For the past few years, despite thinking I’ve been spending a lot of money at times, I’ve actually kept my spending to around $22K, excluding rent, despite living in the most expensive places in the U.S. If I move out into a cheaper living arrangement, then I can keep my expenses under $30K a year. Let’s assume for the sake of argument that if I get married, I’ll make the wife work to earn her share and if we have kids, then I’ll jump in part time to save for college expenses. Otherwise, I won’t do a thing. To determine whether I can retire early, I used a website called www.firecalc.com.
What is FireCalc, you ask? Continue reading
Boy things have been picking up at work lately. But I’ve still got my mind on what’s important. My plans are not entirely set in stone yet though. I’ve been soliciting comments from people about my plan and the resounding feedback has been — why not work for a few years and retire? Since 80% of people have said this — not all of whom are drinking the middle-class striver Kool-aid — I’ve decided to think carefully about that approach. I’m starting to come around a little bit. But I really think this is due to my training of being able to delay gratification.
Right now, I have 8x annual expenses saved in cash. Another 4x annual expenses saved in retirement. Of course, these annual expenses apply only to me. Not to a wife or kids…yet. In order to safely retire, I’d need 25-35x annual expenses. Since I don’t plan on vegging out entirely (my plan to start my venture is now a part-time gig), I think I can be safe and shoot for the lower limit of 25x. I still plan on moving out to a cheaper place at the end of my lease. This means I go from saving 2x annual expenses a year to 3x annual expenses a year.
So I need 25x to last me until 59 1/2 and hopefully by then my retirement accounts will have grown to a point where I can live off those savings at that time. I’m short 17x. If I go another 5 years at 3x a year, then I’ll basically overshoot the 25x assuming I get a decent return. Hey I might start getting raises again and that 5 years might be 3-4 years. Who knows?
*sigh* This is probably the most prudent course of action. Although, if my side venture takes off, I will be more comfortable quitting.