It’s getting closer to crossing the line over to the early retirement – are we getting closer with our financial goals?
February was another turbulent month, ending with a small set back to our goals:
The gap to close shows what we need to accomplish by May 2023 to be able to retire early. In February we “lost” $7K, but the important thing is that the post-tax accounts grew (just a little), meeting my initial goal (for the first time!!). I am still retiring at the end of May (slight change of plans), and DH is considering working till July or maybe even till December. With the cash buffer for another 1-1.5 years we should be fine through 2024, at which point I hope the market will fully recover from today’s lows.
Mortgage
Cumulatively, since July 2021 we reduced the mortgage gap by about half. At this point I am pursuing the intent to build a sizeable cash reserve rather than aggressively pay down the remaining mortgage, so I don’t anticipate that we close the mortgage gap any time soon. I anticipate having about $149K left, which we can pay down on the normal remaining schedule over the next five years. 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 February, I received my annual bonus and had some RSUs vesting, which is why the value of our post-tax accounts increased slightly despite the market decline. I am finally seeing a negative number in the Remaining gap to close, which is a great thing!
Pre-tax accounts
Pre-tax accounts include 401K plans with our current employers and Traditional IRAs.
In February, the value of our pre-tax accounts has declined by $20.5K, and the gap to close indicate that the value of the investments still did not recover to the original levels, despite our constant 401K contributions. Again, I am not 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 that by the time we get to use that money there will be a significant growth in those accounts. Besides, if the stocks are still depressed when we start doing Roth IRA conversions, we’ll have to pay fewer taxes on the conversion with the stocks being valued lower.
Conclusion
In summary, we are getting closer, both in time and in meeting our goals. With only two 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!