September Freedom Fund Update: We’re in Good Shape for Retirement!
Welcome to the monthly update of our journey to financial independence, where we report on the progress of our FI tree, aka Freedom Fund. Our mangoes are almost ripe and we’re projecting to reach our goal by July 2017. This means that we’ll have enough investments to live off of without ever having to work again to pay for living expenses. We’ll consider ourselves financially independent when our Freedom Fund is able to support our lifestyle indefinitely. Our Freedom Fund is comprised of mutual fund investments, short-term reserves and a real estate property.
Freedom Fund Progress
Percentage of Freedom Fund reached in August
In August our net worth went up slightly, but not enough to move our Freedom Fund by a percent, as it stayed at 90% of our goal. Our investments in the market had a tiny loss so the increase came mostly from our active income. Our investments can cover annual expenses up to $31,800 a year. That puts us $3,200 shy of our annual income goal of $35,000! Once we retire, we’ll be able to bring down our cost of living since we’ll be outsourcing fewer chores and will rent or buy in another area. Here’s our expense report from last year.
Year to date gains
Our year to date progress shows a steady upward trend from 73% to 90% in seven months. That mango tree is growing beautifully! Even though it doesn’t show much progress from July to August, we almost got up to 91%. This is how investments work,
sometimes you got to have patience and keep investing, even though the bucket doesn’t seem to fill up at times. And that sometimes is a blessing because it allows for buying at lower prices while accumulating.
Freedom Fund Portfolio
Most of our Freedom Fund assets are in our retirement accounts. We’ll need to wait five years after early retirement in order to access those funds without penalty. Check out the Roth IRA Conversion Ladder article by Mad FIentist to see how this is done. One of our goals is to build our non-retirement assets, so that we can withdraw from those funds during the first five years of early retirement.
Since we’re done front-loading for the year, we’re concentrating on investing in our non-retirement accounts until year end. Our non-retirement assets fraction increased by almost 2% from last month over our retirement assets. The percentage amount will continue to fluctuate while we work, but I don’t think it will change much or if that’s even worth pointing out for now. Should we leave this out of the monthly report? What’s important is that we continue to increase our assets in non-retirement accounts along the way. You can review our asset allocation here.
Early retirement plan forecast
The Retirement Planner tool from Personal Capital shows that we’re in good shape for retirement. They forecast an 82% chance that our portfolio will support our retirement goals. 🙂 Isn’t that nice to hear? We don’t want to hear invalid reasons why we shouldn’t retire early.
Don’t tell us that retirement will be bad for our health, when we’ll be more active than ever. Don’t tell us that maintaining relationships will be more difficult in retirement, when we’ll have more time than ever to nourish those relationships.
We’ll be doing what we enjoy and on our own terms. What we want is to see the numbers and know that it all adds up. And it does!
I think that anything over 80% is acceptable to us if we had the need to retire now. I’ll take a 20% chance of having to need a job in the future to a 100% job commitment until we’re in our 60’s. We’re hoping to see the Retirement Planner forecast that we are in great shape for retirement by the time we pull the plug on our jobs.
As long as we’re enjoying the journey, we’ll continue on the path. It will depend on how tall we want our mango tree to grow. Next month’s report is one of our favorites because that’s where we get to report on the quarterly dividend income. Stay tuned!
Note: The numbers shown above are inflation adjusted to show in today’s dollars and assume 8.9% annual return based on the historical return of our portfolio’s current high level asset allocation.
On a side note, or two:
We’ll be taking a short trip to Colorado this month (for 12 days). We’re just about to start driving to the Philadelphia Airport. This is our first time visiting Colorado and we are very excited about hiking to witness breathtaking views. Follow us on Instagram to view amazing shots of our adventure. Should we stalk Mr. Money Mustache? 🙂
Also, after extensive research, Mrs. Enchumbao gathered an awesome list of the non-toxic products that we started using in our everyday lives, in our continuous search for better health. Our goal is for all of us to live healthier lifestyles. Check it out!
What were your financial goals for the month? Did you meet them?
Risk disclosure: All investing involves risk, including the possible loss of principal. The material contained on this website is for discussion purpose only and should not be misconstrued as financial advice.