don’t let any of our more philosophical posts fool you — we’re still total nerds, and we love tracking every possible aspect of our early retirement plan as much as the next guy. but, we don’t share our numbers here (read this if you’re curious why not), which has sometimes made it tough to explain some of our more unique circumstances, like our need for a two-part retirement. bottom line: we have a lot in funds we can’t touch or don’t want to touch for a long time, and far less in the funds that will need to sustain us for the first 20 years of our retirement.
but, as the reading rainbow kids would say, don’t take my word for it! (anyone? bueller? — oh, wait — do millennials know ferris bueller??? please tell us you guys know ferris bueller, for the love of ben stein! and please say you know ben stein! wow, big digression. but please reassure us that 80s pop culture won’t go to the grave with gen x!)
back to not taking our word for it. you can take our pie charts for it. here is our current asset breakdown, crunched a few different ways, based on different definitions of net worth. at the end is our current allocation of new investments, which shows how we’re trying to balance things out.
the first chart is our full picture, including the equity in our home and in our rental property. but no matter how you slice it, you see that our 401(k) funds (invested in the limited number of mutual funds we each have available on our plans) make up a huge percentage of our assets. home equity is also a big chunk, which is meaningless if we stay put, but meaningful if we decide to downsize and convert that equity into a smaller home.
in the second chart, we’ve taken out home equity, but kept rental property equity because we could sell that property and get that equity back. we view that as a semi-passive income-generating asset, and plan to hold it and make money on it after the mortgage is paid off. but of course that could change.
the third chart is the most accurate reflection of what we have to spend in retirement, with real estate equity taken out. and any two-year-old could see that one piece of pie is a lot bigger than the other pieces. we really got after our 401(k)s early on, and this chart is a nice pat on the back. except that there’s that whole matter of not being able to access that money until 59 1/2. we know all about roth conversions, and we may convert some of these dollars to roth so that we can spend them sooner than 2036, but we also like having a more comfortable cushion waiting for us when we get older. this suits our dirtbag dreams just fine: travel cheaply and live simply while we’re young and able-bodied, and then live and travel more comfortably when we’re older and have worn our our joints and backs. and — more importantly — we’re saving a lot more in our index funds right now than the 401(k) limit, and will have evened that imbalance out (well, almost) by the time we retire in two and a half years.
this final chart shows our current investment allocations each month. we’re still putting enough into our 401(k)s to get our full employer matches, and we’re close to maxing out. we’ve dialed back our 401(k) allocations just a smidge, though, to try to dial up our investments into our index funds, so that we’ll have enough in there to get us through the first 20 or so years of retirement. this chart shows how aggressively we’re getting after those index funds!
what do you think of our imbalanced pie? we’re not reflecting the full diversification of our mutual funds and index funds, though you can see that we prefer not to own individual stocks or commodities. and our cash balance gets drawn down to a comfortable emergency fund level each year as we dollar-cost-average that money over to our vanguard account. fun times. ;-)