Help with early retirement

Millni6 · 6 October 2015 at 5:59PM

Good morning, folks,

My name is Nick and I am a 32 old living in small town Iowa married father of 3 young kids (5,2,6months). I work as a Development Director for a local charity. I am trying to do some advance planning for retirement

but I need some advice and guidance as I am getting a little worried (yes I know I'm still young).

The bad -
I only make 45k a year and my wife stays at home.
My charity is very small and does not provide 401k or any retirement options
We cannot seem to save any money due to our tight budget
Money that could be saved from tax return is spent zeroing out

The good
I have 49k in a 401k plan existing from a former employer.
I owe 59k on my home with 12 (of 15) years remaining on a loan of 3.25% (The home was recently accessed at 86k).
We have no car payments or loans
We have no student loan debts
We have no other debt (other than stated above with the off and on credit card).
Our credit is excellent

At this point as stated above I am having a hard time saving any money and am getting nervous about my lack of money coming into retirement. Are there some tips that I should be looking at.

Thanks a ton!

Linton · 6 October 2015 at 6:36PM

This site is UK based and so people here may not have much knowledge of US taxes, pensions etc. However a general strategy should be pretty universal.......

1) Keep track of all expenditure so you know where the money is going. If its not necessary stop it!

2) Put together a year by year forward plan using say a spreadsheet making assumptions on income increase, inflation, savings, investment return, life expectancy etc

3) The plan should tell you when or perhaps more likely at the moment if you can retire. Assume post retirement expenditure the same as pre-retirement expenditure possibly minus the things that would no longer be relevant.

4) When you get more income, perhaps your wife can start working in a few years, keep your standard of living much the same and save the extra income. Update your plan assumptions and see when/if you can retire.

Snakey · 6 October 2015 at 6:44PM

Hi Nick

As Linton says, the basics of saving and investing and cutting costs are universal. You could try this guy's site, he's based in the US so there might be some country-specific tax and legal stuff there: http://www.mrmoneymustache.com/

32 is a good age, old enough that you should be in a position to do something but not so old that you've left it too late to get there from here. You might have to make some difficult decisions about priorities though e.g. is that job going to give you what you need?

Millni6 · 6 October 2015 at 11:40PM

Thanks guys I appreciate the advice, sorry I didn't catch that seems like a great advice forum. I had looked for people that were posting often, so many non active forums out there. I will check out that website also, thank you so much again, have a great day!

jamesd · 7 October 2015 at 3:11AM

One of the best things that you can do is become familiar with Firecalc and actively use it in your planning. Once you know the target capital needed before you can retire and when you can expect to reach that target you can decide on an appropriate mixture of tax wrappers like IRAs and 401ks that can get you the money you need available at the ages when you need it. For very early retirement you'll need to plan for some money outside any tax wrapper.

The key secret to very early retirement is a frugal lifestyle. That can be frugal in absolute terms or jst compared to typical spending habits. very roughly, for every Dollar that you spend to live on in retirement you're going to need to accumulate 25 Dollars before you can retire.

The book The Millionaire Next Door is well worth a read. Given things like health costs its quite likely that you will need to be a millionaire before you can retire prudently.

The core parts of early retirement planning are pretty much the same everywhere, it's just the tax aspects, investment wrappers available and costs that tend to vary. For example, a British person intending to retire in Britain won't need to budget much if anything for medical insurance because they already paid and will get the UK NHS equivalent of Medicare at no ongoing cost and get this no matter how early they retire, since the whole resident population qualifies.

atush · 7 October 2015 at 10:25AM

And I would respectfully suggest you ask your wife to go back to work, as soon as the youngest attends kindergarden. This will vastly improve your savings and retirement funds

Help with early retirement

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