Ok, the time for the next financial update – what progress has been made towards achieving Early Retirement?
This is horrible! We have a few months before we want to pull the plug, and the market is declining and declining and declining! As you can see, after more than a year of devoted savings, it appears as if we made absolutely NO progress! And that hurts!
The gap to close shows what we need to accomplish by May 2023 to be able to retire early. But look at September “Progress” – loss of $152.6K, which makes the cumulative impacts to be negative. I need to take a deep breath and tell myself – what comes down must come up. The stock market will turn around and deliver back to us everything that appears to be lost.. After all, we are not selling any stocks (not yet), but just buying at the significant discount…
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 September we contributed $3.8K towards closing the gap. This month we did not contribute additional $5K towards the principal, because with markets being down, I am thinking about saving more as cash cushion – not sure if in six months markets will be back to pre-decline levels, and we would need more cash to ride the downturn instead of selling some stocks at the depressed prices.
Cumulatively, since July 2021 we reduced the mortgage gap by $139.3K, 44% 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 May 2023? 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 September, the value of our post-tax accounts declined by $30.7K, driven by the market declines, despite our investment of another $10K in dividend bearing ETFs. Well, at least I am trying to buy at lower prices, even though after I invested, the stocks declined even further…
Pre-tax accounts
Pre-tax accounts include 401K plans with our current employers and Traditional IRAs.
In September, the value of our pre-tax accounts have declined by $126K (!), making the paper losses in 401K accounts larger than a quarter of a million. 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. When those losses are added to the progress I made in mortgage payments and investments in the brokerage accounts, the overall picture is not pretty, at least noy now…
Conclusion
In summary, the market rollercoaster continues. September was the worst, feels like we keep going down and down and down…. We continue contributing to our pre- and post-tax accounts, knowing that eventually the market will go up, just not sure when… After a whole year, it appears as if we did not close the gap at all, but if/when the market fully recovers, we should see a much bigger progress towards our goals. If I were to exclude pre-tax accounts, my gap is closed by 44%. I am still positive that we’ll be in a much better place closer to the retirement date!
Stay tuned to the future updates!