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I have a reader question for you today from Mr. BFS and me.  When I hit a blogging income of $30,000 a year or more and start blogging full time, is our pension, a stagnant 401(k), 2 Roth IRA’s, and stocks going to be enough for early retirement?

As of right now, we have Mr. BFS’s pension, my 401(K), a Roth IRA, and Scottrade investments.  We’re also ready to fully fund another 2010 Roth IRA, which we will do within the next 2 weeks.

As of our last net worth update, this is where those accounts stand:

  • Pension – On target for a 70% pension at age 52.  That would be $33,250 a year if it happened right now.
  • 401(k) – $24,500.  I contribute 6% which is matched 100% up to 6%, so it has been getting $4260 a year.
  • Roth IRA – $23,500.  We’ve been contributing $5000 a year since 2008 and started with $2400 in 2007.
  • Scottrade – $19,500.  We’ve contributed $18,000 to our stock portfolio since 2008 (we learned about investing the hard way early on, so our average rate of return is much higher now than it looks, lol).

We will be losing the ability to contribute to my 401(k) if/when I quit my day job, but we will definitely fully fund a 2nd Roth IRA.  Will we still be on track for early retirement at age 52?

I personally think we will be fine since our annual expenses (without savings) are around $40,000 and that’s with a mortgage according to our budget and the actual results.  Without the mortgage, which is on track to be paid off no later than 2017, we would need $29,000 a year to keep the lifestyle we have right now in early retirement.

Even if we take into account higher medical insurance during retirement, I still bet we’d stay around $40,000 in today’s money.  The pension and the Scottrade account would be able to cover that by themselves.  The 2 Roth IRA’s and whatever is left in my 401(k) should just be uber icing on the cake.

Since it may help, here are some quick projections I came up with using a retirement calculator (I am 28):

  • The pension would be paying out $35,000 a year in today’s money (70% of my husband’s 5 greatest years of pay).
  • The Roth IRA we have already would be around $500,000 with 8% returns at age 52 and $850,000 at age 60 if we stop contributing at age 52 but leave it alone.
  • Our stock account would be at about $300,000 at age 52 with 8% returns and low contributions ($2500 a year).
  • My 401(k) may have $150,000 if we stop contributing 6% at age 30 and simply leave it alone for another 30 years at 8% interest.
  • The 2nd Roth IRA may be around $400,000 if we contribute $5000 from now until age 52 and then leave it alone for another 8 years all assuming 8% returns.
  • Our cash savings will be around $400,000 if I factor in a 2% return overall from now until age 52.

What do you think?  Are 2 Roth IRA’s, a pension, an old 401(k) account, and stocks enough for an early retirement?  If not, what else would you suggest?