What’s My Financial Independence Retire Early Number

This has been a complicated question for me. On the one hand, I am turning 40 in a few months, have a net worth of $1.3 million and owe at least 3.5 more years to the Army. I am debt free and I have three streams of income in you count my salary, rental properties, and dividends. I can carry these three salary streams into retirement because I have a pension, although my pension is less than my income. 

On the other hand, my pension and my rental properties make up the majority of my net worth. Even though they pay me monthly and my pension is reliable income I do not have a sufficient amount saved in my TSP, Roth IRA, or taxable brokerage account. I am trying to rectify that problem over the next eight years and then I will reevaluate.

My eight year plan includes having living expenses below my three streams of income when I decide to stop working. In fact, I want enough wiggle room so even though I am retired I can keep saving. I am currently debt free so I need approximately $2,500 a month to achieve this. This number covers my RV space, food, Roth IRA contributions, rental property taxes and insurance, estimated monthly vehicle expenses, $100 towards an emergency fund, and $100 to my children’s custodial accounts. This number is already covered by my pension. 

This is the catch, my wife and children get a vote. While I live as a minimalist and save huge amounts to retiring early the rest of my family gets a vote in this plan. Last time I checked the movement wasn’t financially independent retire early and single (FIRES) so I had better calculate my wife into the equation. 

A quick story about my lovely wife. She is in the Army as well and unfortunately we are stationed in different places. She lives in our house in Maryland with our nearly two year old son while I live in Texas with our four year old daughter. We have unfortunately been living separate for a few years now but we visit often. This has been tough during the pandemic and the travel costs have been rough on our budgets. The good news is that she should be coming out here to Texas in July 2021 if everything goes as planned. 

My lovely wife is also debt free and plans to retire from the Army. Depending on whether she serves 20 or 30 years she either has 9 or 19 years left. She is about 10 years younger than me and that is the reason for the delay between my retirement and hers. She recently started her Roth IRA and a brokerage account as well. Our retirement plans include owning a home in Wyoming but continuing to RV about the country, traveling to and spending time with our relatives. 

It is hard for me to predict how much the home in Wyoming will cost me or the amount I will need for property taxes and insurance. It is also hard to predict how much money I will need for the kids. I am raising them as minimalists and ensuring they are financially literate, so when I am gone they don’t start where I had to start...not knowing. I should have plenty between my three streams of income, and as I will discuss in a future post I am in the planning stages for a fourth income stream. I don’t want to spend my TSP, Roth IRA, or brokerage account on my retirement, I want to pass that money to my children when I die and count on them to grow it for the next generation. We will see how that works out. I do not plan on having Social Security when I retire. 

For beginning planning I will add $500 for the house in Wyoming and $250 for having children making my monthly total $3,250 which is still covered by my pension alone. That being said my  yearly budget is $39,000 divided by .04 means I need $975,000. I currently have $80,000 in my brokerage account so I need to save $25,306 a year until my wife retires in 19 years. I calculated my fat fire number at $75,000 per year for a grand total of $1.875 million. That means I would need to save $55,800 a year which is in the realm of possible. This past year I was above that number but as we all know the future is unpredictable and that number may be extremely difficult if I don’t work the entire 19 years between now and my planned retirement.

So what’s your number? Do you have a specific plan to get there by a certain age? What made you pick that age? I will be posting my 2021 plan soon so be sure to come back and check it out. I look forward to hearing back!