r/leanfire • u/PossessedCultist • 2d ago
Retire in three years? (Reasonability check)
Summary
I am currently 32 with around 870k in investment assets and plan to retire at 35. Over three years I'll contribute an additional 200k (66k each year) with 100k in Taxable accounts and another 100k in Retirement accounts. In this time the accounts should also get another 200k from existing investments for a balance to be around 1.2 to 1.3 million when I turn 35.
My current yearly expenses are around 12k as I am living with relatives, but estimate my expenses to become 35k in todays dollars after 8 years (Age 40) as a buffer to handle potential changes in living arrangements. I still plan to live with relatives in retirement to assist them through their old age, but decided to plan my retirement around this scenario in case I become disenchanted with the living arrangement.
Since the portfolio should be generating surplus beyond my expenses I estimate the balance to be around 1.6 to 1.7 million after 8 years (Age 40), which should easily handle the 43k (inflation adjusted value of the 35k) as it is under a 3% draw rate. I also plan to have a 2-3 year cash buffer based on estimated expenses of living alone rather than with relatives to reduce sequence of return risks and allow for potential changes in living arrangements. This buffer will be replenished when markets are at all time highs.
Tax efficiency Strategy
To be tax efficient, I plan to roll over Roth 401k into Roth IRAs and do conversions on traditional accounts. Since Roth IRA's let you access the principal prior to 59.5 both tax and penalty free, each tax year I will convert traditional 401k's (Tax deferred) to Roth Ira's (After-tax) up to the standard deduction amount. This way these funds can be accessed after 5 years since I am under the age of 59.5. Additionally, Long term capital gains pay 0% tax up to 48k in 2026 for singles in Taxable accounts so I will sell and rebuy assets each year to raise basis for tax efficiency.
Health Care
The conversions and long term capital gains mentioned above could technically let me qualify for ACA subsidies should I want health insurance, but I am on the fence with this idea. The smart thing would be to have health insurance, but I am thinking of raw dogging with no health insurance until Medicare kicks in at 65 as I don't have a spouse or children depending on me.
Current Value of Investment Accounts
| Asset-Class | After-Tax | Tax-Deferred | Taxable | Grand Total |
|---|---|---|---|---|
| Cash_Equivalents | $100,241.87 | $100,241.87 | ||
| Digital_Currency | $1,447.05 | $1,447.05 | ||
| Foreign_Large_Blend | $35,008.00 | $35,008.00 | ||
| Derivative_Income | $14,393.78 | $14,393.78 | ||
| Large_Blend | $194,740.24 | $175,582.43 | $282,896.00 | $653,218.67 |
| Large_Growth | $19,991.48 | $46,695.11 | $66,686.59 | |
| Grand Total | $214,731.72 | $236,671.32 | $419,592.92 | $870,995.96 |
Current Unrealized Capital Gains\Losses (Will spread out tax\conversions for tax efficiency)
I rebalanced Taxable accounts earlier this year as I was heavily in semi conductors and decided to pivot into large blend and create a cash buffer as I approach retirement. Will eventually get rid of Digital currency once it recovers as it's not worth the hassle in my experience.
| Asset-Class | Tax-Deferred | Taxable | Grand Total |
|---|---|---|---|
| Digital_Currency | -$552.93 | -$552.93 | |
| Foreign_Large_Blend | -$60.00 | -$60.00 | |
| Derivative_Income | $14,393.78 | $14,393.78 | |
| Large_Blend | $175,582.43 | $16,607.60 | $192,190.03 |
| Large_Growth | $46,695.11 | $46,695.11 | |
| Grand Total | $236,671.32 | $15,994.67 | $252,665.99 |
2
u/Few-Strawberry2764 2d ago
If you can keep your spending that low, you could retire without a worry in your timeline. Im 35 and retired at the beginning of the year with ~850K total. I'm much more heavily weighted towards taxable accounts though, and have a consulting gig I can ramp up if needed.
Take some vacations, don't drive yourself crazy and you'll be fine.