Financial Independence I just put my paperwork in to drop down to 20 hours/week...... it is good! |
- I just put my paperwork in to drop down to 20 hours/week...... it is good!
- What would you do if you were 30 years old and single with a very high paying job you like (but are burnt out on) and reliable passive income of 100k per year forever?
- RE: RE - put away last
- Daily FI discussion thread - April 26, 2018
- Fast vs slow path to FI
- Taxes in Retirement
- Trying to help friend's parents with post-retirement investments
- Anyone plan on / have experience with purposeful lifestyle inflation between FI and RE?
- I feel I do not have the right mentality to retire early. The hardest part is trading my freedom for a job and all thee related social conditioning, buzz words, and corporate ownership. Advice welcomed.
- Accumulated enough for my plan of FIRE but I am still afraid
- Salary Curve
- Anyone Traded job happiness, security and guarantee for FIRE? in SF Bay Area
- How to budget for taxes
- Learning about FIRE and need some help on what constitutes my "portfolio".
- Taxation of Dividends from REITs in VFIAX
- Beginning FIRE
- Savings rate - confused a bit
- Living psuedo fire life with full time job.
| I just put my paperwork in to drop down to 20 hours/week...... it is good! Posted: 26 Apr 2018 10:22 AM PDT So I am working my way to FI. I started out a few months ago dropping down to 32 hours as I just didn't really need to do more than that. But now I just took the leap to 20 hours. I feel so great! So much time ahead of me and I have so much I want to do with it. I know it isn't just quitting my job to trek the globe like I'm working towards but soon enough!!! edit: whoops hit submit before I could put in some details. Will update in a sec. So here are some of the facts about my financial status. I own a three family unit that has a really low mortgage, a condo that has no mortgage, and rent out my spare bedroom in my house that also has a small mortgage (I'm not sure how much I actually wanna give for details). I have an SO who contributes to half my bills but I can easily afford them without him. Currently, I need to work because of the medical insurance but my job is really cushy so I'm not stressed about it. I've gotten people who say "Why are you giving up all this money when your job is so cushy??" Well it is because I don't love what I do. I like it but it really isn't what I want to do with my life. I feel like I want to be of service to people and this job is the exact opposite of it. We are really here in the US because my SO has two kids who are young so once they are older we plan on leaving so I can easily just drop my job when that time happens. I just wanted to share with you all because I have had tremendous guilt surrounding not working a 40 hour 9-5 job. It's been a relief since I had the discussion with my boss about going down to 20 hours and honestly I'm so happy about it. [link] [comments]  |
| Posted: 25 Apr 2018 11:41 PM PDT Just to add some detail, I make between 250-375k depending on how much work I take. It's about 7 months of actual work with sporadic off time in between (freelance). It involves a lot of travel and to be honest is an incredible job working with amazing people. BUT, now that I have 2.5M saved and invested, I can't help but feel like I should take a year or two off while I'm young even if it tanks my career. Go travel, live in different countries, try new things etc etc. I could keep saving money and build this up to 3M in 3-5 years (depending on market), but I don't know if I'll really see much appreciable benefit in waiting. These are good problems to have, and I'm sorry if it sounds like I'm bragging. EDIT: Since many have asked, I'm a commercial filmmaker. I direct TV ads. [link] [comments]  |
| Posted: 26 Apr 2018 12:55 AM PDT Single (div), no kids, 42, HCOL. (Ex-)techie. Been FI for maybe 6 months... RE today. Quit. Stats: planned Withdrawal: 105k (85 after healthcare and taxes). WR: 3.2% of portfolio, 3.05% of net worth (inc. equity). Was hoping to wait for 3.0% but... I was DONE. Well done. Concerns: WR if the market (my holdings) deflates to historical PE is 4.3% which isn't tenable. Plan - reduce spending by 10 to 20%, generate 30K/yr for 10 years, bring WR to 3.5% Not included: socsec (minimal), inheritance (likely but bad karma to count on) Immediate plans: open longshot startup (more like, pet research project). Other than that project, split 2018 between reading, new-to-me house renovation, travel (domestic and foreign), and SAHDD (stay at home doggy dad) duties. If said startup does not work out.... 2019 is personal skills year. Maybe back to school, something impractical. Improve cooking, woodworking. Writing. Gym. Bench 400. Deadlift 600. 2020 is always perfect. If bored, go back to work parttime or as consultant. [link] [comments]  |
| Daily FI discussion thread - April 26, 2018 Posted: 26 Apr 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: 26 Apr 2018 07:07 AM PDT Lately I have been caught in a bit of a conundrum which is making me face deep truths about my real motivations in life and how I've been using financial independence to fool myself. I assume many here are probably in the same boat. Background: 30yo. NW ~200K, all investments+cash. I've been aggressively pursuing FIRE for the last few years taking on more and more demanding roles. Trying to speed up FIRE as much as possible. Currently I see two options going forward: Option1: Stay in my high stress high paying job which will allow me to retire in 6 years at the earliest (9 for a more relaxed budget). While the job is enjoyable to me, it is very demanding and leaves me too drained of energy to enjoy much else. Option2: Switch to a much lower stress role (that I used to have before), that will allow me to enjoy life to the fullest and still retire in 10 years (14 for a more relaxed budget). Considering that the entire point of FIRE to me is to enjoy life to the fullest, option 2 looks like a no brainer. Yet I am finding it really really difficult to pull the trigger on this and switch. It would literally take me less than a week to find a lower stress role but every fiber of my mind is fighting it. It's like deep down I see this as giving up and letting go of an opportunity most people never get. It's making me miserable but I just can't seem to let it go. It seems what has really been driving me to take this path is a weird mixture of pride, self-development, status and accomplishment and none of those are worth my happiness so I have been using the pursuit of financial independence as a cover. Moreover, if I can't bring myself to make the right choice for my happiness now, the chances of me doing that and completely letting go when I would be at the height of my career don't seem very high. Tl;dr: I've been lying to myself about FIREing. If that were the real motivation, I would be living a very different life. [link] [comments]  |
| Posted: 26 Apr 2018 07:26 AM PDT I'd like to open up this post to discussing taxes in retirement. Whenever I see people throwing around their target numbers, I often wonder if that is pre or post tax? Due to current tax code, it seems that you would be able to spend a fairly large amount yearly and pay little to no taxes on it (state depending).
For ease of calculation and understanding, I have made a lot of assumptions and simplifications of the portfolio and tax treatment. I am not an accountant or tax lawyer, so take the math with a grain of salt (and please point out any incorrect assumptions/calculations). I did not take into account Roth Rollovers, tax-lost harvesting, qualified vs. non-qualified dividends, selling least depreciated shares first, child tax-credit, mortgage interest deduction, etc. These would all further improve tax efficiency.
Assumptions:
Scenario 1:
Scenario 2:
Scenario 3:
Observations:
I would love to hear from people currently in retirement regarding their tax burden and strategies
[link] [comments]  |
| Trying to help friend's parents with post-retirement investments Posted: 26 Apr 2018 03:25 PM PDT Hello, Friend's parents lived below their means their whole life, retired fairly comfortably with enough ($2m) to live on indefinitely at 65 (they're 70 now), and currently have their money with the private client management side of a large bank. They asked me to take a look at their fee structure, as my friend is not very financially-minded to say the least, and it looks high to me - basically a mix of mutual funds with management fees in the range of 0.5 - 1.15% each PLUS a 0.9% fee that their bank charges on top of it. Would they be better served by putting their money in a mix of Vanguard bond and stock funds? Do set-it-and-forget-it type of funds exist for retired people, similar to the target retirement funds that are so popular? This is not a FIRE story, but I respect the thoughts and advice of this board, and eventually, I'll have the same questions for myself! [link] [comments]  |
| Anyone plan on / have experience with purposeful lifestyle inflation between FI and RE? Posted: 25 Apr 2018 06:55 PM PDT Howdy folks, I've lived fairly frugally since college, and am generally happy and don't feel deprived. I do, however, wish to leave room in my life for a wife and children. If that happens, great! If not, that's ok too. Having said that, while I may be fine living a certain way I would not want to deprive my kids of a great education, or other things just because dear old dad wished to retire early. Because of this, my retirement number is about twice as much as it would take more me to be fully financially independent. This means that I'll have to work about 10 years longer than strictly necessary. To motivate myself, once I hit my FI number, I will increase my spending little by little, to the amount my portfolio could support with a 3% SWR (it pencils out to about 3k/year for every additional year I work post FI). I'm hoping this will be a strong enough incentive to keep me working until I hit my goal. My hobbies are fairly cheap, but maybe travel, or I might earmark some to go to a donor advised fund (anonymous charity) with a ridiculous name. It would certainly give purpose in life that's sorely lacking. With all that said, is this reasonable? Has anyone here done this? How easy was it for you to relax a bit and spend more, and what did you find yourself spending it on? How long did it take before the marginal utility of one more dollar was less than that of retiring? Thoughts and experiences would be appreciated! [link] [comments]  |
| Posted: 26 Apr 2018 04:33 PM PDT I feel like it might be too late for me to start. 4 years of highschool and 5 years of college trying to learn how to get a job, any job, and now I feel like most jobs, even the basic minimum wage position, will destroy me just like school did. The level of conditioning on what I do, what I read, and what others say will compound and leave a mark on my personality. It will harm the core that wants to retire - freedom from most social convention. If I do not work, I feel the insecurity of my current actions on my future self. If I do work, I feel the insecurity and failure to mold my environment to my own will due to submitting to a corporate power (what I wear, what I do, my hours, my mental focus as drone #345, etc). This is honesty hell. The two biggest factors toward FIRE (jobs and SOs) and I get stuck in the subtle compounded issues created from a mismatch. What advice do you have? [link] [comments]  |
| Accumulated enough for my plan of FIRE but I am still afraid Posted: 26 Apr 2018 01:05 AM PDT To begin with, I am a Korean national living in South Korea. Age of 48, living moderately and happily with my wife and my kid who is a highschool boy. I own a small flat in down town Seoul, of which price is inflated beyond common sense. A small flat of 800 square feet with one bathroom is 850K in USD ! Can you believe that ? Anyway, I live in it and I have no plan to sell it. I have 720K in bank account, gathering very minimal interests, and 20K in stocks. I also have a small commercial building, very small and very old, which gives me a monthly rent of 3K. My company retirement account has about 330K. Other than that, my wife and I will be entitled from 65 to National Pension of Korea which would be about 1.3K each, monthly. I earn about 140K from work per year, plus the 36K from the rent. After tax and various deductions like National Health Insurance fees, I get about 130K yearly. I think I saved much more than my work collegues of my age because my wife had the same job as mine (she retired already 5 years ago), and I inherited a tiny fortune of 350K from my parents about 10 years ago. With that money and my savings, I bought the small commercial building at 700K. With the recent real-estate boom, I believe its value is about 900K or even 1M. According to my best calculation, my family has been spending about 5K monthly. This 5K budget includes public school expenses and private tuition fees, which amount up to 2K. I believe I can easily take care of my kid's education with my company retirement account savings, unless he goes to Havard or Yale for graduate school. So far so good. I think I am ready for retirement. But I am not ready to invest in stocks. According to the 4% (or 3%, whatever) rule, I have to invest half my asset in stocks, but I am very afraid of it, even if they are all ETFs. With the current interest of lousy 2.2% from public bond, I am not sure if I can retire. Do you guys really feel confident of the stock market and 4% rule ? Maybe the stock market is resilient enough, but I am afraid I am not. I am not sure I'll be steady enough not to sell off all my stock when another big crash swoops down. Another problem. My conscienciousness for my kid... or for my parents. I think if I FIRE now, I believe it is largely thanks to the 350K inheritance. I feel obliged that I have to leave to my son at least that much when he reaches his 40s. To do that, I cannot possibly put all my savings in 2.2% bank accounts. What do you guys think ? [link] [comments]  |
| Posted: 25 Apr 2018 06:55 PM PDT I've been on this sub for about 1.5 years now and getting to the point where I've reached a limit on reducing expenses. The next step is to look at increasing income. I'm coming up on 5 years out of college, started at $55K year 1 and now at $85K salary. I feel like my salary increase has been low and looking to increase it substantially soon by changing jobs . I'm aiming for $105K+. My job is low stress and very flexible schedule wise. Working from home is always an option, flexible work hours each day, etc so it would take a significant increase for me to leave for something more structured. This got me thinking about the a typical salary curve by years of experience. I did a quick google search but nothing substantial was found. This is what I found and decided to do some benchmarking in 2018 dollars. My goal is FIRE in 20 years, It makes sense that I should try to squish that graph from 35 years to 25. I'll do that later but for now, Here is the graph with 1996 dollars and 2018 inflation adjusted. It looks like I started on the low end of the salary curve but surprisingly, I've had a faster salary increase than what the curve suggests should be the norm (still below expected though). Obviously the goal is not to be on the curve but to exceed, however, it helped me benchmark myself and add another data point to plan my career accordingly. Does anyone else track their salary each year? I'm curious what everyone's salary trajectory looks like. [link] [comments]  |
| Anyone Traded job happiness, security and guarantee for FIRE? in SF Bay Area Posted: 25 Apr 2018 10:39 PM PDT So here's the deal. Work for a company that I really like. Like my boss and my peers. Or at least I used to (one doesn't consider a move if they aren't a little disillusioned). I live in the SF Bay Area and its insanity here when it comes to cost of living and just job offers. My company has their heads buried in the sand when it comes to cost of living for the area and salaries. Were losing top talent and not hiring the best anymore. So me. I have two big offers to leave. One company is a FIRE's dream. 6% 401k match every year, and 19% of your salary in company stock each year that has a historic return of 12% (5 year vest). Bonus is supposedly anywhere from $25-100k as its all performance driven. Base salary of 160k. And a upper management stock dividend payout that they're hush about but supposedly I would be offered. Company doesn't have the best work life balance reputation, poor health insurance and owners supposedly put company first, family second. Other company is $185k a year with supposedly $50k bonuses, good health insurance (important for a family man), other perks, decent work culture and a fast track to executive if I perform. Which would mean huge pay increases to the above. current company is I'm at $150k, bonus sucks at $15k a year, $4k 401k bonus and only 3% 401k match. some other decent perks. The nice part is ive completely written my ticket. I'm supposedly on the short list for executive track, but even then the pay will never be close to the above companies ever, unless drastic leadership change occurs. The deal is I'm pretty sure I would never be fired (maybe thats egotistical) and can easily figure out my life and retirement. I've proven myself and love a lot my team and peers. The deal is they just don't reward high performance. I'm working myself to death for no reason lately to blow our numbers out of the water, but for no reason. The low performers don't get much less than me. Again though its easy here and a known entity. I do what I want, can expense what I want, not show up to work whenever I want (not that I rarely do) and can be there for my family at a moments notice. So its safe you can say. So have people on here traded a guarantee, security and mostly fun job for a faster FIRE? My company I could retire at 60-65 most likely but the other two maybe 55 or less with more retirement. I'm 33 also. [link] [comments]  |
| Posted: 26 Apr 2018 07:13 AM PDT I've been tracking our expenses and have a pretty solid understanding of how much money we need in retirement each yeah AFTER taxes (healthcare uncertainty being the biggest unknown). What resources do you use to calculate how much you need BEFORE taxes? I've been using some calculators on smartasset.com, but no idea how accurate that is. They have both a while working calculator (takes into account SS/Medicare withholdings) and a retirement calculator (that takes into account SS, pensions). I'd love to find a tool that would take into account the structure of my savings (what is pre-tax, what is post) and given my non-tax spending tell me how much I need to withdraw from each pool of money. [link] [comments]  |
| Learning about FIRE and need some help on what constitutes my "portfolio". Posted: 26 Apr 2018 05:50 AM PDT This community seems really great, so I wanted to ask for some beginner help. Little background: I am a food scientist who worked in R&D for many years and just got into tech sales. I have almost zero financial understanding, but have been trying to learn on my own. I have very little desire to continue in "the grind" and have been framing up my career path to lead to early retirement. Trying to FIRE at 55. Here is snapshot: 40yo, No children. (no plans to have them) $108-140K a year (commission dependent) $406K in 401K job 1 $51K in 401K job 2 $80K in stocks $59K in Money market 1.5% $25K in savings 0.85% $19K in checking Only debt is my home and bills (about $2,200/mo). Company pays for car and phone. Will own home in 15 years. So when you talk about SWR at 3-4%, is that based on all this put together or just the 401K? How do recommend I shuffle this to maximize output? Help a food nerd escape the rat race. Thanks! [link] [comments]  |
| Taxation of Dividends from REITs in VFIAX Posted: 25 Apr 2018 10:07 PM PDT So my understanding is that REITs are designed as pass through entities which pay basically no taxes at the trust level, and instead have the shareholders pay taxes at their marginal income tax/non-qualified dividend tax rate on the return of returns distributions. Now REITs joined the S&P 500 in 2016 and hence joined VFIAX at the same point. Despite this, Vanguard tags all of the distributions in 2017 (and so far in 2018) as qualified dividends. Can someone help me make sense of how Vanguard is able to get away without marking those as nonqualified dividends? [link] [comments]  |
| Posted: 26 Apr 2018 08:31 AM PDT Hey everybody! I've been a reader on this sub for close to a year, and about 6 months ago, I started my journey to FIRE. I see a lot of posts on here about people who have progressed well into FIRE, hit a Net Worth Milestone, or have finally pulled the trigger. And I should see a lot of these posts, as that is the end goal! But I thought I would lay out my plan as someone who is young and just getting started, and then we can all pat me on the back for doing so well, or call me a bundle-of-sticks for being so naive. Background I am 22 and recently got my Bachelor degree ('17), and am working in a business role, the details of which are irrelevant. I am engaged to a lovely 22 year old teacher who got her degree in 2016. I am currently in graduate school getting a STEM degree while working full time and should be done either August 2019 or December 2019, depending on my workload. Fiancee is going back for her graduate degree in June, she will continue to work during the program, and she has a more structured program, and she will finish December 2019. We have two incomes and no kids. Current Status Me
Fiancee
So as you can see, we are pretty much starting from the bottom. Fiancee is basically at $0, and I am in the negative from student loans. Luckily we have no other debt other than car and student loans, both of which have fairly low interest rates (and my student loans are deferred until 2020 since I am currently in school). Current Income and Savings Me
Fiancee
You may be looking at these saving rates and wonder how I got to them. For my fiancee, it is very simple. For now, we are not married, so her finances are hers, and I don't have (or desire) control of her money. But, I was able to convince her to at least max out her Roth IRA, so she is contributing $5,500 annually. For me, I am maxing out my Roth IRA, plus contributing 5% to employer 401k (with 100% matching), and 10% to employee stock (on which I get a 15% discount). All added up, 33.7% of my annual income ends up in my retirement accounts. Goals
Now before you look at these numbers and think that those are high numbers, the way we came about our goals had more to do with her career goals than our joint finances. She loves her job more than anything, and she could probably work forever (and maybe she will!), but at 52 she will receive her full pension which will equate to around $60,000/year when it is all said and done. So we based our plan around the idea that she will retire at 52, but we will be financially independent in the traditional sense around age 40. Here is a road map of our plan with a check-in every 5 years: Age 27 Check-in: Income and Savings
Net Worth
The three big things to point out in this check-in is the huge increase in income, huge increase in savings rate, and the huge increase in debt. At this point, we will both have graduated with our Masters degrees, and my expected income should be around $85,000, and hers around $55,000. At this point going forward, we will likely receive no more than cost-of-living pay increases, unless I get a large promotion. The savings rate increase is due to our plan to contribute 75% of our post-grad-school pay increase towards savings. We get enough to cover the extra taxes and get a little pay boost ourselves, but almost all of the rest goes towards savings. And you will notice the debt increase is due to a mortgage. We plan on buying a house in the next couple years, and our expected cost will be about $300,000. It is also at this point that we plan on starting our adventure into parenthood. Age 32 Check-in: Income and Savings
Net Worth
Not much has changed at this point, other than the fact that we will have paid off a significant portion of our house. We continue to put away $60,000 a year, and any pay raises or promotions that we get will just be used to offset the cost of kids, and any leftovers (dreaming here) will be "splurged" on quality of life upgrades. If everything goes to plan, we will be popping out our last kid right around here. Age 37 Check-in: Income and Savings
Net Worth
At this point, we hope to have our house paid off. It might not be quite there, but it should be 80-90% paid off or more at the very least. It should also accumulate some more value as housing costs rise. Our $1 MM mark will hopefully be far behind us, and this is the point where the growth really starts kicking into overdrive. At this point, we could probably both retire and live a good life. And who knows, maybe we will. But if we are still enjoying our careers, I really think we won't be quite ready to give it up yet. Age 42 Check-in: Income and Savings
Net Worth
Around 40 years old is the point where I think we will first consider a major lifestyle change. I think I will likely move to a part time or freelance role. My income is likely to take a hit, but we should be able to make enough where we can both stop contributing to our savings and maintain all of our spending. This is the point where I think we will officially consider ourselves "financially independent." I won't fully retire becuase my wife will likely continue to work full time, so I don't want to retire alone, but we will have the summers off (teacher perks!), and we will probably spend a lot of time traveling. Kids will be 10-15, so they will be a little more independent as well, so we can do a nice combination of family vacations and trips between just the two of us. I don't think we will withdraw anything from the account at this point, and just let it sit and grow. Age 47 Check-in: Income and Savings
Net Worth
Not much has changed financially. Wife will likely continue to work (assuming she is still loving it), I will continue working however much I want to, and kids will start going off to college. We may withdraw a little bit to help pay for college, but it probably won't amount to a huge change in the overall plan. I may officially retire as well and begin withdrawing 1% or so to supplement our income. But for the sake of plans, I will say that I am still doing freelance consulting or an easy part-time gig. Age 52 Check-in: Income and Savings
Net Worth
The big day comes, and we call it quits. We get to collect my wife's pension for working 30 years. We buy our second home, a dream of both of ours. A little place on an island in the Caribbean. We figure this will cost around $1,000,000 (give or take a few $100k), which we will be able to pay cash. That leaves us with $262,000 per year, a HUGE amount. This will go towards a boat (island home), maintenance (island home), and traveling. There is a good chance that this will be more than we use, so the nest egg would likely continue to grow. We may also upgrade our main home if we feel necessary, but we will have plenty of money for this, so I'm not too worried about the actual cost. At this point we will have made it to the RE part of FIRE, and we will do what we want for (hopefully) the next 50 years or more (here's to advances in health technology). If you've made it this far, thanks for reading! Let me know if you see any major issues or questions, and I will either help explain further, or acknowledge I hadn't thought about it and try to adjust accordingly. For all of you young people like me, start now and it will be easy! It only gets harder if you wait. [link] [comments]  |
| Posted: 26 Apr 2018 03:44 AM PDT I see savings rate calculations and I'm not sure how to read them on here. Mostly dealing with the taxable in future accounts. If I max a 401k it's 18.5 pre-tax. Does that just count as 18.5 of savings (as it's taxable later and not the same as a roth saving #) or would it make more sense to treat it differently? Same deal with post-tax taxable accounts. It seems like Roth savings should be favored in some way over traditional or capital gainsable in the calculations. [link] [comments]  |
| Living psuedo fire life with full time job. Posted: 26 Apr 2018 11:13 AM PDT I've been living a pseudo fire life for a nearly a decade now made possible by my unique remote weekend shift job where I work Fri-Sun 12 hours each day and I get the other four days off. It's a six figure chill job with low stress. With this I've been able to explore all my passions to my content. In the beginning I took up drums, then I got the travel bug, I've been to over 15 countries (with my wife whenever possible) in the past 2 years and don't plan on stopping. I've always loved walking, I currently do nearly 12 miles a day (increased to this pace over the years, first it was 8, then 10, then 12 etc...). Only thing I regret so far is not learning about index investing earlier, most of the time, my earnings were in a bank. Even when I learned about it, I was hesitant because I planned on buying a house didn't want to risk it. It's once in a lifetime job, I will enjoy it as much as I can until it lasts. Edit: More FI stats, I plan on retiring at 55. I'm not conscious about SR as we are a two income family, our spend is very low every month. [link] [comments]  |
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