We’re in our 40s with no kids and our investments aren’t much compared to our other assets – will we ever retire?

The road to retirement is a deeply personal one, and it’s probably not going to be a linear path forward. There are sure to be twists, turns, inflection points, high peaks, deep valleys, prolonged periods of consolidation, and all the sort. That’s why comparing yourself to others isn’t all too useful. And if you are behind but have been taking steps to pull ahead, there’s really no sense in beating yourself over something that’s already poised to change with time. 

This couple is in their 40s with no kids and a below-average sum in investments recently took to the r/fatFIRE subreddit. They have a financial advisor, and they highlighted their relative lack of investments (outside of their 401(k)) as a potential shortcoming. The good news is this asset allocation hiccup is easily fixable, at least in my humble opinion. And with an advisor standing on their side, they’re already well-equipped to power ahead and perhaps pick up the speed as they aim for retirement.

Beefing up the portfolio may be needed for a “fatter” FIRE

For someone who’s still mid-career, with significant earnings years ahead of them, I’d argue it’s way too early in the game to throw in the towel on “fat FIRE,” the most ambitious of early retirements. Indeed, losing hope at certain instances on your road to retirement is only normal. Either way, the financial advisor, I believe, has already made their paycheck by notifying the couple of areas where their portfolio may be lacking.

The key is moving past forward and taking the proper steps to position one’s portfolio to get back on the fast lane en route to your magic retirement figure, whatever it may be. While a “fat” early retirement may be somewhat less fat if the individual has a limited amount of savings and a stagnant wage, I do think that a fairly chubby early retirement is more than achievable if one takes steps to unlock the power of compound interest—a very potent force that can allow many to make up for lost time.

Indeed, it’s only natural to think linearly, even when considering compound interest’s uplifting effect on our wealth over time. By investing interest, dividends, royalties, and other cash flow, one will experience a “snowballing” effect that could put one back on the retirement fast track. Personally, I’d recommend continuing to pay the financial advisor to help them get back to a more optimal asset allocation.

Lacking on the investment front? It’s a mistake that’s corrected.

Whether that entails being more frugal to shore up more cash for investments or moving funds to get the investment account in a sweet spot, I do think there’s really no need for the Redditor to worry. They seem to be in good hands, with a plan to help them make up for lost time on their brokerage account.

Indeed, when it comes to early retirement, it’s the funds outside of the 401(k) that ought to be pulling a fair share of the weight. Whether they decide to pick their own stocks or go the route of index funds, their problem is one their advisor can solve without too much difficulty. Depending on the couple’s risk tolerance, they may or may not be open to significantly increasing their stock exposure.

After all, someone who’s winding down for retirement probably shouldn’t be doubling or tripling down on stocks while the markets are fresh off new highs. Either way, incremental buying and dollar-cost averaging (DCA) are just some of the many strategies to help the couple get to the right stock allocation.

The post We’re in our 40s with no kids and our investments aren’t much compared to our other assets – will we ever retire? appeared first on 24/7 Wall St..