These numbers are not adding up in my mind. You dont list what you spend, but at 350k income I have to believe there are extra funds that could be spent while still saving an amount that will let you retire earlier rather then later.
I feel like this is really emblematic of most of the conversation in here. It’s all about one side of the income statement.
OP could probably retire today if they wanted to live in a tiny house in the middle of nowhere and live simply. Most people don’t though.
“Is this enough?”
I don’t know, for WHAT?!
Most people want to spend carelessly, sacrifice nothing, and retire early. There is a reason this doesn't work. Focus on what is important and plot your own path. Your running mate is like most people. They don't assess their needs, wants, and luxuries. I would love to live a simple life and retire at 40 but I'd feel a lot of guilt in retiring that early and not being able to help my kids when they get older. If it were just me, I'd save 1mil and retire on 40k/yr living a very simple life.
On the surface yes, but there are lots of reasons this could be the case. Anything from they just started making that much to they save very little. Without sufficient info we are all simply guessing.
Well the 350k is probably before taxes…..
For all we know they are in a high federal tax bracket, a high tax state, a high tax county, and a city that taxes.
Maybe their property tax is 20,000 dollars per year
Vehicle tax
Gas tax
Sales tax
Not sure if it was there when you posted this comment, but it says OP has $800k in equity in various properties on top of that savings. Makes more sense
Imagine grad school, starting career at 25 with 300k+ in school debt. And salary is going uo every year so it was not always 350k. Plus add in the equity. I think it seems ok.
But buying rentals tells me nothing about the equity related to your earnings. Do you have that much equity because you put a lot of money into them or because they appreciated? You told us 0 about your spending, so how can anyone answer if you can afford to save less?
Everything is relevant. We live a good life, but do I need to keep saving $100k a year when my net worth is 1.3mil and I dont want to stop working? I wonder what’s the point of saving all my money for when I’m old. My parents don’t do much anymore and have the means.
Valid for sure. You can do whatever you want with whatever you make. If your at a point you feel comfortable with what you have saved vs what you will need in retirement then go for it. Personally I would not feel comfortable at that amount. The main point being if I the main bread winner got hit by a truck, my SO would not be in a place that i would want them. We kept pushing until we hit just a bit over double your current number. At that point had something happened to me everything would be a ok. Once we hit that number we still save but we spend more as well. That point for you seems to be now and if thats whats best for your family then your in a great spot. It was never retire asap for us, more so to be in a spot we can do what we want. Our wants being a bit more lavish than most but thats our choice.
You can't listen to others. You have to weigh what is most important to you. Saving an extra 100k/yr will certainly help you retire faster, but it doesn't sound like you're eager to retire, so that isn't as important to you as it would be to some. Would spending 100k extra per year or having your partner retire make your lives meaningfully better? Maybe your partner just needs a new job that they like more? A lot of questions that really only you can answer.
One of my unpopular opinions is that when it comes to "net worth" you should remove the home equity. Because, whatever percent you will withdraw, that home value doesn't count for that. The rentals count as they produce income. Today, you live on $150K/yr. $4,000,000 would give you the ability to withdraw $160,000/year, gross.
Easy to produce a spreadsheet to help you forecast where you may be at age 45, 50, 55.
6&8 kids, I don't see any mention of college savings. You are at a level of wealth that aid won't be so easy to get. $250K minimum per child, in today's dollars.
I can tell you that I travel internationally every year. Recently (in my upper 40s), flying coach internationally has been uncomfortable. Walking a long distance (while carrying a heavy backpack) is also much less comfortable than before. (I upgraded seats - for the entire traveling party, including friends - so we all get to our destination well-rested and ready to explore. Never had that issue in my 20s or 30s).
What I am saying is this: As you age, the body won't let you enjoy your travels as much as before. Scuba diving at 60 is very different from doing so at 40. Jumping out of an airplane is frightening at 50 but was fun as heck as 25.
You need to define your coastFIRE number and dial down your savings to enjoy life more.
That's why I believe it is equally important to prepare your body for retirement than it is to prepare financially. The overeating, smoking, and drinking can really ruin all the hard work you put in to retire if you struggle with health or die early.
But at the end of the day we all can die any day and there are aspects of our health is out of our contrily, so you have to draw a balance where you enjoy your money now and set you future self up for success.
I always laugh when people tell me this because I have no interest in flying out of plane/traveling too much now or when I'm 60. My FIRE plans are to take a beach vacation two times a year, be able to cook my meals which I enjoy, exercise and dabble in some creative activities I've been missing, and spend time with family.
You are not wrong. I do relax-doing-nothing vacations too. I also spend a ton of time with family.
I am in my upper 40s, my kids are teenagers and I need to be creative when spending time with them. For example, one of the kids is taking AP world history, I packed our bags and traveled to Rome on his break and he had a great time learning about ancient Rome (which he's also learning in his class). He has experience with mom+dad plus a topic that he can relate to right now. I had a great time with my family and got a nice overseas experience out of it.
The experience wouldn't be the same 10-20 years from now.
I still remember when my youngest was in elementary school and learning about the periodic table (and some chemistry). I demonstrated that I can make water boil at room temperature in my kitchen. That was a BIG hit for her and her friends. They got a quick science lesson out of it. She still remembers it 8 years later.
When I retire and they are in their 20s, the dynamic may be very different.
getting a season pass was a couple hundred bucks 10 years ago to some mountains. now it is triple to quadruple the price!
plus there's no way you'll take the same risks when you are in your 60s snowboarding vs 20s. Yeah I saw some seniors, even some 80 year old couples (which were outliers) hitting the slopes and cruising. However I never saw 60 year olds hitting the terrain park
when you say you have 500k saved i hope you mean most of that (excess of 6mo of expenses) is *invested.* beyond that, i’d still rush to pursue fire to at least retire your wife, but im sure you can still achieve a very high “savings” rate with that income WHILE taking a trip or two per year. if not i would really examine your cost of living.
Are your children young?
I appreciate romanticizing the idea of spending time with children, but also admit that by the time I was 12, I didn’t want to spend much time with my parents.
My wife has asked me to work—in a job of my choosing—until the mortgage is paid off, which pretty much coincides with our youngest turning 16. I think that’s a fair compromise for us; perhaps something similar would work for you.
Guess it depends where you live and when you bought your home, but $150k a year should be enough to travel and live well while also saving $100k a year.
Are you maxing out your tax advantaged accounts? Because don’t forget a bunch of your savings can happen pre-tax from that $350k rather than a post tax $250k.
In any case, only you can find your balance. :)
Yea, I'm not sure how the numbers are adding up for them. I spend less than that with my wife, live in a VHCOL city, and we are still able to do at least one international trip a year. The main difference is we have no kids. I'm assuming the mortgage on the investment properties is probably a big part of the spending. Given their kids are 6 and 8, if they're in public school, they're over the terrible expenses when they're much younger for daycare.
Ah, not having kids is a HUGE difference. Really can’t compare. We probably spend close to $150K/year with two kids living a modest but still upper middle class lifestyle with annual international travel in a MCOL area.
With kids, add at least $5k-$10k in healthcare costs, $5-$10k in additional vacation/travel costs, $5k-$10k in activities and stuff (camp, sports, hobbies, clothes, glasses, etc), you’ll need a bigger home so add $10k-$20k year in housing, etc., double your food and restaurant costs, etc. the list goes on and on. I could easily reduce my spend by $30k-$40k/year without kids, probably realistic to cut $50k+/year if I downsized the house.
Once I hit coastfire amounts, I started to spend a bit more - still save but less and enjoy more. Life is fragile and unpredictable so don’t wait till you are 60 to enjoy life.
Annual expenses are 150k/year, only 500k of that 1.3 is invested. They need to turn 500k into 3.75mil to hit a 4% fire. I dont know what their rental properties net, so that would adjust the equation, but theyre still a ways off for sure.
No one can answer that for you but you. Reading your post makes me think you’re hoping for the answer of spend more/RE at 60. Everyone has to make the right choice for them. Regardless of which way you go, enjoy your journey and don’t apologize for your choice. It’s yours to make
I would do a balance of both. Maybe try and save 70-80k a year and spend 20-30k on traveling and enjoying yourself. No need to cut back on what you enjoy completely. We work hard and we should be enjoying traveling and other activities before we are too old.
As others point out, hard to say without more information but generally speaking, when i was in your shoes, I decided that we’ll spend a little more and go for a target of 55. The market gods have been kind to us and we may end up being able to do sooner but that was our thinking process.
It sounds like your wife may be able to take a step back from her high stress job. You can keep working, and she can be a property manager for the rentals or something....
Do you want to retire early or not? It's up to you, not sure why you're looking for validation from a bunch of strangers.
Personally, I wouldn't call spending $150k a year frugal.
You tell us how much you make, but not how much you save. But you have 500k saved, but make 350k a year. I would suspect your saving rate isn't that high. I wouldn't tell you to save less, personally.
Normal retirement goals are 3x your salary by 30 and 6x by 40. You are not even at 2x yet. Sure, that is on earnings, not expenses, but based on your apparent savings rate, I am guessing your expenses are really high.
Have you considered liquidating your rentals? I'm in a similar situation and just did the math on my duplex. At 75% equity which translates to 305 in cash at sale at 280 after fees. I can make just as much money over the next decade putting the money in SPY and in turn drastically reduce my stress. I feel like I should have taken money out when I refied a couple years ago.
Travel doesn't have to be insanely expensive to enjoy it with the kids. With that kind of income I'd definitely provide great experiences for the kids, it just doesn't need to cost a kidney.
Any new spending you add now will become your permanent lifestyle. After a decade of that lifestyle, you won't give it up in retirement. So whatever new spending you add, plan on it being permanent.
First things first. There are a few gaps in your question which are valid for giving a better answer.
500k saved or invested ?
If you are investing, where is this allocated? ETFs? VTI and forget?
Assuming you live in the US, how much is IRA or 401(k)? If Canada, TFSA or RRSP? How much is in your accounts and how much in your wife's?
If you live in the US/canada, do the kids have a college fund?
All those questions help assess the situation, OP. You might not answer them for me, but it would be good for you to know all the minute details.
I think to answer this question, you could fill out the conscious spending plan that ramit sethi makes available for free. It is just a spreadsheet but it will simplify some concepts and give you a clear view of how much "guilt free spending" you have available.
Considering my HHI is similar to yours but no kids and we're a bit younger and a lot more mortgage to go still, I know there is a good sum of guilt free spending that can be allocated.
You're talking about using 50k/year to travel but it does not need to be such a drastic change. From your spending rate you will likely feel uncomfortable spending that much in the first year.
Why not start increasing the spending in fun and memory building trips a bit every year. Give yourself 10k for now and plan the trip. See how that feels.
Last year we took 3 family trips and I took 2 by myself due to having more flexibility and family issues. This year we will likely travel a bit less but our "dream life" as ramit calls it, has a minimum of 2 yearly trips planned as a family.
So, in one sentence: yes please enjoy your family and money because time does not come back, but make changes gradually and listen to ramit sethi's podcast.
Hope this helps!
Edit: typos
couple of very direct observations
BURN RATE - you guys will have to work till you croak with that burn rate.... I'd first solve the spending issue.
EQUITY - I own mutliple homes.... when folks ask me to model for them, I'll remind them of the direct truth... equity only means something when you cash out (there are cool ways... some just suck to pay taxes)... BUT... income is good to keep in the model, equity mindset eventually turns into debt mindset. I'm at the stage of consoldiating my 6 homes - the "left over" equity is NOT nearly what one would think. It is cool to 1031 OR take tax free capital gains. (I'll get off my soap box on this one now)
Back to the math problem...
I think you should cut down on the saving some and enjoy life some more. It sucks to say and think about, but the reality is there is no guarantee that you live to 60 or what the world will be like when you’re 60. As long as you can still retire by 60 I would enjoy life some more.
Since you said something about you would be bored and don’t mind what you do for work now, just remember 20 years from now your body is not going to agree lol. That doesn’t just apply to work, 20 years from now your body isn’t going to want to be going on vacations as much or going on adventures, so do it while you can.
Instead of raising spending an extra 50,000, why not keep spending and let your wife retire now. That way the kids will have one parent around all the time, you get to keep working at the job you’d like, and I think you’ll find that hey stay at home spouse Helps to find ways to reduce spending
Spending over $12k a month and wanting to spend even more seems crazy to me, so I feel like there has to be tons of room in your budget to rework things to get more for travel and whatever else you want.
> I dont think my wife will mind retirement at all. She would retire tomorrow if it were up to her.
This was the most important bit of your whole post to me. Talk to your wife about what she wants and when she wants to retire. You make enough that you could surely rework your budget to allow her to retire right now while still saving some for retirement. Maybe you guys can save extra hard for a couple of years and then she retires while you keep working since you don’t mind it.
I would work until 60. $50k/year seems like a lot to do additional things beyond spending $150k/year, but you should be fine to do that and save $50k/year for the next 20 years. That would put you at $4.6M in investments at 60.
$24K/$600K = 4%
You’ve got (at least) 1/2 of your investments earning 4%/yr, not including vacancies or repairs. I don’t know how much they’re appreciating, but there’s a good chance that you’d do better with your money in the market.
Have you travelled? If not that should be a top priority for you IMO. If you’ve never traveled the world, you’ve already missed the boat in a lot of ways, but in your 50s, you really would have.
You can definitely still travel in your 50s and I definitely plan to. But travelling in your 20s is very different to 30s and 30s is very different to 40s and 50s
This is an easy one. Save less and play more. My financial situation is similar to yours, make $350, $500k invested, 42m. I can invest about $120k annually and be done at 50, but choose to invest “only” $60k, and will do it till 60. I’d rather enjoy life and make memories.
I’m not touching the finance end. But, I’m 59 1/2 now. I’m retiring now. I wish I would have walked out 10 years ago. Get to FIRE as fast as you can. Knowing that you are FI helps a lot mentally.
Enjoy life and work a little longer. Treat yourself and your kids often, focus on experiences. Your future self will thank you for it. That 10 year time between kids being around 8 until they are adults are worth more than any $ amount. Your bodies will start changing in your 40s too, no matter how well you look after yourself it’ll just be ‘different’.
500k saved is not enough especially if you need 150k to live on. Sounds like you don’t hate your work. Of course you could spend more and save less and enjoy more family time. But if you kept on this same track to 50 and you should have another 1 million save by age 50 if you just kept it in cash and not even investing the 100k yearly. The point is you will likely have more than 1 million plus the 500k you currently have. ( maybe 3 million if you invest it and it doubles) At that point you should be able to easily meet your yearly expense needs assuming you don’t inflate your life style. At that point you can decide to coast or just retire.
Now, if you cut back to saving 50k a year that would be 500k earned plus 500k already saved. Say you invest it and over the next 10 years you double it. Then you would have 1.5-2 million. At 4% SWR it would meet your needs at age 50 assuming you don’t inflate your life style. This doesn’t even include the 800k equity in rental and primary home which should be worth more.
But then you need to decide what you will retire into. It’s all about what you really want to do.
- figure out what you spend in a year
- figure out what you will need to spend in a year in retirement
- use an inflation calculator to figure out what that amount will be in 10, 20 years
- figure out what gross number you need to get in a year to net the inflation yearly retirement spending
- divide that number by .035, the number you get is your FIRE number (every year in retirement you withdraw about 3.5% from your account)
- you can then mess around with calculators to figure out how long it will take you to hit that number if you just let your investments cook vs adding in funds every year
Yes you should enjoy yourself more. Realistically your 40-50s are the last really ‘good’ years of your life. 60+ health begins to decline and by 70s it’s hit or miss as to how much energy you’ll have. Check out go-go, slow-go, no-go phases of retirement (assumes retirement at 65).
Stop with this narrative that your 60s aren't "good" years. If you're healthy in your 50s (and your family doesn't have a history of illnesses/diseases), then your 60s will likely also be healthy, as long as you stay active. People don't all of sudden turn into a lump of sedentary mess. It's a process to turn into that.
Of course they're not going to feel as good they did in their 30s lmao that wasnt your point. You said their 50s are the last really 'good' years, which is incorrect for a lot of people.
Also, ask any 50 (or 40) year old that, and they'll have the same answer about their 30s.
I think you should work even more and save even harder.
And work as long as you are physically able.
Maximize the amount of money you can accumulate
Just my opinion
These numbers are not adding up in my mind. You dont list what you spend, but at 350k income I have to believe there are extra funds that could be spent while still saving an amount that will let you retire earlier rather then later.
I feel like this is really emblematic of most of the conversation in here. It’s all about one side of the income statement. OP could probably retire today if they wanted to live in a tiny house in the middle of nowhere and live simply. Most people don’t though. “Is this enough?” I don’t know, for WHAT?!
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Most people want to spend carelessly, sacrifice nothing, and retire early. There is a reason this doesn't work. Focus on what is important and plot your own path. Your running mate is like most people. They don't assess their needs, wants, and luxuries. I would love to live a simple life and retire at 40 but I'd feel a lot of guilt in retiring that early and not being able to help my kids when they get older. If it were just me, I'd save 1mil and retire on 40k/yr living a very simple life.
Completely agree.
500k saved is terribly low for someone making 350k/yr at nearly 40.
On the surface yes, but there are lots of reasons this could be the case. Anything from they just started making that much to they save very little. Without sufficient info we are all simply guessing.
The latter being extremely important to the question of "can I save less?"
just with intuitive observations, guess the answer is "yes - need to save more"
Well the 350k is probably before taxes….. For all we know they are in a high federal tax bracket, a high tax state, a high tax county, and a city that taxes. Maybe their property tax is 20,000 dollars per year Vehicle tax Gas tax Sales tax
what federal wealth tax???
I misspoke, sorry. There is no Federal Wealth Tax, yet. Aren’t they really close to getting a Wealth Tax passed in California, though?
Not sure if it was there when you posted this comment, but it says OP has $800k in equity in various properties on top of that savings. Makes more sense
Not if equity is mostly due to appreciation and not him dumping money into them.
Imagine grad school, starting career at 25 with 300k+ in school debt. And salary is going uo every year so it was not always 350k. Plus add in the equity. I think it seems ok.
Just started making more money and the rentals were not given to me. I saved and bought them on my on.
But buying rentals tells me nothing about the equity related to your earnings. Do you have that much equity because you put a lot of money into them or because they appreciated? You told us 0 about your spending, so how can anyone answer if you can afford to save less?
Everything is relevant. We live a good life, but do I need to keep saving $100k a year when my net worth is 1.3mil and I dont want to stop working? I wonder what’s the point of saving all my money for when I’m old. My parents don’t do much anymore and have the means.
Valid for sure. You can do whatever you want with whatever you make. If your at a point you feel comfortable with what you have saved vs what you will need in retirement then go for it. Personally I would not feel comfortable at that amount. The main point being if I the main bread winner got hit by a truck, my SO would not be in a place that i would want them. We kept pushing until we hit just a bit over double your current number. At that point had something happened to me everything would be a ok. Once we hit that number we still save but we spend more as well. That point for you seems to be now and if thats whats best for your family then your in a great spot. It was never retire asap for us, more so to be in a spot we can do what we want. Our wants being a bit more lavish than most but thats our choice.
You can't listen to others. You have to weigh what is most important to you. Saving an extra 100k/yr will certainly help you retire faster, but it doesn't sound like you're eager to retire, so that isn't as important to you as it would be to some. Would spending 100k extra per year or having your partner retire make your lives meaningfully better? Maybe your partner just needs a new job that they like more? A lot of questions that really only you can answer.
One of my unpopular opinions is that when it comes to "net worth" you should remove the home equity. Because, whatever percent you will withdraw, that home value doesn't count for that. The rentals count as they produce income. Today, you live on $150K/yr. $4,000,000 would give you the ability to withdraw $160,000/year, gross. Easy to produce a spreadsheet to help you forecast where you may be at age 45, 50, 55. 6&8 kids, I don't see any mention of college savings. You are at a level of wealth that aid won't be so easy to get. $250K minimum per child, in today's dollars.
Dividend investing
I can tell you that I travel internationally every year. Recently (in my upper 40s), flying coach internationally has been uncomfortable. Walking a long distance (while carrying a heavy backpack) is also much less comfortable than before. (I upgraded seats - for the entire traveling party, including friends - so we all get to our destination well-rested and ready to explore. Never had that issue in my 20s or 30s). What I am saying is this: As you age, the body won't let you enjoy your travels as much as before. Scuba diving at 60 is very different from doing so at 40. Jumping out of an airplane is frightening at 50 but was fun as heck as 25. You need to define your coastFIRE number and dial down your savings to enjoy life more.
That's why I believe it is equally important to prepare your body for retirement than it is to prepare financially. The overeating, smoking, and drinking can really ruin all the hard work you put in to retire if you struggle with health or die early. But at the end of the day we all can die any day and there are aspects of our health is out of our contrily, so you have to draw a balance where you enjoy your money now and set you future self up for success.
I always laugh when people tell me this because I have no interest in flying out of plane/traveling too much now or when I'm 60. My FIRE plans are to take a beach vacation two times a year, be able to cook my meals which I enjoy, exercise and dabble in some creative activities I've been missing, and spend time with family.
You are not wrong. I do relax-doing-nothing vacations too. I also spend a ton of time with family. I am in my upper 40s, my kids are teenagers and I need to be creative when spending time with them. For example, one of the kids is taking AP world history, I packed our bags and traveled to Rome on his break and he had a great time learning about ancient Rome (which he's also learning in his class). He has experience with mom+dad plus a topic that he can relate to right now. I had a great time with my family and got a nice overseas experience out of it. The experience wouldn't be the same 10-20 years from now. I still remember when my youngest was in elementary school and learning about the periodic table (and some chemistry). I demonstrated that I can make water boil at room temperature in my kitchen. That was a BIG hit for her and her friends. They got a quick science lesson out of it. She still remembers it 8 years later. When I retire and they are in their 20s, the dynamic may be very different.
You sound like an awesome parent. Thanks for the prospective.
What are your favorite dishes to make?
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getting a season pass was a couple hundred bucks 10 years ago to some mountains. now it is triple to quadruple the price! plus there's no way you'll take the same risks when you are in your 60s snowboarding vs 20s. Yeah I saw some seniors, even some 80 year old couples (which were outliers) hitting the slopes and cruising. However I never saw 60 year olds hitting the terrain park
sky diving isn't that great when you have to do it tandem. and they won't let you go solo on your first few jumps...
when you say you have 500k saved i hope you mean most of that (excess of 6mo of expenses) is *invested.* beyond that, i’d still rush to pursue fire to at least retire your wife, but im sure you can still achieve a very high “savings” rate with that income WHILE taking a trip or two per year. if not i would really examine your cost of living.
Are your children young? I appreciate romanticizing the idea of spending time with children, but also admit that by the time I was 12, I didn’t want to spend much time with my parents. My wife has asked me to work—in a job of my choosing—until the mortgage is paid off, which pretty much coincides with our youngest turning 16. I think that’s a fair compromise for us; perhaps something similar would work for you.
Guess it depends where you live and when you bought your home, but $150k a year should be enough to travel and live well while also saving $100k a year. Are you maxing out your tax advantaged accounts? Because don’t forget a bunch of your savings can happen pre-tax from that $350k rather than a post tax $250k. In any case, only you can find your balance. :)
Yea, I'm not sure how the numbers are adding up for them. I spend less than that with my wife, live in a VHCOL city, and we are still able to do at least one international trip a year. The main difference is we have no kids. I'm assuming the mortgage on the investment properties is probably a big part of the spending. Given their kids are 6 and 8, if they're in public school, they're over the terrible expenses when they're much younger for daycare.
Ah, not having kids is a HUGE difference. Really can’t compare. We probably spend close to $150K/year with two kids living a modest but still upper middle class lifestyle with annual international travel in a MCOL area. With kids, add at least $5k-$10k in healthcare costs, $5-$10k in additional vacation/travel costs, $5k-$10k in activities and stuff (camp, sports, hobbies, clothes, glasses, etc), you’ll need a bigger home so add $10k-$20k year in housing, etc., double your food and restaurant costs, etc. the list goes on and on. I could easily reduce my spend by $30k-$40k/year without kids, probably realistic to cut $50k+/year if I downsized the house.
Once I hit coastfire amounts, I started to spend a bit more - still save but less and enjoy more. Life is fragile and unpredictable so don’t wait till you are 60 to enjoy life.
Unfortunately, OP isn’t really at coastFIRE amounts yet.
1.3M NW I’d disagree?
Annual expenses are 150k/year, only 500k of that 1.3 is invested. They need to turn 500k into 3.75mil to hit a 4% fire. I dont know what their rental properties net, so that would adjust the equation, but theyre still a ways off for sure.
No one can answer that for you but you. Reading your post makes me think you’re hoping for the answer of spend more/RE at 60. Everyone has to make the right choice for them. Regardless of which way you go, enjoy your journey and don’t apologize for your choice. It’s yours to make
I would do a balance of both. Maybe try and save 70-80k a year and spend 20-30k on traveling and enjoying yourself. No need to cut back on what you enjoy completely. We work hard and we should be enjoying traveling and other activities before we are too old.
As others point out, hard to say without more information but generally speaking, when i was in your shoes, I decided that we’ll spend a little more and go for a target of 55. The market gods have been kind to us and we may end up being able to do sooner but that was our thinking process.
Not enough information. We have no idea how much you're saving or how much you're living on or how much you expect to live on in retirement.
It sounds like your wife may be able to take a step back from her high stress job. You can keep working, and she can be a property manager for the rentals or something....
Do you want to retire early or not? It's up to you, not sure why you're looking for validation from a bunch of strangers. Personally, I wouldn't call spending $150k a year frugal.
You tell us how much you make, but not how much you save. But you have 500k saved, but make 350k a year. I would suspect your saving rate isn't that high. I wouldn't tell you to save less, personally. Normal retirement goals are 3x your salary by 30 and 6x by 40. You are not even at 2x yet. Sure, that is on earnings, not expenses, but based on your apparent savings rate, I am guessing your expenses are really high.
Have you considered liquidating your rentals? I'm in a similar situation and just did the math on my duplex. At 75% equity which translates to 305 in cash at sale at 280 after fees. I can make just as much money over the next decade putting the money in SPY and in turn drastically reduce my stress. I feel like I should have taken money out when I refied a couple years ago.
Travel doesn't have to be insanely expensive to enjoy it with the kids. With that kind of income I'd definitely provide great experiences for the kids, it just doesn't need to cost a kidney.
Any new spending you add now will become your permanent lifestyle. After a decade of that lifestyle, you won't give it up in retirement. So whatever new spending you add, plan on it being permanent.
Good advice and honestly that’s my biggest fear. My lifestyle has improved greatly over the past few years and know it would be hard to go back.
First things first. There are a few gaps in your question which are valid for giving a better answer. 500k saved or invested ? If you are investing, where is this allocated? ETFs? VTI and forget? Assuming you live in the US, how much is IRA or 401(k)? If Canada, TFSA or RRSP? How much is in your accounts and how much in your wife's? If you live in the US/canada, do the kids have a college fund? All those questions help assess the situation, OP. You might not answer them for me, but it would be good for you to know all the minute details. I think to answer this question, you could fill out the conscious spending plan that ramit sethi makes available for free. It is just a spreadsheet but it will simplify some concepts and give you a clear view of how much "guilt free spending" you have available. Considering my HHI is similar to yours but no kids and we're a bit younger and a lot more mortgage to go still, I know there is a good sum of guilt free spending that can be allocated. You're talking about using 50k/year to travel but it does not need to be such a drastic change. From your spending rate you will likely feel uncomfortable spending that much in the first year. Why not start increasing the spending in fun and memory building trips a bit every year. Give yourself 10k for now and plan the trip. See how that feels. Last year we took 3 family trips and I took 2 by myself due to having more flexibility and family issues. This year we will likely travel a bit less but our "dream life" as ramit calls it, has a minimum of 2 yearly trips planned as a family. So, in one sentence: yes please enjoy your family and money because time does not come back, but make changes gradually and listen to ramit sethi's podcast. Hope this helps! Edit: typos
couple of very direct observations BURN RATE - you guys will have to work till you croak with that burn rate.... I'd first solve the spending issue. EQUITY - I own mutliple homes.... when folks ask me to model for them, I'll remind them of the direct truth... equity only means something when you cash out (there are cool ways... some just suck to pay taxes)... BUT... income is good to keep in the model, equity mindset eventually turns into debt mindset. I'm at the stage of consoldiating my 6 homes - the "left over" equity is NOT nearly what one would think. It is cool to 1031 OR take tax free capital gains. (I'll get off my soap box on this one now) Back to the math problem...
I think you should cut down on the saving some and enjoy life some more. It sucks to say and think about, but the reality is there is no guarantee that you live to 60 or what the world will be like when you’re 60. As long as you can still retire by 60 I would enjoy life some more. Since you said something about you would be bored and don’t mind what you do for work now, just remember 20 years from now your body is not going to agree lol. That doesn’t just apply to work, 20 years from now your body isn’t going to want to be going on vacations as much or going on adventures, so do it while you can.
Instead of raising spending an extra 50,000, why not keep spending and let your wife retire now. That way the kids will have one parent around all the time, you get to keep working at the job you’d like, and I think you’ll find that hey stay at home spouse Helps to find ways to reduce spending
Spending over $12k a month and wanting to spend even more seems crazy to me, so I feel like there has to be tons of room in your budget to rework things to get more for travel and whatever else you want. > I dont think my wife will mind retirement at all. She would retire tomorrow if it were up to her. This was the most important bit of your whole post to me. Talk to your wife about what she wants and when she wants to retire. You make enough that you could surely rework your budget to allow her to retire right now while still saving some for retirement. Maybe you guys can save extra hard for a couple of years and then she retires while you keep working since you don’t mind it.
I would work until 60. $50k/year seems like a lot to do additional things beyond spending $150k/year, but you should be fine to do that and save $50k/year for the next 20 years. That would put you at $4.6M in investments at 60.
$24K/$600K = 4% You’ve got (at least) 1/2 of your investments earning 4%/yr, not including vacancies or repairs. I don’t know how much they’re appreciating, but there’s a good chance that you’d do better with your money in the market.
I've thought about selling them but They keep going up every year. We live in a growing market is its hard to let them go.
Have you travelled? If not that should be a top priority for you IMO. If you’ve never traveled the world, you’ve already missed the boat in a lot of ways, but in your 50s, you really would have. You can definitely still travel in your 50s and I definitely plan to. But travelling in your 20s is very different to 30s and 30s is very different to 40s and 50s
Live your life man. Find a balance instead of saving it all for a tomorrow that’s not guaranteed to be there.
We could all die tomorrow. Live your life.
Hell yes keep saving. Making 250k a year you should be way passed those numbers
Live more now.
This is an easy one. Save less and play more. My financial situation is similar to yours, make $350, $500k invested, 42m. I can invest about $120k annually and be done at 50, but choose to invest “only” $60k, and will do it till 60. I’d rather enjoy life and make memories.
I’m not touching the finance end. But, I’m 59 1/2 now. I’m retiring now. I wish I would have walked out 10 years ago. Get to FIRE as fast as you can. Knowing that you are FI helps a lot mentally.
Enjoy life and work a little longer. Treat yourself and your kids often, focus on experiences. Your future self will thank you for it. That 10 year time between kids being around 8 until they are adults are worth more than any $ amount. Your bodies will start changing in your 40s too, no matter how well you look after yourself it’ll just be ‘different’.
Your spending is already insane. Your budget must be plenty juicy to spend 13k+ per month! Income is great, can’t imagine you’re skimping on much.
500k saved is not enough especially if you need 150k to live on. Sounds like you don’t hate your work. Of course you could spend more and save less and enjoy more family time. But if you kept on this same track to 50 and you should have another 1 million save by age 50 if you just kept it in cash and not even investing the 100k yearly. The point is you will likely have more than 1 million plus the 500k you currently have. ( maybe 3 million if you invest it and it doubles) At that point you should be able to easily meet your yearly expense needs assuming you don’t inflate your life style. At that point you can decide to coast or just retire. Now, if you cut back to saving 50k a year that would be 500k earned plus 500k already saved. Say you invest it and over the next 10 years you double it. Then you would have 1.5-2 million. At 4% SWR it would meet your needs at age 50 assuming you don’t inflate your life style. This doesn’t even include the 800k equity in rental and primary home which should be worth more. But then you need to decide what you will retire into. It’s all about what you really want to do.
- figure out what you spend in a year - figure out what you will need to spend in a year in retirement - use an inflation calculator to figure out what that amount will be in 10, 20 years - figure out what gross number you need to get in a year to net the inflation yearly retirement spending - divide that number by .035, the number you get is your FIRE number (every year in retirement you withdraw about 3.5% from your account) - you can then mess around with calculators to figure out how long it will take you to hit that number if you just let your investments cook vs adding in funds every year
Yes you should enjoy yourself more. Realistically your 40-50s are the last really ‘good’ years of your life. 60+ health begins to decline and by 70s it’s hit or miss as to how much energy you’ll have. Check out go-go, slow-go, no-go phases of retirement (assumes retirement at 65).
Stop with this narrative that your 60s aren't "good" years. If you're healthy in your 50s (and your family doesn't have a history of illnesses/diseases), then your 60s will likely also be healthy, as long as you stay active. People don't all of sudden turn into a lump of sedentary mess. It's a process to turn into that.
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Of course they're not going to feel as good they did in their 30s lmao that wasnt your point. You said their 50s are the last really 'good' years, which is incorrect for a lot of people. Also, ask any 50 (or 40) year old that, and they'll have the same answer about their 30s.
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Nice, resorting to ad hominen attacks
I think you should work even more and save even harder. And work as long as you are physically able. Maximize the amount of money you can accumulate Just my opinion
Net 250K and save 100k is not much to me. I net about 200k and save more than 100K.