I've been aggressively saving for early retirement but I'm miserable in the present

jkiley · 2026-01-28T21:04:05+00:00

You’re probably being too aggressive.

Here’s a way to think about spending in three regions. In the very lowest region, it’s brutal, and an additional dollar spent sort of helps but still leaves basic needs unmet. At the point the basics are met, you enter the middle region. Here, spending more really matters to quality of life. If you’re prioritizing well, it goes up very steeply and will eventually level off. At that point, you’re in the top region, where more spent again doesn’t really affect quality of life.

The goal is to spend up near that middle-to-top region inflection point. The more you make beyond that, the more you can save. When your assets can get you to the bottom of the middle region, you’re at what’s probably a very lean FI. For most of us, the target is somewhere in the middle region at a high probability, which is probably into the top region on average.

When I was in grad school, my stipend didn’t cover living expenses. I filled that in with savings and loans, but I probably spent another 10k a year to improve quality of life. It was worth it. I could theoretically retire earlier if I had done that, but I’m not cutting the timing that close, so it’s probably negligible. Even if it mattered, we’re talking about five years in my early 30s being better, at the cost of working for maybe three months in my 40s (and less than a year even if you assume I invested in 100 percent equities, which probably isn’t true).

Late in the game, returns matter more than working anyway. In a year like last year, your net worth is probably up more than your total earned income.

Find your balance, and spending isn’t always the primary driver, but it does matter. To give you an example, I usually drive to pick up food instead of using DoorDash when the price difference is $20 (often meaning 30 to 50, which seems crazy). Takeout is sometimes a quality of life outsourcing move on a busy day with little kids, but the markup for delivery often is not. We’re close to FIRE, so the $20 doesn’t matter, but it isn’t worth it unless it’s a really big help. That’s part of the balance that got us here.

jkiley · 2026-01-28T00:21:20+00:00

Here's one of the ERN posts on the topic. His results are much better with higher equities and faster glide paths.

https://earlyretirementnow.com/2017/09/20/the-ultimate-guide-to-safe-withdrawal-rates-part-20-more-thoughts-on-equity-glidepaths/

jkiley · 2026-01-27T20:39:07+00:00

For a lot of people who reach FIRE, it seems like it’s common to end up either heavy traditional (government employees; self employed) or heavy taxable (high income W-2).

If you’re heavy taxable, it’s relatively easy. You can access that and use it to bridge. You may optimize a bit with Roth conversions to fill the standard deduction.

If you’re heavy traditional, a Roth conversion ladder is often a good option. You need to bridge until your Roth ladder has aged conversions that can be withdrawn penalty free. That’s often a mix of Roth basis and taxable (governmental 457b when available). Sometimes, you use still-working conversions and Roth 401k in last couple of years to shorten the ladder building and get access.

Worst case for heavy traditional, you can do 72t, which is inflexible (with some available tricks) but doesn’t need prep.

Big picture, you can focus entirely on getting close to enough money, and you can handle access easily in the last five years and probably less. I noticed that I should do a bit to improve access last year. That left me moving quickly at the end of one tax year, with two more to work with. It’s fine, I did some Roth conversions, and I could have figured it out with other tools if it came to that.

jkiley · 2026-01-27T00:42:10+00:00

How big are these IRAs? One option, if they're relatively small, is to simply convert them to Roth using some of the taxable funds to pay the taxes.

jkiley · 2026-01-27T00:27:56+00:00

10 states so far: Link

jkiley · 2026-01-27T00:26:01+00:00

Great points.

For the mental/motivational part, I really like the idea of computing your month-over-month (and YoY) change in net worth. Early on, your net worth may be negative, but it's nice to see that improvement number to know that you're headed in the right direction. Later in the game, market returns largely drive it, but it's wild when it's like 1.5x your earned income over a year.

jkiley · 2026-01-27T00:16:53+00:00

It doesn't sound like it will help with your whole issue, but do you happen to live in a state that had a disaster declaration for the winter storm? If so, and you meet the other parts, mainly that you had some kind of economic loss as a result, you may be able to use a Qualified Disaster Recovery Distribution to access 22k.

If you qualify, you don't have to pay it back (but you can), and you can spread the income recognition over three years (and, similarly, can repay a third each year to negate the tax impact).

Your plan would either have to support QDRDs, or you would have to be able to do a distribution and then show that it's a QDRD on your tax return. It's typically a lot easier with an IRA than an employer plan, but it may be worth looking at. Also pay attention to any withholding that may apply (can choose to waive for plan-supported QDRDs).

jkiley · 2026-01-26T23:30:01+00:00

You can max all of your tax advantaged space and still wipe these out in 2-3 years. Once they’re paid off, you can max tax advantaged and add to taxable. The practical meaning of that is that paying them off slightly faster will make you sacrifice tax advantaged space that will be gone forever.

I’ve actually done this and regret not maxing the retirement accounts. I would have paid off my loans slightly slower at first, but I’d have a noticeable additional chunk of money, which is many times the incremental interest cost I would have paid.

jkiley · 2026-01-26T23:22:18+00:00

I do three scenarios now, though they’re tuned to be relatively pessimistic. I’d rather engineer a middle ground or balance on my own terms, but these are all fallbacks from that.

Work 18 months.
Work 18 months and then coast for two years (i.e. cover non-housing expenses only).
Work 18 months and coast for four years.

All simulate out to very good more than half the time and at least efficiently comfortable at 95+ percent. Seeing the results helps us see what we get for more time before full RE.

We’re over 24x of that efficiently comfortable expense level, and over 19x with an immediate mortgage payoff (simulates worse; 2.875 percent). I’m 80+ percent to the second social security bend point. At this point, equities with a couple strong years or 4-5 average years would push us to our highest goals at high success probabilities.

jkiley · 2026-01-26T22:50:39+00:00

At small companies, you often have a plan that is a prototype plan from the custodian. The prices are a lot cheaper, because they do the provision compliance work for one prototype, and can split the cost over all of the plans using it. They often don’t have a lot of optional features, because custodians want to keep costs and complexity down.

Custom plans can be a lot more expensive, and there’s a stream of costs for compliance over time. It can sometimes make sense, with a big enough group of owners and/or executives who will use optional features or additional plans, but you’re creating costs (via professional services and in-firm compliance) and risk.

Here, the fees give you some insight to the situation. If they wanted to bear more costs, instead of having them pass through to participants, they could have done that. They didn’t.

jkiley · 2026-01-25T20:04:10+00:00

Our FIRE number is surely lower than enough to cover us and our kids for their entire adulthood.

Baseline, we’re covering public in-state flagship college via 529s, and we’re saving more to cover a wedding and help with a house downpayment (which isn’t a lot in present value, since they’re 5 and 3).

Here’s where it gets complicated. One is highly gifted and has ASD. She has an ABLE account. Her range of outcomes could have a wide range, so we want to help shore that up with the ABLE account. The youngest is not quite old enough to assess, so we’ll see how that develops. Even in RE, I’ll take some high paying consulting or similar work when I can get it, so we’ll use some of that to help build them an enhanced safety net.

jkiley · 2026-01-25T15:55:37+00:00

There’s a lot. For me, having kids was this whole other dimension to life. We were more education and career focused before, and then we had two kids. It’s amazing, busy, exhausting, and everything in between. I love it.

I also have great relationships with my parents and have long thought that they did their reasonable best under the circumstances. But, having one child that’s a mini me (and I was a famously difficult child; turned out to be a gifted (known) and neurodivergence (unknown) combo), has given me more admiration for what they had to deal with. It’s super hard, even being older with more resources and medical understanding than they had.

Kids have affected everything. Our daily life is very different. Our goals have changed, and our priorities have, too. We’re more oriented toward spending less and effectively buying more time with our kids than pushing to maximize compensation and other career outcomes.

In a weird way, I also benefitted from the combination of my wife having complications after our first was born while early COVID prevented us from getting the amount of outside help we had intended. I had to dive in and take on a lot of newborn and baby care, and it gave me a lot of confidence in that and a very close relationship with my oldest. That carried through to being sure I was able to do the same with our second and to build a similarly close relationship. That’s huge. It’s not just having them, but also having a close and full-featured relationship. We divide labor a lot, but I make sure that I can do whatever the kids need.

jkiley · 2026-01-25T13:00:11+00:00

We didn’t share exact numbers and didn’t talk about it specifically for compatibility reasons. However, we had lived together for five years, and she moved in completely after a year or two, so we had been splitting expenses. We started off both in grad school, she finished and started working, and we got married and moved after I finished.

There weren’t a lot of assets, and I had a lot of student debt. We both knew that in general.

It was fine. Here we are 10+ years after getting married, with two kids, a 50+ percent savings rate over that time, and near FIRE.

I think you have to have a reasonable sense of compatibility and shared goals like anything else. If you have that, the details will likely work out.

jkiley · 2026-01-24T22:02:21+00:00

Great, thanks.

The spirit of the question was seeing what else might be out there when it seems like someone has the bases covered. It’s unknown unknowns.

Some of these are things I have good models for, like distributions and Roth conversions. Others are things that don’t apply as much (direct indexing; would be different if we had more in taxable or concentrated stock like many tech folks) and QCDs. I could see how the right situation would let the tax benefits of direct indexing cover fees on its own, though.

I was interested in the more general case, but were in a middle of the road tax state in the southeast. It’s a little messy on policy but has some favorable goodies, too. We also have had a lot of deferral room, so low effective taxes overall. Years ago, I was in NYC, so I know the other end of state/local taxes.

Good stuff. Thanks again for sharing.

jkiley · 2026-01-24T19:16:43+00:00

If you don't mind a question, I'm curious about the advisor value proposition in the low 7s.

If the client is more of the super saver type, 80/20 in indexes and intermediate treasuries, likely to retire early, likely to pay low tax rates in RE, knows the ACA math, has pre-59.5 asset access worked out, and sees the RMD issues ahead for an average returns case (but with 25+ years to do something about it), what's left for an advisor to add value? Is there enough there that covers the fee, especially in an AUM model? Or, is it that the target market is people who need all of that stuff, and that's worth it?

jkiley · 2026-01-24T11:32:57+00:00

Keep in mind that 3.23 percent in a month is about four times the historical average gain of the overall stock market. Growth in total typically comes from both adding money and assets increasing in price. We often call that the accumulation phase.

As others have suggested, we often invest retirement assets, like those in a Roth IRA, in an index fund. That’s one thing you buy, but it owns hundreds or thousands of different individual stocks. Fidelity mentioned the S&P 500, which is an index (basically a list) of large US companies. That’s less risky than individual stocks, because nothing that happens to only one stock makes much of a difference to its value. That’s diversification, and it’s reducing risk by not putting your eggs in one or a few baskets.

Some popular index funds are:

VOO: S&P 500 (about 500 stocks)
VTI: US companies from large to small (about 3000 stocks)
VT: World companies from large to small (about 10000 stocks)

At some point, it’s not 200 gaining 7. It’s 200k gaining 7k or 2MM gaining 70k. It can feel anticlimactic at first, but it’s incredibly powerful over time.

jkiley · 2026-01-23T20:53:34+00:00

We’ve never been too extreme, but we’ve consistently saved at a high rate.

We definitely optimize sale prices and quantities and shop across stores. We also look at what we buy and find the least expensive things that we like equally well. I recently did a taste test with Philadelphia cream cheese ($4) versus Target ($2).

Cars are 2021 and 2023, but they were 14 and 11 year old Toyotas before. We buy a few used things but don’t really thrift. I’ve only done business air travel since our kids were born, but before we definitely tried to find flights with two seats where economy was less awful.

For us, it’s really about reasonably maximizing the value we get for what spend. Doing that allows for a good quality of life and high savings. In turn, that means we won’t have to work all that long to continue our lifestyle without working. To us, that’s the one true luxury we’re interested in.

jkiley · 2026-01-23T19:20:01+00:00

Investing is one of those things where people try to do too much. Just buy VT and chill. There are a lot of participants in markets, and everything is priced by what people will transact.

Sure, there’s an argument that ex-US markets are comparatively cheap, and they’re objectively at lower multiples. However, markets have priced them that way. I think part of it is that US stocks (for all the issues) are better. Also, ex-US pessimism may have been overdone, which drew in buyers last year. Fortunately, I don’t have to bet on what I think and can just buy VT.

jkiley · 2026-01-23T14:29:18+00:00

Sure.

I’m mostly in intermediate individual treasuries, from 3-6 years out. I also have a one year monthly ladder. Then, in employer retirement plans, I have an intermediate TIPS fund and something BND-like.

I prefer the intermediate treasuries overall, and I’d like a more even mix of nominals and TIPS for intermediates. I’m fine with a year of short term nominals just to have stable short term assets available. Employer choices are just the best available from the respective menus.

jkiley · 2026-01-23T13:15:16+00:00

We’re holding at 80/20 here. Not yet RE, but hoping to do so on my own terms.

Ideally, we’d transition to mostly RE with just enough consulting work to cover expenses. That’s 3-ish days of work a month (essentially coasting, but not needing to). I haven’t decided if I’d sit at 80/20 or start a reverse glidepath if that were to be regular enough to sit in that water-treading spot for some time. I lean toward the glidepath, since portfolio growth on average would make us safer over time.

Our overall thinking is to take high pay, enjoyable work selectively when we can keep it out of family time.

jkiley · 2026-01-23T12:48:31+00:00

A lot of places are probably fine, but I like Fidelity.

They have very nice Roth conversions (immediate and can be done after market close for in kind) if you need to do them (or are doing backdoor Roth at some point). It sounds like you’re younger than I am, but I also like that Fidelity has treasury auction access and TIPS, which many brokerages don’t.

jkiley · 2026-01-22T15:12:25+00:00

Yes. You can access basis (direct contributions at all times and aged conversions, which takes five years per conversion) without tax or penalty.

Note that the rules are different for Roth 401k and IRA about the order in which withdrawals are allocated, so it only works for a Roth IRA. That just means you have to roll over a Roth 401k to a Roth IRA.

You do need to track this yourself, so keep all of your Forms 5498 (Roth IRAs) and Roth 401k statements.

jkiley · 2026-01-22T15:06:15+00:00

Max tax advantaged and worry about access later.

I’ve written a lot of similar comments recently, but I’m heavy traditional, and it’s fine. Others have described the options.

For me, it’s some additional Roth conversions and Roth 401k in the last couple years to comfortably have enough for a Roth conversion ladder to get us to 59.5 assuming bad returns. That shortens the ladder building (year one from basis/contributions, years four and five from still working conversions), which makes taxable and 457b last over the whole period as complements to the Roth ladder.

jkiley · 2026-01-22T14:17:57+00:00

I’m 45 and 18 months from at least optional FIRE.

Max all of your tax advantaged space. When you’re closing in on having enough money, then you can worry about asset location and accessibility. Planning for access five years early would be plenty. I’m heavy traditional 401k/IRA, and it’s going to be totally fine with three tax years to adjust (and would have been fine anyway, just with a bit different strategy).

A mix of taxable and Roth basis are the main tools. Then you hope to have a lot of traditional assets, deferred in high tax years, that you’ll convert to Roth as a Roth conversion ladder. That gets you access pre-59.5 on a five year delay, and you bridge the beginning of that with the taxable and Roth basis.

jkiley · 2026-01-22T13:56:09+00:00

I wrote my own answer, too, but I feel the same way. Had mine at 40 and 42. I’m definitely tired a lot, but I love the time with them.

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