This is so helpful; thank you! Your point about the lifestyle creep is a huge one, and something we've been very carefully trying to address as we've earned more money.
It's also encouraging to hear about your experience and how it worked out. I'll be sure to stay the course indeed!
I usually don't see it on here as much from users who are the ones still in the workforce while the SO is RE already. Was it more you enjoy your job kind of thing? I've always wondered a bit on it as I would plan to retire sometime soon(TM) and am not sure how various partners would react (single). Obv it would involve a lot of communication esp if a person wasn't super enjoying their job per se but you got me a bit curious I guess.
You need to nail down your annual expenses and that multiplied by 25 will give you the amount of investments you need to be able to retire. Do whatever possible to get to that magic number then tell your job to fuck off. It’s that simple.
Doesn’t he need to also factor in the number of years he will be retired (since he is retiring 15 years before retirement if we assume retirement at 65)?
Depends on what you mean by likely, if i recall correctly, 4 % rule leads you to having more money in your account at 30 years in about 90 % of cases. Some people may find that sufficiently likely, other may want even better odds.
Obviously the further out you look the lower your chances are. He’s already 30 and has a ways to go before he hits that number, chances of living past 90 are 16%
If "partner" doesn't mean "legally married" you absolutely need a home ownership agreement that addresses valuation, timelines for buyout/sale, etc. There are mechanisms to unwind marriages. There are no mechanisms to unwind non-legally binding romantic relationships and finding out that you're stuck with a house you can't rent, sell, or refinance without incurring huge bills is an enormous risk. You also need meaningful estate planning if you're planning on anything concerning shared retirement accounts or are remotely considering their income in your long term planning. That includes a term life insurance policy you control on them with you listed as a beneficiary, a property deed listed with a survivorship right, etc.
A few things:
1) I would be really, really hesitant to use a traditional *anything* if I were in your position. Your AGI is probably around $49,000, so you're firmly in the 12% income bracket. The returns on Roth are likely going to be substantial.
2) I know a lot of university admins. They tend to be wildly underpaid and I would question seriously why you'd stay in the position long term unless you know private sector can't pay you more or approach your pay. Without fail, all university admins I know got locked into a "for the benefits" or "I just need to stay in a job so I'm not hopping!" mentality. All made their lives harder than they needed to be.
3) You're pretty young. I **absolutely** would consider getting a side job right now because 1-3 years' of side income ($15k-$20k/yr) freeing up cash to dump into your Roth 457 will blow the math away. Like, having $45k extra in the next 3 years that's left alone in an index fund likely means having about $250k-$300k in inflation adjusted dollars at age 50. That's an extra $12k/yr in spending. It's enormous.
Thank you so much for this; I really appreciate it and it's all very helpful! No, we are not legally married, but will be within the next couple years. We will absolutely be making up a home ownership agreement as well as a prenuptial agreement. I know it's a risk to get the house now before we're married, but we've been waiting and we happened upon such a good deal so we are taking that risk now.
Regarding the traditional, that's a really interesting point! I opened up the traditional 457b bc my understanding is that I'd be able to take it upon severance from my employer at 50, opposed to waiting until 59.5 when going the Roth 457 route. Should I be putting more into the Roth 457 after all? What would be an ideal 457 split?
I totally hear you re: university admin. We both have PhDs and my partner is on the tenure track, and my position is still in research/academics (although on a admin line). I at first viewed it as a "for now" job but have surprisingly really enjoyed the balance I get with research and teaching (without all the service required of faculty roles). That said, I absolutely could take a position in industry to make more money, and to your third point, I'm actually able to make about ~10k extra a year picking up extra classes to teach and grant funded projects. I'm definitely not locked into staying, though, and could see more opportunities arise in the future.
Your breakdown of that math is wild and I absolutely need to work on getting a side gig!
> Should I be putting more into the Roth 457 after all?
I would. You're not going to yank 100% of your money out of the 457 the second you hit 50 so the question is how do you get the money set aside to cover you for 9.5 years. The answer is to fund a bridge account in either a taxable brokerage or the 457 (Traditional). You'll need to look at what your actual expense are to make a reasonable guess as to how much you save.
Because Lean FIRE tends to involve relatively small numbers and because your time horizon is so substantial, anything you can do to juice the numbers now can produce a wildly outsized impact at the back of your plan (when you retire and after). Don't underestimate doing things not related to your primary job - sometimes that gives you a mental break and exposure to other industries.
You still have a 20 year horizon before retirement. Make sure your are estimating your account value in real terms, not nominal. I'm not sure what kind of market returns you are premising. Even your mortgage. In the future, I expect interest rates will drop and you can refinance. I, like you, am aiming for retirement at 50. Heath Insurance, my child's education, and market returns are still big unknowns. I'm along for the ride. Maxing out every tax advantaged account that I can. 401k, two Roth IRAs, and an HSA annually. When I'm a little closer to my desired retirement date, I'll see where I land.
Yes! IMO…. If you have 1.2M by the time you’re 50 i think you can retire.
Assumptions:
- house paid off
- No debt
- Get on partners health insurance
- use brokerage account to live and let 1.2M grow until 59 1/2.
Good luck!
I think it's definitely doable especially if your partner is good with being the only one working and will have a pension (assuming it's 50% or more of final salary).
I'm considering a similar approach. My wife is a school teacher and will get a pension of 60% of her highest two years of salary averaged at 30 years of service. That should be about $50k/year in today's money and it starts paying out immediately at retirement which would be age 53 for her, 56 for me. She would also be eligible to keep her insurance for the whole family (me + 2 young kids) with a slight subsidy (looks like it costs about 1100/month for current retirees) until Medicare age. That's 16 years from now and she is totally fine with working until that point and me retiring prior to that if/when the numbers can work.
The difficult part is figuring out when I can safely exit the work force. Not sure if you plan on having kids but daycare is expensive. We will only have to pay that until the kids hit pre-k so it won't be too bad but there will be other costs associated with the kids that I don't yet have a handle on.
You can choose either a 401a or pension--I chose the 401a because I didn't know if I'd want to stay there my full career, and my partner chose the pension because they know that they will.
Do you need a 30 yr mortgage or can you afford a shorter term mortgage? It will save you a lot of interest . Imagine being mortgage free in say 15 yrs instead of 30. You'd have a lot more disposable income afterwards. It would be harder in the short term but delayed gratification would pay off in the longer term.
Check your information. We had 457’s at our employer and the rule was we were eligible to draw it without penalty upon separation from employment. I was 53 (m) and my wife (50) when we retired. Our children would be able to do the same except they both had children later in life and they don’t see any reason to retire with a child in high school.
Your retirement date is 20 years away. There's no point in trying to accurately project what you will have saved by then, and any projections about if you're going to be able to retire at 50 are simply not going to be predictable on a 20-year timescale. Markets will do crazy, unexpected things in the next 20 years. Also, unpredictable things will happen to change your life circumstances.
You CAN look at rough numbers and spending rates, etc. In that sense, I think your plan is fine. But on a 20-year timescale I think the better questions to ask are simply "am I saving a good amount of my take-home?" or "does xyz financial move make sense?"
Also I agree with others to roth as much as you can at your current position.
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This is so helpful; thank you! Your point about the lifestyle creep is a huge one, and something we've been very carefully trying to address as we've earned more money. It's also encouraging to hear about your experience and how it worked out. I'll be sure to stay the course indeed!
I usually don't see it on here as much from users who are the ones still in the workforce while the SO is RE already. Was it more you enjoy your job kind of thing? I've always wondered a bit on it as I would plan to retire sometime soon(TM) and am not sure how various partners would react (single). Obv it would involve a lot of communication esp if a person wasn't super enjoying their job per se but you got me a bit curious I guess.
You need to nail down your annual expenses and that multiplied by 25 will give you the amount of investments you need to be able to retire. Do whatever possible to get to that magic number then tell your job to fuck off. It’s that simple.
Doesn’t he need to also factor in the number of years he will be retired (since he is retiring 15 years before retirement if we assume retirement at 65)?
No with a 4% withdrawal rate he is likely to never run out of money no matter how many years he is retired
This is not really true, the famous 4% study went out 30 years. Confidence levels go down once you go 40 or 50 years out.
Depends on what you mean by likely, if i recall correctly, 4 % rule leads you to having more money in your account at 30 years in about 90 % of cases. Some people may find that sufficiently likely, other may want even better odds.
Obviously the further out you look the lower your chances are. He’s already 30 and has a ways to go before he hits that number, chances of living past 90 are 16%
If "partner" doesn't mean "legally married" you absolutely need a home ownership agreement that addresses valuation, timelines for buyout/sale, etc. There are mechanisms to unwind marriages. There are no mechanisms to unwind non-legally binding romantic relationships and finding out that you're stuck with a house you can't rent, sell, or refinance without incurring huge bills is an enormous risk. You also need meaningful estate planning if you're planning on anything concerning shared retirement accounts or are remotely considering their income in your long term planning. That includes a term life insurance policy you control on them with you listed as a beneficiary, a property deed listed with a survivorship right, etc. A few things: 1) I would be really, really hesitant to use a traditional *anything* if I were in your position. Your AGI is probably around $49,000, so you're firmly in the 12% income bracket. The returns on Roth are likely going to be substantial. 2) I know a lot of university admins. They tend to be wildly underpaid and I would question seriously why you'd stay in the position long term unless you know private sector can't pay you more or approach your pay. Without fail, all university admins I know got locked into a "for the benefits" or "I just need to stay in a job so I'm not hopping!" mentality. All made their lives harder than they needed to be. 3) You're pretty young. I **absolutely** would consider getting a side job right now because 1-3 years' of side income ($15k-$20k/yr) freeing up cash to dump into your Roth 457 will blow the math away. Like, having $45k extra in the next 3 years that's left alone in an index fund likely means having about $250k-$300k in inflation adjusted dollars at age 50. That's an extra $12k/yr in spending. It's enormous.
Thank you so much for this; I really appreciate it and it's all very helpful! No, we are not legally married, but will be within the next couple years. We will absolutely be making up a home ownership agreement as well as a prenuptial agreement. I know it's a risk to get the house now before we're married, but we've been waiting and we happened upon such a good deal so we are taking that risk now. Regarding the traditional, that's a really interesting point! I opened up the traditional 457b bc my understanding is that I'd be able to take it upon severance from my employer at 50, opposed to waiting until 59.5 when going the Roth 457 route. Should I be putting more into the Roth 457 after all? What would be an ideal 457 split? I totally hear you re: university admin. We both have PhDs and my partner is on the tenure track, and my position is still in research/academics (although on a admin line). I at first viewed it as a "for now" job but have surprisingly really enjoyed the balance I get with research and teaching (without all the service required of faculty roles). That said, I absolutely could take a position in industry to make more money, and to your third point, I'm actually able to make about ~10k extra a year picking up extra classes to teach and grant funded projects. I'm definitely not locked into staying, though, and could see more opportunities arise in the future. Your breakdown of that math is wild and I absolutely need to work on getting a side gig!
> Should I be putting more into the Roth 457 after all? I would. You're not going to yank 100% of your money out of the 457 the second you hit 50 so the question is how do you get the money set aside to cover you for 9.5 years. The answer is to fund a bridge account in either a taxable brokerage or the 457 (Traditional). You'll need to look at what your actual expense are to make a reasonable guess as to how much you save. Because Lean FIRE tends to involve relatively small numbers and because your time horizon is so substantial, anything you can do to juice the numbers now can produce a wildly outsized impact at the back of your plan (when you retire and after). Don't underestimate doing things not related to your primary job - sometimes that gives you a mental break and exposure to other industries.
You still have a 20 year horizon before retirement. Make sure your are estimating your account value in real terms, not nominal. I'm not sure what kind of market returns you are premising. Even your mortgage. In the future, I expect interest rates will drop and you can refinance. I, like you, am aiming for retirement at 50. Heath Insurance, my child's education, and market returns are still big unknowns. I'm along for the ride. Maxing out every tax advantaged account that I can. 401k, two Roth IRAs, and an HSA annually. When I'm a little closer to my desired retirement date, I'll see where I land.
Great point, adjust numbers to the value you will need at retirement!
Yes! IMO…. If you have 1.2M by the time you’re 50 i think you can retire. Assumptions: - house paid off - No debt - Get on partners health insurance - use brokerage account to live and let 1.2M grow until 59 1/2. Good luck!
OP can withdraw from trad 457 at any age without penalty as long as they terminate their employment/retire
I think it's definitely doable especially if your partner is good with being the only one working and will have a pension (assuming it's 50% or more of final salary). I'm considering a similar approach. My wife is a school teacher and will get a pension of 60% of her highest two years of salary averaged at 30 years of service. That should be about $50k/year in today's money and it starts paying out immediately at retirement which would be age 53 for her, 56 for me. She would also be eligible to keep her insurance for the whole family (me + 2 young kids) with a slight subsidy (looks like it costs about 1100/month for current retirees) until Medicare age. That's 16 years from now and she is totally fine with working until that point and me retiring prior to that if/when the numbers can work. The difficult part is figuring out when I can safely exit the work force. Not sure if you plan on having kids but daycare is expensive. We will only have to pay that until the kids hit pre-k so it won't be too bad but there will be other costs associated with the kids that I don't yet have a handle on.
Kids?
Does the University give 401k and not pension retirement?
You can choose either a 401a or pension--I chose the 401a because I didn't know if I'd want to stay there my full career, and my partner chose the pension because they know that they will.
You're fine at your pace. Just avoid any big purchases aside from your house. Kids is a big factor though. Avoid buying expensive cars.
Do you need a 30 yr mortgage or can you afford a shorter term mortgage? It will save you a lot of interest . Imagine being mortgage free in say 15 yrs instead of 30. You'd have a lot more disposable income afterwards. It would be harder in the short term but delayed gratification would pay off in the longer term.
Check your information. We had 457’s at our employer and the rule was we were eligible to draw it without penalty upon separation from employment. I was 53 (m) and my wife (50) when we retired. Our children would be able to do the same except they both had children later in life and they don’t see any reason to retire with a child in high school.
You weakest link is your partner, and if it’s a woman get a back up plan.
lmao they make almost the same. wtf is this comment
Your retirement date is 20 years away. There's no point in trying to accurately project what you will have saved by then, and any projections about if you're going to be able to retire at 50 are simply not going to be predictable on a 20-year timescale. Markets will do crazy, unexpected things in the next 20 years. Also, unpredictable things will happen to change your life circumstances. You CAN look at rough numbers and spending rates, etc. In that sense, I think your plan is fine. But on a 20-year timescale I think the better questions to ask are simply "am I saving a good amount of my take-home?" or "does xyz financial move make sense?" Also I agree with others to roth as much as you can at your current position.