Personal Finance (Not Investing) • Shift from tax-deferred to taxable to retire early?

I started investing late, but have made great progress. Now, my goal is to retire early so I can use my time for hobbies and volunteering. How early depends on a lot of variables but 50 is probably the earliest I can hope for, and might be a stretch. I am trying to determine whether I should shift new investment contributions toward taxable to start coast-FIRE at age 50 (7 years from now)?

Current Assets:

• Income - $250k, plus ~$40k bonus
• 401k - $400k
• Roth IRAs - $200k (total for both spouses)
• HSA - $6k (just started this year)
• 529s - $120k (total across 2 kids)
• Taxable - $150k
• Cash - $200k
• House - $400k
• No debt

Annual Contributions (up to annual max where applicable):

• 401k - $23k (no company match, no after-tax option)
• Roth IRAs - $14k
• Taxable - $36K
• HSA - $8,300
• 529 - $18k
• Total - $99k

Approximate assets at age 50 (assuming ~7% real returns and max contributions)

• 401k - $800k
• Roth IRAs - $400k
• HSA - $80k
• 529s - $0 (kids will be nearly done with college)
• Taxable - $500k
• Cash - $200k

Other Retirement Income

• Pension starting @ 62 (non-COLA)- ~$100k/year
• Social Security #1 @ 62 - $7k
• Social Security #2 @ 70 - $60k

Preferred "income" in retirement, starting in 2030, is $100k +/- ~20%. Pension and Social Security should cover all (or very nearly all) our expenses, starting at age 62, but if I want to start coasting at 50 I need to figure out how to manage for the first 12 years. There is also nothing magic about age 50, I'll work more years if needed, just trying to shoot for 50 for now.

Why? We don't need an extravagant lifestyle and are willing to adjust spending as needed (non-discretionary expenses can be pretty low, and discretionary almost zero, if needed during downturn years). I have plenty of low-cost hobbies and volunteer a lot so I'm not worried about what I would do with my time. It's freedom of time that I'm after, not a luxurious lifestyle. I'm happy to get a part time job to make up a difference, but would value flexibility over pay, and therefore doubt even two part time jobs (me/spouse) will make us $100k/year, so I'll need to draw from investments to make up the shortfall for ~12 years.

Most of my assets are in tax-deferred accounts that I can't access until at least 55 (if I do early 401K/IRA withdrawals), 62 (pension), or 70 (SS). My taxable account was just started a few years ago so it is pretty small. I don't expect to be able to drastically increase investment contributions between now and 50, so I have ~$100k/year of contributions to work with across all my retirement accounts.

Questions

1. Should I reduce tax-deferred contributions in order to put more into taxable so it is available to use before age 55? If so, by how much?
2. Are there any other suggestions anyone has to help me prepare for Coast-FIRE at 50?

Thanks for the advice!

Statistics: Posted by itsjustme — Tue Oct 01, 2024 4:13 pm — Replies 5 — Views 345

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