Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?
Thankfully, November was as good as October, when it comes to recovering after a horrible month of September. Now it does look like we are making the progress (which we did every month but the market losses masked that progress).
The gap to close shows what we need to accomplish by May 2023 to be able to retire early. In November we “gained” $141K, which made the cumulative impact of $238K, with $285K to go… I am getting more confident that we will be fine comes April of next year!
Mortgage
This is the largest item in the table above. We want to retire without any debt, and the vacation house mortgage is the last debt item we have.
As of July 2021, we had $315,827 in principal due to the bank. In November we contributed $3.8K towards closing the gap. I continue saving money as cash instead of paying extra mortgage (for now) to build enough emergency funds to cover us through 1.5 years since the market is currently in the current state.
Cumulatively, since July 2021 we reduced the mortgage gap by $147K, 46% of the gap. Since we have less than a year to go before we pull the plug, the question is – are we going to meet this goal by April 2023 (we shifted our retirement date by a month, by the way)? At this point I would like to build up a stronger cash reserve than pay out the mortgage (which is at 2.5% right now). If some time in the next year or two the stock markets soars, I would be happy to pay it out with the appreciated stocks. As of now, that’s not such a high priority for me.
Post-tax accounts
Post-Tax accounts include cash and stock we own in our Brokerage Fidelity accounts. They also include the value of contributions I am making towards ESPP purchases.
In November, the value of our post-tax accounts increased by $42.5K, driven by the market performance, In addition to standard small contributions towards ESPP purchases (which will happen on April 1st). Now it’s mostly driven by market, so hoping that the stock prices will cooperate when we decide the sell them (for the first year of retirement, I am piling some cash, so that I don’t have to sell stocks while in recession, which may happen during 2023)
Pre-tax accounts
Pre-tax accounts include 401K plans with our current employers and Traditional IRAs.
In November, the value of our pre-tax accounts have increased by $94.5K, making the situation better but still not offsetting the paper losses YTD. On the other hand, I am not so worried about theoretical losses in the pre-tax accounts – we won’t be able to use these money for at least five years, which means I am very certain by the time we get to use that money, there will be a significant growth in those accounts. Without those paper losses in the retirement accounts, we are at 60% of gap closure. The next month’s bonus should make a good dent in the remaining gap.
Conclusion
In summary, the market rollercoaster continues. September was the worst, October and November provided some hope. Let’s see what the remaining months look like, we have about five months to go. We continue contributing to our pre- and post-tax accounts, but with the main focus on building cash reserve with the only stock purchases through the tax savings and discount programs, such as 401K contributions and ESPP purchases… I am positive that we’ll be in a good place closer to the retirement date!
Stay tuned to the future updates!