‘We want to be able to enjoy life in our mid 40s without having to work’: Middle class FIRE seekers struggle with late start in careers and need to catch up. How can they achieve financial independence?

Hey Money Minder,

So, my partner and I are on a mission to FIRE (Financial Independence, Retire Early). We’re all about saving aggressively so we can kick back and enjoy life in our mid 40s without being chained to a desk.

Here’s the lowdown on our situation: I’m 35 and my hubby is 37, with a kiddo who’s 6 years old. We’re living it up in a Very High Cost Of Living area.

Here’s what we’re working with: House paid off, worth around $1M, $250k in 401k, $60k in index funds, $100k in a high-yield savings account, and a family car that’s fully paid off (it’s a Toyota Corolla, in case you were wondering).

After taxes, maxing out our 401k, and my HSA, we’ve got about $14.5k coming in each month (and that sweet annual bonus of $40k, post-tax).

Let’s break down our monthly expenses: $850 for property tax, $300 for home and car insurance, $600 for after-school care, $500 for utilities, $50 for gas, $1200 for food, $1500 for all other expenses, $9000 in index fund investments, $500 for fun money. And guess what? Zero debts!

Oh, and when that annual bonus rolls in, we divvy it up between investments, vacations (usually splurging $10-12k on a big trip and some smaller getaways), home repairs, and $10k into a 529 college savings account. That’s outside our monthly income and expenses, just so you know.

Both of us have fancy degrees (JD and PhD), so we’re playing catch-up with our 401ks after a slow start in our careers. But hey, at least the student loan debt is history!

Catch you later, Money Minder!

Dreaming Early Retirement

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the initiative to pursue Financial Independence, Retire Early (FIRE) goals! It’s clear that you and your husband have made significant strides in boosting your financial health, particularly with owning a mortgage-free home and diligently saving through various investment vehicles. Your detailed breakdown of assets and expenses demonstrates a thoughtful approach to managing your finances and planning for the future.

Given your current financial standing and long-term objectives, it’s commendable that you prioritize investing in index funds and contributing to your 401k and HSA. Maxing out these accounts is a smart move, especially considering your late start in your careers. Your strategy of leveraging annual bonuses for a balanced approach to investments, vacations, home repairs, and college savings for your child shows a well-rounded financial plan.

However, as you work towards achieving FIRE in your mid-40s, it’s essential to continue monitoring and optimizing your expenses. While your monthly spending breakdown appears reasonable, you may want to consider reassessing certain areas to potentially increase your investment contributions or build up your emergency fund. Additionally, ensuring that your retirement savings are on track to meet your desired timeline is crucial, especially given the high cost of living in your area.

In conclusion, maintaining your disciplined savings habits and wise investment choices will undoubtedly position you well for early retirement. Keep up the excellent work and stay focused on your long-term financial goals. If you ever need further guidance or support on your FIRE journey, feel free to reach out for personalized advice tailored to your unique circumstances.

Farewell from THE MONEY MINDER.