Two years ago I made a post celebrating hitting the milestone of reaching a net worth of a quarter-million dollars, which itself came two years after one of my first posts on the blog in August 2019, laying out my plan to retire by age 40. This seems like a great time to take another look at my personal journey towards financial independence and see if I am still on track to hit my early retirement target.
Inflation-adjusted, my $1M target portfolio value when I started this blog now requires a cool $1.2M in today’s dollars, which I learned using the BLS’s CPI Inflation Calculator.
My most recent budget review saw me spending an average of $3,756 per month, or $44.4k in annual expenses. This would amount to a 3.7% withdrawal rate from a $1.2M portfolio, slightly more conservative than the oft-quoted “four percent rule” in the FIRE community. So my target portfolio value still seems reasonable relative to my expenses.
Now I’m 30 years old and only a decade out from my early retirement goal. To take a look at how I’m doing I’ll need my current FIRE portfolio balance, and project it forward assuming a 5% annual real return while accounting for additional savings contributions — an average of $4,050 per month, also taken from my recent budget review.
Here’s my results (click to enlarge):
I am still projected to reach FIRE by around 40.5 years old. At a first look this is slightly disappointing compared to my 2021 projection, where I was ahead of the curve and my FIRE date actually appeared to be moving closer.
I attribute this mainly to a single factor, which is our recent home purchase. While I include home equity in my net worth, I am not counting it towards my FIRE portfolio balance, because it shouldn’t be drawn down to pay for living expenses like one’s liquid investments.
Previously as a renter, the entirety of my net worth consisted of liquid investments such as stocks, bonds, and cash. Thus my net worth and FIRE portfolio value were equivalent. However when buying the house, my portion of the down payment was converted from cash to home equity and it could no longer be counted as part of my FIRE portfolio.
On the other hand, a few positive notes:
Despite the large down payment and closing costs (about $60k) that I laid out, my FIRE portfolio balance at age 30 is still slightly higher than I predicted it would be at this point in 2019. Most reassuringly, this was a one-time setback in the projection. Additionally, since my largest (housing) expense is now fairly fixed, if I can increase the amount I am saving it will continue to inch up my FIRE date moving forward.
A mortgage payment eventually goes away if one plans and acts responsibly, which is a massive boon for retirement compared to renting. If I never saved another dime beyond making mortgage payments and just let my current portfolio continue growing, my “worst case” situation for retirement is somewhere in my early 50’s. Our mortgage will be paid off at age 60 at the latest leading to a huge drop in monthly expenses, and Social Security kicks in at some point in the near future after that.
Brick by brick
Month-to-month, and even year-to-year, financial progress can feel slow. It’s like adding a single brick at a time to a wall. But after a bit you take a step back and from that wider perspective you can see the project coming together. As I reflect on eight accumulated years of data in my FIRE journey, I end up being really impressed with my progress. That’s the real source of motivation to keep grinding, at least for me.
The goal is coming more clearly into focus. I’m sure that life will throw me several curveballs over the next decade, but as always I’ll keep adapting, optimizing, and continuing to do what works. I’ll revisit this graph in another two years.
As we head into yet another fall season up here in New England, I’m eagerly anticipating breaking out my flannel shirts. Life is good and always getting better!
Glad to see you continue to update your blog and openly share personal data. Wish more content creators would do the same. The hard work certainly pays off even before the end of the race, like you I’ve got around 9-12 years left at this point the security of having a nice six figure stash makes life much less stressful. Be well and hope to follow the site to see you get over that finish line.
Thanks for reading, Cecilia! It’s certainly my hope to keep this blog running through hitting FIRE and beyond, as a complete record of my journey and what I’ve learned along the way.