Back in January 2015, I created some financial goals as a countdown to retirement. The goals were pretty aggressive; it’s time to see if I have lived up to my plan.
It is one thing to create a plan, and another to follow through with the plan. On January 1, I had 551 days until I leave my full time job. Today, it is closer to 380, with only 230 work days left, or 54 weeks. That is only 60% work days, as I have some vacation and holidays coming. And it doesn’t count sick days. But who is counting…?
As the days draw closer to the last day of full time work, and the last days of getting a steady paycheck, I check my retirement plans very often. Way more often than needed. Does a retirement plan need to be checked every hour? I sometimes think it needs to be checked even more often, especially when the market is soaring.
Here is how I have progressed.
401K contributions
This one can be marked complete. I maxed out my portion of the 401K on 3/27/2015. The maximum contribution for 2015 is $18K, plus another $6K for being over 50. That’s $24K to the good.
My company also made the 2014 match in January, of 4% of my salary, so I got to see my 401K balance jump a bit in the first quarter. From here on out, it’s all investment performance to get the balance higher in the 401K for the rest of 2015.
With a 75% contribution rate until the 401K account was maxed out, it’s nice to see some bigger paychecks now. I have already set up my employer payroll tax deductions for single, 0 deductions, with an extra $1,250 per paycheck for taxes. I can avoid quarterly taxes if I do that. $1,250 in extra taxes every two weeks stings a bit but it saves making out separate tax payments. They also do not get ‘lost’ at the IRS.
IRA Contributions
For 2014, I was only able to do a non-deductible IRA, not a Roth. The same is true for 2015. Since I have some funds in my after tax account that I use to fund this savings, and the market should go up, down, or sideways throughout the year, money in earlier is 66.67% of the time better than money in later. My 2015 contribution was made in January. That is the $5,500, plus the extra $1,000 for being over 50. That is $6,500 saved in my non-deductible IRA. In 2016, I will revert back to a Roth IRA with my 2016 contributions.
H.S.A. Contributions
My goal was to contribute the max to my H.S.A. On January 2, my company kicked in $400 for me, which means my maximum contribution, is only $3,950. Divided up among the 26 pay periods, that is $151.92 per pay check. So far, so good. I have made the contribution every pay check. While I could max out the account with an additional contribution on any given date, I am not entirely sure how it would be pre-tax. An H.S.A. is also pre-Medicare and FICA, so I will just let the deductions go forward as-is.
Next year, I will likely max out the account before I leave my job, with after tax money unless I can get the cash pre-tax.
If you are following along, that is about $32K saved in the first quarter in tax-deferred deductions.
After Tax Savings and Spending
My goal here was to spend less than $3,000 per month. This goal is so far, so good. My spending is probably closer to $1,000 a month so far. I do not have a house payment, so it is a bit easier. With the rental income, I can actually save more after tax than I do via payroll deductions.
As a side note, I did buy one frivolous purchase. A X5C-1 Quadcopter and extra batteries. Total cost was under $70. I still do not have it, as I had to cancel the order, get a refund and re-order it. A three month process!
Since I am getting close to retirement, I watch my spending and save as much as I can. I am over 60% of my savings goal, and we are only at the 6th month. But the last half of the year I wil save less. I have no more bonuses, no more 401K employer match, no more employer HSA match.
Now, if I can just get to my retirement date!
How have you progressed towards Financial Independence? Are you on track for 2015? Did you aggressively put money in early, to have your money in the market for as long as possible?
No Nonsense,
WHOA. That’s some serious savings, contributions and retirement savings, without a doubt. Already maxed? It’s just incredible and the match I’m sure is awesome. Congrats!
-Lanny
Thank you for the comment!
I try to squirrel away as much as I can these days. If I can get enough in my savings, whether it be 401K, HSA, IRA or after-ax, it will help me throughout my remaining years on the planet. I actually save more than I make at my regular job each year. So, even now, working at a full-time job is optional.
Wow congrats! It must be exciting. Are you going to take 6 months off somewhere to sail or something drastic? 🙂
A lot of people are putting out the pre and post early retirement schedule. I’d love to see how you juggle >20+ properties and a full time job. 🙂
I am going to stick around and get a few backlog items completed. Some on my own home, some on the rentals. These improvements will make for lighter and easier maintenance. And, it will keep me busy while I prove out the plan.
I do plan on some week+ long adventures stateside. Even getting out of the Minnesota winters, something i have not done for a while.
I have been taking care of 25 properties, managing and maintenance and a full-time job. I have posted my maintenance schedule for all to see, so it shows it can be done. Also, all of my apartment turns are listed on my cash flow statements.
I think that you meant the maximum contribution for your 401(k) is $18k plus $6k for a total of $24k 🙂 Congrats on maxing out your 401(k) already! I’m now done with the pre-tax side of mine for the year, which is a great feeling.
I like your plan of having extra taxes withheld from your paychecks. That’s what I do when my bonuses don’t have enough tax withheld from them.
I’m pretty much on track for 2015. It was really nice to see the 401(k) going up again since I finished contributing in July for 2014 and my new employer match is about double the $ amount of the match at my last job.
I tried to comment on my phone earlier, but there was no “Post comment” button? It was a bit strange.
Thank you for the comment and correction! I look at your blog too, as you are a great saver as well.
I will look into the post comment on the phone. It’s WordPress jetpack mobile friendly, supposedly…
I envy you NNL! I cant wait for the day that I can set a date on my freedom (retirement). Its going to be a great day. At the sound of it, I dont see how you wont succeed with your set date. You sound very motivated and passionate about this. I love it!!
Cant wait to hear more about it.
Thank you for the comment!
It’s getting real close, and I have a severe case of senioritis. Not from being old, sort of like your senior year in high school. All the numbers say I should be better off after I retire, but I am still aggressively saving.
Almost there, just the home stretch.
Hi Eric, Haven’t posted in a while, but just to let you know, I do check your blog regularly. Especially the maintenance log.
I know this question is not related to your Financial Check Up (congrats on that by the way). But this is your most recent post and this is a current issue affecting us landlords.
Have you read about the latest Supreme Court ruling giving the OK for Liability for Unintentional Housing Discrimination?
Now you can get sued for a “disparate-impact case”. Really becoming concerned with the way the courts are leaning.
Thank you for reading and following! Keep doing things in a systematic fashion and use credit score, income and criminal record the most. That is an objective measure of a tenant.
Congrats on your accomplishments. I am making it a goal to max out my 401 next year. I’m building up to it slowly this year.
It’s a great feeling once you get your 401K maxed out. That’s a lot of savings, more than 90% of Americans save.
Just do it!
This is great NNL! I’m years behind you but similar structures on our FI path, so I love reading the updates.
Never fear, the time will fly by faster than you can imagine. You will get there. Keep making sound financial decisions and save what you can.
Wow — nice work! You reminded us that we can use IRA contributions to cut our income post-retirement, which we hadn’t been thinking about since we haven’t qualified for those for a while now. We WERE on track for the year until this week’s little market dive. 🙂 In truth, it’s always hard to know how we’re doing at this time in the year, because a big portion of our income comes at the end of the year, and is highly variable. We just have to do our best month to month and then hope for a big payday in December!
Thank you for the comment!
You can only contribute to an deductible IRA with earned income. If you are post retirement, you need income for that year. In a case where you work a partial year, it is a great strategy.
If you do a back door Roth, it is a taxable event. You do not need earned income.
That’s how we’re thinking about the IRA — being able to work a little in ER, put that money into our IRAs, and using that to make sure we don’t exceed the ACA subsidy limit for health insurance. Then maybe we do some back door Roth stuff with the IRA and/or 401(k)… We’re still 2.5 years away, and now in a period of big volatility, so we have more immediate concerns, but this is good future food for thought. Thanks!
Great plan. Do not sacrifice your lifestyle to get the ACA subsidy though. Waiting another year to convert an IRA might mean even higher taxes than the ACA subsidy later, if you have an extra great few years and the market runs up.
I will be doing the back door Roth in 2017 I think.