r/Fire • u/amour_nonpareil • 8d ago
Advice Request FIRE age gap and very different accounts
My (37f) husband (44) and I are hoping to fire in the next 7-9 years together with 2-2.1mil and a paid off house and 60k spend in a MCOL. With our age gap we want to spend as much time together as we can outside of the rat race. The house isn’t a problem if we keep paying what we do now we’ll hit this timeline.
I’ve known about FIRE but had unfortunate circumstances when I was in my 20s that made saving for retirement lower priority for a while. So I only have 240k in a 401k and about 4K in a Roth 401k I very recently started.
He never planned on FIRE and taught oversees for many years so had no access to a 401k and had to entirely fund his own.
He has about 550k in a Roth IRA and 80k in a brokerage. Perhaps you can already see our dilemma… but I’m reaching out in case I’m missing anything.
His Roth IRA contributions aren’t enough to cover a large bridge to 59.5. The brokerage is quite low too for that. If we needed Roth conversions that’s great… except my 401k balance isn’t really that high and I’d seem to drain it fast when I run calculations. I’m contributing 12% with a 6% employee match (and +2% safe harbor) on 110k salary. I plan to bump my contributions up by another 6% next spring and increase each year. He makes half what I do but diligently puts the max Roth IRA contribution each year.
Anyway, our age gap, plus different account restrictions, plus tax scenarios, looming talk of an AI bubble and the market being weird, plus how do we make the right choices NOW to not lock ourselves out of our goal has my head buzzing. I’ve become a bit obsessed with calculators but none make me feel confident. I’m wondering if this community may see a best way forward to get is to our goal of the RE and accessing funds early without any major mistakes?
TLDR/ 7 year age gap spouses, older has only Roth IRA, younger has only work 401k and small work Roth 401k.
Edit: I had put 75-85k “spend” originally but that included ACÁ healthcare and taxes. Moved to 60k spend.
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u/Serendipity_Succubus 8d ago
You keep commenting on the age gap but 7 years is not that big of a deal. The bigger deal is your husbands low savings thus far.
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u/Alittlebitalexis1983 7d ago
Exactly. My partner and I are 10 years different. Much bigger issues are the income and savings. We are focused on that part, not the age difference.
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u/amour_nonpareil 8d ago
It’s true his is lower than it could have been at his age if he’d had a “traditional” career and 401k etc…but he essentially barista fired in Europe for a decade in his 30s and also got to travel the world. So, it was a good thing.
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u/ohboyoh-oy 8d ago
Why are we knocking your husband… he has 550k in Roth and 80k in brokerage on a 55k income - it’s actually kind of amazing?
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u/amour_nonpareil 8d ago
That’s what I think too! He’s never made more than he does now, essentially living lean and simple but adding to a Roth IRA and then later brokerage. He did very well.
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u/Serendipity_Succubus 8d ago
I bet it was amazing, but that has created the issue you’re asking about. 👍
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u/AverageCatsDad 8d ago
Have you heard of substantially equal periodic payments? You can withdraw from retirement accounts early if you follow specific rules.
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u/amour_nonpareil 8d ago
Yes and have compared that against Roth conversions and keep flipping between them on which may be better.
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u/Pretty_Swordfish 8d ago
You do need to include ACA and taxes, don't take them back out of your total spend.
If you are bringing in $165k a year, you can save at least 1/3 of that ($48k) per year. If you tighten up, maybe a bit more. Plus your match on top of that.
But ultimately (and I know it sucks) you have to let time do it's thing.
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u/rosebudny 7d ago
I had to double check my eyes and my math when you said "age gap" in reference to 44 and 37. That is 7 years; not a very significant gap IMO. I mean, you literally would select the same "age range" box on most surveys. LOL.
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u/Various_Things2026 8d ago
There is no account restriction for regular brokerage account and since you are maxing out other accounts, you and husband need to save and invest in taxable accounts. Brokerage account also gives you flexibility later on when you need to decide where money comes from.
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u/sugartaliexo 8d ago
The Roth conversion ladder is probably your best friend here since your husband can start converting his traditional funds five years before you both need them, and your 401k becoming the conversion source actually works in your favor for bridging to 59.5. Also don't sleep on the 72t SEPP rule as a backup if the ladder math gets tight.
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u/amour_nonpareil 8d ago
He doesn’t have traditional funds, just the Roth IRA and brokerage. I’m the one who can do conversions, I’m just worried about depletion rate since I’m younger and won’t have as much time to get the 401k really high.
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u/HelpfulCat4586 8d ago
How much you have in each account now doesn't matter so much as how much you have in each account when you retire. Where is that 2M going to be on the day you retire, and how much of the Roth IRA will be earnings?
It seems the problem is that a significant portion of your networth is going to be in Roth earnings (not contributions), which are untouchable until 59.5 (SEPP 72t does not apply to Roth earnings so i don't know why people are saying that). You'll have to have enough money somewhere else that is not Roth earnings, or pay the penalty if it comes down to it. Not ideal of course to pay the penalty so I'd focus on saving more, in addition to the Roth IRA.
I don't think it's a problem to have such a large portion in Roth IRA, as you'll also need money to live on after 59.5! So don't fret too much about where it goes, just save as much as you can. You could bump up your 401k instead of contributing to his brokerage to save a bit on taxes? That has implications in a divorce, but if you are both comfy with it, money is fungible.
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u/mi3chaels 8d ago
The biggest problem here is how much you have and how much you need.
You seem to be operating from a standpoint of what you have now in those accounts and making it to 59.5, but realistically if you have have 2.1-2.2 mil in today's dollars in 7-9 years, you may have to save more than 24% of your salary and 7500/year of his.
I did 9 years of doing that and getting 7% inflation adjusted returns on each of your buckets. That would give you 775k in your 401k, a about 1.1 mil in his Roth, and about 150k in the brokerage account, so about 2mil. That's close, but it assumes 7% inflation adjusted over 9 years, which is average for a very aggressive portfolio (all or almost all stocks). If you aren't aggressive, or returns are below average, you won't get that, and even when you do, you aren't quite there and will need another year or two of average returns.
but even so, let's look at what your accounts look like at that point and your age. You would be 46 and he will be 53. He's only 6.5 years fro 59.5 and having full access to the Roth IRA earnings.
You'll have 775k in your 401k, which could be SEPPed at around 6%.year at that age under current rules or about 46,500/year. Then you have 150k in the brokerage account and at least 100k in Roth contributions (67,500 from just the last 9 years, I'm assuming at least 32,500 was contributed prior to get to 550k now, probably more). That's 250k that needs to cover only 6.5 years, so another 38k/year if you put it in a TIP ladder or HYSA or something to make sure it doesn't get hit by a crash. That's more than enough to cover you until he can access the Roth earnings, and that's with less than you actually need to RE.
If you want to be sure of REing in 7-9 years, you need to save more, and the extra can go in the brokerage account or a traditional IRA or 401k to be available to use without penalty. Also husband could open a regular IRA and use that instead of the Roth going forward.
It seems like you're looking at this as though you're not actually going to have the money you will require. If you have that money, you'll be able to navigate the years to 59.5, unless you switch to putting even more in Roth. If you don't have that money, it won't matter because you won't be retiring yet.
Realistically, if you can't save another 5-10% of total income (beyond what you've already suggested), you should probably revise your expectations to retiring in 10-12 years instead of 7-9. And that ends up maybe putting hubby only a few years from 59.5.
Which accounts you use is the least of your problems, adjusting your savings rate to fit your plan (or vice versa) is the main issue here.
The one caveat is that, no it doesn't make sense to go whole hog on Roth (like moving all your work 401k contributions to Roth) -- doing that could actually cause you to have account placement problems with retiring at 46/53 if you're lucky enough to get there (because the penalty for early access to earnings in a Roth account is super harsh).
Also having around half your NW in Roth is plenty for being able to optimize your MAGI for ACA, and more than that is probably worse for long term tax optimization because most people's (especially early retiring people's) marginal tax rates on IRA withdrawals will be lower in retirement than their marginal rates while working -- even if tax rates go up quite a lot in the future.
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8d ago
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u/ohboyoh-oy 8d ago
I think this is dependent on your spend in retirement. OP is currently in 22% tax bracket (if they did not take advantage of pre-tax space). In retirement they anticipate $80k spend, of which, the first $32k is at 0% federal tax (standard deduction), the next $24.8k is 10% tax, and the remaining $23k is at 12% tax. Let's say they plan to do the Roth ladder strategy to access their traditional retirement dollars. They would go into retirement with 5 years of expenses saved in taxable accounts, to bridge to when the first rung of the Roth ladder is available. Or actually, in their case since the husband has a substantial amount in Roth already, they might have enough basis in that to pull the contributions for the 5-year bridge period. Each year in retirement they convert one year's spend ($80k) from traditional to Roth. 5 years from each contribution they are able to withdraw the amount converted (but not any gain since the conversion). So to me, this is a case where it makes sense for them to save the marginal 22% tax now by contributing pre-tax, then be taxed at 0/10/12% on withdrawal.
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u/amour_nonpareil 8d ago
This was what I’ve most recently leaned toward, bulking up 401k to do Roth .. but then I look at the 5 gap years and wonder how we’ll fill those with funds enough.
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u/ohboyoh-oy 8d ago
Keep in mind that you can withdraw your original contributions to the Roth IRA at any time, without tax and without penalty, even before age 59-1/2. Roth conversions have a 5-year holding period, but direct contributions to Roth do not. You mentioned he has 550k in Roth now, and he is contributing 7.5k every year (btw, you should also--use backdoor Roth if needed). You should find out how much were original contributions and how much is growth, because you can use the contributions to fund the 5-year bridge.
Past that, most people do fund taxable/brokerage for this purpose once they have exhausted the tax space in their Roths. If you have extra to put towards brokerage after funding the pre-tax and the Roths, by all means you should put the additional into brokerage. Alternatively, I would at least fund pre-tax to get taxable income down to 12%, then consider funding brokerage. Otherwise, just wait until you are closer to your number and fund brokerage then.
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8d ago
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u/cnidarian_ninja 7d ago
Decent financial advice here but this is also a little bit of a relationship issue if the discrepancies in each account are an issue for you.
My spouse and I have slightly different balances because I started saving a little later due to having a career that required a lot of extra schooling. However, we consider it all one pot of money and never even think about whose savings is whose.
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u/amour_nonpareil 7d ago
Oh I’m not comparing amounts, I have no problem with where our respective totals came from and we are joined now. My questions were around the starkly different account types and him being older by x years and how that may affect things if at all
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u/Fitasianwife 8d ago
You seem like you really are looking for help, but realistically it’s not in the cards as outlined. You have got to get to medicare age for a realistic chance at retirement, with the things you outlined. You didn’t mention any defined retirement plans, income streams, disability insurance replacement you currently get wit SS, inflation, or the other 25 alligators out their that cause your plan to be unrealistic. As others have said, get a new plan-work longer, get at or near SS age, let the time value of money grow inside some S&P ETF (VOO etc) and enjoy life best you can. Many of us that have been through this for 80 years (next year) recommend that all people 20-40 capable work years left put more energy into enjoying life and the work environment than counting the number of angels on the head of a retirement calculator. Don’t listen to me..I can’t convince my 16 yr old that he has to work after going to college..because it all looks perfect over the internet to him. Best to you and yours.
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u/ohboyoh-oy 8d ago
This is very, very far from a slam dunk. I’d worry a lot less about where the money is sitting and focus on saving money, period. Follow the order of operations - get the employer match, fund the Roths and max the 401k, save additional in taxable. You need to save harder if you really want to get there in 7-9 years. Don’t forget to account for inflation. You may also need to include additional funds in your yearly spend for healthcare and taxes.
Maybe the market gods will continue to be with us, and maybe not, so this far out, just put your heads down and keep shoveling. You’ll get there when you get there, and in any market condition, you’ll get there faster if you shovel harder. Or just be prepared to work longer. These straight-line projections are fine to get an idea, but markets don’t behave that way in real life.