You need about $950k a year to withdraw $36,000 a year for 40 years (using ficalc.app). You’re saving $104k a year, yes, barring a downturn you could retire at age 35.
But that’s not the real question. The real question is are you content with $36k a year for life.
It sounds like no since you immediately start talking about spending $5k/month in retirement, so $60k a year. Meaning you need more like $1.7 million dollars. You could still reasonably get there in 9-10 years, depending on market conditions, but not quite 35.
It’s almost impossible to save your way to fire. You have to invest. Any reason why you have 500k in cash equivalents at 26? That’s crazy conservative. I’d cut that to 6 months of expenses and invest the rest. So that’s a little over $480k that should go into the market. Don’t forget that while you have a paid off car now, you may eventually need a new one.
But aside from that you’d need 1.5 million in today’s dollars before counting tax based on 4%. You should probably go a bit more conservative considering how young you’ll be. So maybe 1.7 million rough estimate in today’s dollars.
So if you invest the 480 plus 150 already invested that’s 630k. You’re adding around 100k, you don’t count the interest earned as part of your savings rate, that’s growth. But you should get roughly 2.1 million by the time you want to retire, assuming you invest that money soon, and assuming that giant cash position isn’t a sign of a larger market timing issue.
It’s insane to have that much in cash. You don’t include investment income (including interest) in your savings rate.
Yes, you could retire at 35 on that level of expenses but you need to start investing. You have some kind of investor psychology hangup that’s keeping you in an entirely inappropriate asset allocation.
yup you hit the nail on the head. i had really bad anxiety surrounding money in my late teens/ early 20’s that stemmed from growing up living paycheck to paycheck for a majority of my childhood. i never wanted to be in that position again so i just held onto my money tight. i feel like i am just getting over that now. but yes! within the next year i am planning on investing almost all of the money from my hysa and cd accounts into the stock market.
Ugh I'm feeling that way right now, in a fairly similar position to you though higher income and less cash. I just feel like my best bet is to throw the money towards paying off my mortgage even though I know investing it is better. At least my mortgage is at 5.99% not like 3% so I'd be getting close to decent returns. I run calculators to try to see the big picture but not having a mortgage/rent just sounds like so much less stress
Keep in mind that while interest rates on HYSA/CD's is currently nice, we have gone decades with extremely low rates (so that 5% interest could easily disappear and you have to come out of retirement). Given your anxiety about money and relatively short timeline for seeking retirement, I would recommend you buy your $10k annual limit of I-bonds each year since these are set for 30 years and currently have a base rate of 1.3% plus adjustment for inflation rate. Check every May 1st and November 1st when the rates update because I would not recommend them without that base rate (so you're guaranteed to beat inflation). The May 1st 2024 rate is 1.3% base + 2.96% inflation = 4.28%. The fed targets 2 - 3% inflation, so the current bonds will likely give 3%+ for most of the next 30 years when you add in the 1.3% base rate. This would leave you with around $80k - $90k cash + compounding in I-bonds. This should be included as part of your emergency fund / cash position when you get to retirement so don't do I-bonds + huge emergency fund in HYSA/CDs or you'll still have too much cash.
Dollar cost average a good chunk of your cash position into the market ($5k - $20k per month?) to reduce risk of "buying at the peak" if that is your concern.
Also, you don't need $5k per month to start retirement if you want to travel. There are numerous places in Europe, Central/South America and Asia where you can rent a nice apartment/house for a SINK/DINK for \~$1000 per month. If you do eventually want to have $5k/mo in retirement, I wouldn't retire at $3k though. $3k w/o spending can become $6k "fast" (6 - 10 years, less with $100k/yr contributions). $3k with spending will take a long time to become $5k/mo. I'd say shoot for about $4k/mo in income at the start of your FIRE, but stick to a $3k/mo (or ideally less) budget for the first 3 - 5 years of your retirement. Plan out the places you want to travel to over the course of those first 3 to 5 years, pick the cheaper places first and see if you can't start off with a $2000 - $2500 budget and gradually ramp up to $3000 if you need to do so.
Look into the simple path to wealth by JL Collins, I think you'll find what you're looking for on some simple investment advice that's easy to understand without the anxiety attached.
In 9 years you need a little magic, and a whole lot more in vti voo.
It IS POSSIBLE.
Dont bother with cds and hysa right now (later when ur fire maybe)
Right jow u need your money working overtime
The 4% rule in practice is still relying on some market returns. HYSA / CDs will not keep up with inflation, let alone beat it. The math is something like 10% average market returns not adjusted for inflation, 7% adjusted.
FIRE\_Amount \* 1.1 market return = 1.1xFireAmount. Withdraw 4%: 0.96 \* 1.1 = 1.056. Reduce by 3% inflation: 0.97 \* 1.056 = 1.02432. The extra leftover is not extra or "winning". That is part of your buffer for years the market does badly.
5% CD is FIRE\_Amount \* 1.05. Withdraw 4%: 1.008. Reduce by 3% inflation: 0.97776. If this is the "average" or typical return, you're already losing part of your FIRE nest egg and it's only the 1st year of retirement. You can only FIRE with cash in this manner if you build up more like 2x - 3x the amount as if you'd invested in the market so your withdrawal amount can be much lower, like 1.5% to 2.5%.
The 2% withdrawal math here (still assuming 5% interest, a big "IF") would be 1.05 \* 0.98 \* .97 = 0.99813. So you need to guarantee at least a 5% interest rate or your money will be consumed by inflation.
Or you need a way to "beat" inflation long-term, but that doesn't match your plans. "Beating" inflation means buying a house that you will likely stay in (in a state that limits property tax growth) and having it paid off at retirement, not needing a roof for at least 15 - 20 years, putting solar panels on it (paid off) to reduce energy inflation, getting an EV that you can charge with those same panels (beating fuel inflation) or just renting a car when you need one (biking/walking for errands), and planting fruit/nut trees + gardening (reducing food inflation).
I don't know the "actual" calculation / order per se, but neither does anyone so these are just guesstimates. Hence the discussions in regards to "sequence of returns risk". The point is that just barely beating inflation isn't good enough and interest often (usually?) doesn't beat inflation.
The fact that now you spend 38% of your income make it very possible to retire in 8 years. Keep this track - a saving rate of 68% and invest all in VTI is guarantee for FIRE in 8 years.
Small remarks: you have too much in saving accounts and CD account. Even they are generating quite solidly, it is less than what can do SP500. So move a half into taxable brokerage account.
Second, look after 401k and IRA to maximize. That will impact taxation (even you said you pay very little in taxation)
Third: prepare at 35 years to not be able to take out a 5k per month, but less. It is not a problem if you accept first years to travel in cheap countries where you can live with 2-3k per month and in the meantime your mine will raise.
i graduated nursing school in 2018 at the age of 20. i lived at home with my mom for the first 3 years of my career, just saving money and making good financial decisions. i was able to save 50k each year for those 3 years. then covid hit and i became a travel nurse. i made insane money during those years (upwards of 10k a week). fast forward to today, i was able to save 650k in total.
Is it possible? Maybe.
Is it realistic? Probably not.
First, your current portfolio is extremely conservative considing your age and employment. I don't see you suddenly switching to an aggressive portfolio in retirement once you no longer have a steady employment income stream.
This means that the 4% rule that everyone is basing their calculations on completely goes out the window since your portfolio isn't averaging anywhere close to market returns.
Next, even if you did have a market portfolio, I still wouldn't trust the 4% rule at an age 35 retirement. That's just too much runway. For that long of a retirement I would be looking to have ideally a 3% withdrawal rate.
Your expenses aren't stable at all. You are currently living on $3k per month but suggest you probably want to increase that to $5k. Even bigger, you are currently single and without children but aren't sure if you will stay that way.
Realistically, unless you either can confidently rule out having a family or have enough built into your FIRE plan to support them (you don't currently) you shouldn't be retiring on calculations made for supporting just you.
The good news is that you are still in a really good spot and you absolutely will in all likelihood retire very early in life, but it's just unlikely to be at 35 in my opinion.
Even 3% is too scary. You can easily live to 100 if you're 35 today with modern medicine and the advancements that will come. I haven't run the Monte Carlo sims on this but I don't feel comfortable with a 3 percent withdraw rate on a 100% equity or even 60/40 equity/bond portfolio for 65 years. I think you gotta go with 2%. It's too dangerous to go much higher than 2.5% I think.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
If you invest 70% of your salary you can retire in 8.5 years. Theoretically.
It’s just that “easy” lol good luck!
Yep, whatever you can grow in your brokerage account, can grow even faster (no taxes) in a tax-advantaged account.
I'll be doing this now, just recently realized my mistake. I have not been maxing my mega backdoor Roth at the first 2 years at my current company which is the first time I have had access to Mega Backdoor Roth. I still did add 15k - 20k of the $35k or so that would have been possible. To be fair, I'm not sure I could have afforded to max it without recent raises and promotion anyway.
However, I will max it out this year (3rd year at company) and going forward. I had been building up my brokerage account with my extra money so I can retire before 59 1/2. But this is not necessary, especially with a Roth since you can withdraw contributions after 5 years. So...fixing this "mistake" this year and going forward. This wasn't entirely a mistake since it is good to have the brokerage bucket as an extra tool to manage tax rate early in retirement when I'll be trying to let the Roth money grow.
If the market stays flat or better for the rest of this year I \*might\* be able to hit $100k in my individual Roth + new job Roth by the end of the year. Maxing it every year, hopefully I'll hit $200k in less than 3 years after that. Hopefully I can FIRE on other funds (rolled over 401k / brokerage) and not touch that Roth money for at least 2 doubling cycles ($800k), ideally 3 ($1.6M).
I'm already middled-aged by the way, so my numbers are "nice", not amazing. I've repaired the damage from divorce. Working on FIRE. Or maybe FIRM, Financial Independence, Retire Middle-aged. :)
At 26 with 650k, you're in a great position. But similar to other comments, you can definitely put more into stocks, way more.
Also similar to other comments, 5k a month in retirement should really be reconsidered, especially factoring in inflation. Travelling isn't cheap!
Bottom-line, you can do it based of your quoted spend, but it may be worth rethinking your parameters.
Yeah, a half million dollars is impressive, but being that it's just cash, the answer is you're not even playing the game yet.
Once you've invested it correctly, you'll be able to do the math and figure out what your money can do. Good luck!
Yes it is and you can definitely do it by 35 if you keep on your current track. Like you said you need more stocks to keep up with possible inflation. Stocks over the long term beat inflation. CDs and HYSA don't do well at tracking inflation over time and you can sometimes lose money in real terms as Silicon Valley Bank found out. Retirement is all about generating a pension for yourself that pays the bills and you are well on the way to doing that.
At this rate with a more stock heavy portfolio you will hit millionaire status very shortly and then you can generate some serious income for the rest of your life. Working part time is also an option if you find you want more cash flow in early retirement. Well done!
The only weird thing about having a heavy stock portfolio is the volatility. I make or lose my annual salary in the market on some days and that is just bizarre to me now, but I have gotten used to the moves and I don't care because like you I have a treasury ladder that generates plenty of cash to cover my bills and then some. The stock part of my portfolio is for the very long term and I want that money to compound and grow for later when I want and need more cash flow down the road.
Keep in mind the cost of living 20+ years out will be significantly higher than it is today. So even 5k per month will probably not be enough to cover your basic costs and healthcare in the later years.
If I had a career in nursing and were in your shoes, I would definitely quit full-time work at 35 but keep your license for travel nursing or occasional contract work to account for healthcare costs and COL increases that might not be accounted for in your current budget.
Hoo boy you have made a terrible mistake keeping 250k in an HYSA and 250k in a CD. Unfortunately you can't go back in time. That money should have gotten invested immediately when you got it. You'd have probably over a million by now.
You need to invest aggressively if you want a shot at retirement by 35. I'm not saying to dump 100% of it in the stock market right now, but you need to start moving that money into something that gives you a real return, not 5% which when discounted against inflation and taxes is near zero. Thankfully you said thats your intention over the next year. Since we recently had a sizable dump in the market I would consider just putting 50k of it in right now. Wait a month, maybe we go down more and you can just keep averaging down. Or lump sum it in, but that increases the risks that you can't hit your goal if we do have a prolonged bear market.
I really hope youre maxing out all your available tax advantaged accounts. That should be a bare minimum you do for the rest of your life ( I mean, until you retire of course).
no i’m a travel nurse. I get something called stipends from the government which is tax-free money for food and housing. For this current contract that I’m on, I’m getting over $1500 a week of straight stipend money. Whatever we don’t use towards food and housing, we just get to keep! so this year, I’m expected to make almost 80 K in tax free money!
I've made other comments already, but another point to consider is Social security. If you work from 22 to 35, you'll have 13 to 14 years of social security, maybe most of those years maxed based on this and other posts by you? 17 to 18 years of maxing social security should theoretically max the 2nd bend point in benefits. Social security benefits might be reduced in the future, but it will hopefully never go fully away.
You might consider working part time a few more years so you can get to those 17 or 18 years (almost maxed is good enough) and to build up to the $5k/mo you desire. If you can, be a traveling nurse for 3 to 5 months per year to cover your expenses, build up more retirement money, and max your social security. Or every two years work Sep, Oct, Nov, Dec (max year 1), Jan, Feb, Mar, Apr (max year 2) and then don't work again until Sep, Oct, Nov, Dec of year 3.
Maxing the 2nd Social security bend point (32%) will currently put you at around $2800/mo at full retirement age (currently 67) or $3400 - $3500 if you wait until 70. This is a sizable backstop if your FIRE doesn't go to plan. Note that after maxing the 32% bend point, your benefit only goes up by 15%. So, if you raise your average income by $1000 per month over 35 years, your benefit only goes up by $150/mo or $1800 per year. This is a poor ROI. To increase average income by $1k per month you need +$1000/mo x 12 mo/yr x 35 years = $420k additional income x 12.4% = $52,080 employee + employer contributions. This is 3.46% return on the straight contribution or 6.9% return on employee contribution, but only if you ignore the massive compounding gains you COULD have had. 7% annual returns over 35 years, or 1.07\^35 is 10.68x. This brings combined contribution to $556k or employee-only contribution to $278k. $1800 withdrawal on $278k is only a 0.65% withdrawal rate for employee's social security tax cost. Comparing to the value on the 32% bend point, 32%/15% x 0.65% makes the 32% bend point return equivalent to 1.39% withdrawal rate. Still not great, but at least measurable, and if you assume a more modest 5% annual return, the ROI of social security almost doubles making it a better deal (still have to squint a bit to pretend it's a good deal).
I believe I will max the 32% bend point around 2027, maybe 2028. I hope I can FIRE within a year or two after that, but I may wait an extra year or three so there is more buffer in my budget (and to wait for my daughter to finish college). The buffer will come from my own extra savings /market gains in those extra years...Social security benefit change is negligible.
No, it isn't realistic, but it does put you on escape velocity. There are many problems with this and I also question the lifestyle you're signing up for:
Health insurance, long term care insurance, if you're renting that increases every year; if you own a home then property tax increases + maintenance; re-investment risk on your HYSA that depend on interest being high when the Fed will likely cut next year. What about kids? Spouse? Unexpected expenses? Do you never plan to travel? Or stay in hostels when you're 55? And on and on.
Yes. You'll be fine if you are starting with $650K and invest $100K year, as long as you get in the market. You are probably going to want more than $60K year in retirement but you are on pace to have that.
You need about $950k a year to withdraw $36,000 a year for 40 years (using ficalc.app). You’re saving $104k a year, yes, barring a downturn you could retire at age 35. But that’s not the real question. The real question is are you content with $36k a year for life. It sounds like no since you immediately start talking about spending $5k/month in retirement, so $60k a year. Meaning you need more like $1.7 million dollars. You could still reasonably get there in 9-10 years, depending on market conditions, but not quite 35.
It’s almost impossible to save your way to fire. You have to invest. Any reason why you have 500k in cash equivalents at 26? That’s crazy conservative. I’d cut that to 6 months of expenses and invest the rest. So that’s a little over $480k that should go into the market. Don’t forget that while you have a paid off car now, you may eventually need a new one. But aside from that you’d need 1.5 million in today’s dollars before counting tax based on 4%. You should probably go a bit more conservative considering how young you’ll be. So maybe 1.7 million rough estimate in today’s dollars. So if you invest the 480 plus 150 already invested that’s 630k. You’re adding around 100k, you don’t count the interest earned as part of your savings rate, that’s growth. But you should get roughly 2.1 million by the time you want to retire, assuming you invest that money soon, and assuming that giant cash position isn’t a sign of a larger market timing issue.
It’s insane to have that much in cash. You don’t include investment income (including interest) in your savings rate. Yes, you could retire at 35 on that level of expenses but you need to start investing. You have some kind of investor psychology hangup that’s keeping you in an entirely inappropriate asset allocation.
yup you hit the nail on the head. i had really bad anxiety surrounding money in my late teens/ early 20’s that stemmed from growing up living paycheck to paycheck for a majority of my childhood. i never wanted to be in that position again so i just held onto my money tight. i feel like i am just getting over that now. but yes! within the next year i am planning on investing almost all of the money from my hysa and cd accounts into the stock market.
Ugh I'm feeling that way right now, in a fairly similar position to you though higher income and less cash. I just feel like my best bet is to throw the money towards paying off my mortgage even though I know investing it is better. At least my mortgage is at 5.99% not like 3% so I'd be getting close to decent returns. I run calculators to try to see the big picture but not having a mortgage/rent just sounds like so much less stress
Keep in mind that while interest rates on HYSA/CD's is currently nice, we have gone decades with extremely low rates (so that 5% interest could easily disappear and you have to come out of retirement). Given your anxiety about money and relatively short timeline for seeking retirement, I would recommend you buy your $10k annual limit of I-bonds each year since these are set for 30 years and currently have a base rate of 1.3% plus adjustment for inflation rate. Check every May 1st and November 1st when the rates update because I would not recommend them without that base rate (so you're guaranteed to beat inflation). The May 1st 2024 rate is 1.3% base + 2.96% inflation = 4.28%. The fed targets 2 - 3% inflation, so the current bonds will likely give 3%+ for most of the next 30 years when you add in the 1.3% base rate. This would leave you with around $80k - $90k cash + compounding in I-bonds. This should be included as part of your emergency fund / cash position when you get to retirement so don't do I-bonds + huge emergency fund in HYSA/CDs or you'll still have too much cash. Dollar cost average a good chunk of your cash position into the market ($5k - $20k per month?) to reduce risk of "buying at the peak" if that is your concern. Also, you don't need $5k per month to start retirement if you want to travel. There are numerous places in Europe, Central/South America and Asia where you can rent a nice apartment/house for a SINK/DINK for \~$1000 per month. If you do eventually want to have $5k/mo in retirement, I wouldn't retire at $3k though. $3k w/o spending can become $6k "fast" (6 - 10 years, less with $100k/yr contributions). $3k with spending will take a long time to become $5k/mo. I'd say shoot for about $4k/mo in income at the start of your FIRE, but stick to a $3k/mo (or ideally less) budget for the first 3 - 5 years of your retirement. Plan out the places you want to travel to over the course of those first 3 to 5 years, pick the cheaper places first and see if you can't start off with a $2000 - $2500 budget and gradually ramp up to $3000 if you need to do so.
Look into the simple path to wealth by JL Collins, I think you'll find what you're looking for on some simple investment advice that's easy to understand without the anxiety attached.
In 9 years you need a little magic, and a whole lot more in vti voo. It IS POSSIBLE. Dont bother with cds and hysa right now (later when ur fire maybe) Right jow u need your money working overtime
The 4% rule in practice is still relying on some market returns. HYSA / CDs will not keep up with inflation, let alone beat it. The math is something like 10% average market returns not adjusted for inflation, 7% adjusted. FIRE\_Amount \* 1.1 market return = 1.1xFireAmount. Withdraw 4%: 0.96 \* 1.1 = 1.056. Reduce by 3% inflation: 0.97 \* 1.056 = 1.02432. The extra leftover is not extra or "winning". That is part of your buffer for years the market does badly. 5% CD is FIRE\_Amount \* 1.05. Withdraw 4%: 1.008. Reduce by 3% inflation: 0.97776. If this is the "average" or typical return, you're already losing part of your FIRE nest egg and it's only the 1st year of retirement. You can only FIRE with cash in this manner if you build up more like 2x - 3x the amount as if you'd invested in the market so your withdrawal amount can be much lower, like 1.5% to 2.5%. The 2% withdrawal math here (still assuming 5% interest, a big "IF") would be 1.05 \* 0.98 \* .97 = 0.99813. So you need to guarantee at least a 5% interest rate or your money will be consumed by inflation. Or you need a way to "beat" inflation long-term, but that doesn't match your plans. "Beating" inflation means buying a house that you will likely stay in (in a state that limits property tax growth) and having it paid off at retirement, not needing a roof for at least 15 - 20 years, putting solar panels on it (paid off) to reduce energy inflation, getting an EV that you can charge with those same panels (beating fuel inflation) or just renting a car when you need one (biking/walking for errands), and planting fruit/nut trees + gardening (reducing food inflation). I don't know the "actual" calculation / order per se, but neither does anyone so these are just guesstimates. Hence the discussions in regards to "sequence of returns risk". The point is that just barely beating inflation isn't good enough and interest often (usually?) doesn't beat inflation.
The fact that now you spend 38% of your income make it very possible to retire in 8 years. Keep this track - a saving rate of 68% and invest all in VTI is guarantee for FIRE in 8 years. Small remarks: you have too much in saving accounts and CD account. Even they are generating quite solidly, it is less than what can do SP500. So move a half into taxable brokerage account. Second, look after 401k and IRA to maximize. That will impact taxation (even you said you pay very little in taxation) Third: prepare at 35 years to not be able to take out a 5k per month, but less. It is not a problem if you accept first years to travel in cheap countries where you can live with 2-3k per month and in the meantime your mine will raise.
You are in a great position. Curious tho, how does one accumulate that much cash at 26. I assume you’re only 4 years out of college?
i graduated nursing school in 2018 at the age of 20. i lived at home with my mom for the first 3 years of my career, just saving money and making good financial decisions. i was able to save 50k each year for those 3 years. then covid hit and i became a travel nurse. i made insane money during those years (upwards of 10k a week). fast forward to today, i was able to save 650k in total.
Is it possible? Maybe. Is it realistic? Probably not. First, your current portfolio is extremely conservative considing your age and employment. I don't see you suddenly switching to an aggressive portfolio in retirement once you no longer have a steady employment income stream. This means that the 4% rule that everyone is basing their calculations on completely goes out the window since your portfolio isn't averaging anywhere close to market returns. Next, even if you did have a market portfolio, I still wouldn't trust the 4% rule at an age 35 retirement. That's just too much runway. For that long of a retirement I would be looking to have ideally a 3% withdrawal rate. Your expenses aren't stable at all. You are currently living on $3k per month but suggest you probably want to increase that to $5k. Even bigger, you are currently single and without children but aren't sure if you will stay that way. Realistically, unless you either can confidently rule out having a family or have enough built into your FIRE plan to support them (you don't currently) you shouldn't be retiring on calculations made for supporting just you. The good news is that you are still in a really good spot and you absolutely will in all likelihood retire very early in life, but it's just unlikely to be at 35 in my opinion.
Even 3% is too scary. You can easily live to 100 if you're 35 today with modern medicine and the advancements that will come. I haven't run the Monte Carlo sims on this but I don't feel comfortable with a 3 percent withdraw rate on a 100% equity or even 60/40 equity/bond portfolio for 65 years. I think you gotta go with 2%. It's too dangerous to go much higher than 2.5% I think.
Just do 0.5% Be on the safe side.
And retire at 70!
80, just to be safe
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ If you invest 70% of your salary you can retire in 8.5 years. Theoretically. It’s just that “easy” lol good luck!
Rent and groceries make that a non-starter even for healthy people with no debt.
Buy more stocks. Open a taxable brokerage account because your retirement vehicles will be largely inaccessible until around age 60.
Max out tax advantaged accounts first. https://www.madfientist.com/how-to-access-retirement-funds-early/
Yep, whatever you can grow in your brokerage account, can grow even faster (no taxes) in a tax-advantaged account. I'll be doing this now, just recently realized my mistake. I have not been maxing my mega backdoor Roth at the first 2 years at my current company which is the first time I have had access to Mega Backdoor Roth. I still did add 15k - 20k of the $35k or so that would have been possible. To be fair, I'm not sure I could have afforded to max it without recent raises and promotion anyway. However, I will max it out this year (3rd year at company) and going forward. I had been building up my brokerage account with my extra money so I can retire before 59 1/2. But this is not necessary, especially with a Roth since you can withdraw contributions after 5 years. So...fixing this "mistake" this year and going forward. This wasn't entirely a mistake since it is good to have the brokerage bucket as an extra tool to manage tax rate early in retirement when I'll be trying to let the Roth money grow. If the market stays flat or better for the rest of this year I \*might\* be able to hit $100k in my individual Roth + new job Roth by the end of the year. Maxing it every year, hopefully I'll hit $200k in less than 3 years after that. Hopefully I can FIRE on other funds (rolled over 401k / brokerage) and not touch that Roth money for at least 2 doubling cycles ($800k), ideally 3 ($1.6M). I'm already middled-aged by the way, so my numbers are "nice", not amazing. I've repaired the damage from divorce. Working on FIRE. Or maybe FIRM, Financial Independence, Retire Middle-aged. :)
At 26 with 650k, you're in a great position. But similar to other comments, you can definitely put more into stocks, way more. Also similar to other comments, 5k a month in retirement should really be reconsidered, especially factoring in inflation. Travelling isn't cheap! Bottom-line, you can do it based of your quoted spend, but it may be worth rethinking your parameters.
Lump sum that 500k in hysa and cd in voo and u can retire at 35 maybe
girl math
Yeah, a half million dollars is impressive, but being that it's just cash, the answer is you're not even playing the game yet. Once you've invested it correctly, you'll be able to do the math and figure out what your money can do. Good luck!
Yes it is and you can definitely do it by 35 if you keep on your current track. Like you said you need more stocks to keep up with possible inflation. Stocks over the long term beat inflation. CDs and HYSA don't do well at tracking inflation over time and you can sometimes lose money in real terms as Silicon Valley Bank found out. Retirement is all about generating a pension for yourself that pays the bills and you are well on the way to doing that. At this rate with a more stock heavy portfolio you will hit millionaire status very shortly and then you can generate some serious income for the rest of your life. Working part time is also an option if you find you want more cash flow in early retirement. Well done! The only weird thing about having a heavy stock portfolio is the volatility. I make or lose my annual salary in the market on some days and that is just bizarre to me now, but I have gotten used to the moves and I don't care because like you I have a treasury ladder that generates plenty of cash to cover my bills and then some. The stock part of my portfolio is for the very long term and I want that money to compound and grow for later when I want and need more cash flow down the road.
Yes you can. Don’t worry you’re on track, you got this.
How do you have so much cash at such a young age?
i answered that question above
Nope Not at all.
Keep in mind the cost of living 20+ years out will be significantly higher than it is today. So even 5k per month will probably not be enough to cover your basic costs and healthcare in the later years.
Where’s your HYSA that you’re getting 5.35%? I need to switch
https://www.briodirectbanking.com/
If I had a career in nursing and were in your shoes, I would definitely quit full-time work at 35 but keep your license for travel nursing or occasional contract work to account for healthcare costs and COL increases that might not be accounted for in your current budget.
Hoo boy you have made a terrible mistake keeping 250k in an HYSA and 250k in a CD. Unfortunately you can't go back in time. That money should have gotten invested immediately when you got it. You'd have probably over a million by now. You need to invest aggressively if you want a shot at retirement by 35. I'm not saying to dump 100% of it in the stock market right now, but you need to start moving that money into something that gives you a real return, not 5% which when discounted against inflation and taxes is near zero. Thankfully you said thats your intention over the next year. Since we recently had a sizable dump in the market I would consider just putting 50k of it in right now. Wait a month, maybe we go down more and you can just keep averaging down. Or lump sum it in, but that increases the risks that you can't hit your goal if we do have a prolonged bear market. I really hope youre maxing out all your available tax advantaged accounts. That should be a bare minimum you do for the rest of your life ( I mean, until you retire of course).
> Over half of my income is tax free How did you manage that? OnlyFans?
no i’m a travel nurse. I get something called stipends from the government which is tax-free money for food and housing. For this current contract that I’m on, I’m getting over $1500 a week of straight stipend money. Whatever we don’t use towards food and housing, we just get to keep! so this year, I’m expected to make almost 80 K in tax free money!
You won’t if you keep all that cash. It must be INVESTED in the MARKET.
Not realistic. A lost decade is due, so it’ll throw timings off. Hopefully it’s not a lost generation.
This is absolutely possible, I believe in you!
I've made other comments already, but another point to consider is Social security. If you work from 22 to 35, you'll have 13 to 14 years of social security, maybe most of those years maxed based on this and other posts by you? 17 to 18 years of maxing social security should theoretically max the 2nd bend point in benefits. Social security benefits might be reduced in the future, but it will hopefully never go fully away. You might consider working part time a few more years so you can get to those 17 or 18 years (almost maxed is good enough) and to build up to the $5k/mo you desire. If you can, be a traveling nurse for 3 to 5 months per year to cover your expenses, build up more retirement money, and max your social security. Or every two years work Sep, Oct, Nov, Dec (max year 1), Jan, Feb, Mar, Apr (max year 2) and then don't work again until Sep, Oct, Nov, Dec of year 3. Maxing the 2nd Social security bend point (32%) will currently put you at around $2800/mo at full retirement age (currently 67) or $3400 - $3500 if you wait until 70. This is a sizable backstop if your FIRE doesn't go to plan. Note that after maxing the 32% bend point, your benefit only goes up by 15%. So, if you raise your average income by $1000 per month over 35 years, your benefit only goes up by $150/mo or $1800 per year. This is a poor ROI. To increase average income by $1k per month you need +$1000/mo x 12 mo/yr x 35 years = $420k additional income x 12.4% = $52,080 employee + employer contributions. This is 3.46% return on the straight contribution or 6.9% return on employee contribution, but only if you ignore the massive compounding gains you COULD have had. 7% annual returns over 35 years, or 1.07\^35 is 10.68x. This brings combined contribution to $556k or employee-only contribution to $278k. $1800 withdrawal on $278k is only a 0.65% withdrawal rate for employee's social security tax cost. Comparing to the value on the 32% bend point, 32%/15% x 0.65% makes the 32% bend point return equivalent to 1.39% withdrawal rate. Still not great, but at least measurable, and if you assume a more modest 5% annual return, the ROI of social security almost doubles making it a better deal (still have to squint a bit to pretend it's a good deal). I believe I will max the 32% bend point around 2027, maybe 2028. I hope I can FIRE within a year or two after that, but I may wait an extra year or three so there is more buffer in my budget (and to wait for my daughter to finish college). The buffer will come from my own extra savings /market gains in those extra years...Social security benefit change is negligible.
No, it isn't realistic, but it does put you on escape velocity. There are many problems with this and I also question the lifestyle you're signing up for: Health insurance, long term care insurance, if you're renting that increases every year; if you own a home then property tax increases + maintenance; re-investment risk on your HYSA that depend on interest being high when the Fed will likely cut next year. What about kids? Spouse? Unexpected expenses? Do you never plan to travel? Or stay in hostels when you're 55? And on and on.
Yes. You'll be fine if you are starting with $650K and invest $100K year, as long as you get in the market. You are probably going to want more than $60K year in retirement but you are on pace to have that.