Could I be financially independent in 4-5 years?

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Topic Author
ardrum
Posts: 43
Joined: Fri Jul 20, 2007 12:39 pm
Location: Ohio

Could I be financially independent in 4-5 years?

Post by ardrum » Tue Jun 25, 2019 2:30 pm

Emergency funds: A few months of living expenses

Debt: Small car loan balance at 0.9% interest to be paid off in late 2021; no other debt because I paid off my remaining student loans this past winter!

Tax Filing Status: Single

Tax Rate: 12% marginal (Federal) and 8% effective (Federal) on last year's return (maxed 401k/traditional IRA/HSA); unsure on exact state rate, but it is small

State of Residence: Ohio

Age: 36

Desired Asset allocation: 100% stocks
Desired International allocation: 40% of stocks

Size of total portfolio represents about 9.5-10 times my current annual living expenses. I have a girlfriend who is also a big % saver/investor who has over 10 times her annual living expenses invested so far. The allocation below will just pertain to me though.

Current retirement assets

Taxable
100% VTSAX - I am just getting started this year with my first taxable account, so the amount is very small (barely over the minimum for VTSAX).
Retirement Accounts including 401K/Roth IRA/Traditional IRA/HSA
Allocated such that the collective allocation across all accounts (including taxable) is as follows:
US Market (60%) --- Total US 45% (VTSAX/FSKAX mix), Small Cap Value (VSIAX) 15%
Ex-US Market (40%) --- Total ex-US 30% (VTIAX/FTIHX mix), Small Cap ex-US (VFSAX) 7.5%, Emerging Markets (VEMAX) 2.5%

Contributions
My current after-tax savings rate is between 70-75% (closer to the latter pending moving in with my girlfriend this weekend), so I anticipate saving about 3 times my annual living expenses each year. This is more a reflection of my inexpensive tastes/lifestyle than a high salary, though I do not anticipate suddenly acquiring expensive tastes (and my girlfriend is very frugal too haha). My girlfriend earns more than me and is saving about 80% of her after-tax income.

Question:
My girlfriend and I would like to achieve financial independence as soon as we can in order to shift down our working hours and use that reduced hours work income exclusively for cost-mindful but fun travel experiences (with investments covering everything but this travel). She is a bit "ahead" of me in this journey, but do you think it is reasonable to expect I could get there in the next 4-5 years if I maintain my 70-75% savings rate with 9-10 years of living expenses saved so far? I'm aware a recession could hit 4-5 years from now or tomorrow, but I'm just wondering if it would be plausible/reasonable with average or even below average returns to be financially independent by the end of that timeframe so that I have a range of expectations. We do not anticipate any major costs in the next 5 years and do not have children or pets in our plans. Thanks!
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

ohai
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Re: Could I be financially independent in 4-5 years?

Post by ohai » Tue Jun 25, 2019 2:42 pm

What are your actual numbers? So vague. Things can change very quickly - if you need to pay for surgery, is that 10% of your income or 200%? What about college tuition if you have kids later? Point is, it is much, much easier for expenses to go from $20k a year to $100k a year than from $100k to $500k. So, multiples are often not that useful...
Last edited by ohai on Tue Jun 25, 2019 2:47 pm, edited 1 time in total.

MotoTrojan
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Re: Could I be financially independent in 4-5 years?

Post by MotoTrojan » Tue Jun 25, 2019 2:43 pm

Is it that difficult to use a basic return calculator which includes contribution amount and expected return? A better question would be "is it reasonable to expect to receive X% over the next 4-5 years?" but not taking the time to run the calc is making work for someone else.

Here is a straightforward option. What rate of return would you need?

https://www.calculator.net/investment-calculator.html

Thegame14
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Re: Could I be financially independent in 4-5 years?

Post by Thegame14 » Tue Jun 25, 2019 2:49 pm

I think the answer is no, if you save 30 times expenses and then want to retire at 40, first expenses go up since you will have to pay for medical insurance, so then you don't have 30 times expenses, but even if you did, retiring at 40 with 30 times expenses, then you are hoping the market will be kind over those 30-40 years and will make enough returns for you not to run out, but you have no backup plan until SS, but since you retired early, your will get reduced SS. You could prob do it, but this also assumes you don't ever have kids, that will significantly increase your costs.

mariezzz
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Re: Could I be financially independent in 4-5 years?

Post by mariezzz » Tue Jun 25, 2019 2:54 pm

25x expenses is the starting point for someone around age 55-60 to start thinking about stepping out of the work force. At a much younger age, you need to increase that to at least 30x (lots of other threads about this; some would say 35x) expenses.

Do you own your home (no remaining payments)? If not, you'll have rent to pay. If you do, you still have taxes, plus homeowners insurance.

As someone else already replied, you need to provide real numbers if you want real advice.

Keep saving, though. The more money you have packed away, the more freedom you have to walk away from a job (without something else lined up or to take a more satisfying, lower paying job) even if you can't quit working forever. Many define that as financial independence.

HomeStretch
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Re: Could I be financially independent in 4-5 years?

Post by HomeStretch » Tue Jun 25, 2019 3:03 pm

You are doing great. You have 9-10x living expenses saved and you are saving 3x more per year. I don’t believe you will have enough saved to retire in 4-5 years but you should have enough saved within the next 10 years which puts you in your mid-40s. Good luck!

Jordan4FI
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Re: Could I be financially independent in 4-5 years?

Post by Jordan4FI » Tue Jun 25, 2019 3:11 pm

you do not need 25, 30, 35X your expenses if you just want to cut back on work and hours or just do work for fun... But you need enough to know that you can go 5 years without working and after that still be in a good position. I really do not like the Retire Early part of FIRE, it is a confusing thing and so many people don't understand it, you can totally be FIRE and have a job, look for paid gigs, sell things you make.... "RE" Recreational Employment is a much better term and is understood by more.

I would consider anyone FIRE with 10X proposed future expenses invested.. plus there are many steps to FI.

Youtube "10 Levles of Financial Independence and Early Retirement" by Next Level Life...

That is a good track to see what level you feel safe to make the step off of the daily grind.

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Meg77
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Re: Could I be financially independent in 4-5 years?

Post by Meg77 » Tue Jun 25, 2019 3:22 pm

Simple answer - yes you can be financially free in 4-5 years if you continue to save 75% of your income and your expenses don't increase. This is especially true if you don't intend to quit earning money entirely.

https://www.mrmoneymustache.com/2012/01 ... etirement/

You're already arguably financially independent. You may not be able to afford to fully retire and never work again right now (without dropping your living standard at least), but you're certainly on good enough financial footing to do whatever work you please, leave your job, start a business and even to take quite a long sabbatical from the working world if you were to choose to.
"An investment in knowledge pays the best interest." - Benjamin Franklin

mariezzz
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Re: Could I be financially independent in 4-5 years?

Post by mariezzz » Tue Jun 25, 2019 4:56 pm

Since you have only said you have saved 10x annual expenses, the answer in part depends on what your annual expenses are.
If you're living on $20k annually, that means you've saved $200k. If that's what you get by on, fabulous, but there isn't much wiggle room for unexpected expenses in future, even with 20x annual expenses.

Trader Joe
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Re: Could I be financially independent in 4-5 years?

Post by Trader Joe » Tue Jun 25, 2019 5:02 pm

ardrum wrote:
Tue Jun 25, 2019 2:30 pm
Emergency funds: A few months of living expenses

Debt: Small car loan balance at 0.9% interest to be paid off in late 2021; no other debt because I paid off my remaining student loans this past winter!

Tax Filing Status: Single

Tax Rate: 12% marginal (Federal) and 8% effective (Federal) on last year's return (maxed 401k/traditional IRA/HSA); unsure on exact state rate, but it is small

State of Residence: Ohio

Age: 36

Desired Asset allocation: 100% stocks
Desired International allocation: 40% of stocks

Size of total portfolio represents about 9.5-10 times my current annual living expenses. I have a girlfriend who is also a big % saver/investor who has over 10 times her annual living expenses invested so far. The allocation below will just pertain to me though.

Current retirement assets

Taxable
100% VTSAX - I am just getting started this year with my first taxable account, so the amount is very small (barely over the minimum for VTSAX).
Retirement Accounts including 401K/Roth IRA/Traditional IRA/HSA
Allocated such that the collective allocation across all accounts (including taxable) is as follows:
US Market (60%) --- Total US 45% (VTSAX/FSKAX mix), Small Cap Value (VSIAX) 15%
Ex-US Market (40%) --- Total ex-US 30% (VTIAX/FTIHX mix), Small Cap ex-US (VFSAX) 7.5%, Emerging Markets (VEMAX) 2.5%

Contributions
My current after-tax savings rate is between 70-75% (closer to the latter pending moving in with my girlfriend this weekend), so I anticipate saving about 3 times my annual living expenses each year. This is more a reflection of my inexpensive tastes/lifestyle than a high salary, though I do not anticipate suddenly acquiring expensive tastes (and my girlfriend is very frugal too haha). My girlfriend earns more than me and is saving about 80% of her after-tax income.

Question:
My girlfriend and I would like to achieve financial independence as soon as we can in order to shift down our working hours and use that reduced hours work income exclusively for cost-mindful but fun travel experiences (with investments covering everything but this travel). She is a bit "ahead" of me in this journey, but do you think it is reasonable to expect I could get there in the next 4-5 years if I maintain my 70-75% savings rate with 9-10 years of living expenses saved so far? I'm aware a recession could hit 4-5 years from now or tomorrow, but I'm just wondering if it would be plausible/reasonable with average or even below average returns to be financially independent by the end of that timeframe so that I have a range of expectations. We do not anticipate any major costs in the next 5 years and do not have children or pets in our plans. Thanks!
You have not provided enough information to adequately answer your question:

"Could I be financially independent in 4-5 years?"

Please add details.

Luckywon
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Re: Could I be financially independent in 4-5 years?

Post by Luckywon » Tue Jun 25, 2019 5:16 pm

OP you haven't provided enough information to receive any meaningful feedback, with all due respect to those who have tried anyway.

J295
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Re: Could I be financially independent in 4-5 years?

Post by J295 » Tue Jun 25, 2019 5:28 pm

Insufficient information for a meaningful response. Actual asset dollar amounts and pertinent expense detail is necessary.

Also, an explanation on what you think will be different asset and expense wise five years from now will be helpful.

Thanks

CnC
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Re: Could I be financially independent in 4-5 years?

Post by CnC » Tue Jun 25, 2019 5:47 pm

Agreed with most other posters.

Let's take my own numbers as an example. I'm early 30's with 10-12x my expenses saved.

My expenses right now are around 60k a year. I save around 1.5x what I spend each year. To me this is not quite enough expenses to judge being FI by.

I could technically be FI in 5± years but tax drag on investments future college for my kids car purchases health insurance all could surprise my and my expenses could easily bloom to 90k a year and my multiple of 12x could drastically shrink.

Now if my expenses were 30k a year the surprise growth could eat away even more of my multiple. A single newish car or surgery could do that.

But if the expenses were around 120k the chance of the surprise increasing 50% is much lower.

My advise is to use approximate us average of 50k as a baseline. At less than 50k expenses can grow 50% to 100% just with some bad luck. So I would be very hesitant to call 25x 50k or less FI.

But once you get to double the us average it's unlikely that a new roof air conditioner and transmission will all hit and double your expenses for the year.


Granted continuing to work just with the mental understanding that you are FI if you need to be might be a bit different.


Long and short are if you are spending 40k or less a year and think hitting 1m or less before 40 will make you FI I disagree.

But if you spend 80k a year and will hit 2m or more by 40 then yes I think you can consider yourself FI.
Last edited by CnC on Tue Jun 25, 2019 5:52 pm, edited 1 time in total.

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Wiggums
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Re: Could I be financially independent in 4-5 years?

Post by Wiggums » Tue Jun 25, 2019 5:50 pm

I agree. More info is needed to give you a better answer.

Topic Author
ardrum
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Location: Ohio

Re: Could I be financially independent in 4-5 years?

Post by ardrum » Tue Jun 25, 2019 8:31 pm

Hmm, specific numbers ok. What if I share household income/expenses (including girlfriend I'm in serious relationship with)? Collective household expenses of $35k (though this will decrease to closer to $25k as we optimize our living expenses together and with condo she purchased years ago being paid off within the next few years) with ~$450k invested currently in market and investing additional $120k/year into the market (could be a bit higher depending on an expected raise coming up, but I'll assume I don't get it).

I should additionally add the detail that I'm an unusual person with how little I desire to use spending (to extent utilized in wider U.S. culture) as a means of solving problems or achieving happiness. Also, neither of us remotely want children. We're vigilante when it comes to monitoring our spending, and we're not prone to sliding into lifestyle creep or trying to appear successful via possessions acquired and displayed for neighbors. I've never minded if people don't "get" how I live on so little (they also don't get how I run ultramarathons, weigh the same as I weighed 20 years ago, etc). Honestly I have no idea what I'd buy for $50k/year allocated to daily/routine spending without kids/pets/other dependents.

With the figure of $35k of expenses though... 12.8x years of living expenses invested currently + 3.4x additional years of expenses invested per year earning a pessimistic 0% return gets us to 26.4x current living expenses in 4 years and 29.8x in 5 years. The real figures could be better/worse of course depending on what Mr. Market does. We both would intend to continue working beyond these next 4-5 years though (cutting back significantly but still likely earning somewhere around 1x collective annual living expenses). I suppose I've essentially used the comments to dig deeper and answer my own question. Thanks for all the responses though lol!
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

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Watty
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Re: Could I be financially independent in 4-5 years?

Post by Watty » Tue Jun 25, 2019 9:00 pm

ardrum wrote:
Tue Jun 25, 2019 2:30 pm
My girlfriend and I would like to achieve financial independence as soon as we can in order to shift down our working hours and use that reduced hours work income exclusively for cost-mindful but fun travel experiences (with investments covering everything but this travel).
Just for brainstorming a couple of ideas;

1) Figure out how to work overseas for a while.

2) Some people work at seasonal jobs like ski resorts so that they can have the rest of the year off.

3) I have known several people that were laid off in their 50s that got jobs as school bus drivers as a bridge job into retirement. It does not pay a lot but at least around here they come with benefits and they get school holidays and summers off. Around here they are always looking for school bus drivers since it does not pay enough for someone who needs a full time job.

Topic Author
ardrum
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Location: Ohio

Re: Could I be financially independent in 4-5 years?

Post by ardrum » Tue Jun 25, 2019 9:02 pm

Watty wrote:
Tue Jun 25, 2019 9:00 pm
ardrum wrote:
Tue Jun 25, 2019 2:30 pm
My girlfriend and I would like to achieve financial independence as soon as we can in order to shift down our working hours and use that reduced hours work income exclusively for cost-mindful but fun travel experiences (with investments covering everything but this travel).
Just for brainstorming a couple of ideas;

1) Figure out how to work overseas for a while.

2) Some people work at seasonal jobs like ski resorts so that they can have the rest of the year off.

3) I have known several people that were laid off in their 50s that got jobs as school bus drivers as a bridge job into retirement. It does not pay a lot but at least around here they come with benefits and they get school holidays and summers off. Around here they are always looking for school bus drivers since it does not pay enough for someone who needs a full time job.
Cool ideas. Thanks!
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

stoptothink
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Re: Could I be financially independent in 4-5 years?

Post by stoptothink » Tue Jun 25, 2019 9:26 pm

ardrum wrote:
Tue Jun 25, 2019 8:31 pm
Hmm, specific numbers ok. What if I share household income/expenses (including girlfriend I'm in serious relationship with)? Collective household expenses of $35k (though this will decrease to closer to $25k as we optimize our living expenses together and with condo she purchased years ago being paid off within the next few years) with ~$450k invested currently in market and investing additional $120k/year into the market (could be a bit higher depending on an expected raise coming up, but I'll assume I don't get it).

I should additionally add the detail that I'm an unusual person with how little I desire to use spending (to extent utilized in wider U.S. culture) as a means of solving problems or achieving happiness. Also, neither of us remotely want children. We're vigilante when it comes to monitoring our spending, and we're not prone to sliding into lifestyle creep or trying to appear successful via possessions acquired and displayed for neighbors. I've never minded if people don't "get" how I live on so little (they also don't get how I run ultramarathons, weigh the same as I weighed 20 years ago, etc). Honestly I have no idea what I'd buy for $50k/year allocated to daily/routine spending without kids/pets/other dependents.

With the figure of $35k of expenses though... 12.8x years of living expenses invested currently + 3.4x additional years of expenses invested per year earning a pessimistic 0% return gets us to 26.4x current living expenses in 4 years and 29.8x in 5 years. The real figures could be better/worse of course depending on what Mr. Market does. We both would intend to continue working beyond these next 4-5 years though (cutting back significantly but still likely earning somewhere around 1x collective annual living expenses). I suppose I've essentially used the comments to dig deeper and answer my own question. Thanks for all the responses though lol!
FWIW, we're of similar age (38 and 33) and seem to be of similar mindset when it comes to spending. Current annual household expenditures are ~$45k/yr, and this includes full-time daycare for one child (done in 2yrs), 15yr mortgage (done in ~3yrs), and full-time tuition for the wife (1 more year). So, our expenditures will be similar in a few years, and we have 2 kids - I am easily one of the most miserly individuals on this board (that's not a brag, it can be a problem). We have about 75% more retirement assets than you currently and are saving a similar amount every year. Playing with calculators, we could be financially independent in 4-5yrs, but I sure as heck would not feel comfortable doing so. I'll work at least another decade, more likely another 15+ years, and my wife has similar expectations.

Started almost from scratch 8yrs ago thanks to a double whammy of the market crash and a a divorce in 2yrs, so I'm ultra risk averse. I wouldn't want to hit 60 and suddenly feeling the finances tightening, with little SS on the horizon, and trying to get employment having been out of the workforce for 2 decades.

Topic Author
ardrum
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Location: Ohio

Re: Could I be financially independent in 4-5 years?

Post by ardrum » Tue Jun 25, 2019 10:08 pm

stoptothink wrote:
Tue Jun 25, 2019 9:26 pm
FWIW, we're of similar age (38 and 33) and seem to be of similar mindset when it comes to spending. Current annual household expenditures are ~$45k/yr, and this includes full-time daycare for one child (done in 2yrs), 15yr mortgage (done in ~3yrs), and full-time tuition for the wife (1 more year). So, our expenditures will be similar in a few years, and we have 2 kids - I am easily one of the most miserly individuals on this board (that's not a brag, it can be a problem). We have about 75% more retirement assets than you currently and are saving a similar amount every year. Playing with calculators, we could be financially independent in 4-5yrs, but I sure as heck would not feel comfortable doing so. I'll work at least another decade, more likely another 15+ years, and my wife has similar expectations.

Started almost from scratch 8yrs ago thanks to a double whammy of the market crash and a a divorce in 2yrs, so I'm ultra risk averse. I wouldn't want to hit 60 and suddenly feeling the finances tightening, with little SS on the horizon, and trying to get employment having been out of the workforce for 2 decades.
Thanks for sharing. I live in a LCOL area which helps keep costs down more easily as well. Do you plan to adjust your asset allocation more conservatively over the next 10-15 years or simply keep hammering away on saving up additional years of living expenses with current allocation using your continued income as your means of combating volatility?
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

smectym
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Re: Could I be financially independent in 4-5 years?

Post by smectym » Wed Jun 26, 2019 12:07 am

Agree with several comments above: when requesting serious answers to serious questions such as “can I be financially independent in x timeframe,” probably counter-productive to play it coy with the numbers. Just provide straightforward numerical information regarding total net worth, investable net worth, asset allocation, income, and any special circumstances.

ohai
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Re: Could I be financially independent in 4-5 years?

Post by ohai » Wed Jun 26, 2019 12:23 am

OP, thanks for sharing more info. Short answer is of course you could be "financially independent" if you wanted to, in 4-5 years, under an ideal scenario. I mean, some people in the US live on $10k a year. It is usually not a good lifestyle, in my opinion, but I can't judge people who choose certain standards.

There are so many caveats though.

First, everything is based on probabilities. Your answer is more like "I have X% chance of satisfying my assumed financial liabilities in perpetuity". What X% is good enough for you? It will never be 100%.

Second, your current spending level is influenced by your wealth. Maybe you have a low delta, but I am willing to bet it's not zero. If you were gifted $100 million today, I don't think you'd live on $35k a year. My point is that you have some number in your head about retirement - let's say $1 million. I pretty much guarantee that when you have $1 million, it will not seem as big as you thought it was.

How do I know this? Because it happens to basically everyone who achieves financial milestones, as far as I can tell. So, whenever I see someone relatively young saying, yeah, I want to retire in 5 years, I usually do not believe them.

Anyway, best strategy, in any case, is probably to do what you are doing and build a capital buffer that will increase your options regardless of what you decide later.

Luckywon
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Re: Could I be financially independent in 4-5 years?

Post by Luckywon » Wed Jun 26, 2019 1:17 am

ardrum wrote:
Tue Jun 25, 2019 8:31 pm
Hmm, specific numbers ok. What if I share household income/expenses (including girlfriend I'm in serious relationship with)? Collective household expenses of $35k (though this will decrease to closer to $25k as we optimize our living expenses together and with condo she purchased years ago being paid off within the next few years) with ~$450k invested currently in market and investing additional $120k/year into the market (could be a bit higher depending on an expected raise coming up, but I'll assume I don't get it).

I should additionally add the detail that I'm an unusual person with how little I desire to use spending (to extent utilized in wider U.S. culture) as a means of solving problems or achieving happiness. Also, neither of us remotely want children. We're vigilante when it comes to monitoring our spending, and we're not prone to sliding into lifestyle creep or trying to appear successful via possessions acquired and displayed for neighbors. I've never minded if people don't "get" how I live on so little (they also don't get how I run ultramarathons, weigh the same as I weighed 20 years ago, etc). Honestly I have no idea what I'd buy for $50k/year allocated to daily/routine spending without kids/pets/other dependents.

With the figure of $35k of expenses though... 12.8x years of living expenses invested currently + 3.4x additional years of expenses invested per year earning a pessimistic 0% return gets us to 26.4x current living expenses in 4 years and 29.8x in 5 years. The real figures could be better/worse of course depending on what Mr. Market does. We both would intend to continue working beyond these next 4-5 years though (cutting back significantly but still likely earning somewhere around 1x collective annual living expenses). I suppose I've essentially used the comments to dig deeper and answer my own question. Thanks for all the responses though lol!

You have an amazing savings rate and ability to manage expenses. It's great you are investing in low expense passive funds and maximizing retirement account contributions. There are many unknowns that could throw a wrench into things-health care expenses, life events, but It seems that if anyone could achieve financial independence very early in life it will be you.

You are probably aware already but If you do elect to cut back work significantly at an early age, it may be worth your time to keep an eye on where your payroll tax contributions are in relation to the social security bend points.

If you have the flexibility, perhaps being self employed and and having a single participant 401(k) to maximize your 401(k) contributions would be particularly advantageous for you and your girlfriend as it sounds like you may have a long runway of relatively low income years (when you are traveling) for Roth conversions.

Best wishes and congratulations on your successes so far.
Last edited by Luckywon on Wed Jun 26, 2019 10:04 am, edited 1 time in total.

chessknt
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Re: Could I be financially independent in 4-5 years?

Post by chessknt » Wed Jun 26, 2019 6:36 am

Your healthcare expenses aren't being accounted for since you'll need to cover this if you retire and it is very expensive.

What if something happens that requires a large purchase, like a foundation/roof problem in the home or expensive health condition? Your ability to absorb this expense is greatly diminished because your expenses are so low that it will be hard to cut anything more back.

But you seem to be looking for a specific answer so yes, you can Fire. It would be extremely risky and prone to failure should anything unexpected happen, but you seem to already know that.

aristotelian
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Re: Could I be financially independent in 4-5 years?

Post by aristotelian » Wed Jun 26, 2019 7:01 am

With 100% stocks, the question is not so much can you do it, and more can the market do it for you. Nobody knows what the market will do and you are taking a lot of risk over a short timeframe. You could take a less risky approach, but it would take longer with lower expected return.
ardrum wrote:
Tue Jun 25, 2019 8:31 pm
Hmm, specific numbers ok. What if I share household income/expenses (including girlfriend I'm in serious relationship with)? Collective household expenses of $35k (though this will decrease to closer to $25k as we optimize our living expenses together and with condo she purchased years ago being paid off within the next few years) with ~$450k invested currently in market and investing additional $120k/year into the market (could be a bit higher depending on an expected raise coming up, but I'll assume I don't get it).
One concern I have is you mention that one of your goals for ER is to increase your travel. You say cheap travel, but that can mean different things to different people. Unless you are couch surfing, even budget hotels are $100/night in many places, even emerging market countries. Also, the perennial health care question. Finally, are you 100% sure kids will not be a factor?
Last edited by aristotelian on Wed Jun 26, 2019 9:11 am, edited 1 time in total.

longinvest
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Re: Could I be financially independent in 4-5 years?

Post by longinvest » Wed Jun 26, 2019 8:44 am

The OP might want to play with the Accumulation sheet of the VPW Accumulation And Retirement Worksheet to test the feasibility of early retirement plans with various asset allocations and retirement horizons. This Social Security Estimator might be useful to project future benefits for inclusion in the investigated plans.
Bogleheads investment philosophy | single-ETF balanced portfolio | VBAL

Topic Author
ardrum
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Location: Ohio

Re: Could I be financially independent in 4-5 years?

Post by ardrum » Thu Jun 27, 2019 9:49 pm

Thanks for all this great feedback.
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

SheReadsHere719
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Re: Could I be financially independent in 4-5 years?

Post by SheReadsHere719 » Fri Jun 28, 2019 3:20 pm

chessknt wrote:
Wed Jun 26, 2019 6:36 am
Your healthcare expenses aren't being accounted for since you'll need to cover this if you retire and it is very expensive.

What if something happens that requires a large purchase, like a foundation/roof problem in the home or expensive health condition? Your ability to absorb this expense is greatly diminished because your expenses are so low that it will be hard to cut anything more back.
+1. You are sidestepping the posters who mention major expenses by reiterating your Mustachian commitment to low expenses. While this this is commendable, it’s missing the forest for the trees. 1) Healthcare and 2) home repairs are major drivers of cost that could easily sink your portfolio. In order to consider yourself Financially Independent, I encourage you to do some simulations on these and have plan in place for when (not if) they arise.

Topic Author
ardrum
Posts: 43
Joined: Fri Jul 20, 2007 12:39 pm
Location: Ohio

Re: Could I be financially independent in 4-5 years?

Post by ardrum » Mon Jul 01, 2019 3:41 pm

SheReadsHere719 wrote:
Fri Jun 28, 2019 3:20 pm
chessknt wrote:
Wed Jun 26, 2019 6:36 am
Your healthcare expenses aren't being accounted for since you'll need to cover this if you retire and it is very expensive.

What if something happens that requires a large purchase, like a foundation/roof problem in the home or expensive health condition? Your ability to absorb this expense is greatly diminished because your expenses are so low that it will be hard to cut anything more back.
+1. You are sidestepping the posters who mention major expenses by reiterating your Mustachian commitment to low expenses. While this this is commendable, it’s missing the forest for the trees. 1) Healthcare and 2) home repairs are major drivers of cost that could easily sink your portfolio. In order to consider yourself Financially Independent, I encourage you to do some simulations on these and have plan in place for when (not if) they arise.
I'll likely have to save significantly more than what I expected, since healthcare expenses could easily cost way more than the rest of my entire life's expenses combined.

Is there any way in the U.S. that any insurance option for those under age 65 could prevent catastrophic healthcare expenses though? I could easily get frustrated and declare retirement impossible if I had to save an additional $1-5 million just to cover potential healthcare expenses.

I'm also curious about the potential for going ex-pat to potentially address that issue, but that's just a distant idea right now.
"The stock market is a device for transferring money from the impatient to the patient." - Warren Buffett

SheReadsHere719
Posts: 97
Joined: Fri Jan 06, 2017 7:28 pm

Re: Could I be financially independent in 4-5 years?

Post by SheReadsHere719 » Fri Jul 12, 2019 3:06 pm

Hi ardrum – apologies for the delay. You can investigate indemnity insurance, which can help cover for catastrophic expenses. I would also encourage you to do comprehensive research on the ACA plans available to you, as well as their prices and any subsidies you would receive. I agree that trying to save several million dollars to cover these expenses would be unreasonable. However, I would encourage you to 1) do your research on available plans and options, 2) bake the anticipated costs into your assumptions, and 3) up your number(s) accordingly. Hope that helps.

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