(Early) Retirement Progress Health Check

(Early) Retirement Progress Health Check

It is helpful to track our progress as we continue to execute and adjust our plan to reach (“an early”) retirement. Two important factors are our budget (“how we’re doing“) and our net worth (“where we are“). Most of the concepts to achieve financial independence are simple, the key is to act consistently in order to see the concepts come to fruition.

Save me today, and I’ll save you tomorrow


There are many great calculators and resources online to establish a budget, I like several at Bankrate.com for example. We have also used calculators there to analyze potential savings with our mortgage or to calculate auto loans or lease payments. An obvious, but not necessarily followed guideline would be to “spend less than you make“. 🙂 Spending more than you make is not going to work long-term.

Our budget includes fairly aggressive saving goals, and we do our best. It is definitely tough with tuition for our eldest daughter and the recent stress tests for our emergency fund. We have saved diligently for a long time, funding our tax-sheltered retirement accounts (Roth and 401k) and more recently our taxable brokerage and real estate crowdfunding account through Fundrise. We do not have a lot of disposable income leftover, but these savings are baked into our budget.

A nice benefit is that our overall budget will be down significantly when we do retire, because a large percentage is currently allocated to retirement savings (40%). A guideline is to generate 80% of your income in retirement, but I believe we will be able to get by on less. If we can eliminate other “big ticket” items in time (mortgage and tuition), it would further reduce our income requirements, and/or free up more “fun money“.

Another good principle is to be over-prepared. We are considering a “partial retirement” or maybe a staggered retirement to address issues like health insurance and to further shore up our plan. There are probably other black swan events looming. Covid-19 and the 2020 pandemic ended up being “good” years for the markets, but the ride had a lot of stress and “pucker” moments along the way…

A general rule to follow is to “save as much as you can, as soon as you can, for as long as you can“. It definitely takes commitment and some faith to persevere and follow financial best practices, especially in the early years long before you start to see evidence that they work. Building your net worth from $5,000 to $10,000 is a 100% increase, but 10k isn’t going to go very far. However, it is these early years that are so critical to building a foundation as well as habits that can last a lifetime and support you and your family in the “golden years“.

We also need patience and the discipline of “delayed gratification“. We have guilty pleasures where we strayed and spent too much on interests or hobbies, but overall we have done ok. As you start to pass major milestones: $100K, $500K, $1,000,000, it is rewarding to see the best practices coalesce into something concrete. Still, I was expecting confetti and balloons when we hit $1M and then $2M, but nothing happened. Most recently we are approaching $2.5M, but with inflation $3M is probably the new $1M. However, net worth by itself doesn’t tell the whole picture. It does provide some way to track where we are, but our financial independence goal is to continue to build our passive or other retirement income stream until it can cover our expected expenses. Depending on the timing, we will continue to consider ways to tap our tax-sheltered accounts if appropriate, but for now we are happy with our progress and will maintain the status quo.

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~$Retirement Nerd🤓

Disclaimer: I am not a financial planner and content on this site is meant to provide food for thought, not professional advice. I share my experiences to show what worked so far and what didn’t, YMMV. Please consult your financial advisor or tax professional as needed.

By $Retirement Nerd

$Retirement Nerd is in his late 40s and looking to retire in the next few years.

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