The Slow Boat To Early Retirement

I like to think of us as the tortoise in the Tortoise and The Hare story. We started on this financial independence/early retirement (FIRE) idea later, we’re going slower, but we will get there in the end.

Our Next Life issued a Road Less Traveled Challenge to ask FIRE bloggers how they are charting their own unique path to early retirement.

Things we might have in common with a lot of the FIRE set:

  • One of us is an engineer with a relatively high income. It’s not as high as it could be, though, because we choose to stay near family and keep a 40 hour workweek instead of 50-60.
  • Our kids are in public schools.
  • We have no debt other than a mortgage. We are avoiding more student loan debt by paying cash for my master’s in nursing education.
  • We ditched cable and landlines years ago.
  • We have a low food budget of $100/week, eat lots of lentils, and try and keep entertainment spending to $100/month.
  • I work from home and the kids take the bus to school, so I put very few miles on our minivan.
  • We are still using our ancient furniture and have done almost nothing to decorate our house in the 11 years we have been here.
  • Our kids wear used clothing and hand-me-downs.
  • We have Vanguard accounts.
  • We don’t pay for day care. Three kids in day care is over 2 grand a month around here. I work float pool for an insurance company as a nurse and pay for a sitter for the younger two kids. She lives a street over and we can walk there on nice days. I hope to teach nursing part-time for an online program when I am done with my degree to supplement my current job, and that shouldn’t require another sitter.
  • We’re at about 19-20% of our retirement savings goal. We are shooting for 1.2 million.

 

Things we do not have in common:

  • We have three kids. Yep, we wanted three. They were all on purpose. I wanted more, but thanks to high risk pregnancies, we capped it at three.
  • We aren’t Millennials and there will never be a story on this blog about retiring at 30. We left 30 behind quite a long time ago. I am 38 and the mister is 48. He doesn’t want to retire until his 60s because he loves his work, and I want to retire in 15 years or less. I have a chronic health issue and want us to be financially secure in case it becomes so bad I cannot work.
  • While we max our Roths, we don’t yet max the mister’s 403b.
  • I work part-time (though I am slowly working on cobbling together work that can match my previous full time nurse income).
  • We bought our minivan new in 2014. (In our defense, we needed something specific that could also be used to carry two 11 foot long 100 pound each steel underwater hockey goals plus have a backup camera for my Hobbit-sized self, and the used market was not forthcoming.)
  • Speaking of cars, we have two of them. The mister has a 30 minute commute to work, and we have three kids with health issues. There are months we have 10 medical appointments plus school activities, scouts, etc. We live in the burbs and a car for me is a must. Biking everywhere while hauling three kids in a bike trailer is not going to happen, especially with arthritis. I only drive about 20 miles a week though, mostly thanks to telecommuting, babysitter one street over, and the school bus.
  • We have smart phones and don’t have Republic Wireless. We are happy with our service and don’t want to switch. We paid cash for our phones and mine is 4 years old and slowly circling the drain.
  • We don’t own bikes.
  • We don’t save/invest 70% of our income. It’s closer to 30% of gross income. This should increase once I am done with grad school and earning more next year. Since the average American is only saving about 4%, I’m not going to cry in my Cheerios about that too much.

What about you? Are your goals early retirement, normal retirement, or “I’m screwed and will work until I drop”? Are you saving anything at all?


Goal Update: Retirement

PLAN

It’s been a long while since I last updated on our retirement goals. 2016 is not going to be a year of big moves or 70% savings rates, thanks to our ambitious cash for grad school goal.  Despite that, 2015 was still a decent savings year.

2015:

2015 is in the books, and we have been able to fully fund our Roth IRAs. My husband doesn’t get a match per se, but has a certain percentage of salary added to his retirement funds every year. This is not the same percentage every year, but can vary. I also was able to save in my 401K with a 6% employer match until I dropped to part-time in May. We calculated that we would hit a savings of 16% of gross income back in November, and we did hit that right at 16.5%.

2016:

This year, without the boost 5 months of my working full-time gave us, and while we pay for school, we will probably not hit it that high. I calculate we will hit 14% of gross income by maxing two Roth IRAs and hopefully getting an end of year boost from my husband’s employer.

Beyond 2016:

We have home updates we have to complete: a new roof, new HVAC, fence, and new windows. I will attempt to add another part-time at-home teaching position post graduation to generate income, but I don’t know how much that will earn me. We hope that these can all be cash-flowed within 18 months of my starting a teaching position, and then we can increase our retirement savings rate to 20-25%. (It would be more, but we will also be contributing to a car replacement fund and a travel fund as well).

This year I had three retirement-related tasks on my action-plan. How am I doing?

  1. At the moment, I have 3 different 401K accounts with three previous employers. Since I dropped to float pool, I am no longer eligible for the 401K or for the generous 6% match at my current job *sniff*. I have been researching, trying to decide if I want to consolidate those 401Ks into one IRA.  On my long to-do list is finding out the fees for each one, and seeing if I can roll them over to a different placement with lower fees. We decided to go with Vanguard.
  2. I have a savings account fund for my 2015 Roth, but I still need to open one with Vanguard. We have the money, but haven’t opened the account yet. My husband is waiting to do the taxes first. 
  3. We have a lot of research and learning to do, when it comes to deciding where we are going to put the “early retirement” portion of our funds. I have a list of books on my list, and we plan on hitting up my father-in-law for advice over the holidays. I admit I am a newbie when it comes to understanding how the market works. While we are in a holding pattern this year, I feel the best use of this time is to learn as much as possible and prepare us for when our income increases. I got recommendations for reading material from some people on finance forums and I have started working my way through them. I’ve linked to a few below:

Bogleheads Lazy Portfolios

jlcollins Stock Series

The Boglehead’s Guide To Investing

A Random Walk Down Wall Street

The Magic of Thinking Big

I Will Teach You To Be Rich

And for those post-retirement thoughts: The Life You Can Save, a book about giving away the wealth you have accrued after you have died.

I would love to hear what finance books you recommend!

Goal Update: Retirement

Retire

In 19 years, my husband will be old enough to retire with full Social Security benefits. Ten years after him, in 2045, I will be 67 myself. (He robbed the cradle- at least that’s what he tells everyone.)

He plans on retiring at the traditional age, but I would like to join him when he does. What’s the fun of hanging around all by yourself? In 16 years, our youngest will be graduating high school, and hopefully heading off to college or the great wide world. Wouldn’t it be nice if we were in a place to make sure our youngest has a little help with school, but we don’t have to get up every morning and work unless we really wanted to?

Mr Thrifty envisions a retirement of hanging out with his wife, reading, playing hockey, hiking, and woodworking. He may even be dragged around on a few trips by that wife, once a year or so.

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I envision a retirement of working on writing projects I like, maybe a little teaching here and there, a daily trip to the YMCA,  bike trail,  or state park for exercise, volunteering as an usher for the Broadway Series so I can see every show for free, lunching at my favorite foodie spots once a week, meeting friends and family, and doing some volunteer work with a local foster agency. I plan on being just as busy, but with the ability to pick and choose and even donate my time if I want.

Most of our parents get Social Security for their retirement benefits, with the amount only dependent upon retirement age. The question is, once we hit that magic number, will we be getting just as much back as we’ve put in? Plenty of things can happen over the next few decades, but as things stand now, the Social Security trust fund reserves will be depleted by 2034, and those receiving Social Security benefits after this year will only get about 79% of the expected benefit. Say what?!

We are opting to take the “better to be safe than sorry” approach, and not include any Social Security benefit into our future retirement planning. Whatever we get, if we get anything, will just be the icing on the cake. Maybe we’ll use it to fund college funds for grandkids? Who knows.

We have a predefined number we are looking to hit before retiring, and it is in the 7 figures. Right now, we are at 20% of that goal. We have a good start, but have a ways to go, especially if we want to retire in 16 years. Once we no longer have a mortgage, our expenses will be pretty low.

How are we doing at getting there?

My income fluctuates every month, but after 6 months of this, I can see what I average per month, and what our new yearly income will be. Based on my plans to fully fund a Roth IRA, plus my husband’s contributions, we are putting 16% of gross income into retirement accounts. If you count what we are putting into traditional savings as well, we are saving/investing about 30% of our income.

While that is more than the average American saves for retirement, it is far below the 50-60% of our income we would like to be saving.  Even though we are above average savers, and we aren’t in the half of Americans who have nothing saved at all, that is no reason to rest on our laurels.

What’s the plan?

We have two big hurdles we need to leap before we can increase our savings rate. The first is getting through with paying for graduate school for me. That is costing us between $12000-14000 per year for two years. Our last payment will be in January 2017, which is almost a year away.

The second is that we have a host of major home repairs/improvements that we need to complete, including getting a new roof, replacing the windows, replacing the HVAC system, putting up a fence (and possibly a play set), getting a new dishwasher, and replacing a toilet.  The original builder went cheap, and now that the house is about 20 years old, we are reaping the harvest of those poor choices.

We have a couple years (we hope) to save for the roof and windows, but we probably will not be able to limp along and hack the air conditioning for the third year in a row in order to survive another summer. We have no choice but to replace the toilet soon, and will probably get a new dishwasher within the next few months. Because of a safety issue with the kids, we would like to get the fence done this coming spring.

We’re debating staying in this house and paying it off within 10 years, and not building until the youngest graduates high school. If that happens, we will probably finish the basement as well.  But let’s not think about that today.

How much will this cost? Possibly around $35,000-45000.

For the next 1-2 years, we won’t be increasing contributions very much, as we plan for the Great House Overhaul. Once that happens, and I get additional work teaching, we think we will be on target to sock away at the 50% level.

Does that mean nothing happens in the meantime? No! The faster we can fund the Overhaul and Grad School, the faster we can start funding freedom from the work hustle.

Action plan:

  1. At the moment, I have 3 different 401K accounts with three previous employers. Since I dropped to float pool, I am no longer eligible for the 401K or for the generous 6% match at my current job *sniff*. I have been researching, trying to decide if I want to consolidate those 401Ks into one IRA.  On my long to-do list is finding out the fees for each one, and seeing if I can roll them over to a different placement with lower fees.
  2. I have a savings account fund for my 2015 Roth, but I still need to open one with Vanguard.
  3. We have a lot of research and learning to do, when it comes to deciding where we are going to put the “early retirement” portion of our funds. I have a list of books on my list, and we plan on hitting up my father-in-law for advice over the holidays.

I know we can do this within 19 years, and I think we can do it in 16. The magic number, in my book, is 2032. The kids all grown and retired- woo woo!