Updated: Jan 27
I plan on retiring in 2026 (4 years from now at the age of 51). My youngest will be graduating High School then and heading off to college, and my wife and I plan on downsizing and moving to a lower cost of living area. At some point I'll write more about the plans post FIRE so stay tuned.
I often write about some of the individual moves I'm making to get there, but I wanted to paint an overall picture of how I plan to use each asset class in early retirement (and ultimately retirement).
First let's ground out on some critical points that I factor in:
Like most Americans I cannot touch my retirement accounts until I'm 59.5.
Social Security - will it be there in 2042? Your guess is as good as mine. But assuming it will be around, I won't plan on touching it until then (no age 62 withdrawals for me).
About half of the music royalties I invest in are for 10 year durations, so the bulk of the payback will be in the first 10 years after investment.
I'm accumulating enough stocks in my after tax accounts that I can safe withdrawal 4% of my entire stock portfolio from them until I can begin tapping into my retirement accounts (I'll be doing a post on this later).
I've been investing in single family home / long term rentals. The goal with these investments is cash flow, I don't really care much about the appreciation.
Okay, so with that in mind here's a high level visual of my asset allocation strategy:
As you can see, other than rental properties, each asset class comes in and out of my retirement plan at different times. Each one is serving a specific need, has a specific job to do. Yes this view is overly simplistic, but it helps tremendously to keep my goals, and plan to achieve them, in view.
Now let's break this down a bit into segments of time.
Now (2022) --> Age 51 (2026)
Accumulation is the name of the game. I'm buying stocks. I'm buying rental properties. I'm buying music royalties. I'm investing hard. Currently I'm at between a 40%-50% savings rate for these investments. Gotta keep investing! This nest egg isn't going to build itself.
Age 51 (2026) --> Age 59.5 (2034)
This is the "Bridge Decade" for us, as it needs to bridge between the end of my working life and the start of my retirement account withdrawals. This decade will be focused on living off of music royalty payments, cash flow from rental properties, and draw down of after tax stock investments.
Age 59.5 (2034) --> Age 67 (2042)
A large portion of my music royalty investments will be expired at this point leaving a trickle of income from what's left. I do not expect there to be much left in my after tax stock accounts either. My rental property cash flows should have been increasing nicely however, and I'll also be able to start tapping in my 401k and IRA finally!
Age 67 (2042) --> End of Days
At this stage my cash flows will consist of mostly rental properties, retirement accounts and possibly a trickle from social security.
Hopefully that helps paint a bit of a picture of what I'm doing, and how each asset fits into my overall plan. As readers of this blog know I will continue to share many of the deeper details of each of these investments, and decisions I make along the way...so stay tuned!
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Personal Capital: My go to place for tracking all things Net Worth.
YNAB: My go to place for managing my spending and budget.
Betterment: I use this account for general investment purposes.
M1 Finance: I use them for my dividend stock investments.
Greenlight: How I manage my kids allowance.
ANote Music: One of the ways I invest in Music Royalties.
Venmo: How I send money.
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As always this blog is meant for entertainment. I'm not a financial advisor in any way, shape or form. Anything I suggest here will need your own due diligence.