we retired early

The Full Financial Breakdown at Early Retirement

Here we are, at our very last quarterly financial update post chronicling the journey to early retirement. (Insert Kevin McAllister from Home Alone scream here. Which I may have watched more than once over the holidays. It holds up, you guys.)

While there’s a ton we have no idea about in early retirement — what will we be doing five years from now? how long will it take us to learn the skill of not filling up our schedules? what oddball hobbies will we fall head over heels in love with? — we feel more than solid on the financial side, which you’ll see here in more detail than I’ve shared before.

And while you’re free to say this in the comments, too, I’ll head some of y’all off and say: Yes, I know it will look to plenty of folks like we overprepared. And that’s fine if you think that. Each of us has to figure out our own comfort level with savings, withdrawal rate and all the rest. Our comfort level on financial stuff is more conservative than some others’, namely because of all the health care unknowns, the bubbly-feeling state of the economy, the cost of long-term care down the road and a bunch of other factors that folks tend to underestimate.

Plus, as I said to a new friend at the Longmont meetup yesterday, we’d much rather have our names on NPR as program sponsors for years after we die than risk running out of money. Far better, in our view, to leave behind a charitable legacy and to have overshot than to hit some bad sequence of returns, follow that with an extended flat market, and realize in our late 70s, when it’s too late to do much about it, that we don’t have enough. Being able to possibly oversave and still retire at 38 and 41? That is a, ”Pinch us!” moment, and not, ”Doh! We worked too long!”

Our Next Life financial independence meetup in Longmont, Colorado, December 2017

Rad FIers in Longmont, CO

But let’s actually get to the show-and-tell portion, so you can see what I’m talking about. Without further ado, it’s the full financial rundown at the time we’re reaching the goal post (or the starting line, depending how you see the early retirement journey). And keep reading to the end, where I share much more concrete detail than I have before!

Our Next Life early retirement full financial breakdown // assets and liabilities at the time of our early retirement at age 38 and 41

Continuing with the grand tradition of the quarterly updates, let’s start with the rundown on progress in recent years. First up, our total net worth.

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

I love seeing the story in the charts, and not just the numbers (which we don’t share here anyway — here’s why), especially when those lines get steeper, meaning we stepped up our focus.

Let’s break it down into components. We paid off our house in January of our final working year, so the remaining mortgage balance is on our single rental home, and the 401(k) line and taxable savings represent the progress on our two big pools of assets:

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

We are somewhat unique (weird?) among financial independence and early retirement bloggers for thinking of our early retirement in two phases: phase one when we’ll rely on taxable investments and savings only (and not doing any significant Roth conversions) in the years before 59 1/2, and phase two after Mark turns 59 1/2 when we’ll shift to our tax-advantaged accounts (currently 401(k), soon to be rolled over to IRAs). This approach works for us because we got an early jumpstart on saving in our 401(k)s (and when I say ”we,” I mean Mark), and because we’ve earned enough that we could max out our 401(k)s and still save more in taxable investments. Obviously it’s a less practical approach for folks able to do one or the other but not both.

The Later Phase — Traditional Retirement

So that 401(k) line that looks all big and pretty? We ain’t touching that money for a long time, more than 18 years. Meaning it just gets to keep growing. And given that it\’s already well above what we expect to need come age 60 and beyond, we get to sleep well at night knowing that we’ve looked after future us. (And that if we screw up this whole early retirement thing, our actual retirement is still intact.) Here\’s what it looks like now, at 150 percent of what we projected we’d need to have saved by the time we pulled the plug:

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

We expect some of that balance to go away whenever the markets correct from this general frothiness, but even if they lose a third of the value, never recover it and then grow modestly over the years, we’ll be in good shape. And if things go better than that, then we can step up our standard of living a lot in “real” retirement, which we would be a-okay with.

The Now Phase — Early Retirement

The charts for our taxable savings and investments are way more interesting, because that’s where the stories are. You can see, for example, what we haven’t been able to share in pre-reveal updates, that we were always able to save more in election years, given that those are the bigger years especially in Mark’s work.

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

And you can see when we actually got serious about saving, even though we loosely formulated this plan back in 2011:

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

In the chart above, comparing what we projected we needed to save each year versus what we actually arrived at through a combo of saving more than we’d planned and market tailwinds, you can see where we got ahead of schedule in 2015, and that we adjusted our magic number upward to give us more security and peace of mind. And it makes us super happy to know that we actually beat that magic number by quite a bit, and were just able to sock a big chunk away in our donor advised fund (DAF) to continue our charitable giving even in lower income early retirement years, in addition to making a big charitable gift this year to the many organizations whose work we believe in.

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

Looking only at the last two and a half years, it’s crazy to see how much of our taxable savings has happened only in that time. We know we’re lucky to have been able to save as quickly as we did, but we kept surprising ourselves. And we don’t have a corner on being able to do that.

Travel 4Ever — The Points Balance

Travel is crazy important to us, and while we can shrink the rest of our retirement budget significantly if we have to in a recession to avoid depleting our assets, the thought of not being able to travel the world in a bad market bums us out massively. And that’s why we’ve made such a point to build up a big, fat travel points portfolio. We really tried to be smart about points these last few years, especially while we were traveling for work. I’m super proud that I was able to accumulate so many miles while still finding the best travel deals for my clients and company (#travelninja), and I can definitely attest that there is something much sweeter about that giant, comfy Polaris seat on a long-haul flight to Asia when you know you earned that upgrade the hard way, with butt-in-seat miles. So here’s where those are ending:

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

Through pretty minimal travel hacking, we’ve compiled well above our goal of 3 million travel points. The Chase Ultimate Rewards balance this quarter reflects an 80,000 points signup bonus we just got for adding the Ink Business Preferred card, and earlier in the year I got the Sapphire Reserve when it was still offering 100,000 points as the bonus. We also each have a United and Marriott card through Chase, and six cards feels like more than we need long term, without all the work travel. So stay tuned for thought on streamlining those.

I also can’t help but color code the miles to show who earned what. Given that Mark’s contribution on the financial side was bigger, I’m claiming credit for the travel mile greatness. (Not to worry… I will be reminding Mark of said greatness when we’re enjoying our ice cream sundaes in our new 777-300 Polaris seats en route to Taiwan this winter.) ;-)

(P.S. Did y’all know it can be way cheaper to fly to Asia than to Europe even though it’s much farther from North America, and that there are way more upgrades available and smaller copays to use miles? We have recently discovered this and are wondering why we’ve thought mostly about Europe our whole lives. There’s a whole big world out there, much of it far cheaper to get to!)

Real Detail: Multiples of “X”

The inverse of the 4 percent rule for safe withdrawal rates (a rule I have issues with) is the rule of 25X, with X as the amount you need to cover your living expenses for a year. Save 25 times your annual living expenses and you’re good to go, right? Um, maybe.

This is more than I’ve shared before, but here’s a breakdown of how much we’ve actually saved, well in excess of 25X:

Our Next Life early retirement financial rundown // assets and liabilities at the time of our early retirement at age 38 and 41

In total, we’ve saved about 37.5 times X, but it’s truly even more than that, because after our rental mortgage is paid off in 12 years and that becomes all cash flow, our ”X” will also go down by 40 percent. So the 22.5X in our tax-advantaged phase 2 accounts? It is really more like 37.5 of what X will be when we reach 59 1/2. And that would feel absurdly conservative, even for us, if we weren’t planning to step up our standard of living at that point. But we are. #balleryearspartdeux We may be fine traveling like dirtbags for the next two decades, but after that, we want comfy mattresses and no more shared bathrooms. Not so much to ask, right?

And on the taxable phase one side, our early retirement is 18 1/2 years long, but with the rental income kicking in after 12 years, the total multiples of X we require (in today’s dollars) is only 16.2, not 18.5. Put another way, we’ve saved 93 percent of everything we expect to need in early retirement, assuming that our investments can gain at least enough to keep up with inflation. It would take only the most minimal real gains (under 2 percent after inflation), or a little bit of side work, to get us to traditional retirement without running out.

So why save so much and not pull the plug a year ago? A bunch of reasons:

  1. Health care is of paramount importance to us, and we wanted to have answers after the last presidential election about what the fate of the Affordable Care Act would be before pulling the plug, which tied our timeline to real events as much as our magic number.
  2. Sequence of returns risk impacts those who experience a recession early in their withdrawal phase, and given how overvalued the markets feel by many measures, it felt reasonable to assume some contraction will happen in the first couple of years of our retirement. If the markets lose 20 percent, which is not crazy, then we’re back at our original magic number and still okay, versus having only saved that amount and being at risk of our assets contracting to an amount that wouldn’t be enough.
  3. I get notes often from people who wish they\’d saved more, and almost never from folks who wish they’d saved less. And the consequences of the former are much worse. So building up a cushion felt like the right move for peace of mind.
  4. We could spend some of that cushion on other stuff like an RV, or on something less fun like an earthquake deductible if our house gets shaken apart. We wanted our savings to at least allow for the possibility of a big ticket purchase at some point.

What’s Most Important — and Worth It

As we now step into the great unknown, we have a ton to learn. How will we cope with actually selling shares instead of accumulating them? What will be the many inevitable surprises, even though we’ve put about as much time as we could have into anticipating what the transition and next life will be like? How will we feel valuable in the world, and derive meaning, and live out our purpose?

I believe wholeheartedly that early retirement is mostly about evolving personally and emotionally, and is only a little bit about money. But if we’d cut it closer with what we’d saved, we might end up being forced to think about money a lot. Saving more than is strictly necessary frees us from having to think about it because our odds of running into problems are so much lower.

And the question we’ve asked ourselves from the beginning of this journey has been, “What would make it all feel like it had been worth it?”

Quitting our long-time careers only to feel even a little anxious about money? Not worth it. Maybe working a little longer than we possibly had to, but never feeling that anxiety? Totally worth it.

To us, that’s the most important part, and pretty much the best gift we could buy ourselves.

Chime In!

Fire away with any questions you have. Or want to tell me you think we saved too much? I’m braced for it. ;-) Mostly I’d love to hear from you guys about how your year-end numbers are looking — I’ve got virtual high fives at the ready for those who hit goals this year, but any good news is fair game. Let’s continue this in the comments!

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150 replies »

  1. I love thinking about things in terms of how many “X” you have… especially factoring it the rental property. I think our “X” goes to infinity in ten years when our rental properties are paid off.

    Since you don’t plan to touch Phase 2 for quite some time… maybe around 20 years (err… 18.5), it could have 2 (or more) cycles of doubling (rule of 70, using 7%). So that 22.5X could be 45X in 10 years and then 90X in 20 years, right? This is with all the standard disclaimers of market uncertainties and such. And with the rental property, it seems like you could be at around 125X. Kudos!

    P.S. You missed the link to the “here’s why” when you explain why you share your numbers. Also some of the apostrophes are “escaped” with a slash. There’s even a few \n in there. Do you write you blog post in C ;-)?

    • Still some artifacts, as you found, to the fact that this post got eaten by WP and had to be recovered. I clearly didn’t catch all the code funkiness that came through in the recovered version. (And the links get lost.)

      I think the doubling is theoretically potentially true but you have to take the effect of inflation out of that, which would eat up a LOT of the growth. So I still think our spending power will go up over time, but just maybe not quite as dramatically as your numbers suggest. ;-) Hope you guys had happy holidays!

      • I have friends who travel a lot for work and they discuss among themselves the different strategies to maximize points. I’m sometimes a little envious of all the points… but I realize the cost is real even if it isn’t financial.

      • Totally! The cost isn’t financial at all. And man, those miles/points convos are so engrossing when you’re traveling all the time, but they are so BORING to the rest of humanity. Can’t wait to regrasp reality and stop talking about that stuff. Hahahaaha.

    • Early retirement is definitely possible but not everyone thought it could be. The key is to start early. But the focus of most young professionals is to have fun and enjoy by spending most of their money and not thinking about retirement . These people should be educated with the right information to make them plan early in their lives. This should also be taught in universities. Soon these college students would be employed and it would be better to start saving as early as possible.

  2. Great job, and congratulations on making the leap into the exciting next stage of your life!

    I think you’ve done things just right (for you). You saved enough to feel comfortable enough. You can be “dirtbag” travellers around South East Asia… but you also have the option to come home again or traveling a bit more upmarket when the urge strikes. I’d much prefer that to being trapped with only the option being budget travel or living in a caravan or whatever a more modest budget affords.

    • Thank you!! And absolutely agree — real freedom means having options, and you don’t have options if you haven’t saved enough to afford them. We’re staying in some hostels in Taiwan, but are only sharing a bathroom in one place, because we’re ballers. Hahaha. (Not really.)

  3. Great post. I share your thinking on the value you will get from the having more than you need. Peace of mind seems like the biggest reason for retiring early. It was a pleasure meeting you and Mark in Longmont last night as well. Happy travels.

    • So nice to meet you, Wesley! :-) And I feel strongly about that peace of mind stuff, but it’s much harder to put a price on than many things. So we each have to decide our own price for it.

  4. Have you calculated the numbers on giving yourselves a bit of break and raising your thermostat to 58 degrees? This might throw your charts off going forward, but think of all the money you’ll save on not having to buy fingerless gloves. Much less the time savings on being able to actually use hand soap right from the container without thawing :)

    You didn’t save too much – I also want a cushion, with healthcare being my biggest reason. So my semi-retirement is perfect for me right now. I still collect a pretty handsome salary and get so much time back to start #mynextlife.

    And I hit my goals this year, plus extra. My net worth went up 20% and that was with 3 months at half my salary. Boo-yah!

    Happy New Year to you and Mark!

    • LOLOLOLOLOL ;-) Well I already HAVE the fingerless gloves, so there’s no need to buy more. Hahaha. So awesome you hit such big numbers this year with so little time worked — what a sweet gig you have! Happy new year!

  5. I think your extra savings makes sense more and more as we get further in to this journey. Originally I was thinking in terms of 25x, and its a pretty solid initial target. But for younger retirees, with the unknowns that currently exist in health care, I keep moving that number up. Congrats on getting to that bigger number. So excited to continue to follow your story!

    • Thanks so much for following up to this point! :-) And yeah, 25X is a GREAT starting point. But I agree completely that the farther you are from 59 1/2 or, really, 65 (Medicare age), the bigger you should consider making that number.

  6. I am 52, and a little late to the party for ER, but for someone my age what is the number of “X” any of you guys would recommend? I would love to hang it up at 55 but also don’t want to mess it up by being under-prepared.

    • I just announced my retirement at 52 (after 30 years of non stop work) but my number might be too high for you – mine is based on having the freedom to have a much larger than average annual income than most FIRE folks would say is necessary when living a debt free life.

      So I recommend 30 to 40 X and I base this on the fact that you cannot expect the long term returns on your portfolio post retirement to equal the pre-retirement run up. At some point you will have to move to less risky asset classes and you may want an oversized nest egg when you require long term care and don’t want to be shelved in a facility where the government is paying for your care.

      • Hi Tanja, I loved your podcast with Afford Anything. Can you talk a little more about your discomfort with 25X? I realize to some extent the answer is “it’s personal” but I’m hoping you can talk through the reasoning? 25X = 4% safe withdrawal rate. 30X = 3% rate. 40X =2.5% safe withdrawal rate. If you are 40X, are you really planning on restricting yourself to a 2.5% withdrawal rate? Or are you planning that your “X” might increase over time due to anticipated healthcare costs or what not. Is it that you are operating on a very small X where you might fluctuate 0.8-1.5X in a given year based on things like heating bills?

  7. You guys have done a fantastic job of saving and over saving for your retirement. I hope your retirement is long, healthy and a whole lot of fun – with some important things (to you) accomplished as well. I look forward to see the posts in the coming months and years.

    You have spelled out your withdrawal strategy very well in several posts through the past 12-18 months. One comment I would have, maybe more for others that read your blog vs. for you and Mark, is I wouldn’t automatically convert 401K money to IRAs. While IRAs can have more and better investment options and often, but not always, carry lower fees you can withdraw from your 401K at age 55 without penalty (50 if you are a police officer or fireman/woman) and IRAs you must wait until 591/2 to withdraw penalty free.

    • The penalty free withdrawal from a 401k only applies to the 401k of the employer you leave and it only applies if you leave no sooner than the year you turn 55. If you leave at age 40 like our friends here, or let’s say 52 like me, this option is not available. In that case if you want to tap deferred tax assets penalty free before 59 1/2 years of age then a 72(t) withdrawal plan is the way to go

    • Thanks, Keith! And re: 401(k)s, I believe someone else beat me to the answer on 55 vs. 59 1/2 (have to be currently employed to do 55 without penalty), but I agree it’s not necessarily the best choice to roll over 401(k)s. If you happen to have a great one with low fees and good choices, it’s no problem to keep that stuff in place. Mark’s has especially high fees so will get rolled over ASAP. Mine is with Fidelity and is decent, so there’s less urgency. Plus, there’s the potential liability points I outlined in this post: https://ournextlife.com/2016/09/07/401k-after-quitting/

      • One benefit to many (if not most) 401K plans is that they offer something that you can’t find in traditional IRAs: what are known as “Stable Value” funds. Stable Value funds are designed to protect principal. No, they don’t accrue much in the way of gains. That’s not their purpose. But they are backed by insurance to keep your principal safe. Does that go against the grain of compounding, etc.? Sure. But if you want to protect, say, a few years of living expenses and the markets are very rocky, this could give you peace of mind, vs. having to watch the markets every day. Anyway, it’s one potential benefit of keeping your retirement funds in your 401K vs. rolling over. It goes to risk tolerance, of course. https://www.investopedia.com/terms/s/stable-value-fund.asp

  8. Whoah! You guys are absolutely rocking it. I don’t expect we’ll have the huge margin of safety built in that you do, but we might change our mind at decision time. It must be a great feeling to have worked toward this and no matter what happens, you’ll be okay. Celebration time! We look forward to what you guys have in store for 2018. Cheers!

    • :-) Thank you! I don’t know if we feel as solid as “no matter what happens,” but we do feel better knowing we saved up a reasonable margin. ;-) Thanks for following along for the fun! Happy new year.

  9. I was reading this and just had a question for you about your plan. I know you mention having the two stage retirement plan, so thus not touching your retirement money, but have you given any thoughts to still doing Roth Conversion during your early retirement years even if you don’t actually use that money? I only ask because it could potentially save you some taxes now, even if you still don’t touch the money until “real” retirement age.

    Any maybe you have addressed this already in the past (or just don’t want to over complicate things) I just couldn’t remember from reading older articles. Even if you simply do the conversion, put it in a separate account where it’s simply reinvested into the same things and not touched for 18 years, it could save some money down the line. Just something that popped into my head while reading and thought i’d ask about.

    Congrats on hitting your goal! I don’t see any reason to think that you saved “too much”. The right amount is what works for each individual. Oh no, you ONLY retired 25+ years early :) I hope to make it by around that same age, but we shall see. At least having a plan is much better than hoping things work out for future me and even if I’m off by a couple years, it’s still better than most.

    • We HAVE thought a lot about this! Short answer is that we may do some limited Roth conversions in years with low income, and then set that money aside for “phase 2.” The biggest X factor right now is health care. Under current ACA rules, the subsidy cliffs are much lower than the tax brackets, so while we’d definitely save money on taxes doing the conversions, we might get penalized and pay much more for health care… of course, all of that could change, so it’s going to be a bit of a moving target, and we’ll most likely make that decision each December when we know where the rest of our taxable income is netting out for the year. Good question!

  10. High-fives to you guys! Your savings seems perfect for you, cause I know if you’ve saved ‘too’ much you’ll love giving more to the causes you believe in, win-win! We met all our goals with the exception of one. Instead of maxing out the Roth IRAs we used some of the funds to purchase a rental property. Still a win just different than anticipated. Happy New Year!

    • Thanks, Amy! And 100% true! We’d LOVE to give more if we earn more than we need. Or maybe fly first class once in a while. ;-) Hahaha. Congrats on having a great year! And I agree — you didn’t miss that goal, you just pivoted into a different one. Still a win all the way!

  11. “I get notes often from people who wish they’d saved more, and almost never from folks who wish they’d saved less.”

    Just to balance the correspondence numbers, I get quite a few e-mails from readers afflicted with “Just One More Year” Syndrome. (Both military and civilian readers.) We also wish we’d saved less. Reaching FI in 1999 with “enough” led to the experience of two of the world’s nastier recessions, yet today we’re at “still way more than enough”. I see a lot of parallels between today and 1999. And 2007.

    I agree that the 4% SWR still doesn’t model everything adequately, and it probably never will. Inflation & healthcare are issues, and I don’t see easy solutions to those either. On the other hand, nobody spends blissfully (and blindly) through recessions & bear markets. Everyone can find a retirement passion which happens to generate part-time income to bridge the tough spots. All of these risks can be seen way in advance and dealt with long before they destroy FI.

    You guys clearly enjoyed your careers, and perhaps that greatly helped cope with the dissatisfiers and the risks. On the other side of that, it’s disheartening to see people living with fear at jobs they hate when they’re way past 25x and can’t get past the JOMY concerns. Why they stay at those jobs is another issue, but FI is one solution.

    I see 25x expenses as a tripwire for FI, and I hope people can have faith in their flexibility.

    • “Quitting our long-time careers only to feel even a little anxious about money? Not worth it. Maybe working a little longer than we possibly had to, but never feeling that anxiety? Totally worth it.”

      I love this quote. The focus isn’t on money. It’s on being comfortable with where you are and feeling good about it. Since you enjoyed your jobs, it should never feel like wasted years. That’s the biggest thing people miss – that you should focus on always living your best life, one that you are truly enjoying, no matter what stage you are in. That will look different for everyone.

      • Aww, thanks! :-) And absolutely agree — if you see retirement as the time you’ll live your best life, you’ll miss out on a big chunk of your life. We should all be striving for that best life in every chapter. :-)

    • Thank you for providing the counterpoint, Nords! :-) I’m actually with you all the way on it being sad to see folks who have enough saved but can’t pull the plug — I DO get those notes semi-regularly, too. I see that as a different issue, though, and that’s why I write a lot about peace of mind. We each need to figure out what will let us sleep at night without a regular paycheck, put a system into place that suits us, and then trust the system and make the leap.

  12. No, you didn’t save too much. Giving our country’s screwed-up healthcare situation, it’s better to be safe than sorry. Mrs. G and I could have technically retired a little younger. But depending on the 4% rule and being 12-13 years away from Medicare was too risky for us. Like you, we felt much more comfortable with a 2.5-3% withdrawal rate. You guys played this retire thing very well. Happy New Year.

  13. I get a lot of flak from my coworkers about my $2M target asset worth because they all say, “but we have a pension, why do you need so much”. Yes, we have a pension and health benefits in retirement right now, but I won’t be retiring for another 18 years. A lot can happen between now and then, and I don’t want my plans of never working again to be in the hands of politicians. Congrats on saving so much and not having to worry about it so much! Have you all built any sort of cash cushion to potentially ride out sharp downturns without having to sell assets?

    • I think you’re smart not to rely on your pension 100% — a lot of people who’ve done so are in rough shape now, and pension reform is only going to continue. Though maybe you also don’t need QUITE that much. ;-) (But only you can know that — I can’t!) And on cash, YES. We currently have 2.5 X in cash (included in the phase 1 totals), so well equipped to ride out whatever market bumpiness we see in the near future. ;-)

  14. We just returned from visiting my parents and my Dad just went in to assisted living. Since none of us know where and when we may need that level of assistance, having saved extra is so important. The cost for long-term care (in addition to all of the unknowns for “regular” medical insurance and care) is incredibly high. You guys nailed early retirement and you’ve provided such important information for others. I appreciate your leadership in in this awesome community.

    • Wow, Vicki. You totally made my day with this note! :-) Sorry your dad needs that level of care — I’m sure it’s stressful for plenty of non-financial reasons, as well as the money part of course. Hope you otherwise had good holidays! Happy new year!

  15. “I get notes often from people who wish they’d saved more, and almost never from folks who wish they’d saved less. And the consequences of the former are much worse. So building up a cushion felt like the right move for peace of mind.”

    ^^^^^ THIS!

    Not many people in the world wish that they would have saved less in their lifetime, it’s almost always people who wish they would have saved more. We have enough saved to retire whenever we want (because we have saved like crazy and haven’t done any major lifestyle inflation). I’ll never regret the amount we are saving, and we live a great life traveling full-time in an RV so I don’t see myself regretting anything.

    • I can only imagine how much you guys must have saved at this point, given how hard you’re crushing it with your blog! I can imagine you could hang it all up anytime you want, but if you enjoy what you’re doing and how you’re living, then why stop? What’s especially awesome about you continuing to save is that you’ll have endless future options and won’t be obliged to live the RV life forever if you don’t feel like it. Happy new year!

  16. I am with you in that I would rather have a bigger cushion just in case as there are so many variables that you can’t control. Healthcare as you mentioned can be a huge one and is such a big unknown. Within the past week I ran two quotes for clients to get estimates for Medicare Prescription Drug Plans. Even with a plan covering some of their costs these two individuals are likely end up spending more than $10,000 per year on prescriptions. That’s a lot of unexpected costs, especially for someone on a fixed income. I would rather have a little extra saved and live large if it is not needed rather than drastically drawing down accounts and living like a pauper in 80’s and 90’s.

    • Those prescription numbers are sickening! Mark is on just one medication that’s not too crazy, but we’re literally choosing our exchange health plan on the basis of prescription drug coverage because it’s nearly $1000 a month otherwise. But at least we have choices! I know a lot of folks on Medicare do not. Totally with you, though! So much better to have extra left over than to be miserable and money-stressed later in life!

  17. That progress in less than a decade is pretty incredible! I can understand your reticence to step away too soon, particularly if you’re unlikely to find a position with similar pay if you did have to return to work. My path is completely different (contract work lets me tick off the big bucket list items and career simultaneously and I don’t necessarily plan to quit even after reaching my magic number), but I love seeing how others tackle the question of what to when they have an abundance of both time and money Can’t wait to watch your new adventures and pursuits now that you’ve stepped away!

    • Thanks, Lauren! It’s still hard to believe that it all was possible so quickly. And yeah, the fact that we wouldn’t be able to find comparable jobs definitely kept us working until we felt super duper secure. And now we get to figure out what to pour all that energy into! ;-) Thanks for following along!

  18. I only found your blog after hearing Tanja on a blog and being impressed with her philosophy on how fortunate we all are to be living now at this point in time to be able to DO this FIRE thing.
    Have you saved too much? Hell no! If I was American I’d be incredibly leery about healthcare costs in the future and I’d have a huge buffer saved just in case. Also, speaking as a single mother who remembers what it’s like to have to live on the smell of an oily rag, you can never have too much money in the bank. Security and being able to sleep at night is absolutely priceless.
    One more thing before I finish this novel: I loved your graph about your savings rate. It shows what people can do once they get that bubble of excitement in their stomachs about what might be possible. When you got ‘really serious’ as you put it, that savings rate climbed. I think that happens with everyone.
    Good luck with retirement stage 1! Enjoy!

    • Glad you came over to the blog after hearing that podcast — I’m guessing it was ChooseFI. ;-) And I am so in agreement about the savings excitement and motivation. Once you see what’s possible, amazing stuff happens, and we are not at all alone in this!

  19. Well you know how I feel about the American health care so I’d say you and Mark definitely did the right thing. It’s better to be on the safe side when health care is something that you cannot control. Having a little bit of cushion so you can sleep well at night is well worth it.

    That’s a lot of travel points and with some more travel hacking I’m sure you can accumulate even more.

    • Seeing the cost of just medications on our new plan is enough to make me want to go back to work for another year. (Just kidding!) ;-) And you’re right that won’t be the end of our travel point accumulation, but I’m excited to slow down that earning for a while!

  20. Congrats guys! I only discovered the FIRE movement earlier this year and it’s stories like this that validate it! The idea of a 2-phased approach is an interesting one I’ll have to consider!

  21. I got kind of obsessed with how the 4% rule might not work myself and there is something magical about how you finished up strong careers with a lot of integrity. The way things are going – I foresee even Medicare coverage changing significantly in the next decade – I think approaching things on a conservative fashion was quite wise. I did a lot of similar type of planning in that I don’t intend to touch retirement funds until I can without having to do a back door Roth conversion but never thought through the specifics and separated out into two distinct phases.

    The mechanics of creating the actual necessary cash flow without selling my shares of stock in my after tax accounts was also a sticking point for me so I created my own plan using a combination of after tax index fund investments, private equity, and an alternative investment which, so far, has worked. But, like everybody else, I’m waiting to be battle tested.

    Enjoy those travel points. Once I realized how easy they were to accumulate, I let go of trying to maximize each use, if that makes sense. I’ve only used points for now 15 nights in hotels since retirement and believe we have another 18 months before I need to buckle down and churn some cards again to build up a reserve. I’ve got Delta miles galore for whatever plane travel we decide to do… though no highballer status like you!

    • I love how you created your own two phase plan! Great minds think alike. ;-) And yeah, great point on not being so stingy with the travel points. We just booked all our Taiwan lodging and aren’t using (or earning) a single point, which feels weird. But the local hotels are SOOOOO much cheaper than the chains (plus there aren’t chains everywhere we’re going), so it felt like a no-brainer.

      • The points really are so easy to accumulate just by doing short term card churns and given your balance, you have a good 5 years of travel hooked up already so you don’t even need to go there for a long while. I’d like to thank you for the inspiration on accumulating them as it spurred me to set a little point goal/experiment for the heck of it and then proceed to crush it. It’s been fun using them, too, especially now that I’m not stressed about using them up too quickly. I can always go back for more when I need to.

  22. Like y’all, I’m very conservative in terms of how much of a nest egg I think I’ll need. It’s important to be conservative in some aspect of my life :). I absolutely agree that I would sleep better at night with a bigger buffer. I would also just use the “excess” to fund the causes I care about.

    Mainly this is just me being your cheerleader! You did it and were wise about making sure your hearts could be quieted for the next few decades.

  23. I love how you’ve broken traditional retirement and FI retirement up into two segments. That looks so safe!

    Great post, definitely giving us food for thought. I just can’t wait for my paychecks to come in, so I can squirrel as much as possible away into savings and investments!

    • Not saying the two-phase approach is necessary at all, but it feels great for us! And boy do I know that feeling of itching for each paycheck! Though in my case, that only lasted the first few years of our intense savings period, and then I chilled out about it. ;-)

  24. You said it all here….”working a little longer than we possibly had to, but never feeling that anxiety? Totally worth it.” That’s the important thing for you both!

    As for my own goals, every year we try to keep expenses (excluding taxes) flat or down. While the categories may change, the result was deemed successful for 2017 and the rest was plowed into savings, investments and of course maxing 401k. 😀

    • Congrats keeping your expenses level and having a great 2017! Here’s to a fantastic 2018!

      And of course we don’t *think* we worked too long, so would only possibly see that in hindsight, years from now. ;-)

  25. Holy travel miles Batman! You definitely pulled your weight there ;)

    I think the biggest part of working that extra year – for you two – is something you didn’t touch on here. You both liked your jobs quite a lot. (Wow, liked, past tense!!!) If your jobs were something you dreaded every day, I have to imagine you might have felt differently about that extra career time.

    • Haha — I’m the travel boss in this house. ;-) And it’s true that doing work we cared about and mostly enjoyed made a difference. But we also didn’t work an extra year. We in fact worked four years LESS than we’d originally planned, and the only way we may have worked too long is if, many years down the road, we find out that the markets performed well and the last year or so was unnecessary. But we weren’t at any comfortable place to retire a year ago and needed this year to shore everything up. ;-)

  26. When it comes to financial needs and working longer, we all have different levels of comfort when it comes to breathing room / error. I’m more like you, I’d rather “pay” by working a little bit longer and enjoy my time without worry (even if it’s a year or two shorter) than try to be optimal and retire sooner but feel a twinge of concern when the market drops 10%. It’s like flying above the clouds during a storm – as long as you’re above it, whether a foot or a mile, you’re above it. I prefer being a mile so that if the clouds do move up, I have a ton of room to fly.

    How about those miles! haha insane.

    • I’m cracking up responding to comments because we definitely didn’t work “longer.” ;-) From the moment we conceived of early retirement to now was only 6 years, out of our original 10-year plan, and we never added time to our timeline. The only way we worked “too long” is if the markets continue going gangbusters for several more years, make us all rich, and then prove in hindsight that we could have quit sooner. ;-) (Let’s all hope that happens!) But either way, I totally love your flying above the clouds analogy! (You know, because I fly a lot, to get those miles.) ;-)

  27. Tanja and Mark

    Congratulations again on your achievement and as usual I enjoy the story of your graphs and approach to distribution. I fully respect your decision not to share numbers but I also know that the numbers matter the most to folks looking for guidance and that the trust and reputation you have earned goes a long way for those who follow you

    Rather than doing hypotheticals that may be too close to home for you two, maybe you can bring in a qualified guest commentator from your FI circle of friends who can use real numbers and examples folks can then apply to their own situations so the 20 something’s and the 50 something’s can get some insight from a trusted source

    Just a thought

    Happy new year


    • Thanks, Phil! My sense is that most folks read multiple blogs and there are plenty of folks like the 1500s and Physician on FIRE who DO share numbers that I’m assuming people see. But correct me if I’m wrong! I do really like the multiples of X method because everyone is going to have different annual spending needs (you’re a great example of that!) and the X method allows people to apply their own base spending to things. But I love this feedback and am game to try different approaches. Happy new year!

      • Tanja,

        I must admit that I have definitely wished at times that you shared your numbers. HOWEVER, totally respect your decision not to, and if I was creative enough to be a FIRE blogger, I wouldn’t either. I agree that there are plenty of bloggers who share real numbers and anyone who is craving it from you can just go over to rockstar finance’s blog to find some dollar signs and commas! 475 financial bloggers share their net worth and he has a directory! Problem solved :)


        Hope your first few weeks retired are as amazing as I’m imagining them to be :) Join you in 6-ish years!

      • Thanks for chiming in with that, Emily! There are times I *want* to share, but given both our privacy concerns and my much larger concerns about stoking unhelpful comparison, I feel sure this is the right approach. :-) Thanks for backing me up!

  28. I enjoyed this post. Whenever my husband and I are discussing our finances we always remind each other that as risk-averse people we won’t regret saving money! Also let’s be honest, NPR program sponsor = #lifegoals. Hope your meet up in NYC is on a weekend so we can make it!

  29. I don’t think you saved too much. You saved just enough to feel comfortable when making the leap :) I totally get it – when I plan for retirement I have plan A, plan B and plan C. It’s the only way to keep the worry gremlins at bay :) :)
    Good luck for the next phase of your life!!!

  30. Thanks for sharing the information on how you plan to find your retirement! It’s underreported in the FI community. I’ll be using your tips to fund and pull out of my accounts.

    I agree that your tax deferred accounts should be last to be emptied. I plan on living off of my savings accounts and rental income in early retirement, while withdrawing a small portion from my tax deferred accounts to replenish savings. That means I’ll now have to focus on investing in my Canadian TFSA and paying down my rental mortgage.

  31. What does your 401k portfolio look like? Mostly index funds or a mix with conservative investments? I was surprised to see your 401k line soaring above your taxable accounts.

    Right now, we have the inverse, mostly due to the annual 18k cap on 401k contributions (despite us both having solid company matches). We’ve both been working and contributing to tax deferred retirement accounts for 11 years and I feel like they should be further along than they are.

    • Oh dude, I have a suuuuper conservative 401(k), dating back from my super fearful money days. A big chunk is in the Pimco bond fund. LOLOLOL. Fortunately, in recent years, I got smarter and put most of my funds into the Fidelity Spartan S&P index fund. Mark’s 401(k) is much more aggressive than mine (shocking: it has outperformed mine!), but also has high fees that have eaten into gains. Mostly that line is just higher because it has a larger balance so compounding adds a lot more to it. Plus we’ve still been maxing out plus getting employer matches, so that helps. On yours, it sounds like you just haven’t hit the snowball point yet. But it’s coming soon. Mark’s 401(k) is almost 20 years old, and after 12 or 13 years was when it really just seemed to explode on its own.

      • i almost spit out my beverage when i saw pimco bond fund! i’m trying to turn as much of our assets into roth assets as possible, maybe at the expense of some present day taxes that are not hurting our lifestyle. i’m glad you have a big phase one cushion as that is one thing i’ve noticed with relatively young 401k and real estate millionaires. all their dough is restricted.

        happy new year, baller.

  32. I’m curious about your points. It must have taken you a few years to acquire millions worth. What was your strategy? How do you avoid paying fees on all these cards?

    • Oh, it took YEARS AND YEARS. And there has been no fee avoidance. We’ve paid MANY fees. But given how much travel we’ve done for work, the fees have been worth it. Moving forward, we’ll have to decide if that’s still true!

  33. First Congrats!! I appreciate the way you discuss your numbers. The graphs are so helpful. I have been battling how to describe my journey without revealing specifics. I find it so helpful how you used graphs to show your progress. It’s not about keeping up with the Jones it’s about making progress. “Start where you are with what you have and do what you can.”

    • Thank you! :-D And glad the graphs are helpful! I am a big fan of using graphs with the Y axis removed (and especially if you use weird intervals, not obvious ones like $100K, just to throw people off the scent). ;-)

  34. Congrats. Your excellent savings have left you a wide margin of safety. I find myself in a similar position but haven’t had the courage to the pull the trigger yet. Hearing your story helps.

  35. Good for you guys and for anyone that achieves their goals or is able to retire early. It’s nice to hear stories of people doing these things. Keep up the great work.


  36. I’m already in semi-retired mode. But I’m young, so I want to do something fun. I’m thinking of turning my investing blog into a financial media company. So provided that my back heals nicely, I’ll pour $200k into it next year and see where that takes me.

    Happy New Year!

    • That’s a big investment! Is that money you can afford to lose, or do you *need* it to work out? I personally would panic with that kind of investment, but that’s why I’m not cut out for entrepreneurship. ;-)

  37. I hope y’all are not weird because I am also planning a two phase retirement.. Phase 1 for us will be 11 years and we have approximately 11X saved in taxable accounts so I’m glad to see you also have almost 1X per year saved for that phase. I think I’m comfortable with that and the ability to draw from over $100k of Roth contributions in case of an emergency. On the phase 2 side we have exactly 25X saved.

    Enjoy your early retirement! We’ll be joining the club in June.

    • Woo for the two phases! And wow, it sounds like you’re one of the weirdos who’s as financially conservative as we are! ;-) But I totally support your extremely secure plan. Well done! Can’t wait to welcome you into the club this summer. :-)

  38. Thank you for sharing this fellow SUPER SAVER!

    My fiancée and I are much like you and your husband in our savings habits. We are 25 & 24 and have recently begun to MAX out my Roth 401k and both of our Roth IRA’s. This year we will also begin funding our taxable brokerage account for the first time with its goal to allow us to begin having an early retirement before we hit 59 1/2 and the other accounts kick in.

    it is great to see what savings does over the long-term!

    • Congrats on taking on some big goals and forming some strong habits at such young ages! You definitely have us beat there. ;-) We didn’t figure this stuff out until the tail end of our 20s and early 30s, so I’m sure you’ll be able to retire way earlier than 59 1/2 at the pace you’re going.

  39. Is it reasonable to subtract out pension monies in well funded plans when determining X times expenses. Also is Social Security ignored or subtracted from monthly expenses

  40. Congratz on the FIRE! It has been a pleasure to read your story: entertaining and informative. Keep it up!

    And this one: Quitting our long-time careers only to feel even a little anxious about money? Not worth it. Maybe working a little longer than we possibly had to, but never feeling that anxiety? Totally worth it. –> I like it. You need to do what makes you sleep well at night!

  41. Congrats! You’ve certainly done your homework. Thanks for showing us what’s possible when you put your mind to it!

  42. Happy you that have the 401(k) option. The rest of the world only dreams about it.

  43. Thanks for sharing this information with us.felt really good after going through this, especially from the financial aspect of managing life.
    Keep Writing

  44. Hi,
    I am 52 and married with two dependents aged 11 and 9. My mortgage is fully paid on my house.I have a successful business that generates money for my me every year. It is completely passive. I also have a full time job. I do not have much in the bank. I also do not have any in mutual or index funds.Can you please guide me on how to setup an aggressive savings plan, in order to reach my retirement multiples. Any help will be greatly appreciated.

  45. Hi all,

    One possible way for possible early retirement is to assess the current asset. Divide the amount by 25 or more. The result will be the budget amount one can consider living on after retirement. I think that this is useful for those who want to see whether he/she retires presently.


  46. Hello! I’m a fairly new reader and I’m enjoying your blog a lot! Thanks for sharing your experience.
    I live in the UK, and although our tax system is a bit different we also have pre tax and post tax investments opportunities. I’m 30 and looking to be FI by 45/50, so far I only invest in our equivalent of your 401k (the limit is 40k £) and I think I should also invest in post tax as we cannot get money out of our “401k” until 57. However I don’t know how to calculate how much to put where. I can see that you first saved in your retirement accounts and then saved for the early retirement number of years, do you think it is better to fill them at the same time or one after the other? I hope may question makes sense :)
    Thank you

  47. Wow, this is so inspiring and as I like to think we can do the same, I just don’t think we make enough to be able to retire in 10 years. As our side businesses ramp up though, that may change. How much do you recommend putting into the 401k every month that got you to this point?

  48. Wow, interesting look on this. My wife and I just began to take a serious look at FI and we are about 10 years away now. Neither one of us would like to do nothing in FI. The question then becomes what would we do if we achieved FI and what if preventing us from doing that now? Do you think this is a worthwhile question? What are the fundamental questions you believe are essential when beginning FI? :)

    I appreciate your effort and hard work! Keep it up

  49. I’m relatively new to the FI movement but have been working my own slow version of this for several years already. I love the charts – they make it real and are pretty inspiring. Kudos to you guys and thanks for sharing so much detail!

  50. Thanks for the detailed post. I’ve been following your blog lately and reading up on most of your posts and it’s great!

    I always had a question on the 25x rule and thought to post it to you!
    When we say, I spend $40000 so I’ll need $1MM corpus seems fine. But, where do we take tax into consideration? Selling shares or getting rental income is bound to attract tax. So, the actual number should be much higher right? I’ve never seen it referenced like that so wanted to enquire. Your thoughts?

    • Hi Pradeep. Re: taxes, you’re right that you need to factor that in. So the amount you base your “X” on should be PREtax. How much that is is based on what your income sources are, your tax bracket, etc., so there’s no blanket answer.

  51. This entry is the first time that I have seen someone put so succinctly and helpfully the multiple phases of retirement, if one is to do an early one. It is very helpful and got me to redesign my plans accordingly. I also listened to a podcast that you two were interviewed — I love the honesty and calmness with how you both explained the evolution of your lives! Thanks so much.