The plan – done in 5 years or less

Over here at the FIREdad house we have shifted gears into planning for our retirement which seems to be getting closer every day. The journey of FI/RE has been pretty short for us compared to most and that is in large part to some major upticks in income in recent years mostly from businesses that I have started. I started about 8 years ago and should be done in the next 5.

We have gone from an initial goal amount of $750,000 in assets with a paid for house to thinking we would want $2 million. At this point we have scaled it back and the FI/RE goal for us looks something like this:

$60,000/yr in income from various sources
$400,000 in pre-tax retirement savings
A paid for homestead on 40 or more acres of timber

Today I’m going to dive deeper into each of those goals, how we are going to achieve them, where we are on the path to that goal and what the future holds.

$60,000/yr in income from various sources

I expect that point is 2-5 years away depending on where life takes us. Most people would look at those lists above and say something like “They want $60k a year in income, sounds like work to me!” and snicker because they outsmarted me. When I think about FI/RE I rarely think about the Retire Early part. The end goal for us is to live life exactly how we want without needing money to be a part of the equation. 

When I write that we want $60,000 in annual income to be FI that sounds like a conflicting statement, but here is what I mean by that and the breakdown. We currently own multiple businesses that I have built up while working full-time in Accounting & Finance. At this time I have two that are producing fairly well with minimal involvement from myself.

Retail Running Speciality Shop – This business has been around for 30 years and is quite established. It was one of the first jobs I had after graduating college doing their accounting and selling shoes in the store. Over the last 10 years I became very close to the family that owned and operated the store. Last year the owner passed away suddenly and I offered to purchase the business. We had been talking about it for years, but that unexpected incident really lit a fuse. As of today I spend about 10-15 hours a week as the owner of the business. I have an extremely reliable manager and staff that run the business day-to-day. 
$40,000/yr – This will vary greatly as the health of the shop financially is my main goal

Racing Consulting Business – I also run and manage a race timing/consulting business. I’ve sold ⅔ of the business over the years to 2 other partners which has been both rewarding and challenging. Until 2020 I was President and lead consultant for this company and at our peak we were supporting around 100 events annually. With COVID there is no telling when this business will come back. When it does come back I’ll be scaling my involvement in this business back quite a bit by hiring a President and other employees. I’ll just be doing the events I want.
$0/yr during a pandemic – Roughly $20,000 when I hire out all my current work

Rental properties – We own 1 fully paid for condo worth $130,000. I use a property management company to make this as passive as possible which is great, especially considering the condo is 800 miles away from our home. I would really like to purchase 1-3 more before reaching retirement age. We also rent out ½ of our primary residence. Our attic is remodeled to be a studio apartment and the COL is so high here that it generates $1,000 a month. Our homestead dream will reduce this income by $12,000/yr as we will sell our current residence and lose that studio rental.
$21,600/yr Now
$9,600/yr post FI

CFO – I am also still working a full-time accounting/finance job. I am 2nd in command at a Destination Marketing Organization. This is a really rewarding position that is quite fun at times. However, quitting this job is the main driving force of FI/RE for us. This is more of a traditional job and that is the thing I am trying to get away from. When we reach our goals I will quit this position, purchase our homestead property and make homestead our primary “job”.
$110,000/yr

As you can see when we review the list of our FIRE goals that the income side is already met with my businesses and rental properties. That means the CFO role is currently being held to supercharge the savings rate to accomplish these other goals.

$400,000 in pre-tax retirement savings

401k,457,IRA, Roth IRA, CO PERA (pension)- As of today we max both a 401k and a 457 as well as the maximum allowed in IRAs each year. The CO PERA pension will be multiple posts in the future but it currently automatically takes 8.5% of my salary and goes into that bucket.

$220,400 – All retirement accounts including cash value of pension 

When you look at our income and see we ‘only’ have about $220k in retirement it might seem like we have a terrible savings rate. The truth is that we do save quite a bit of money but I have used that savings over the years to invest in businesses, rental properties and other ventures rather than just pure retirement savings. 

$400k in pre-tax accounts that are left alone until we reach retirement age will turn into $1.5-$2.5 million by the time we turn 59.5. The plan is to get that to $400k then let it sit for the next 25 years in VTSAX, international and a small % of bond funds with an annual rebalancing. 

In 2020 we will have contributed $58,000 to our retirement accounts. Assuming we aren’t faced with a major economic collapse (apart from COVID) this goal should be met by 2023 and with average returns will be even sooner.

A paid for homestead on 40 or more acres of timber

We have set a budget of around $400,000 and not to exceed $500,000 on our homestead plans. This is the land, home and improvements we want to do.Our list for the homestead phase of our life is far more luxurious than I’ve seen on most homestead bloggers and YouTubers. It’s why I am such a big proponent of living the life you want to life, but just being intelligent about it.

Our list includes:

• 40 or more acres, mostly timber where I can build MTB and running trails
• Water on or accessible from the property: lakes, streams, rivers are all acceptable
• 3 acres or more of semi cleared land near the home for agriculture
• Outbuildings – at least 1 but more is better
• A mostly or fully remodeled home with 3 bedrooms, 2 bathrooms with significant space for food storage

This is the part of the plan that is going to take the longest. While we could afford a mortgage on this dream property it is a personal goal to have no mortgage. Our current home is worth $75,000-$100,000 more than what we owe. We also have another $30,000 in after tax savings.

I put a lot of my free time into working on projects at our current home to raise the value as well as living frugally to save as much of our income as we can.

We currently save 100% of the income from all our businesses towards this goal. There are a lot of variables but this should be achievable in 3-5 years depending on market returns and if we can maintain these income levels.

When reviewing this plan there are people who would say it’s too conservative that with our income, savings and expenses that we could quit today and go homesteading now. There are others that would say I’m not going to have enough of a cushion should things change. All of those perspectives and opinions are equally valid. The plan above works for us. Both my wife and I have serious anxiety issues and this very conservative plan with multiple revenue streams along with a very comfortable retirement account is what works for us to sleep at night. If we needed to we could live on just the retail business income, if that needed to stop we could live on just the investment properties income, if that didn’t work then at least we own land that is producing a majority of our food and water needs. 

That’s the plan. Keep maxing the retirement accounts and save everything else to buy a homestead with cash. Then spend our days teaching our children how to live off the land, growing your own food along with selling at farmer’s markets/roadside, and hiking on our private slice of rural America on trails we built ourselves. I can’t think of a better dream to be able to pursue.

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