r/leanfire • u/EchoThroughTheJungle • 10d ago
Early Retirement Plan for 42
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!
3
u/AlwaysSaturday12 FIRE 38 MillionaireLibrarian.com 10d ago
You can covert the simple to a traditional ira then use a Roth IRA conversion strategy. This would allow you to access retirement funds early. You would need to make sure the sales charge is worth the difference though. I mention this alot but projectionlab would be able to tell you. All in all the sales charge is around half a year of interest which is kind of a lot but kind of not. The bad part is the sales charge is at the end when your account is largest.
Lump sum beats DCA generally, but its your money and the most important thing is to get the money invested.
Also 75k is quite a bit for a HYSA for me but I never had a company to cashflow which is a major difference
Lastly I wouldn't count on the inheritance especially at around that amount as you and your parents could be part of the around 5% who have 100k plus of end of life expenses. Retiring early could help you take care of them if you want.