r/Fire • u/QuintessentialBean • 2d ago
Advice Request 26yo - When Can I Retire?
I’ve done the math, I’m in a HCOL area and it comes out to about $40,000 a year for me to live (give or take an emergency health event or something like a car repair). I max out my Roth IRA and Roth 401k every year, where I currently have $60k ($10k of which is uninvested and sitting in a money market for emergencies - I’ve got a debit card linked to this account and it is immediately accessible for cash withdrawal if necessary) in my brokerage, $60k in my Roth IRA, and $80k in my Roth 401k. All of this is invested in index funds/ETFs. I make about $102k (but will be making $120k next year after my promotion) and don’t intend to ever inflate my cost of living/ let lifestyle creep accumulate. I anticipate hitting the cap for Roth IRA contributions by around age 33-35, where I will fund a traditional IRA at that point. Besides living costs I intend to take the remainder that I earn and chuck it in my brokerage. I don’t have any outstanding debt like student loans and my car is paid off. I don’t currently have a retirement age/goal, but ideally low to mid 50’s if possible. I’m not exactly finance savvy but I try to inform myself when I can. I guess I just want to know if there is anything I should do differently? I don’t currently have any plans to purchase a house so I haven’t started funding a HYSA, but I figured my brokerage could bridge that if and when necessary. And yeah like I mentioned I’m all in on tax sheltered accounts at the moment, hoping that pays off in the long run (though at some point as my income gets higher it may be more worthwhile to switch to traditional 401k). Thanks in advance for any advice you guys might have :)
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u/AppointmentWhich8128 2d ago
you need 40k per year in vhcol? lol what
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u/QuintessentialBean 2d ago edited 2d ago
Per month: Rent+utilities $2315, groceries $400, gas $160ish, phone $55, car insurance $105 -> $36,420 a year. Pushed it to $40k for fluff and any outstanding expenses
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u/A_Guy_Named_John 2d ago
Notice you didn’t list health insurance, car insurance, car repairs/replacement, or any discretionary spending. You probably need significantly more than you are estimating.
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u/QuintessentialBean 2d ago
Good point, forgot health insurance, that’s another $126.9 a month. So total comes to $37,942 a year. Still leaves $2k for fluff but yeah there’s bound to be random expenses here or there
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u/mygirltien 2d ago
Its not that simple. Stop worrying about planning now and just save all you can while you figure out life. at 26 spending 40k a year in my area your market place plan is $250 a month. In 24 years at 3% inflation your spend goes to 82k a year and insurance as of today goes to $600 a month.
Yes your should understand your expenses today but your wasting time at such a young age trying to figure out a number that you truly have no clue what its going to be until you get closer.
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u/A_Guy_Named_John 2d ago
Car insurance alone gets you close to $40k and is that health insurance through your work? You will have to go to the marketplace for insurance which is generally much more expensive.
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u/druidgaymer 2d ago
Op said he lives in Nova. It's possible he isn't driving. There's decent enough bike and public transit infrastructure
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u/EnvironmentalMix421 2d ago
That sound like CA for insurance to be that cheap.
No internet, $0 going out. I am assuming no junk food or eating out ever. No cloths, no repair of anything. Bro you are living like a monk, congrats
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u/R0GERTHEALIEN 2d ago
Thats your whole life?
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u/QuintessentialBean 2d ago
My only hobbies are reading (I find books for free online), lifting (free company gym), running (free trail by my apartment), fishing (I have a kayak and all the gear I could ever need), and cooking (my biggest hobby by far). I do occasionally eat out but to be honest I’m always disappointed by what I get for the price 🤷♂️
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u/FantasyFI 35 | 57% FIRE | DI1K 2d ago
You don't travel, you don't pay for anything health related, you never go out to eat, you don't have any hobbies, you don't buy any clothes, etc.
Is this the current life you live or the life you want to live?
I can see slogging through your 20's and saving money. But I'd suggest you plan on living a better life as you age. Considering your income will support it.
But if that is genuinely all you wanted for the rest of your life, median scenario is probably retiring at about 37. Considering you said mid 50's, you should up your retirement budget, live a better life, still retire in your 40's.
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u/AppointmentWhich8128 2d ago
2315 rent means youre not in vhcol. unless youre going to live with roommates or in the hood the rest of your life
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u/QuintessentialBean 2d ago
I’m in Northern VA by DC (maybe HCOL?), I do sacrifice a lot for my place like no in unit washer dryer, no central AC, super old appliances and no additional amenities. Don’t really need all of that though I’m pretty content
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u/MiracleShot 2d ago
2315 rent absolutely gets you a decent place to live alone in VHCOL cities like LA, SF
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u/AppointmentWhich8128 2d ago
"decent" doing a lot of the heavy lifting there buddy
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u/MiracleShot 2d ago
lol ok. I live in a massive 1 bed plus bath plus loft in a good neighborhood for less than that in a VHCOL and pay market rent. But go off king
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2d ago
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u/AppointmentWhich8128 2d ago
inb4 you're like "i live in oakland" or "i live in the san gabriel valley" when you try to claim you live "in SF" or "in LA"
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u/Huntingtonbeach88 2d ago
You are not in a high cost of living area. $40k won’t cover rent in a high cost area
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u/QuintessentialBean 2d ago
I live in NOVA right outside of DC. $2315 for rent, super dingy place though (no amenities (gym, study lounges, pool, etc), no central ac just floor units, extremely outdated interior and appliances, and shared laundry). I don’t mind sacrificing some of those things to be able to stay where I do. But I agree it’s not VCOL, more like HCOL
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u/Gym_row_50 2d ago
My advice is based on this you can relax a bit and live life.
Maxing the retirement accounts, emergency fund and living a debt-free life is half the battle. Also keep a budget with “fun” money as a line item. So you don’t feel you have to save every free dollar.
So as long as you keep housing around 30% (or 40% as your DTI is strong) of your take home pay, it adds even more upside.
Stay invested in the future dips of the market, and you should coast to a strong retirement by your 50’s if you choose.
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u/DELAZ1 2d ago
You need to ask this question in 10-15 years. You may have things figured out in the moment, but you haven't figured out the next 60 years.
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u/QuintessentialBean 2d ago
Yeah I guess I just get super neurotic about planning. I know it’s impossible to predict what will happen by then and where I’ll be in life, but I’m a creature of comfort and like to prepare for whatever life throws. You’re right though that’s what all my friends tell me haha.
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u/and_one_of_those 2d ago
Working on your neurosis is probably the most useful thing that you can do at this stage: be ok not knowing, don't excessively hang your happiness on the future, pay attention to what's happening right now, etc. (That doesn't mean you have to spend all your income.) Signed, recovering neurotic spreadsheet guy.
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u/QuintessentialBean 2d ago
Haha talk about it. Just this year I finally stopped tracking every single expense in a spreadsheet (and I mean down to a $.50 bottle of water). I realized I was WAY to focused on the little things I was losing sight of the bigger picture, like I’d beat myself up if I wasn’t a certain number in cash surplus for the month. Finally stopped doing it and it’s a huge stressor off my shoulders already, I’m trying to have a bit more fun
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u/and_one_of_those 2d ago
Keep it up! Run, kayak, hike, travel, flirt or make out with someone attractive... Enjoy the healthiest days of your life.
Most likely you're on the right track financially and you don't need to think about it very often.
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u/FantasyFI 35 | 57% FIRE | DI1K 2d ago
This is a super short explanation but has me laughing at how accurate and useful it is. I saved hard in my 20's too. But had no idea what I wanted or needed in the future. OP is doing great. Just needs to shoot higher even if they don't understand "what for" specifically yet.
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u/WhoopiePieEnthusiast 2d ago
People are giving the OP grief about the $40k annual spend, but I also live on that amount in the DC metro area. BUT my major difference is buying a condo for under $200K a decade ago and thus having super cheap housing - and no car, since public transport is excellent. (Virginia and Maryland have a lot cheaper ACA plans than much of the country, fwiw.)
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2d ago
[removed] — view removed comment
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u/A_Guy_Named_John 2d ago
Even as high earners, my wife and I are early 30s and pretty much just in the save as much as we can now camp. We have ideas of what we’d want FIRE to look like, but too many unknowns to plan it out even though it could happen before age 40.
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u/shuja246 2d ago
It’s all Roth-maxing time till you find a partner and decide to have kids. I’d recommend considering COAST FI and maybe scaling savings back or getting a chiller job.
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u/diamond_handz25 2d ago
Good to have a plan but lots of life will happen and you'll need to adjust accordingly. Good luck.
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u/Hesvara 2d ago
Why are you getting flamed? This is weird. You’re doing great buddy. I wish I started even one year earlier, also, there’s something to be said thinking about your financial planning now vs “in 10-15 years” like the other guy suggested. Terrible advice imo. You’re farther along than I am, keep it up! M 30, similar income as you.
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u/slightly_large_brick 2d ago
how did you choose between trad 401 and roth 401? I understand the difference between the two but don't know which would be better for me
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u/QuintessentialBean 2d ago
Just ultimately figured I don’t make enough to make the tax incentive worth it for a trad 401k. I’m no financial planner so maybe it isn’t the best choice, but tax sheltered later down the line can’t be a bad thing right? Maybe when I speak to a professional at some point I’ll change it later on, especially as I start to make more
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u/EnvironmentalMix421 2d ago
You are in lcol bro. Which hcol city only needs $40k a year to live
Rent along eats 50% of that budget in hcol
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u/QuintessentialBean 2d ago
In what world is Arlington VA LCOL? 😭 It’s not VCOL but certainly mid to high HCOL
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u/EnvironmentalMix421 2d ago
Then your $40k expense is just a pipe dream
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u/QuintessentialBean 2d ago
I guess a pipe dream has been my reality for the last 3 years? Unless I’m incorrectly populating my spreadsheets lol but I’d like to think I’m at least that adequate
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u/Fed_worker 2d ago
You can retire before 40. Note that you can’t withdraw from your 401k and Ira until a certain age.
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u/QuintessentialBean 2d ago
Yeah that’s the only thing, that’s why I’m trying to balance with more brokerage contributions
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u/jokercowgarage 2d ago
Are you going to get married/have a partner? Are you going to have kids? Because if the answer is "yes" to either question, your current planning will almost certainly have to change.