I’ve decided to work hard toward an early retirement (like, maybe in August 2017) and that will be quite the challenge considering the debt I need to pay off and the money I need to squirrel away.
‘been thinking a lot about how I can accomplish this and this led me to think, how low go I go? How much am I willing to give up in terms of my current lifestyle with this goal of retiring early?
This led me to come up with an amount of money I am willing to live on each year.
Because I hate completing my taxes every year and I hate accountants and lawyers (sorry if you, reader, are either or both of those), I am thinking about earning just enough to not have to file.Or, if I file, just need to file that EZ form.
According to Turbotax,
In 2016 for example, if you are under age 65 and single, you must file a tax return if you earn $10,350 or more, which is the sum of the 2016 standard deduction for a single taxpayer plus one exemption.
I can then add my college kid for another exemption of $4500, which brings my total to $14,850. Once a month, I can hand $375 over to the kid. Good luck living on that, honey.
Keeping the long term in sight, I am preparing to live on the $10,350, increasing it as allowed by the IRS.
I know there will be some state tax to pay and I am ok with that because the state tax form is pretty easy to gag my way through.
So, here is what I’ve come up with so far: rapidly pay down my debt, rapidly build up my 401K and HSA so I can retire when I turn 60 in August.
I plan to live on $10, 350 each year from my 401K until I draw from Social Security.
Starting today, I am going to practice living on that amount, which comes out to $28 a day.