Financial Independence MOST people misunderstand the role of early Social Security checks in financial independence! |
- MOST people misunderstand the role of early Social Security checks in financial independence!
- There is a reason for the most part you only see fit people go for a run.
- nine months into early retirement
- Any forever renters here?
- Daily FI discussion thread - March 01, 2018
- What is your daily schedule?
- After retiring and pulling your pension, what should one do with it?
- Help me to retire early!
- Newly self employed with a lot of cash doing nothing. Is this my financial plan decent?
- For those of you who manually rebalance your investments, how often do you rebalance and why?
- Striving for FIRE. Feeling stagnant, what to do...
- After FI/RE, what are your dreams and aspirations?
- What paperwork do you hold onto, and for how long?
- Choosing International Stocks
- Advice for FIRE and purchasing first home in 2 years?
- New to FIRE
- Is Wealth Front a good option for starting a taxable investing account?
- How to obtain a University Degree post FIRE?
| MOST people misunderstand the role of early Social Security checks in financial independence! Posted: 01 Mar 2018 10:53 AM PST Just before I turned 62 years old, I talked to many people who were retired, and who thought they were financially independent, when they plan to take Social Security. Most of them said they would wait until they were 67-70 so they could get more money from SS. The next question I asked them was are they sure they would get more money from Social Security by waiting until they were in their late 60s to 70 years old. They looked at me like I had two heads. They said, "of course, I will, all the experts tell me so." My next question was how much extra money they would be pulling out of their investment portfolio, or not getting because they were not collecting Social Security as early as possible. They had not thought about it. Yes, if you live well into your 90s, you will come out ahead financially by waiting until you are in you are 70 to collect SS. But only 25% of people will live that long. The actual break-even date for Social Security if you get a conservative 6% return on your investments is 87 years old. While you get a larger monthly check by waiting, you get a lot more checks that can be invested or saved by collecting SS at age 62. If you are not working, collect as soon as you can. [link] [comments]  |
| There is a reason for the most part you only see fit people go for a run. Posted: 01 Mar 2018 06:09 AM PST One thing I have noticed over the last couple of months is the number of posts here that either go "I am afraid of having nothing to do after I FIRE" or "I probably won't reach FI/It seems to be impossible for me". People are beating themselves up over this and I think this could be avoided fairly easily. So here is my advice: Do not make the mistake of working towards a goal for the sake of reaching it. Work towards it for the sake of the experience. It sounds preachy, but it'll make things before and after FI vastly easier. I am at a point where I enjoy driving a beater car, using a two-year-old smartphone and not buying new clothes. I don't do it primarily to gain financial independence, but much rather because I enjoy the experience of less consumption. (I obviously also work towards FI - but that is only second tier). I would probably continue doing so even after reaching my goal, because I like the experience. So when you start doubting whether you are going to reach your FIRE goal, ask yourself what you are truly hoping to achieve? Is it really that number in your bank account? Or is it happiness and you think that number is going to give you the freedom to finally pursue it? Find things in life that you enjoy doing before you reach that point - it's going to make the journey towards that number much easier and much more even so after you have reached it. Or in other words - there is a reason only fit people seem to jog. They enjoy the experience. [link] [comments]  |
| nine months into early retirement Posted: 28 Feb 2018 09:55 PM 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 might be limited. Career and background summaries are provided at the end and repeated every month. Please check those sections as well as the comments and posts from previous months to find answers to potential questions. I genuinely appreciate all the thanks and well-wishers, even if I don't take the time to say so individually. Model: I wish to maintain a portfolio that began in June 2017 at $1,025,772. My maximum withdrawal rate is 3% of each year's starting balance, provided that the portfolio remains above $1M. Should the portfolio drop below $1M, I will lock back into a maximum $2500 per month ($30k per year) guardrail withdrawal until the market recovers. I realize that this is not the holy Trinity method, but consider these three factors that give us flexibility: a 3% withdrawal rate is below the 100% historically safe mark of 3.2% for fifty-year portfolio survival, the extended bull market peaked us nearly 20% above the original target amount (meaning that $30k annually is actually 2.5% instead of 3% if restarting from the peak); and our actual withdrawal rate has averaged less than 2% of the original portfolio balance thus far due to earning additional income. The budgeted withdrawal amount is $2773 per month for 2018. In 2017, it was $2564 ($2618 adjusted for inflation). Spending: Living expenses for the month came to $2750. This is $23 under the 2018 monthly targeted amount of $2773. Our spending is 0.8% under budget for the month, 10.1% under for the year, and 12.7% over since retirement. We generated $5140 of income this month from a tax refund, my wife wanting to work, and some of my old book royalties. Our investment withdrawal was -$2390 this month (a $2390 deposit), thus our pro-rated, annually-adjusted withdrawal rate is -2.59% for the month, -0.89% for the year, and 1.58% since retirement. Without the additional income stream, our pro-rated, annually-adjusted withdrawal rate would have been 2.98% for the month, 2.70% for the year, and 3.38% since retirement. Investments: The portfolio went from $1,155,635 to $1,114,925 (a 3.52% decrease for the month), which went up to a new total of (drum-roll) $1,117,315 after cashing the checks and paying the bills. This is an 8.9% increase from the original starting balance of $1,025,772, even after withdrawals of $12,349 for living expenses over nine months. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $66.60/hr of labor income. To sustain the original portfolio balance, $16.98/hr is the pace needed for COL based on spending rate; $7.92/hr is the pace needed for COL based on withdrawal rate. Ignoring possible dividends, VTSAX (62% AA) went down 3.9% this month (1.3% up for the year); VFWAX (21% AA) went down 5.2% (0.2% up for the year); VWLUX (17% AA) went down 0.8% (down 2.3% for the year). Reflections: Given the wild ride of the market in February, I suspect that many subscribers are curious about my level of investment panic. These are the ten best reasons why I have none: my withdrawal rate thus far has been less than one-half of the 100%-historically-safe fifty-year portfolio survival point (1.58% versus 3.20%); the market showed that I retired well below its maximum appetite when the portfolio increased a further 10% above my goal amount by year-end 2017 (and nearly 20% by the 1/26/2018 peak); portfolio survival is best understood when considering its correlation with CAPE, and nothing has actually changed there (e.g., $1M at peak market value is no more/less historically safe than $900k following a 10% drop); my model still has no reliance upon social security, supplemental income, inheritance, or home equity; I understand the inevitably of corrections and am still light years beyond where I would have been financially if I had listened to any of the dart-throwing monkeys offering their advice over the years on when to jump out; starting a new career at some point seems inevitable considering that I burn through interests, goals, and accomplishments rather quickly; a market downturn due to something like wage inflation is for the overall good of society (and for the good of those new to the financial independence movement); a market downturn would (fairly or not) reflect poorly upon the one person who is already widely regarded by intellectuals as a demagogic moron; my 100-point gratitude list is embarrassingly rich; and I will never regret leaving work since it was for the sake of my physical and mental health, not because I had met my financial goals. Sure, I wish I had temporarily jumped out near the market peak, but I'm also glad I didn't jump out in 2008/2010/2011/2015 when the monkeys were howling just as loud. Experiences: I posted a 1:25:04 in my half marathon to earn my first age group award and first top 1% finish (4th out of 406). My previous best was 1:27:57. I miscalculated/overestimated the effort necessary to go sub-1:25 upon completing Mile 12, conceding that I could not go uphill at 6:10/mi pace when it was actually 6:25/mi that was needed. It's easy for me to suggest this now, but I feel that I could have found a way to shave five more seconds. Math is hard when you are deprived of oxygen. I finished watching Game of Thrones, which I placed at #11 on my favorite shows list. I played the rest of the Gamecube games that I never got around to experiencing, including the excellent Tales of Symphonia. The controller however nearly ruins the system. I am now finally caught up for the first time since 2005 on having played every game, listened to every album, and watched every film that I own. My parents recently had their house and farm appraised at $800k (up from $500k five years ago), which is good news when considering potential inheritance. I neatened up the driveway a bit and detoured water flow in our woods so that we have a small creek after a rain instead of having everything continue to run into a growing sinkhole. I spent a whole day hanging out with an old friend, listening to what he thinks are financially responsible plans for a large profit from the sale of his house. My solicited advice was analogous to a horse and water. Upcoming: I have nothing major planned this month because Final Fantasy XV gets a PC release on 3/6. I resisted buying a PS4 to play it for over a year. Training intensity will also peak due to my full marathon taking place on 4/7. It's the state championship, so we'll see how that goes. These two events will occupy most of my free time in March. 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 (1997-2001) and a doctorate (2001-2005) before joining the workforce for nearly twelve years (2005-2017, 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). My salary plus compensation went from $115k in 2005 to $150k in 2017. My savings rate was about 70%. 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: 01 Mar 2018 01:19 PM PST I currently own a townhouse that I bought 5 years ago. I love the location and the increase in value, but man oh man, I have not loved the maintenance and repairs that have come with it! Granted my place is larger than I need and it's from the early 80s, I probably should have anticipated the work that would be involved... Anyways, enough about me. Are any of you currently renting (or planning to) for life vs buying a home? I feel like this is a fairly uncommon plan, especially when paired with the idea of FIRE, and am wondering if it's really feasible when you wish to retire early. [link] [comments]  |
| Daily FI discussion thread - March 01, 2018 Posted: 01 Mar 2018 03:09 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]  |
| Posted: 01 Mar 2018 03:51 AM PST Curious to know what other people's day looks like, especially for those still working in higher income jobs. My current daily routine is to get up at 5 to workout, 7 leave home, 8 get to work, leave work at 5:30 - 6, home at 6:30-7, cook dinner, done by 8-8:30....then I'm pretty much looking at going to bed around 9-10 to get 7-8 hours of sleep. It's kind of draining me mentally. [link] [comments]  |
| After retiring and pulling your pension, what should one do with it? Posted: 01 Mar 2018 03:27 PM PST 401k shall remain untouched and one can continue collecting but should we actively invest our pension? Or what is the smartest thing to do with it? [link] [comments]  |
| Posted: 01 Mar 2018 03:08 PM PST So I just wanted to put out there this is my first ever post to reddit and came here first. I'd like to be able to "retire early" aka not have a 9-5 slave job. I wouldn't mind working on certain things and still getting paid but I'd like to be able to not HAVE to work in this dream. Some background on me. I'm a 32/m, no wife, no kids, making 125k/yr (gross), I currently rent ($1,600/mo), own my car outright (good condition), have 85k in my 401k/retirement accounts (I currently put away 8% of my salary into my 401k with my company matching 3%), 30k in a separate investor account where half is in ETFs/Index funds and the other half is in individual stocks, I have 8k in my checking account. I also have 35k in student loans (@3.95%) that I aggressively pay at $850/mo. Tack on another $300/Mo for electric, cable, Netflix, phone bill, car insurance, Spotify. Most of you will probably ask why I don't have more saved up and the quick answer to that is that I've only been at this job for two years at that salary, I live in California, I like to travel, and I dine out/drink more than I probably should (it adds up!) knowing I need to change my ways to attain my goal I was hoping for any advice to be able to start making my money make money. Any advice on subreddits, books, websites, etc to help with this journey would also be welcomed! Some questions are where should I start investing my money? Is it in the right spots? Should I try to pay down my student loan debt as much as I am (I realize 4% is pretty low so most may say "yes" to this but I also have this thing in my head that I will not feel "free" until I get that settled). Should I put away more or less into my 401k? (Note: I feel like this is money I can't touch for a long time so is it smart to do that or try to accumulate more liquid cash in other investments?) Should I buy a house/property? (Note: I live in California! And a down payment would pretty much take away all the cash I have saved. I am also able to move if I want as I currently work from home (So. California is just too nice but I'm willing to move to Arizona say if it makes financial sense at the moment)) These are just some things to spark the conversation - I'm open to any and all advice! Greatly appreciate all the comments! :) [link] [comments]  |
| Newly self employed with a lot of cash doing nothing. Is this my financial plan decent? Posted: 01 Mar 2018 02:37 PM PST Before you answer, I know that consulting a small-business CPA/tax accountant is the best form of help. This is post is meant only to get a rough draft of my options and potential plan. Background:
My plan is to start a company 401k with matching, so I would essentially be matching myself on personal contributions. Note that I have never contributed to a 401k before by any past employers, so nothing to roll over. Also move everything in the personal savings account into a Wealthfront/Vanguard account, except what is needed to cover 6mo worth of expenses as an emergency fund. Right now I feel like I have too much cash burning a hole in my proverbial pocket and want to put it somewhere that 1) will earn steady ROI and 2) not require active management. Does this seem like a sound plan? [link] [comments]  |
| For those of you who manually rebalance your investments, how often do you rebalance and why? Posted: 01 Mar 2018 07:15 AM PST I used to have my retirement savings in a Target Retirement Fund that would automatically rebalance my holdings based on a predetermined stock/bond ratio based on my age. Recently, I decided I wanted to do this myself, so I cashed out of the TRF and repurchased stock/bond ETF indices at the ratios I want. Obviously, those ratios change over time as each of those indices will rise/fall at different rates. My question for you is, what is the optimal interval for rebalancing and why? (annually, semi-annually, quarterly, etc.) [link] [comments]  |
| Striving for FIRE. Feeling stagnant, what to do... Posted: 01 Mar 2018 11:21 AM PST I want to retire early or become financially independent but feel like I am pretty stagnant with where I am at the moment. I am 38, married with 3 kids under the age of 10. My gross yearly earnings are around $115K. I have no child care expenses and my wife runs a small business out of the house that clears around $15K. My rental property clears about $525/month. My net worth is $765K: $1.158M assets, $392K liabilities. The only debt that I carry is my primary mortgage (15yr @ 3.125%) and the mortgage on my rental property (30yr @ 3.375%). I have a $34K LOC (6%) on the rental property that holds a $0 balance that I can use to float anything if I need to. Home is valued at $365K and rental is valued at $200K. I have a 401A of $164K, a $403B of $2K (just started it), a Roth IRA for myself and my wife that I max out each year $47K & $3K, Mutual Funds $48K, contribute to three life insurance policies: one term and two whole life policies with cash value of $9K, $15K in crypto (BTC/ETH), $10K in Gold, two inherited IRA's in CD's totaling $127K, and cash of $19K. I also hold a balance of $120K in my brokerage account 88% of which is vested in the following (AAPL, NFLX, BX, AMZN, TSLA, BUD, FB, JNJ, DE, WMT, FCX). I also have custodial brokerage accounts for the kids not included in my NW. $11K, $5K, & 2K We try to live as modest as possible. We have one vehicle and always buy used. The one thing we splurge on is private school for the kids which is $500/month. I guess I want to be judged on where I am at and what ideas someone would have for me from the outside that has reached FIRE. Happy to provide more information. [link] [comments]  |
| After FI/RE, what are your dreams and aspirations? Posted: 01 Mar 2018 10:57 AM PST It is a common goal for most, if not all, on this sub to achieve FI/RE. However, I just wanted to ask a simple question on what comes after. Freedom is amazing and I wanted to hear either what's planned out for afterwards or the journeys that people have had with limitless freedom. [link] [comments]  |
| What paperwork do you hold onto, and for how long? Posted: 01 Mar 2018 04:19 AM PST In the path to FI, I have noticed I have amassed a huge amount of statements, receipts, title work for houses, insurance documents, etc, etc etc. I have heard you need to keep 7 years of tax paperwork plus the backup. What about property sales, how long for those, etc. So my question of the day is what paperwork do you keep and for how long? [link] [comments]  |
| Posted: 01 Mar 2018 11:29 AM PST Hello FIRE! I discovered this sub a little over a year ago in my last semester of college. Because of it I maxed my IRA for the first time (after learning what it really was) with a combination of target date fund and VTSAX (once I realized that I wanted a little more risk and reward). This year I am looking to keep diversifying the portfolio a little with international stock. I started with, and would like to stay with, vanguard. While I was looking through all their options I realized that the fees are considerably more expensive on international. For instance VTSAX is around 0.15% while VTRIX (one of the options I'm considering) is 0.4%, which is on the lower side of international fees that I've seen. Am I reading this correctly? Why are international stocks or index funds so much more expensive than domestic index funds and target date funds? [link] [comments]  |
| Advice for FIRE and purchasing first home in 2 years? Posted: 28 Feb 2018 07:12 PM PST I am 27 and my SO is 28. Two cats. Most likely will not have kids. I'm a resident physician and will become an attending in July 2019. Hoping to FIRE in 10-15 years with goal of 2mil-2.5mil Combined gross salary: 130k (Mine is 57k, SO is 73K) Combined Roth IRA/401k: 100k SO's taxable brokerage acct: 77k in various mutual funds/ETFs SO's Ally 1.45% savings acct: 12k Combined checking acct: 7.5k Combined monthly paychecks: 6.5k Combined monthly entertainment/living expenses: 3k (including $900 rent) We each maxed the Roth IRA this year already. I contribute the employer match of 6% and SO contributes 15% to 401k. I'm paying off the last 10k of my 4.5% interest student loans ASAP. There will be a lot of changes coming up. We are having a very small wedding/honeymoon at the end of this year that will cost about 10k. In 1.5 years, we are moving out of state where I will be making about 200k gross and SO will retire and stay at home. At that time I plan to max all retirement accounts (11k to IRAs, 18.5k to 401k, 6.9k to HSA, 18.5k to 457k if available) and put the rest of the savings in brokerage acct mutual funds. We plan on purchasing our first home in 2 years that will probably cost 350k-400k and want to put 20% down. We each have 2014 cars we plan to drive for a while. My main question is if this FIRE plan would work assuming we start spending 70k per year in 2 years and what we should do in the next 1.5 years until I get my new job and buy the new house. Should we increase our 401k contributions now? Continue putting excess money into the Ally saving's account or invest it in the brokerage account? Transfer investments from the brokerage account to the Ally savings account? I'm just not sure what the optimal balances would be in preparation for putting 80k down on a house. We are definitely planning for lifestyle inflation at that time too with the new house and buying nicer things which is why our FIRE goal is 2m-2.5mil. Thank you so much for any advice you guys can offer!!! [link] [comments]  |
| Posted: 28 Feb 2018 04:46 PM PST I'm a single 27 year old woman that currently makes around $30k per year. I've been actively attacking my debt (<$20k) and would like to be financially independent. I have managed to get my non-debt monthly expenses (including rent) to under $1,000, however with an income of only $30k I am worried that I do not have enough capital to work with. What ideas would you guys have for lowering monthly living expenses or for increasing income? Rent currently is around $700 of my monthly cost which seems extreme considering my living expenses are less than $300. I fully understand the min-maxing of expenses vs income, but I also feel that if I reduce anything else I'll be eating literal rice and beans for the rest of my life lol. I apologize if this post isn't in line with this sub and can delete it if that's the case. Thanks for your consideration everybody! [link] [comments]  |
| Is Wealth Front a good option for starting a taxable investing account? Posted: 01 Mar 2018 05:17 AM PST I've read the post on here about Wealth Front and other robo-advisers and I agree that it's not a good option once you're investments are getting bigger. However, since you can get up to $20,000 manged for free ($15,000 with promotion + $5000 for referring a friend), is it a good place to start? Let me be clear, I've already put my 401K and IRA in low cost Total Market Index Funds and now I'm just trying to figure out what to do with the extra money I have to invest. WealthFront seems like a good option because of the Tax-Loss Harvesting. What do you all think? [link] [comments]  |
| How to obtain a University Degree post FIRE? Posted: 28 Feb 2018 06:32 PM PST Hi FI-peeps! The spouse and I are in our mid thirties and we are really close to reaching our FIRE target. Once we FIRE, we would love to dedicate some time to personal growth and learning and go back to school to obtain a rewarding degree of some kind. Unfortunately, tuition and related expenses can be overwhelming, especially if you are on a FIRE budget. What are your recommendations or work-arounds for school costs post FIRE? Ideally, we would find a community college or university or Masters's program where we can attend tuition- free in exchange for student-work, research-work or work in our field after graduation. We are interested in a wide variety of subjects/ degrees, especially those regarding social work, teaching, art, therapy, counseling or environmentalism. Do you know of any cool programs? Note: We can relocate if a specific program is only offered in a particular city. But, we would prefer a LCOL location overall. Thank you!! [link] [comments]  |
| You are subscribed to email updates from financial independence / early retirement. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment