem like it would be difficult to spend a significant amount if we desire to travel the globe. However, I also realize that I can not merely flip a switch to go from "saving" to "spending" mode overnight.


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.

You may also find that you want to do a lot of traveling in the first few years of retirement but the motivation is significantly less after that. Seeing the Great Pyramids is great. Seeing them a 10th time isn't as awesome. It sounds like you mostly enjoy the simpler things in life anyway.

For me and my wife, we have places we'd like to travel. But we prefer to spend 90% of our time at home. To me it makes more sense to spend money on a home I'll enjoy spending time in, and living in a city I want to live in. That's where I'm going to spend most of my time.

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

Post by dicejam » Tue Aug 04, 2015 2:24 pm

MaxSave wrote:Thank you for all the replies! I really appreciate it! There was a good mix of insight, reality, and humor :D

Reading these replies has allowed me to realize that a $13 million goal is unrealistic, likely unachievable, and most of all, completely unnecessary.

I had used a few online calculators in the past, but they all gave such wildly varying results that I didn't know which answers to believe. In addition, I have never discussed this "goal" with anyone else, so all I had was my own distorted view that I needed to amass a huge pile of money in order to safely enjoy retirement with an ultra conservative withdraw rate of 1%. As I recently turned 30, I thought it would be a good idea to compile my first detailed post as a sanity check regarding my overall saving and investing.

Though I do expect our annual expenses to increase as the kids grow, I would also anticipate spending more in retirement than we do now, mainly as a function of travel. It does not seem like it would be difficult to spend a significant amount if we desire to travel the globe. However, I also realize that I can not merely flip a switch to go from "saving" to "spending" mode overnight.

Overall, it sounds as if most agree my current savings are on track, or ahead of the curve for my age, and that I just need to reign in my expectations of what my ultimate portfolio balance will be upon entering retirement. It sounds like $4 - $6 million is a more realistic goal, which would give us more than enough to enjoy retirement and still be able to donate to various charitable causes.

Also, instead of having the goal of retiring by age 50, I should have stated it as being FI by age 50, with the option to continuing working in my current career, or a different one of my choosing, at that point.

For those who inquired how I have achieved the savings we have amassed thus far, I was lucky in several regards. I don't necessarily feel like I need to explain myself to those speculating I am fabricating details, but if this outline helps someone else reach their savings aspirations, I am happy to oblige:

    I discovered Vanguard mutual funds when looking where to invest my first Roth contribution at age 16

    I have been maxing out my Roth since age 16 through part time jobs/summer internships before I began full time work ~7 years ago

    My wife has been maxing out her Roth since age 16 through part time jobs/summer internships/grad assistant-ships before she began full time work ~5 years ago

    Both my wife and I received full rides to a large public state university, we took what was meant to be our "college savings" and invested it in taxable in 2004 upon high school graduation

    I discovered Bogleheads just before starting my career in the summer of 2008 and decided I wanted to max out my 401K that year, despite only working half a year (lived off of wife's assistant-ship salary), so I was contributing massive amounts (for a recent college grad) during the 2008 crash

    My wife worked at a large public state university and had access to a 401a (forced 10% pay employee contribution coupled with 14% pay employer contribution), 403b, and 457, which we maxed as much as was mathematically possible (she earned $0 taxable income for her entire 5 year career - we lived off of my salary)

    Cashed out taxable "college savings" and bought a modest house in Ohio before kids were born

    I have access to the Mega Backdoor Roth through my employer 401k, which I have used to get a few extra thousand into my Roth each year
I think that covers it. As I mentioned, I had a fair amount of luck along the way, especially with regard to when I happened to start my career and subsequent 401k savings. Otherwise, I think being diligent and making smart decisions financially played a big part.

For those who mentioned that I may be saving too much/living on too little, I think that is a matter of opinion. We do not feel like we are sacrificing anything by saving this much annually. We do not currently budget our monthly expenses, nor do we feel like we are for want for anything. We do not stress over saving/investing, nor is my job particularly stressful.

These days, most of our recreational time is spent playing/teaching/raising our children. We are lucky that most of our extended family is local, so we have a lot of family get togethers. Other than that, we like being outdoors, going for walks/running/etc. I suppose our most expensive habit is indulging in a satellite TV subscription. I also like to play poker (extra income!) and drink beer.

Thanks again for all of the advice/encouragement, criticism, and everything in between.

MaxSave :sharebeer



thanks for sharing and clarifying. great story. kudos!! i personally am an immigrant en route to becoming a naturalized citizen here in US. I learnt a lot by way of follies. Hopefully i will be able to set my kids on such a path of becoming FI.

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

Post by celia » Tue Aug 04, 2015 2:58 pm

OP, Not only were you lucky, but you seem to have known your like-minded soulmate before you were both 16! You and she are doubly-blessed to be able to support each other in reaching your goals. I hope she is an equal partner in the family financial decisions.

You appear to be fearless in willing to invest massive amounts in 2008 when the rest of the country was scared. Your following of bogleheads during that time probably helped. :sharebeer
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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

Post by mervinj7 » Tue Aug 04, 2015 3:22 pm

MaxSave wrote:
For those who inquired how I have achieved the savings we have amassed thus far, I was lucky in several regards. I don't necessarily feel like I need to explain myself to those speculating I am fabricating details, but if this outline helps someone else reach their savings aspirations, I am happy to oblige:

    I discovered Vanguard mutual funds when looking where to invest my first Roth contribution at age 16

    I have been maxing out my Roth since age 16 through part time jobs/summer internships before I began full time work ~7 years ago

    My wife has been maxing out her Roth since age 16 through part time jobs/summer internships/grad assistant-ships before she began full time work ~5 years ago

    Both my wife and I received full rides to a large public state university, we took what was meant to be our "college savings" and invested it in taxable in 2004 upon high school graduation

    I discovered Bogleheads just before starting my career in the summer of 2008 and decided I wanted to max out my 401K that year, despite only working half a year (lived off of wife's assistant-ship salary), so I was contributing massive amounts (for a recent college grad) during the 2008 crash

    My wife worked at a large public state university and had access to a 401a (forced 10% pay employee contribution coupled with 14% pay employer contribution), 403b, and 457, which we maxed as much as was mathematically possible (she earned $0 taxable income for her entire 5 year career - we lived off of my salary)

    Cashed out taxable "college savings" and bought a modest house in Ohio before kids were born

    I have access to the Mega Backdoor Roth through my employer 401k, which I have used to get a few extra thousand into my Roth each year

MaxSave :sharebeer


Wow, that's an amazing story! Thanks for sharing a truly inspirational post.

jane1
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Re: $13 Million Goal for Early Retirement (am I crazy?)

Post by jane1 » Tue Aug 04, 2015 3:24 pm

Congratulations on what you have achieved and learned at such an early age! A few random thoughts -
Increase your spending slowly. I know and understand you don't want anything more right now and you are very satisfied. Same here. Why do you think you will want so much more after 20 years? Develop your hobbies now, take trips and do some of your desired travel now. Anything you want to do in retirement, ramp up to it. What you can do in your 30s/40s travel will be quite different from the travel you will do in your 60s. Backpacking Europe/SE Asia. Hiking trips. Basically don't give up your younger years in the hope of doing something very different in the future. Life is unpredictable.
As someone else pointed out, after traveling a lot for a few years, you are likely to want to spend a greater percentage of time at home. A $3-4M seems would be a good FI goal. Even less would be sufficient, IMO.

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

Post by surfstar » Tue Aug 04, 2015 4:03 pm

OP - incredible that you would know to save at such an early age and save so much. To have a partner that did the same thing, is truly akin to winning the lottery (but working smart for it).

:sharebeer

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

Post by staythecourse » Tue Aug 04, 2015 4:20 pm

MaxSave wrote:I discovered Vanguard mutual funds when looking where to invest my first Roth contribution at age 16

I have been maxing out my Roth since age 16 through part time jobs/summer internships before I began full time work ~7 years ago

My wife has been maxing out her Roth since age 16 through part time jobs/summer internships/grad assistant-ships before she began full time work ~5 years ago

Both my wife and I received full rides to a large public state university, we took what was meant to be our "college savings" and invested it in taxable in 2004 upon high school graduation

I discovered Bogleheads just before starting my career in the summer of 2008 and decided I wanted to max out my 401K that year, despite only working half a year (lived off of wife's assistant-ship salary), so I was contributing massive amounts (for a recent college grad) during the 2008 crash

My wife worked at a large public state university and had access to a 401a (forced 10% pay employee contribution coupled with 14% pay employer contribution), 403b, and 457, which we maxed as much as was mathematically possible (she earned $0 taxable income for her entire 5 year career - we lived off of my salary)

Cashed out taxable "college savings" and bought a modest house in Ohio before kids were born

I have access to the Mega Backdoor Roth through my employer 401k, which I have used to get a few extra thousand into my Roth each year


I hate to pick at this, but am I the only one not getting the math which gets this to around 750k with a fully paid off home?

You started Roth saving at age 16 to now: 14 yrs. x 5k or so on average: around 60k saving
Wife stared Roth saving at age 16 to now: around 60k saving
Full time 401k saving without match for him: 17k x7: 140k
full time 403b, and 457 for her: 17+17= 34x5= 170k
401a saving: If one has 60k salary: 6k saving+ 8k or so match: 14kx5: 60k

That totals up: 500k or so. That is not including a full paid off home and supporting 3 babies.

I don't doubt you, but get a bit neurotic when the numbers don't make sense. Am I missing something or hope someone can shed some light on my poor back of the envelope calculations?

Good luck.

EDIT: Should be less then above calculation since I think max. employee contribution for 401k and 403b is COMBINED at 17k. Also the maxes for all these accounts were less then today numbers so the total should be even less. Perplexed at best.
Last edited by staythecourse on Tue Aug 04, 2015 4:40 pm, edited 1 time in total.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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

Post by stoptothink » Tue Aug 04, 2015 4:29 pm

staythecourse wrote:
MaxSave wrote:I discovered Vanguard mutual funds when looking where to invest my first Roth contribution at age 16

I have been maxing out my Roth since age 16 through part time jobs/summer internships before I began full time work ~7 years ago

My wife has been maxing out her Roth since age 16 through part time jobs/summer internships/grad assistant-ships before she began full time work ~5 years ago

Both my wife and I received full rides to a large public state university, we took what was meant to be our "college savings" and invested it in taxable in 2004 upon high school graduation

I discovered Bogleheads just before starting my career in the summer of 2008 and decided I wanted to max out my 401K that year, despite only working half a year (lived off of wife's assistant-ship salary), so I was contributing massive amounts (for a recent college grad) during the 2008 crash

My wife worked at a large public state university and had access to a 401a (forced 10% pay employee contribution coupled with 14% pay employer contribution), 403b, and 457, which we maxed as much as was mathematically possible (she earned $0 taxable income for her entire 5 year career - we lived off of my salary)

Cashed out taxable "college savings" and bought a modest house in Ohio before kids were born

I have access to the Mega Backdoor Roth through my employer 401k, which I have used to get a few extra thousand into my Roth each year


I hate to pick at this, but am I the only one not getting the math which gets this to around 750k with a fully paid off home?

You started Roth saving at age 16 to now: 14 yrs. x 5k or so on average: around 60k saving
Wife stared Roth saving at age 16 to now: around 60k saving
Full time 401k saving without match for him: 17k x7: 140k
full time 403b, and 457 for her: 17+17= 34x5= 170k
401a saving: If one has 60k salary: 6k saving+ 8k or so match: 14kx5: 60k

That totals up: 500k or so. That is not including a full paid off home and supporting 3 babies.

I don't doubt you, but get a bit neurotic when the numbers don't make sense. Am I missing something or hope someone can shed some light on my poor back of the envelope calculations?

Good luck.


You aren't the only person doubting it. Meeting a spouse who also began investing in retirement accounts in their teens? Doesn't really help that impression when the entire premise of the thread is pretty fantastic. Reads a lot like this recent story http://finance.yahoo.com/news/27-year-o ... 23184.html

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

Post by siamond » Tue Aug 04, 2015 4:44 pm

I wonder if the OP made math in nominal dollars, while everybody answered in real dollars... This could (partly) explain the disconnect...

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

Post by surfstar » Tue Aug 04, 2015 5:43 pm

Whether or not their current wealth was derived from gifts/inheritance, I would argue that to have an investing mindset in your teens, and the ability to invest all of your summer earnings, there has to be a parental wealth factor. Someone enabled them to be able to invest their summer job money, and not spend it on going to the movies with friends and gas for your car. Someone had to have pointed them to an IRA at such a young age. Teenagers simply don't find this out for themselves. There was outside motivation/influence.

"engineer" = software engineer? OH isn't the state that comes to mind, though.

It is a fantastical story. Each of these individuals, investing in maxing Roths during their teenage years, have to be in the .01% of their cohorts.
And then they find each other? 0.01 * 0.01...

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