Wow nice. How much is in retirement accounts and tied up in your house? Congrats on having the balls to take the plunge - excited for you.
I don't include non-liquid assets in any calculations. I don't plan on selling our house or car to pay for living expenses. In fact, I've always found including those types of things in net worth as being a bit ridiculous.
I've been saying since we retired that I'd do an early retirement type thread, but I need to face the fact that I'm just entirely too lazy and don't give a shit, and likely never will.
But anyway, to answer one of the questions
Rangoth
asked, we knew several years out that we'd need money to live off. So we maxed out IRA's and 401k's (TSP in my case), and then the additional savings all went to a taxable account. That's what we've been living off of the last 3 years. At our peak earning years, we were saving about 65% of our income. High savings is a double whammy, because you obviously save more, but you learn to live more frugally and that then becomes your new baseline spending. Anyway, our taxable account will likely run out next year, unless I end up getting disability from the VA in which case it'll stretch it out maybe another year.
Every year I do a traditional to roth conversion though, known as a roth conversion ladder. Roth principal is tax free after 5 years if you convert it. And all our accounts are long term capital gains now, which as a married filing jointly, is taxed at 0% until you have about $100k in income. Which means I can use the standard deduction (or more) and convert, and after 5 years withdraw it 100% tax free. I obviously did this starting in our very first year of retirement. So we
would be hit with a penalty, but we'll be drawing roth principal for a while.
When that runs out, yes, we'll take the 10% hit. It sucks, but we've been taxed 10% (usually significantly more) on income our entire lives, so who cares? And in another 15-20ish years, we'll draw social security and I've got a small pension coming, so that should make our withdrawals tiny. And that penalty will drop off.
It's interesting to me that $50k in spending is considered "frugal" though. We basically don't hold back on spending at all. Our mortgage at 2.75% is about $1250 (we used some of the proceeds of our house in CA for a down payment, but it wasn't crazy; about $90k), we spend maybe $400 on groceries a month, $250-300 on gas/insurance, $300 on utilities, $125ish for phones and internet, $800 for medical expenses, and that leaves us with almost $1k a month in bullshit spending (restaurants, "fun," miscellaneous).
My mother-in-law is spending something like $80k a year, and my mom said she's spending around $70k (retired for a year less than me). I have no fucking clue where it's all going. Both of them are living in paid off houses, and both have very low medical expenses. My mom does have a Tesla payment. But like, what the fuck are you blowing money on as a single person to the tune of $6k+ a month?
