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You have a decent plan to start with. A few suggestion:
1. Think about owning your home and pay it off asap. No mortgage. And rent out a room or two for rental income.
2. Start a small side business to make extra income. Prefer something you love to do
3. Plan extra saving to take care your parents
Good luck.
Thanks man. Things are going as planned for now. Just trying to plan out the houses situation.
Property is so much more expensive than I'm comfortable spending on (I want a 15 year loan). I take home roughly $2500/mo at my day job with a 7% mandatory pension contribution. My 2nd job would allow me to take home $1000-$1200 a month (working 3 days a week PT) if I were to cutback my 401k contribution to 6%(it's currently set at 50%). A 200k home (which isn't getting me much house) would be around $1700 on a 15 year which would be 50% of my take home and nearly 70% of my main jobs income. So in the meantime I'm comfortable renting an apartment for $700/mo but id like to own at some point. Part of me hopes for another mini recession or housing crisis where I can pickup something cheap.
Crazy thing is Zillow says my affordability is 276k. GTFO.
I can always increase my income by working more hours at job #2 but I'm not willing to work anymore than I currently do even though I love job #2.
Last edited by UntilTheNDofTimE; 04-04-2016 at 12:47 AM..
You have a decent plan to start with. A few suggestion:
1. Think about owning your home and pay it off asap. No mortgage. And rent out a room or two for rental income.
2. Start a small side business to make extra income. Prefer something you love to do
3. Plan extra saving to take care your parents
Good luck.
That number 3 there can be a big one depending on your parents' finances. I never thought about it earlier in life but it is a reality now. Elderly parents can be more expensive than an arrest-prone kid.
Thought I’d update this after I saw thinking man make a post about how he retired at 40.
Some things have definitely changed in life. I found a job I actually like (outside of government) so work isn’t just a means to a end anymore for me. I feel purpose. I’m a very aggressive saver but early retirement isn’t just a get out of the rat race and objective for me anymore. Still unmarried, still no kids.
I rent and do not own a home. Housing still seems unaffordable to me at about 6x salary for an entry level house in my area. I’d rather just continue to hit the max on the retirement accounts than put 50% of net towards a house.
Age 32
Income 70k base plus 15% ish yearly bonus.
The last 5 to 6 years since I started this thread I’ve maxed out my 401k and Roth each year and have mostly just had my funds in vanguard Wellington 25% and Snp 500 mix for the other 75%. I did very well holding teal for a bit and my Roth did amazing a few years ago in 2020 when the market cratered and I rotated out of the Snp 500 into Apple Google Microsoft and UPS for 50% of my Roth. Once they recovered all loses plus 20% I rotated back into the Snp 500. If I just held all those I’d probably have another 125k or so in that account.
My equity mix I believe is 88%.
401k: $168,000 my employer just started a contribute 6% and they match 9% starting this year. Definite plus.
Roth IRA: $341,000
Taxable brokerage: $75,000 ish. I have this portfolio in risky assets and the figure changes a ton.
Plan is to continue saving $26,000 ish a year to max out the Roth and 401k. If I get 8% for the next 13 years I’m looking at 2.1m at age 45. At this point in life I just want the flexibility to retire early but I’m not banking on it until maybe 50.
I've never enjoyed "working", although I work a lot. I've always been a big saver my whole life because I want the option to leave the rat race as soon as possible. I've always told my parents that I will retire by 40 jokingly. I believe with solid market returns I can get there. Since I can't predict the future, can you all give me advice on the best way to allocate my assets for early retirement?
Currently I live on $25k after tax per year. I don't have kids and don't plan on getting married.
Goal: Save $20,000 a year for the next 20 years. I have a government job where losing employment for a long period of time is near impossible. With my current career trajectory I expect to see 5%-10% annual raises for the next 6-8 years until I cap out at the highest non management position.
Investments: I plan to primarily invest in Vanguard Wellington (80%) and large cap dividend stocks (20% Pepsi, Coke, AT&T, etc..). If i can get 7% a year I will have 1.4m at age 45. If I can reach anywhere near 1m by this time I will quit my Government job.
10 years later at age 55 I will apply for a service retirement which is when i can begin receiving free lifetime health care and my pension. My pension at that time will be equal to 46% of my highest pay. I approximate this to be around $37,000 a year. At 65 I could apply for social security and get around $10,000 a year.
Asset allocation:
I plan to continue to put $5500 into my Roth IRA. Then my plan is to put $10,000 a year into a 401k and $4500 a year into a taxable account. If I wanted to retire at age 45 would there be a better way to spread out my investments?
I figure I have a 10 year gap before I have secure cash flow. During this 10 year period I will withdraw for living expenses in this order
1)Money from taxable
2) Up to 15% bracket from 401k (since I'll have no income my effective tax rate will be near zero). Would I be eligible to receive distribution under the 72T rule?
3) Principle from Roth IRA.
Health Care Age 45-55:
I'm still figuring this out. This might be my biggest hurdle. If healthcare is too ridiculously expensive in 20 years I may have to keep working.
Housing: I currently rent an apartment and would like to purchase a house at some point. This is about 5 years down the line.
What do you guys think? If I fail I'll still be on the right track to a secure retirement.
Nice look and thoughts. Given that you are in a stable position, that means you know where you will live for quite some time. As such, I would prioritize getting the downpayment on a home. Especially given inflation, you'll want to cap your housing expense. Think of the purchase price as the price you will pay for rent over the next 60 years if you purchased it this year. If you buy next year, you will pay more for 59 years. As soon as you buy your final home, you've now successfully capped your largest expense (rent) for the rest of your life.
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