Financial Independence You Can Live Longer If You Retire Earlier |
- You Can Live Longer If You Retire Earlier
- My 60+ Year Vanguard VTSAX/VBTLX FI Plan and A Detailed Estimate of U.S. Federal Taxes for 2018 by the Numbers. $1,300,000 Principal. Safe Withdrawal of $35,000 in Annual Inflation-Adjusted Net Income.
- Has anyone here FIRE'd to open their own business?
- Daily FI discussion thread - March 28, 2018
- 100k passed
- I'm nearly 30. Is it too late for me to think about retiring "early"?
- How to deal with people that think FIRE is impossible and not realistic?
- FIRE post on Marketwatch--mistakenly(?) assumes FI/RE movement is always about simultaneous FI and RE
- How much do you hold in cash accounts in retirement?
- If you were 25 years old and decided to start fresh, what path would you pursue to maximize your income potential?
- Weekly Self-Promotion Thread - March 28, 2018
- This is a long shot, but anyone aiming for FIRE who is currently making below poverty level trying to raise their income? I'm unemployed while waiting for work authorization and looking for similarly driven buddies.
- Working after FIRE
- Selling the house to live in a camper?
- CFP/FA here and I need your help! Help me name my new firm, and tell me if my vision for where industry is going is wrong?
- Can't relax even when given the opportunity
- Most Anti-FIRE person I know
- Demoted 5 years too early
- 3% withdraw pre or post tax?
- Advice for my dad
- Annual expenses less than taxes paid. Can't increase %SR
| You Can Live Longer If You Retire Earlier Posted: 28 Mar 2018 09:08 AM PDT |
| Posted: 28 Mar 2018 10:09 AM PDT This will be really long, but I put a lot of work into learning about the FI side of FIRE and putting it down plainly. It was interesting how everything worked, so I hope it might also help others as an example of how things might play out in their future situations. That said, I'm just some guy researching stuff on the internet before I reach FI myself and I could be wrong somewhere, so the main purpose for my post was to ask for any input or advice you might have! Please leave a comment if you see something wrong with my example plan, I'd really appreciate it! This was something I did as practice, so my actual numbers will vary somewhat, but that shouldn't matter for the purposes of my example. I did put all the criteria I could think of that apply to me though. I will, of course, be hiring a financial consultant for sessions as needed going forward, but I plan on keeping my portfolio fairly simple and lazy so that I can do the majority of the work. It also helps to be able to walk into a consultation with a decent amount of headway on the subject, so here I am. Anyways, on to the example: Details: I'm 26 and plan to remain in a LCOL area for the foreseeable future. I'll be solely using a non tax-advantaged, personal brokerage account with Vanguard. I have no money saved in IRAs or 401k yet, but I do have my Vanguard account already established. That said, I've never taken the next step into actually investing and plan to wait until my first consult before moving forward. My FI timeframe is much longer than 30 years, so I've adjusted most variables conservatively. For example, I estimate inflation at 3% and I've adjusted my SWR down from the widely suggested 4% to 2.7% which seems safer for the longer time frame and should give me decent growth over inflation in the good years. Any real danger is in the first decade or so, I've been told. If your money doubles in 10 or 15 years and you're still able to live on that same initial withdrawal rate, then it makes sense that you're pretty well protected from volatility. On the flipside, if I were to invest right before the next recession, as is the fear of any new investor, I would be okay. I could still have a decent stipend and I can also get a job if need be or set up and rely on a fund separate from investments. I don't plan on sitting around doing nothing all the time either, but for the purposes of this example, I assume no earned income. The Numbers: My own situation differs slightly, but for brevity sake, assume I win the lottery and I have $1.3 million to invest 70/30 in Vanguard Total Stock Admiral (VTSAX) and Vanguard Total Bond Admiral (VBTLX) all at once, right now, and then wait a year and 1 day before selling any shares. I get most of my numbers going forward from the two links above, however no one can predict the future, so realize that these are estimated averages. VTSAX and VBTLX are both no load. https://investor.vanguard.com/mutual-funds/no-load-funds VTSAX Expense Ratio is .04% VBTLX Expense Ratio is .05% $910,000 in VTSAX with 10 year average annual total return of ~9.9% = $90,090 $390,000 in VBTLX with 10 year average annual total return of ~3.5% = $13,650 Total 10 year average annual return of 70/30 allocation is 7.98% or $103,740 of my principal. I only need 2.7% SWR + 3% inflation + combined Expense Ratio which I estimate is around .042%. So 5.742% real returns. Anything more is growth. So how do I get that 2.7% into my bank account? My plan involves using the quarterly dividends from VTSAX and the monthly distributions from VBTLX for the majority of my income, and then selling shares to make up the difference and keep my allocations close to 70/30. Well, I'm not entirely sure about how qualified and unqualified dividends work on stock funds, so I'd appreciate advice if the math coming up soon is wrong, but Vanguard says VTSAX has 94.78% qualified dividends, 0% qualified short term gains here. All distributions from bond funds are unqualified. VTSAX has an average annual yield of ~1.65% 910000 * .0165 = $15,015 Of that, 94.78% are qualified dividends 15015 * .9478 = $14,231.22 qualified, $783.78 unqualified VBTLX has an average annual yield of ~2.6% 390000 * .026 = $10,140 unqualified Total qualified dividend income: $14,231.22 Total ordinary income: $10,923.78 Gross Income: $25,155 So to hit my SWR of 2.7% I would need to sell enough shares to cover the difference between my distribution income and my SWR which is $9,845 in LTCG. As a worst case scenario, I'm going to assume a 0% cost basis, because it would be very difficult for me to estimate that and it'll change before I actually do any of this anyway. If my math checks out so far, it doesn't actually matter. Higher cost basis will reduce capital gains tax liability further. Normally, I'd be taxed 10% on ordinary income of $10,923.78, but as I understand it, the standard deduction of $12,000 wipes out ordinary income first and then $1,076.22 of capital income leaving $23,000 as taxable income, all of it at capital rates and well under the $37,950 upper limit of the 0% capital gains bracket. Gross Income: $35,000 Total Ordinary Income: $10,923.78 Total Capital Income: $24,076.22 Standard Deduction from Ordinary Income: -$10,923.78 Standard Deduction from Capital Income: -$-1,076.22 Taxable Income: $23,000 at Capital Rates Leaving my federal tax rate effectively 0% in this situation! This seems insane and I feel like I must have missed something. Afterthoughts: Bear in mind some states do have their own rules for capital gains and may just treat everything as ordinary income, in which case I would pay some taxes to the state in this example. In this situation I could work and earn up to $5500 in a year and contribute that to an IRA tax free as an adjustment to gross income. Questions:
I appreciate anyone taking the time to read this. I know it was long, but I don't really feel comfortable discussing any of this with anyone I know personally and I want to iron out the general details of my plan before I sit down to my first consult. If you see something completely wrong and would like to tell me, I'd like to thank you in advance for any advice you might offer! I hope this opens up some healthy discussion. Have a good day! EDIT: I do want to mention that I know I'm not taking taxable accounts into, well, account. The thing is, for my situation, I don't currently HAVE anything in tax sheltered accounts. I do plan on contributing $5,500 earned income to a Roth IRA every year going forward and I understand the benefits to doing so. [link] [comments]  |
| Has anyone here FIRE'd to open their own business? Posted: 28 Mar 2018 08:07 AM PDT This is a dream my SO and I have had for years. It is going to require some startup cash so it is definitely a risk but we do not even expect to make much money at it, as long as we break even and enjoy what we are doing it will be worth it to us. I'd be interested to hear anyone's experiences with this. What are some things we should consider? Should we try to cut back to part time at our jobs and start the business on the side before taking the plunge to running the business full time? [link] [comments]  |
| Daily FI discussion thread - March 28, 2018 Posted: 28 Mar 2018 04:08 AM PDT 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: 27 Mar 2018 04:07 PM PDT This is my first posting here and just wanted to share something encouraging for my family. I've really appreciated the time everyone on here has taken to share their wisdom and advice. Details for me: Live in HCOL area (Vancouver, BC) $80k gross salary Wife and three kids 32 y/o 100k doesn't seem like a lot, but it's a huge milestone for us. We don't make a ton of money for our area and having three children is pricey. We also get no matching contribution to an RRSP. But thanks to this sub and some vision for our future, we've been able to effectively save half of our take home pay for the past three years. My wife and I decided that the only thing standing in the way of us retiring is ourselves and adjusted our lifestyles accordingly. My hope is to be FIRE by 50. Here's to the next two decades and beyond. [link] [comments]  |
| I'm nearly 30. Is it too late for me to think about retiring "early"? Posted: 28 Mar 2018 09:57 AM PDT I don't know what I'm doing with my life. I graduated from college relatively "late"--27. But having entered the workforce full time (I was a Mormon so I started college "late"--22 after a 2 year mission), I realize how much I hate selling my time and labor to others for over 40 hours a week. I make about $2,000 a month. But I don't consume that much. My rent is about $600/month. Maybe $300-$400/month for food. At my job i pay $20/month for health insurance. I have no debt (besides a reasonable credit card balance I pay off month to month). I'd rather have time to play the piano, learn Ancient Greek, learn German, learn French, write music/play in a band, dance, etc. But I feel like retiring in my late 40s (or however long it takes) because I'm starting so late won't give enough time and by then my body and mind (and maybe the world--who knows how long we have until WWIII breaks out at the pace we're going) won't be as able to do them and I won't get as good as if I had started in my 20s. I don't know but I just feel hopeless. [link] [comments]  |
| How to deal with people that think FIRE is impossible and not realistic? Posted: 28 Mar 2018 02:06 PM PDT So. I was talking to my dad (he is in his 50s) today when we started talking about my financial plans. When i brought up the idea of early retirement and saving around 60-70% he became sort of mad and said that it was impossible and 'not realistic'. He also started bringing up things like 'go have some fun' and that sort of stuff. Anyways, sorry if this is random (I just wanted to write this cause it triggered me somehow) but my question is; how do you deal with people who don't see the point in FIRE/dont find it realistic? I know the answer 'just dont care' is a option but this is very hard with close people. [link] [comments]  |
| Posted: 28 Mar 2018 12:59 PM PDT |
| How much do you hold in cash accounts in retirement? Posted: 28 Mar 2018 03:32 PM PDT How much do people who have retired hold in cash accounts? Why? I currently only keep a few months budget in cash, and just spend dividends, and cashed out investments when needed, but am wondering if there's a good reason to hold more in cash. [link] [comments]  |
| Posted: 28 Mar 2018 10:34 AM PDT What skills, careers, resources, etc. would you recommend to maximize income for financial independence? [link] [comments]  |
| Weekly Self-Promotion Thread - March 28, 2018 Posted: 28 Mar 2018 04:08 AM PDT Self-promotion (ie posting about projects/businesses that you operate and can profit from) is typically a practice that is discouraged in /r/financialindependence, and these posts are removed through moderation. This is a thread where those rules do not apply. However, please do not post referral links in this thread. Use this thread to talk about your blog, talk about your business, ask for feedback, etc. If the self-promotion starts to leak outside of this thread, we will once again return to a time where 100% of self-promotion posts are banned. Please use this space wisely. Link-only posts will be removed. Put some effort into it. [link] [comments]  |
| Posted: 28 Mar 2018 02:00 PM PDT So without income it's quite a hassle to increase that savings rate ;) I made a post on /r/getmotivatedbuddies looking for folks who are interested to communicate regularly. Since that sub is mostly "help me wake up on time", I felt out of place. I'm assuming that when you're aiming for FIRE, you already got your basics sorted out. I know a lot of us just need this: save more => FIRE I was hoping to have long-term communication with folks who have this trajectory: get income => save more => FIRE If anyone can recommended resources outside of Reddit for this, I'd appreciate it too. [link] [comments]  |
| Posted: 28 Mar 2018 01:20 PM PDT There seems to be a big debate about working after RE. Quite a few people "work" after retirement, especially if they retire early. How boring to sit around doing nothing right? Sometimes that work may simply be volunteering or it could be something the are passionate about and do because they love it. I think we can all agree that if post-RE work is done because the money is needed then it is not really RE. Is NEED where you draw the line on RE? However, if the person continues to do various jobs because they love, but don't need it do you still consider them RE? Is your answer income agnostic? (i.e. would you change your answer if that job actually brought in some money) [link] [comments]  |
| Selling the house to live in a camper? Posted: 27 Mar 2018 11:46 PM PDT Hi. Long time lurker. Please poke holes in this idea. My partner of 9 years (38) and I (34) own our home (but still owe six figures on it) and pull down about 100k between the two of us. We work in jobs that tie us to defined benefit pensions. She loves her job, I am happy but not married to mine. We both have modest 401k plans. House is the only debt. She wants to sell the house and downsize. First to an apartment or condo, then to an RV or camper of some kind. We would need it to be winterized for our climate. Rent is climbing in our city, and we don't have immediate plans to move. Eventually maybe. Putting aside the question of why (no, really - I'm not looking to engage on that), what financial pros and cons do you see with this plan? Ideally we gain mobility and swapping mortgage costs for gas, Rv park fees, and repairs, which would result in greater net. We could save for retirement without necessarily tethering ourselves to the housing market, which is very bubbly right now. We also live in an area prone to natural disasters (flood, earthquakes) and we don't want to wind up underwater on our house because of a shitty insurance loop hole. This seems like a faster track to FI than our current accumulation of assets. Thanks in advance for your thoughts. [link] [comments]  |
| Posted: 28 Mar 2018 11:36 AM PDT TL/DR: I need help naming my new firm? (see below for what i have so far) and Is there an appetite for how I am structuring my firm and my value prop? I am a CFP(r) and Financial Advisor for a small BD/RIA in the northeast. My firm has increasingly become more about annuity sales and only marketing to older individuals. By their words "I like to fish where the fish are". To me that is bullshit and short sited. I am only 32 and have a long career ahead of me. I have 50+ Mil under management and have decided to leave my firm. They think the industry isn't changing and I think they are dead wrong. So here are my dilemmas. I need a name. Fuck, I didn't think this would be so hard. I don't want to use initials because I am an IAR for my RIA and I have my CFP and eventually the initials get confusing. I also don't want to name it after myself as my parents are immigrants and have damned me with a difficult name to pronounce. Okay, what I have so far: Lumos Financial Planning and Asset Management- A little nod to Harry Potter which I love and also derived from Lumen meaning light. Like a flash light, I am a tool to help guide you along and avoid tripping and falling in your financial life. Caerus or Tempus Asset management. - Greek and Roman God of good fortune. I started my career young and have been fortunate in my life, this is a little tip of the cap to that. Verge Financial Planning and Asset Management- Verge is the norwegian word for guardian and also when you are on the verge of something its generally a breakthrough.....or if you have toddlers like me its on the verge of a breakdown but lets not be negative. Tenzing Asset Management - Tenzing Norgay was a guide for Sir Edmund Hillary when he climbed Mt. Everest. After that I am totally blank. Please help!! Second: I am structuring my firm to have no minimum investments and to be completely fee only other than if someone needs TERM life insurance. I am not the biggest believer in whole life. My goal is to market to young families and be more about advice than asset management. If you are 30-45 yrs old me telling you how smart I am and how I am going to beat the market is bullshit. My value added is providing low cost efficient exposure to the broad markets, with rebalancing and repositions as time goes on. I feel that other value comes from more advice and financial planning. My fee structure is either monthly retainer, hourly, or a percentage of assets under management ranging from 1.5% to 1%. I find people pay for stuff they don't need. If a young family comes to me with no savings, I am not going to start having them add $500 a month to a brokerage account and then charge an AUM fee. Thats stupid they won't ever build any wealth. In that case maybe they just need to pay hourly for when we sit down, or a low monthly retainer (50-150 dollars depending on complexity). Do you feel there is an appetite for this type of an advisor in the world going forward? Gone are the days of selling products, now its about efficient exposure to the markets and being the go to person to help people make good financial decisions. Helping people budget, and pay down debt efficiently and effectively. More goal based planning like funding education for children etc. My aim is to eliminate all conflict of interest. Okay I am sorry for the whole book but help would be much appreciated. [link] [comments]  |
| Can't relax even when given the opportunity Posted: 28 Mar 2018 09:48 AM PDT So, 32m, finishing up my current job, will be done with it in a month. I'm very strong financially, approximately 44% of the way to my FIRE goal (and that's after the market took a dump in the last couple weeks.) I will also be getting 2 additional months salary on the way out, so I could technically just kick back and relax for 2 months and not be any worse off. I also just completed my masters degree so that's no more nights and weekends of writing papers and doing projects. Yet even when know I'm in a good position, I'm already getting antsy. I've been updating my resume, collecting references, looking at some of the more attractive offers that are currently available etc. This is probably the best opportunity for me to take a break and relax but it's really damn hard to do. I think it partially has to do with the fear that if I take a break it will make it harder for me to go back to work (that and employers don't like seeing long periods of unemployment on your record). Anyone have any sage advice they could give me on this front? [link] [comments]  |
| Posted: 27 Mar 2018 11:11 PM PDT I know some people enjoy hearing failure stories from time to time for multiple reasons, whether to learn from others mistakes or just to feel better about their own position. So here's a quick story for y'all. My old college roommate has seen better days. He is 23 years old, a college drop out, and has not had a job for 3 months. He went through a bad break up 4 months ago which has lead to him being pretty depressed and not caring about returning to school. This depression has also amplified his mindset of "Living for the moment". Saving or preparing for the future simply does not exist for him. His living for the moment attitude has resulted in some pretty crazy spending habits over the past couple months. We're talking bars and drinks on the regular, steaks & margaritas at Texas Roadhouse, coffee shops practically every morning, cigarettes, and a crazy amount of driving in general. Because he doesn't have a job you're probably wondering how he can afford this stuff. Well he admitted to me that he can't as is credit card has been maxed out and his savings have dwindled to nothing. When his depression got bad, his parents actually started helping him out monetarily while he figured things out. As of last week they have finally said it's been enough, and are cutting him off. Here's a breakdown of his overall financial situation. He has about $20,000 in Student loans and no degree yet. Owes like $15,000 on a car he bought 2 years back because he said he could afford the payments (he could only afford it because his parents were paying half the amount). Has a maxed credit card (idk his limit) that he told me he's had longer than a year and has no idea what the interest rate is. He also still has to pay rent, gas, and food every month. The whole situation is pretty daunting honestly. He is going back to waiting tables next week though which will be some income. School: He found out it would take him 2 more years to graduate at this point which made him more depressed. He feels like he's too old for it already and it's not worth it. He actually took 2 classes last semester just so he could defer his student loan payments some more. Now I have actually tried to help him out and explain how his credit card interest works and just saving in general. Unfortunately he's just so reckless and just refuses to buckle down on his situation and take control. He's all about experiences and living life to the fullest which I feel is very relatable to FIRE but he's not taking any personal responsibility for his actions. I want to help but sometimes it's like talking to a wall. He may be building/living the life he wants but he surely isn't saving for it. 1) Just wanted to share simply as food for thought 2) Any advice? I still like the guy and want to help but he's pretty down. I want to get him pushed in the right direction. 3) I know a couple people in situations like his. Just know that if you're following this sub, you're way ahead of most people out there! [link] [comments]  |
| Posted: 27 Mar 2018 11:18 PM PDT The company I work at has been doing a org chart reshuffle, and as part of this I'm losing my team manager position since we're being absorbed into another dept. While I've made significant progress towards FIRE, I opted not to accept a severance package which I had an option for since I'm getting to keep my salary, and I'm still about 5 years out from saying fuck you to my boss and pulling the plug. I have more than enough FU money, but since I'm interested in maintaining my career trajectory (staying in mgmt until I FIRE) I figure it's easier to apply for new mgmt position opportunities while still having a job since the right kinda positions aren't present in my local job market at the moment. All in all I'm feeling disappointed because I still feel owned by the man. Anyone else been in a similar situation? [link] [comments]  |
| Posted: 28 Mar 2018 10:13 AM PDT If someone is living off saw 2 million at 3% per year does this mean 60k post tax income or 60k pre tax? [link] [comments]  |
| Posted: 28 Mar 2018 05:47 AM PDT Hi all, Hoping to get a little advice for my dad/parents. He is 60 years old and will be retiring in the next 3-5 years. They have approximately 400k in savings, another 200k in an IRA, and a house worth approx 300k. They live in a HCOL area in the United States. [link] [comments]  |
| Annual expenses less than taxes paid. Can't increase %SR Posted: 28 Mar 2018 10:20 AM PDT Anyone else? Don't think there's any solution because I'm already maxing 401k & HSA (18500+3450). Even if I get a 50+% salary bump, taxes (assume 25% on take-home) will still leave me with the 67%SR I have now. 33% pays my living expenses and taxes. Well, guess I could find a husband so I get to stuff more in HSA. [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