Early Retirement Extreme Forums

I have been reading these forums off and on for about 5 years. I got a late start on the 'early retirement' quest and have gotten so comfortable with my routine that I would likely never be able to take the risk associated with 'extreme early retirement'.

I do like reading the posts here though because it does provide a certain amount of motivation in reading about other peoples experiences.

I have managed to save $354K in my 401K that matches 5% up to the first for every 6% that I contribute. I have made the maximum 401k contribution for the past 3 years. We also make the maximum IRA contribution each year and have $35K in that account. We have another $15K in dividend paying stocks (telecoms, banking, minerals, oil pipeline)

I also have a traditional pension benefit that currently projects a $2,300 / month benefit. That projection grows as my time on the job and salary increases. I suspect it will max out in the $3,300 a month range based on my remaining years to retirement and based on experiences of my friends who have retired already.

I owe $60K on a home worth $220K. I have two paid for vehicles. I commute 20 miles each way to work. I eat out about 3 times a week having cut that back from 3 times a day as recently as 10 years ago. I budget for purchases. I save first and spend second. We also track expenses pretty closely with a big part of our funds going toward traveling to visit family, purchasing gifts for family and donating to charitable causes each year.

If I had known then what I know now, I could have gotten to my current point of savings much quicker.

thebbqguy wrote:If I had known then what I know now, I could have gotten to my current point of savings much quicker.

True for most of us on this board.

Think about how far off track you'd be if you hadn't made a change. You'd be blissfully ignorant and just waiting for financial disaster to strike (-:

Yes, happy are us who realize that maybe we didn't approach things so well in the past but have changed the approach and are doing better than before.

Some progress is often enough progress.

So ... what's with the title? Are you creating a 40 year plan? Do you wish you had created a 40 year plan 30 years ago?

Looking at your situation, I'd say you're doing pretty well. If I were in your shoes, I'd be pretty close to calling myself financially independent, and I would also be pretty close to retiring.

Do you also have social security payments to look forward to?

I am also from the late camp but I fortunately avoided the too little too late camp, which, with the exception of Auschwitz, is the worse camp to find oneself in.

I'm 43. I still have a couple of years of work to go. I don't really see it as an issue. I suppose you can't change the past anyway. Interestingly I don't think we've ever been big spenders at all.

The title of the thread is referring to the fact that when it's all said and done I will have worked 40 years.

I will also benefit from whatever is left of the social security program.

On Friday I used a retirement estimator program provided by my employer and determined that with a 7% annual return, continued 401K funding by me of $18,000 a year, matching by my employer of $5,000, and 2% merit increases that have been typical recently, my combined 401k, IRA and investment account balances should reach $1 million when I am 59 years old, which is 10 years from now.

I could probably do it quicker if I reallocated a $380 monthly expense that currently goes toward long term care insurance for my wife and I toward investments. I have had that policy for 9 years at this point. We don't have children and in both our families we have relatives who have had very extended periods of in home health care (more than a decade in two cases) where long term care insurance would have helped tremendously. I have a certain level of benefits that will not reduce if I stop paying on the policy, but since health care costs continue to rise I am not sure I am comfortable stopping the benefits accrual on the policy. The policy has a death benefit that pays my beneficiary a portion of the unused benefit. (I don't think they are even issuing those types of LTC policies any longer.)

I'm interested in the 7.0% return. I calculate based on a 5.4% return.

7% seems optimistic.

I don't focus on the return used for those types of projections. They serve more as motivational tools to help keep me stay on track than anything else. I did several projections ranging from 4 - 8%. My gut feeling is that 7% is a "best possible" hope scenario and 5% is the more "realistic possibility", but for that matter we may see 2%. It's hard to know with certainty.

The 7% scenario represents the earliest possible timeframe I would ever in a million years think that I could retire a little earlier than the typical number of years.

I did find this interesting chart on Investopedia:

Performance of the S&P 500 Index over various time periods - Average Annualized Return


3-Year (2014-2016) 8.87%
5-Year (2012-2016) 14.66%
10-Year (2007-2016) 6.95%
15-Year (2002-2016) 6.69%
20-Year (1997-2016) 7.68%
25-Year (1992-2016) 9.15%
30-Year (1987-2016) 10.16%
35-Year (1982-2016) 11.50%
40-Year (1977-2016) 11.07%
47-Year (1970-2016) 10.31%


Read more: What is the average annual return for the S&P 500? | Investopedia http://www.investopedia.com/ask/answers ... z4ZBiU59jz

Putting your figures together it looks like your NW is $564k. Thats loads. And your main cost - housing - must be peanuts at current interest rates if you only owe $60k. Plus your pension. Looks like you are almost at Financial Independence. Mind you I dont know how those 401k/roth/IRA things work, being in a different country, so I dont know when/how you can access those funds. Looks like you have done extremely well despite not focusing on ERE earlier.

thebbqguy wrote: should reach $1 million when I am 59 years old, which is 10 years from now.

What million? Either you love working or you did not look around a lot on this forum.

How does this huge amount of money relate to your web of goals?

I don't plan to live in my current home after I retire. The move will eat up a significant chunk of my savings. My wife has different views on lifestyle than I do as well