Status Check: 2025

It has been six months since our last progress update! I've been meaning to make these updates monthly or quarterly, but steady progress made it seem a bit boring. Yearly updates are a little more interesting.

Portfolio

We have about $5,436,000 invested across taxable, pre-tax, and tax-free investments. That's a gain of about $636,000 (+13.25%) since our last portfolio update in June 2024.

The Goal

In the last update, our goal was $4,800,000 by May 30, 2025. As you can see, we already smashed that goal. I thought 4% gains per year would be a stretch, but we had a very unlikely bull run in 2024. I'll go into how I'm preparing for sequence of returns risk later in this post.

Life Changes

We had a baby! He was born in December, so we've been slowly adjusting. Part of that adjustment was a move to a bigger place. A bigger place means bigger rent, of course.

We are still firmly leaning toward retiring, even with the addition of a very expensive family member. I briefly considered staying in my job for security ("just one more year!"), but I will never get the early years of my son's life back. I also won't get my own years back, but the difference between year 40 and 41 is not so different vs getting to experience more of my son's 1st and 2nd years.

Spending

I can drill into the details, but I'm trying not to get caught in the weeds so much. The high-level summary is that our spending is now roughly $150,000 per year. If we break that down into needs vs wants, we have $22,000 for wants and $128,000 for needs. That's about double what we spent last year! The vast majority of the change is due to the new housing situation, a little bit is due to the baby. Thankfully, this is all going according to plan.

Income

I've started a flexible side hustle that's beginning to pay off, boosting my confidence in our May retirement decision. I can spend as little or as much time on it as I want, it's essentially a hobby. Making it grow is fun! Finding a non-full-time source of income has been a long-time goal of mine. Making money feels a lot more like play when there is no pressure to earn a certain amount or as much as possible. It also proves to myself that leaving traditional employment is not as risky as most people think.

The Plan

Just because we blew away our goal doesn't mean success is guaranteed. The reason we hit our goal so early is because the market is on a nearly unprecedented bull run. There has only been two other two-year periods with 20%+ gains: 1995-1999 and 1927-1928. Whether or not this time is more like the 90s or 20s is still uncertain, but they both ended in a huge market crash. I might as well not count these gains, they are ephemeral. The only difference is that these gains are in our accounts, so we can take steps to prevent the market from taking them back.

Sequence of returns risk is our greatest obstacle. My side hustle will help reduce our required withdrawals and an increased bond/cash allocation will guarantee a certain timeframe before we start having to sell equities. We're very close to our allocation targets, but not quite there yet. A very violent crash in the first few years of retirement will still be very scary, but I'm confident that we'll be able to get through it.