Financial Independence seven months after early retirement |
- seven months after early retirement
- 2017 Savings Update
- Newly minted millionaire...critique my plan
- Modifying the Trinity Study
- Daily FI discussion thread - December 30, 2017
- Is FI in a way self-made "basic income"?
- Capital gain distributions by mutual funds and FIRE
- What was your net worth when you FIed?
- Getting Health insurance plans from international providers that also cover the US
- Should we have a mega thread (or wiki) which links to all other threads talking about experiences with early retirement?
- ~$55k net worth at 25, critique my life
- FIRE with focus on FI over RE [Level 27 human]
- American Funds study says 4% rule no longer enough
| seven months after early retirement Posted: 30 Dec 2017 06:05 AM PST Introduction: This post is part of an ongoing monthly early-retirement series that will continue indefinitely, provided that the voting reflects the view that it is still seen as relevant to the community. I suppose that this is my way of giving back to a movement that helped me tremendously on my journey. As this post has become increasingly popular based on the number of views and comments, and as my desire to spend a great deal of the first day of every month on reddit has significantly waned, my responses will be very limited going forward. Career and background summaries are provided at the end and repeated every month. Please check there to find answers to potential questions. Model: I wish to maintain a portfolio that began in June 2017 at $1,025,772. I will use a maximum withdrawal rate of 3% of the year's starting balance, provided that the portfolio remains above $1M. This amount is $2564 per month for 2017, based on the June 2017 starting balance of $1,025,772. Should the portfolio drop below $1M, I will lock back into a maximum $30k/yr guardrail withdrawal until the market recovers. I realize that this is not how the holy Trinity works, but since 3% is well within historically safe territory for indefinite portfolio survival, and since our withdrawal rate has actually averaged below 2.5% of the original portfolio balance thus far due to earning additional income, we have some flexibility. Spending: Living expenses for the month came to $3618. This is $1054 over the 2017 monthly targeted amount of $2564. Our spending was 41.1% over budget for the month, now 19.7% over for the year. We generated $1227 of income this month from my wife's part-time fun job at the library and some of my old book royalties. Our investment withdrawal was $2665 this month, thus our pro-rated annual withdrawal rate is 3.12% for the month and 2.19% for the year. Without the additional income stream, our pro-rated annual withdrawal rate would have been 4.07% for the month and 3.59% for the year. Investments: The portfolio went from $1,098,383 to $1,111,949 (a 1.24% increase for the month), which dropped down to a new total of (drum-roll) $1,109,284 after paying the bills. This is an 8.1% increase from the original starting balance of $1,025,772, even after withdrawals of $13,992 for living expenses over seven months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $80.36/hr of labor income. VTSAX (61% AA) went up 0.7% this month (19.0% for the year); VFWAX (21% AA) went up 1.4% (23.7% for the year); VWLUX (18% AA) did what it was supposed to do. Reflections: Our investments are once again at an all-time high, primarily due to passage of the tax cut for wealthy job creators like myself. /s Spending continued to be over budget in December due to the $1100 property tax, $400 six-month car insurance premium, and $200 payment for trees. This should settle back down next month. The increase in the new year-end balance from $1,025,772 to $1,109,284 means our spending budget will increase from $2564 to $2773 in 2018. I'm gonna get some extra cheese on my Whopper! Experiences: I broke the three-hour barrier in the marathon by going 2:58:18 on 34 miles per week of running during the training cycle. I consider this to be my greatest personal accomplishment since retirement, especially considering the healthy amount of skepticism shared by the running community on being able to do so with less than 50 miles per week. I finally played all of the PS1 games that I purchased nearly a decade ago, including Chrono Cross, Dragon Warrior VII, Xenogears, and Final Fantasy V. I'm still volunteering at the natural history museum. I've watched a few of the new movies that are expected to compete for awards this season. I planted a lot of trees and picked up a lot of litter. I made a fairly detailed map of our property. Looking back at this partial year, it's hard for me to comprehend how much time I've spent housekeeping, cooking, weightlifting, running, swimming, volunteering, writing, exploring, building, gaming, reading, studying, internetting, mapping, napping, planting, listening to music, watching movies, picking up litter, and visiting family. My life expectancy is fifty more years, but I feel like I've lived a lifetime in just these past seven months. I would not return to retail pharmacy for triple the salary. I do not know what real stress is. I do not know what alarm clocks are. My life is so much better than it was before. I hope everyone here finds this peace. Upcoming: The following is a rough plan for 2018: half-marathon in February (1:24?), full-marathon in April (2:55?), two-week vacation across Middle America in April, half Ironman in August (5:15?), three-week vacation across Northern Japan in September, half-marathon in October, and full-marathon in December. Other projects for 2018 without set dates: construct an astronomy exhibit for the museum (possibly opening my own small museum), become a volunteer running coach (possibly becoming certified through RRCA), regain some proficiency in Japanese before the trip, play all of the Nintendo Gamecube games that I bought ten years ago and never touched, bench press my body weight (155), bowl a 200 game or possibly a 600 series (last bowled 200 when I was in a league eighteen years ago), watch Game of Thrones, play Final Fantasy XV all the way through once it gets a PC release, and significantly improve the appearance of our driveway. I'll also be doing whatever the fuck I want. Career: I am a former retail pharmacist who hated his profession for the following reasons: unacceptable amounts of stress, lack of civility from the general public, capitalism gone amok, fundamental disagreement with the overuse of pharmacotherapy as an answer for underlying health issues, and a severe opiate crisis that few have yet to appreciate. I attended college for eight years to earn a bachelors and doctorate before joining the workforce for nearly twelve years, entirely with CVS. $150k in education costs were covered by academic scholarships ($25k), employment during college ($20k), prior savings from high school employment ($5k), revenue from an eBay business while in college ($10k), and massive help from my parents ($90k). Background: I retired at the age of 38 on June 6, 2017, the day before the twentieth anniversary of my high school graduation. I am married with no kids and generated over 95% of the family income while employed. We live in LCOL rural TN. Our asset allocation goal is approximately 60% VTSAX (total US stock market) / 20% VFWAX (total INTL stock market) / 20% VWLUX (US municipal bonds). We also hold roughly $400k in house, land, and belongings not included in the portfolio. My spending model places no dependence upon supplemental income (future employment?), social security ($10k/yr?), inheritance ($500k?), house equity (no heirs), universal health care (probable?), or universal basic income (possible?). The final balance will be left to charities and worthy causes. [link] [comments]  |
| Posted: 30 Dec 2017 01:42 PM PST Ok, I received my last paycheck of the year yesterday, and today I made my final savings/investment calculations. In 2016 I decided to better track how much I saved in each category throughout the year, watching for savings rates as a percent of after tax income and totals. Here are my percentages from 2016 and 2017. 2016 Retirement Accounts: 14.8% 529 Accounts for kids: 0.26% (horrible, I know) Taxable Accounts: 9% Total Liquid Savings Rate: 24% Accumulated Home Equity: 9% Total Savings + Home Equity: 33% 2017 Retirement Accounts: 21% 529 Accounts for kids: 4% (this needs to be a focus for 2018) Taxable Accounts: 8% Total Liquid Savings Rate: 33% Accumulated Home Equity: 9% Total Savings + Home Equity: 42% I have mentioned before on this sub that I am not really interested in Early Retirement, but the idea of having Financial Independence for my own peace of mind is of great importance to me. My father also gave me the gift of a debt free college degree, which gave me total freedom when I graduated college, and I very much want to give the same gift to my 2 boys. I still worked in college, but only had to cover the costs that a part time job during the year and full time work in the summer would cover. The same will go for them. I am 38 with a good job, and I think one of the hardest things at this age with kids is the "keeping up with the Joneses" mentality. People tease me about my car, its a Chevy Spark, while most of my work colleagues drive Audi's, Mercedes, Lexus, etc. My 12 year old is the only one of his friends without a smart phone, I bought him a $20 flip phone. Not that we wont spend money on nice things if it truly improves our lives, but buying things as status symbols is a huge deal among American families and I really hate it. This year we were invited(pressured) to go with friends on a week long ski trip to a high end resort, and to St. Barts for a friends 40th. We declined both, but its always a weird conversation and I have gotten into the habit of just saying that is outside our price range. That comment always makes people really uncomfortable but it does end the conversation. We bought a season pass to the National Parks instead ($80), and try to go backpacking/camping at least once a month. To me the National Pass is the greatest deal in the country. The good news is that my 12 year old seems to get it and doesn't mind our choices at all. Anyway, I just wanted to share and tell everyone how much I like this sub, and wish everyone a Happy New Year! [link] [comments]  |
| Newly minted millionaire...critique my plan Posted: 30 Dec 2017 09:31 AM PST Just cashed out my long term crypto-currency investments netting ~1.8MM, which should be ~1.4MM after the 20% long term capital gains tax. Some background...I am married, my wife and I both in our late 20s, living in a Med to High COL area. Before this windfall, we've always wanted to retire early and have saved and sought to position ourselves for that. Our debt includes a ~$15,000 car loan and ~$10,000 in student loans. We have $50,000 in an IRA, as well as a small emergency fund of ~$10,000 (or 5 months of living expenses). No other assets or debts. We will be making ~$100k combined by next year. Our long term goals include buying a house in the next 5 years ($300-400k in current market prices in our city), having children, retiring early (~50 yr old ?) then lots of travel. My wife enjoys her career and has the potential to make $150k per year or more with experience. I would like to slow down in my career and eventually focus on starting a business (have been planning on this for a while.) First, I plan on finding a good CPA who is familiar with crypto-currency to provide tax guidance. Next, pay off the two loans in full and put another $5-10k into savings for the emergency fund. The rest of the money will be put into investments: ~$100,000 in Vanguard Total Bond Market Index Fund (for buying a house) or similar, and the remainder in a Total Stock Market Index Fund and letting that go until we're ready to retire and move into less risky investments. We plan on keeping our monthly expenses at $2,000 or lower and continuing to save and put as much salary as possible into our 401k, IRA, and HSAs as possible. Does this seem like a good plan? I'm unsure of how much to set aside for the house and if there are better funds to be using to reach my goals. Also not sure what age would be feasible to FIRE; we live, what I would consider, a very frugal lifestyle, but we would like to be able to eat out more, buy gadgets, own nicer things etc, and in general, live more comfortably, though I'm not sure where that would put our monthly living expenses. [link] [comments]  |
| Posted: 30 Dec 2017 01:47 PM PST Has anyone ever come across a study that was similar to the trinity study, but instead of spending 4% per year by selling securities, the retiree would just borrow against securities and increase debt. I have a hunch this would be a much more efficient way to fire, as you never have to pay taxes because you never sell shares, interest is tax deductible, and it is well researched that the optimal portfolio for long term gains involves leverage. Additionally, a retiree would never have to reduce market exposure during down markets. Of course the risk is that in down economies credit shrinks and may not be available or rates could spike. [link] [comments]  |
| Daily FI discussion thread - December 30, 2017 Posted: 30 Dec 2017 03:08 AM PST Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply! Have a look at the FAQ for this subreddit before posting to see if your question is frequently asked. Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts. [link] [comments]  |
| Is FI in a way self-made "basic income"? Posted: 30 Dec 2017 01:57 AM PST I've been playing around with my spreadsheet lately, and a thought occurred to me. I've looked at one of the cells for my Portfolio tab, which tells me what's the monthly withdrawal I can sustain from my portfolio using the 4% rule (just total-portfolio/300 really). There I was, staring at a number (not too large yet) of money I can get every month of my life, indefinitely. In a way, I thought, it's like I've created my very own "basic income" for myself, with which I can do what I want. I can continue working. I can use it as a buffer when changing jobs. I can supplement my income. I can save it (the default, really, if I'm not withdrawing). It's kind of an empowering way to think about it, even if you haven't reached your "magic number" yet - and especially when you have. What do you think? [link] [comments]  |
| Capital gain distributions by mutual funds and FIRE Posted: 30 Dec 2017 02:24 PM PST As you know, many mutual funds distribute capital gains during the year. Currently, I automatically reinvest. When I FIRE (hopefully in 2018), should I take this capital gain distribution along with the dividends in cash as living expenses? Or should I automatically reinvest them like now and sell the shares up to my swr? I don't think it matters, but thought it's worth asking the community... [link] [comments]  |
| What was your net worth when you FIed? Posted: 30 Dec 2017 09:42 AM PST Would love the breakdown between liquid assets and non liquid assets (including your home if applicable) if you are willing. [link] [comments]  |
| Getting Health insurance plans from international providers that also cover the US Posted: 29 Dec 2017 08:26 PM PST Just wrote to someone about this you can get plans from overseas that can cover you here in the US at a lower cost than some states who never regulated there health insurance market . Here is a quote of a plan for a 60 year old male < 4000 for a gold plan 2500 deductible https://purchase.imglobal.com/Quote/GLOBAL_MEDICAL/quote-selection I am sure redditors wil take it upon themselves to do reasearch and see if they are aca compliant [link] [comments]  |
| Posted: 30 Dec 2017 09:27 AM PST I am not ready to retire yet, but when I am closer to the event, I would love to read all the threads where folks who have RE go over their state of mind, what worked, what didn't work etc. That will be immensely helpful in deciding whether to pull the plug or not, whether to wait "one more year" or not etc. Mods, thoughts? [link] [comments]  |
| ~$55k net worth at 25, critique my life Posted: 29 Dec 2017 06:02 PM PST Just turned 25 last month and am feeling mildly discouraged after seeing the other 25-30 y/o folks with already six figures net worth. Can someone help me out? Info:
Assets:
Debts:
Net Worth:
Planned room for improvements in 2018:
Questions:
[link] [comments]  |
| FIRE with focus on FI over RE [Level 27 human] Posted: 30 Dec 2017 09:31 AM PST I'm 27 and I've recently (ish) taken the step into being a full adult and started my career path. I'm guessing I want to retire at 50 but frankly I don't know what's for dinner so... shrug.... I wanted to get some additional input regarding if I'm doing it at least somewhat right or what I could be doing better. My Significant Other (SO) is smart and very into FIRE but I'm not going to put all my eggs in one basket of advice. I find finances and investment incredibly boring. I try to research and learn myself but it just doesn't stick. When I read articles I feel like I'm watching paint dry. Feel free to skip the additional lifestyle crap down to the finances below. Psychologically I don't care about the debt. I'm able to look long term no problem. I've got the higher debt gone over the last year (5%+) and now I see conflicting stories about whether I want to invest more or pay off faster. My expenses are a tad inflated because I'm still trying to see how my expenses will even out over the next few months. I share a 2 bedroom apartment with my SO. We split expenses proportionate to our income and if we happen to move somewhere nicer my housing costs would maybe go up $100 a month as he would take on the additional cost. While I understand things happen this is a stable relationship. I am slowly picking up wood working but admit my most popular past times are video games and trolling my SO. Neither costs me much. My skills as a Data Analyst once honed is highly sought after in this region so I don't see an approximate 5% income growth (conservative guess) as a problem and suspect my cap will be 85-90k. In all I don't care about luxury but want to be comfortable enough to be happy. I have a lot of anxiety so I don't want to really restrict myself which is why I have such a high food budget. I replaced my shit car and I'm happy (usually). Our idea of vacation is $200-300 drive/BNB somewhere random over the weekend but want to be capable of saving to do something nice once a year (cruise, fly somewhere cool, nothing fancy) Currently I have around $1500 checking and $2000 savings. I only use my credit lines on costs of living and pay them off every month. Employer matches 4% of salary and up to $800 of my HSA. These drop a little the more I make. I've split 401k between pre tax and post tax because I have no idea what my tax situation is going to look like when I retire so I figure 6 of one half dozen of the other. Big Pic Breakdown: * Income $55,000 * Pretax Deductions $13,812.94 * Post Tax Deductions $8,778.82 * Employer Match (HSA) $800 * Employer Match up to 4% or $2,200 Micro Details * Pretax: * 401k $9,625 * HSA $2640 * HDHP (healthcare) $588 * Parking $960 Post Tax *401k Roth $8,634.86 *Critical Illness Benefits $100.8 *Life Insurance $43.16 Expenses * Food $6,000 * Car Loan $1,993 * Car Insurance $600 * Gas $1,800 * Basics $600 * Phone $1,080 * Rent $6,360 * Student Loans $600 Student Loans * $13,063 @ 4.04% * $4,888 @ 4.41% * $8,515 @ 4.41% * $5,739 @ 3.61% * $2,964.04 @ 3.15% * $5,829.40 @ 3.15% * $4,858.65 @ 4.25% Car Loan * $8,500 @ 4.84% that was so many words... I'm sorry [link] [comments]  |
| American Funds study says 4% rule no longer enough Posted: 29 Dec 2017 11:56 PM PST I know many of us have seen the super long study suggesting that the 4% rule doesn't work well for REs. But it can be a hard to read article given how long and thorough it is. This is a more succinct article and I'd be interested to hear people's thoughts: https://www.americanfunds.com/ria/insights/can-i-retire-at-40.html?cid=sm_tw_50306 [link] [comments]  |
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