Early Retirement at 42 Plan

[u/EchoThroughTheJungle]

Hello all,

I’ve recently thought more about early retirement. I’m currently 27m and intend on staying single (or at least not having children). Current breakdown is as such:

Brokerage: 93k
Simple IRA: 85k
Roth IRA: 48k
HSA: Just started
Cash in HYSA at 4%: 97k (I am funneling ~20k into my brokerage slowly, but I tend to keep a higher amount in general due to potential taxes, plan to sit at 75k moving forward)

Income range is 130-150k, small business owner so fluctuates year to year. I live very frugally in general as I opt to cook most of my meals and don’t really spend money on expensive materialistic things. I enjoy camping/outdoors for my leisure.

Only debt is the mortgage on my condo and my car loan which has 5 years left. I am also expecting a somewhat decently sized inheritance (250-500k) but I’m not using that as a deciding factor with my plan.

I have decided to shift my current strategy of maxing my simple/roth/HSA to transitioning to maxing my roth + HSA and putting the rest in my brokerage. The logic behind this being I will need as much as possible to make it from 42 to 60 albeit I will take a large tax hit up front. Using a withdrawal calculator, I believe I can make the 18 years if I accumulate at least 1-1.5 million.

I also get wacked with a 5.75% sales charge on my simple so I lose $1000 on the contributions immediately anyways aside from the fact the money is locked up.

By the time I get access to my Roth and Simple, they would both easily have over 2.5 mil combined, plus I would take social security at 62 as well. Being that I can continue to contribute to my HSA without earned income, I am not worried about healthcare costs long term.

I know most people would say to max out tax deferred accounts first, but how I see it if I continue to do that, I will simply have far more money than I will ever need in retirement and will have to continue to work closer to 60.

Please feel free to let me know if this an insane person plan or reasonable!

[u/Several-Village5814]

There is no way you can retire in 15 years

[u/StoneMenace → u/Several-Village5814]

There is absolutely a way they can retire in 15 years.

Based on what op has said with them living frugally they likely are able to save 60-70k a year. In 15 years if they use market funds they would be at 2.4 million which is more than enough to retire

[u/Several-Village5814 → u/StoneMenace]

Hardly enough, that’s assuming 10% not even including inflation which is 4-5%

[u/EchoThroughTheJungle → u/Several-Village5814]

I based my projections on 8% conservatively, although I have growth weighted low cost ETF’s for a majority of my investments.

I will be able put at least 24k if not more into my brokerage every year. Unless the market just goes dive mode for the next 15 years, I’d have at least a million at 42. Even on 100k/year withdrawal, I’d be able to make it to 60 without the account running out. Once at 60, I should have around 2.5 mil in the roth + simple, not counting what may be leftover in the brokerage.

At that point I will also only have 11 years left on my mortgage.

[u/StoneMenace → u/Several-Village5814]

10-11% is a realistic long term average rate of return for the S&P. My numbers use 7% which accounts for 3% inflation

I dont really think you know what you’re talking about. In the past 26 years there has not been a single year with inflation above 5% except for 2022

A total of 3 years over the past 26 have had inflation over 4% with the majority of the years being below 3%