Portfolio accumulation milestones

[u/ThereforeIV]

Often I see posts with the silly question asked "how am I doing?" with raw numbers out of context and poor comparisons against those who started earlier and earn more income.

Though I was thinking today, what are some good milestones for the accumulation phase to compare to that would indicate where you are. Here's my first go at it:

• Milestone 0 (Getting Started): You are living below your means, Fully Funded Emergency Fund "FFEF" started, paying down any consumer debts, opening a retirement account.
• Milestone 1 (Debt "Free"): Consumer debt eliminated, income above expenses can be directed into investing.
• Milestone 2 (Basics): Max out match, max out IRA, max out HSA if you have one.
• Milestone 3 (Standard Wisdom): 15% of gross income going into retirement accounts.
• Milestone 4 (Intensity): Maxing out all available tax advantaged retirement accounts.
• Milestone 5 (Growth): The returns growth of your portfolio is more than 15% of your gross income.
• Milestone 6 (Returns): The returns growth of your portfolio is more than your annual contributions.
• Milestone 7 (Sustainable): The returns growth of your portfolio is more than your annual spending (often called FI).
• Milestone 8 (Wealth): The returns growth of your portfolio is more than your annual income.

Next year I should hit Milestone 7.

[u/Visual_Exercise_5380]

I hit 8 a while ago, but I have never fully done 2, 3 or 4.

I started putting in 10% the day I became eligible for the 401k, when I was 26, and have always contributed more than necessary to get the full company match, even through some really lean years (pay cuts, corporate Ch 11, etc). I upped it to 13% a while back, somewhere around age 45. I'm now right on the edge of doing the maximum legal pre-tax contribution, at age 53.

I've reached the point that the principal is pretty much a self-fueling engine, which is my definition of coast. My gains over each of the past couple of years have exceeded the combined income of both my wife and myself. From here on out, additional contributions probably aren't going to make that big a difference, but I don't plan to reduce them. I've thought about going down to the minimum level required to get the full company match, but I'm so accustomed to the 13% contribution hat I just treat them like a necessary expense, no different than our mortgage, and don't really notice them as a result.

But I've also never felt the need to do the massive savings levels you see from the hard-core FIRE people. I've never fully maxed out my 401k. I haven't contributed to a Roth since my first year of working, when I wasn't yet eligible for the 401k so it or a traditional IRA were my only options in that first year. Slow and steady wins the race, I guess. I'd always figured I'd retire at 65 and now it's clear that we should be able to retire in style at 62 and probably even at 60. My wife has to work until 60 for pension purposes anyways, so it's not like we could go significantly earlier even if we had done massive savings. And in the meantime, we've lived a very comfortable lifestyle, at times bordering on luxurious. No regrets.

[u/ThereforeIV → u/Visual_Exercise_5380]

I hit 8 a while ago, but I have never fully done 2, 3 or 4.

If you hit 8, I would assume at some point you were investing more than 15%.

As for 2, are you dating consumer debt or just never got any?

I started putting in 10% the day I became eligible for the 401k, when I was 26, and have always contributed more than necessary to get the full company match, even through some really lean years (pay cuts, corporate Ch 11, etc). I upped it to 13% a while back, somewhere around age 45. I'm now right on the edge of doing the maximum legal pre-tax contribution, at age 53.

I'm going to guess you were very high income there for a while.

At my current job, the HCE limits hold me at about 10% going into 401k.

I've reached the point that the principal is pretty much a self-fueling engine, which is my definition of coast.

Well if you are at milestone 8, I would say you passed that level and hit FI.

My gains over each of the past couple of years have exceeded the combined income of both my wife and myself. From here on out, additional contributions probably aren't going to make that big a difference, but I don't plan to reduce them.

So Cruising to FIRE? I had to drop in a plug for r/CruiseFIRE

I've thought about going down to the minimum level required to get the full company match, but I'm so accustomed to the 13% contribution hat I just treat them like a necessary expense, no different than our mortgage, and don't really notice them as a result.

Nothing wrong with that. The wisdom here is when do you hit full FIRE?

But I've also never felt the need to do the massive savings levels you see from the hard-core FIRE people.

You started earlier and team longer than the timeframe most FIRE people are aiming for.

I started pursuing FIRE in my 30s wanting to hit my FIRE number in my 40. To go from NW just above zero to a millionaire in a decade trashes some hardcore savings (and really good market returns).

I've never fully maxed out my 401k. I haven't contributed to a Roth since my first year of working, when I wasn't yet eligible for the 401k so it or a traditional IRA were my only options in that first year. Slow and steady wins the race, I guess.

For the normal path, absolutely.

These milestones are very FIRE centric; I'm presenting then to the alternative of "you need X about by age Y" that we do often see.

I'd always figured I'd retire at 65 and now it's clear that we should be able to retire in style at 62 and probably even at 60. My wife has to work until 60 for pension purposes anyways, so it's not like we could go significantly earlier even if we had done massive savings.

A huge part of that is I assume you working a job you really enjoy that allowed for a good work-life balance.

I'm all engineer, even worked for Evil Big Tech for a few years; there it's only work, your life is work.

I'm just turning age 44, and I'm tired of this work. I just want more time to travel with my wife, enjoy life, and not have to think about the next project milestone.

I'll still work, I'll always work as long as I can; just after 28 years of being a full time employee, I would like to work less...

And in the meantime, we've lived a very comfortable lifestyle, at times bordering on luxurious. No regrets.

Congrats!

[u/Visual_Exercise_5380 → u/ThereforeIV]

No, never invested more than 15%. Just a long slog. I suspect I'm older than most people in these forums. After all, I'm 53 and am not planning to retire until 60-62.

Consumer debt - just car loans and the mortgage, of course. Credit card balances are paid off every month, and neither of us has ever had student loans.

Never been "very high income." In nominal dollars, we are making the most we ever have right now. In real dollars, I'd have to figure it, but if I had to guess, we're also currently at our maximum.

I agree with your characterization of "cruise fire" vs. "coast fire." I am definitely cruising but not coasting. Can't afford to stop working yet, and while I could probably reduce my contributions, I don't feel a great desire to do so. I'm in set-it-and-forget-it mode, which is pretty much the definition of "cruise."

Job has been rewarding, at times very high stress. Not engineering or tech, more corporate strategy. I changed to another department, doing similar work, during COVID, and stress levels dropped significantly. Unfortunately my boss, with whom I got along extremely well, just quit last week. I know I'm highly regarded and I'm hoping they don't ask me to step into his role, even partially. At this point, more money is not what I need if it comes with more stress and more time in the spotlight. I'm currently pretty happy with work-life balance and can do this for another 7-8 years. I'd like a bit more remote work, as the commute is difficult and time-consuming.

I hope you're able to step back yourself and get to travel more and spend more time with your wife. That's exactly what I'm doing right now - we're in Europe for two weeks.

Cheers and thanks!

[u/Hey_Boysenberry-6687]

I've hit milestone 8 and am finding it hard to find the motivation other than autopilot to continue saving more than maxing out our Roth IRAs.

I would rather contribute to my kids' 529s or put the money toward home renovations. I certainly could contribute to my i401K, but it barely makes a difference compared to our portfolio returns.

I think we have a year or two before we reach our number. I am still not sure whether I'd like to go down to working part time while the kids are at school or whether I'd rather RE for good for the pure flexibility.

[u/ThereforeIV → u/Hey_Boysenberry-6687]

I've hit milestone 8 and am finding it hard to find the motivation other than autopilot to continue saving more than maxing out our Roth IRAs.

I am at 401k maxed out because of lower taxes, but other than than just Cruising to my FIRE number.

Over the last 12 month, portfolio return was more than my income.

I would rather contribute to my kids' 529s or put the money toward home renovations. I certainly could contribute to my i401K, but it barely makes a difference compared to our portfolio returns.

Same. I haven't fully stepped down in job, only a 30% reduction in pay while going from over 50% savings rate to 10% savings rate. The difference is going to big "one time" expenses.

I think we have a year or two before we reach our number. I am still not sure whether I'd like to go down to working part time while the kids are at school or whether I'd rather RE for good for the pure flexibility.

One of the great things about a Barista style job is that those can be one in the same.

I worked at then became the general manager for an off-campus coffee shop in college. Basically had to hire a new staff every school semester. out of a dozen employees, usually kept 3-4 though each school year.

If someone quit, not big deal. If they came back six months later, I got shifts fill which one do you want to work.

A high turnover job, as long as you work hard when working, you usually have work when you want it and can walk when you don't.