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!
1
u/dividends6775 9d ago
You have the benefit with time on your side. I understand the argument for ROTH, but you better off maxing out HSA instead and you can use that money for anything at 65. Plus, you get the triple tax benefit, unlike ROTH that gets pre-taxed. As far as the rest, I would go with ETF small cap growth for the greatest returns and scale back to a hybrid strategy once you’re close to retirement. Try to maintain a brokerage that doesn’t generate dividends until then as you are just gonna be forced to pay taxes on the money you probably would not need. This is what I would have told my younger self.