Financial Independence Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice. - April 22, 2019 |
- Weekly “Help Me FIRE!” thread. Post your detailed information for highly specific advice. - April 22, 2019
- Early Retirement May Even Kill You -- WSJ
- Has anyone here used their umbrella insurance policy for anything? If so, how difficult was the process?
- DAE get insanely frustrated with family members who spend their money irresponsibly and then complain about having no money but won't take advice?
- How do you handle family members asking for handouts/borrowing money?
- Preparing for Responsibility of Special Needs Siblings
- Anyone else pursuing FIRE a gamer?
- Article in USA Today on FIRE
- Daily FI discussion thread - April 22, 2019
- Time is an incredible valuable non-renewable resource. How can I take actions in my late 20s to reach FIRE faster?
- Weekly FI Monday Milestone thread - April 22, 2019
- Anyone Worried About Going Broke from a Lawsuit?
- Budgeting for hobbies, how little is too little?
- About to FIRE - best Pension Option Decision?
- Roth v. Traditional: Conversion Ladders with one spouse still working
- Goodbye Social Security!
- How to fill out Form 8606 for previous year non-taxable tIRA contribution.
- NOT AN ADVERT: What do the users here think of Ramit Sethis's blog? He's churned out yet another program targeting millennials and teaching them about Financial Independence.
- 401k after tax or before tax?
- British equivalent
- Should I GFM?
- What does FIRE enable you to GIVE?
| Posted: 21 Apr 2019 11:09 PM PDT Need help applying broader FIRE principles to your own situation? We're here for you! Post your detailed personal "case study" and ask as many questions as you like, or help others who've done the same. Not sure if your questions pertain? Post them anyway…you might be surprised. It'll be helpful to use our suggested format. Simply copy/paste/fill in/etc. But since everybody's situation is different, feel free to tailor your layout to your needs. -Introduce yourself -Age / Industry / Location -General goals -Target FIRE Age / Amount / Withdrawal Rate / Location -Educational background and plans -Career situation and plans -Current and future income breakdown, including one-time events -Budget breakdown -Asset breakdown, including home, cars, etc. -Debt breakdown -Health concerns -Family: current situation / future plans / special needs / elderly parents -Other info -Questions? [link] [comments]  |
| Early Retirement May Even Kill You -- WSJ Posted: 22 Apr 2019 09:39 AM PDT WSJ Link: https://www.wsj.com/articles/the-case-against-early-retirement-11555899000?mod=hp_featst_pos2 Obviously, the thoughtful folks on this sub are building the life they want to live. I consistently see articles like this in the popular media which is frustrating given that the FIRE philosophy is designed to avoid some of the traps detailed below. ----------------------- Most people look forward to retirement, a reward for decades of hard work. But like many other pleasures, it may be bad for your health. It may even kill you. How can that be? How can working longer be good for your health? After all, many people dream of—and plan for—retiring early. Strenuous, stressful work can wear people down and damage their health. On the other hand, retirees can relax and reinvigorate themselves. They have time to follow their passions and pursue activities that enrich their lives. But in our rush to leave the office, we don't realize that retirement also has a downside, especially over the long term. Many retirees indulge in unhealthy behaviors. They become sedentary and watch too much television. They eat too much. They drink too much. They smoke too much. Without the purpose of fulfilling work, retirees can feel adrift and become depressed. Without the camaraderie of their co-workers, retirees risk becoming socially isolated. Without the intellectual stimulation that work can provide, retirement can accelerate cognitive decline. The problem for researchers is measuring which is the more powerful force—the joys of a more leisurely life or the downsides. An experimental study, in which researchers randomly force some workers to retire and others to remain in the labor force, would provide the best evidence, but that kind of experiment is impossible. Instead, researchers have turned to statistical models that rely on factors that affect work but are unrelated to health—like Social Security eligibility ages, tax breaks for older workers or mandatory retirement rules. Researchers then can determine how health changes when these milestones are reached. The result: Many of these studies clearly show that health problems intensify after workers qualify for retirement benefits and abate after policies encouraging work are introduced. MORE IN ENCORE When you're 62Consider a 2018 study by Maria Fitzpatrick at Cornell University and Timothy Moore at the University of Melbourne, which used administrative data covering the entire U.S. adult population to examine how mortality rates change at age 62, when people can first begin collecting Social Security retirement benefits. After all, death is the definitive indicator of poor physical health, which itself is difficult to measure. Dr. Fitzpatrick and Dr. Moore found that men are 2% more likely to die in the month they turn 62 than in the previous month. This mortality surge is driven largely by increases in deaths from lung cancer and chronic obstructive pulmonary disease, and risk factors for these conditions include smoking and lack of physical activity—both of which become more common when people retire. Mortality rates at age 62 increase less for women than men, and the relationship is not as clear-cut, perhaps because age-62 mortality is much lower for women. More evidence comes from looking at a Dutch policy change in 2009, which introduced a tax break for older workers. It provided workers a 5% bonus at age 62, a 7% bonus at 63, and a 10% bonus at 64. These incentives, which were eliminated in 2013, spurred work by men ages 62 to 64, and had smaller effects on women. Using this temporary policy innovation as a type of social experiment, Alice Zulkarnain and Matthew Rutledge at the Center for Retirement Research at Boston College concluded that delaying retirement reduced the five-year mortality risk for men in their early 60s by 32%. As in the U.S. study, the impact was smaller for women.The evidence also suggests that retirement can accelerate cognitive decline. The mental exercise that work provides seems to keep people sharp. Learning new skills seems particularly important. By establishing "cognitive reserves," such activities may help the brain become more adaptable and better compensate for age-related erosion in cognitive ability. Economists Susann Rohwedder and Robert Willis used data spanning the U.S., England and 11 European countries to show that retirement significantly reduces cognitive function. When people retire, they typically get less mental exercise, because work activities are generally more cognitively stimulating than home activities. Retirees may routinely play bridge or do crossword puzzles, but that isn't as intellectually challenging as many jobs. A 2014 study of half a million retired self-employed workers in France found that dementia was significantly less common among those who retired later than those who retired earlier. The social networkAnother risk for retirees is that leaving the workforce can cause them to be socially isolated. Most workers interact extensively with their colleagues, providing camaraderie and often social support. Although you would think that retirement provides people with additional time to nurture social ties, Eleonora Patacchini at Cornell University and Gary Engelhardt at Syracuse University found that retirement shrinks social networks and the frequency of social interactions. The impact is especially large for women and college graduates. Smaller social networks and social isolation tend to reduce life satisfaction and impair physical and mental health. It's important to point out that a paying job isn't always necessary to reap the health benefits of work. About one-third of Americans age 55 and older regularly volunteer for community groups and other organizations. Such unpaid activities can involve levels of physical, cognitive and social engagement similar to those in paid employment. Many studies, including a 2019 evaluation of the Foster Grandparent and Senior Companion programs, find that unpaid work, like paid work, reduces depression and loneliness and improves life satisfaction for older adults. These studies aren't definitive. More research is needed to establish the pathways through which retirement affects health, and to identify which types of workers are most affected. For example, the health benefits of work aren't generally shared by people with especially stressful, boring or physically demanding jobs. Workers in blue-collar jobs, for instance, accumulate health problems more rapidly as they age than workers in less physical jobs and usually experience health gains when they retire.Financial fitnessRetirement, meanwhile, doesn't just threaten the physical and emotional well-being of people. In fact, perhaps the biggest downside of retirement is financial. Social Security replaces only about 40% of a typical paycheck. Employer pensions are much less common today than in the past, and relatively few people have saved enough in 401(k)s or elsewhere to guarantee a financially secure old age. By staying on the job, workers can redeem their retirement prospects. Workers who extend their careers can save part of their additional earnings for retirement, and they can accumulate more Social Security credits. What's more, retirement savings don't have to last as long when workers delay retirement. My Urban Institute colleagues Barbara Butrica, Karen Smith and Eugene Steuerle have estimated that an additional year of work raises future annual retirement income by 9%, on average. The financial benefits from continued work are even greater for low-income workers because Social Security's progressive benefit formula replaces a higher share of earnings for low-wage workers than high-wage workers. The bottom fifth of earners gain, on average, 16% by working an additional year. The good news is that many older Americans are working longer. For much of the second half of the 20th century, the average retirement age for men declined steadily, as expanded employer pensions and the introduction of Medicare and early Social Security benefits made early retirement increasingly affordable. Between 1950 and 1993, the share of 65-year-old men participating in the labor force plunged from 69% to 28%. But the trend then reversed, in response to declines in employer pensions and employer-provided retiree health insurance, increases in older adults' educational attainment and changes in Social Security rules. By last year, the participation rate for 65-year-old men had rebounded to 46%. The trends differ somewhat for women, reflecting changing norms about women's work. Between 1950 and 1993, the participation rate for 65-year-old women edged up 5 percentage points, to 21%, as women of all ages moved into the labor force. The participation rate then surged to 35% in 2018. Despite these gains, obstacles to work at older ages remain. One is psychological: Many people feel they should retire by a certain age (or earlier), because that is the way it has always been. We should be encouraging older workers to stay on the job for their own health. What's more, for many older workers the decision to leave a job is not their own. Instead, too many are pushed out of their jobs before they are ready to retire, and end up struggling to find new work with comparable pay. Employers often seem reluctant to hire older workers, because of fears that they are too expensive, lack up-to-date skills, or will retire before employers can recoup the cost of hiring and training them. Various policy changes could increase older workers' employment. Federal law prohibiting age discrimination in the workplace could be strengthened after a 2009 Supreme Court decision made discrimination more difficult to prove. We could revamp our approach to education and training to prioritize lifelong learning so older workers can keep their skills up to date. And we could invest more in programs and benefits for older unemployed workers, who generally have trouble finding jobs and often stop looking. By enabling more older workers to stay on the job, these reforms could benefit companies facing shortages of skilled workers. But it could do more than that. It could also save lives. [link] [comments]  |
| Posted: 22 Apr 2019 10:49 AM PDT Title. I hear a lot of people recommending getting an umbrella insurance policy to protect their assets against lawsuits, but I was just wondering if they're reliable when stuff happens and they have to pay up. I'm wondering that because 1) the monthly premium/fee for most umbrella insurance policies look VERY low compared to other insurance types and because of that, I feel like they would be really stingy with their money, and 2) I've heard from an asset attorney (not an unbiased source, i know) that those insurance companies will fight tooth and nail not to pay out. [link] [comments]  |
| Posted: 22 Apr 2019 09:49 AM PDT IF YOU DON'T WANT TO READ MY RANT JUST SKIP TO THE BOTTOM My fiance's family is full of people like this. They openly admit they don't budget, spend money on brand new cars and trips to Florida, and an outdoor in ground pool, fitness videos/meal plans ( that they could literally get for free online), fast food and Dunkins, meanwhile living in a falling down trailer shack and living off of the government and complaining about how they can't pay their bills or have a nice house. Literally the other day my MIL was driving past a decently sized house and was like "I don't understand how people afford houses like that" and it took everything in my power not to start lecturing about budgeting. I've already politely tried to tell her to budget, suggested the app Mint as an easy way to do it, and she is not open to it. She just spends how she wants and doesn't keep track of where her money is going. She always offers to buy me Dunkins every time we are out (she buys like 3 coffees an hour) and I usually turn it down or if I agree offer to pay but her arguement is "oh I have the app iit's fine" and it's like "the app doesnt make the coffee free though..?" She also spends ridiculous amounts of money on garbage people who just suck her dry, like this "friend" of hers who has her drive her around everywhere (despite having access to other transportation), doesnt pay for gas (MIL doesnt ask for it either) and constantly sends my MIL to go pick up her pills or groceries and then doesn't give her the right money for it so my MIL just pays for it??? Like what are you even doing?!?! The FIL doesn't work, and if he does it's like part time. Doesn't really help with the house either, just kind of collects clutter and starts projects without finishing them. They don't understand how credit works and think racking up a ton of interest on a credit card IMPROVES your credit score because "you have to use credit to build it". When we told them we had a credit card, they assumed we were paying tons in interest and were like SO CONFUSED about how we avoided interest but still had good credit. They had a nice piece of land, but turned it into a junkyard by dumping tons and tons of crap in the back so now it's all polluted and dirty. No way to salvage it at this point. But the most frustrating thing of all is that WE'RE GOING TO END UP PAYING FOR THEM WHEN THEY CAN'T WORK ANYMORE!!! They have minimal savings, if any savings at all, and tons of debt. TL;DR: Advice on how to navigate this? I care about them and don't want to abandon them in their old age, but I also don't want to be literally paying for their mistakes. How do I protect myself and my fiance from taking on their debt when they pass away? Help?? [link] [comments]  |
| How do you handle family members asking for handouts/borrowing money? Posted: 21 Apr 2019 06:43 PM PDT My wife and I were recently at a family get together and the discussion about a distant relative came up and a fundraiser that was setup to collect money for her (she is having medical problems and they want to help pay the medical bills). My wife and I hadn't donated because we weren't completely comfortable with how the money was going to be spent (e.g are they properly using insurance, etc.) and also hadn't gotten around to figuring out how much money to give. One of my in-laws (without prompting or any discussion) mentioned to my wife they saw we hadn't donated and that we could setup our bank account to send it to them directly and that they were going to send her money periodically (it felt like they were saying we should do the same thing). The issues kept being pressed and my wife told them 3 times she didn't have much extra money to donate but she would talk with me about it. This is the same person who asks us to borrow money every 3 or 4 weeks (which we do help with and are paid back 99% of the time). We were very put off by this because the jist of the the discussion was that we were expected to give money, instead of us doing it because we wanted to help. It also bothered us the same people who ask to borrow money is offering to give their money up so easily. My wife wasn't exactly truthful on our ability to help, but we also try to avoid being looked at as the well-off family members. One of the reasons we have a good nest egg is our ability to save money by sacrificing now to save for later. We see others squander their money and always wanting to borrow from us. How do others approach this conundrum of wanting to help but always seeing other peoples financial issues are self-inflicted? Edit to add: Thanks for everyone's thoughts and opinions and I have read them all. I think I have conflated two things together that I should think of separately 1) Being asked to donate for a distant relative I haven't met and 2) The on-going requests to help family that doesn't manage money. I am going to help the distant relative a little bit because they had a legit issue where they will have medical bills (although I hope they will use the donations wisely since the amount of bills being quoted would break anyone) and address the constant borrowing separately. [link] [comments]  |
| Preparing for Responsibility of Special Needs Siblings Posted: 22 Apr 2019 04:22 AM PDT Hey, all. I wanted to reach out to see if anyone in this community has experience with this or knows someone that does. My brother lives with my parents and needs regular support with various activities of daily living. I spoke with my mom recently and found that while he is set up for SSI and Medicaid, there is no special needs trust or anything else set up. I will eventually be the guardian, and while I want to make sure my brother is well taken care of, I also want to be financially prepared so that my wife and I can still be on the path to financial independence. Is there anything I should be doing now to prepare or any hurdles to be aware of that anyone has experience with? Anyone else preparing for this? Thanks in advance for your feedback. EDIT 1: Thank you all for the feedback and comments! It's encouraging to know there is this shared experience within this community. Does anyone know of conversations that should be had regarding our parents will? Again, just trying to plan for FI for my wife and I while also setting my brother up with a sustainable way of life. [link] [comments]  |
| Anyone else pursuing FIRE a gamer? Posted: 21 Apr 2019 08:48 PM PDT If so, are you partially motivated to RE so that you can play more games? Not sure if I'm the only one. I don't seem to see too many people discuss hobbies outside of hiking on this subreddit. However the demographics survey seems to hint at us being a fairly nerdy/tech-oriented group. [link] [comments]  |
| Posted: 22 Apr 2019 05:46 AM PDT |
| Daily FI discussion thread - April 22, 2019 Posted: 22 Apr 2019 01:10 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: 22 Apr 2019 11:20 AM PDT I earn pretty decent money right out of college ($65k) working in IT in a HCOL area / country. I do have some free time in the evenings I could put to better use. Ideally I could spend this time working to create some passive or semi-passive income. As of now I could probably retire by 50. But man, that is a lot of years and precious non-renewable time I will not get back. I believe we all should make the best of our time here on earth, as far as we know it is the only time we will ever get. Very little of that time should be spent suffering/ being bored and unfulfilled. An ideal work situation would be to earn good money working 20 or so hours a week. As of now, as a full time employee, that is not possible. Anyone here have taken some actions that led to you reaching FIRE quicker than planned? How long did that take? Any tips or advice you could give me? [link] [comments]  |
| Weekly FI Monday Milestone thread - April 22, 2019 Posted: 22 Apr 2019 01:10 AM PDT Please use this thread to post your milestones, humblebrags and status updates 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! 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]  |
| Anyone Worried About Going Broke from a Lawsuit? Posted: 21 Apr 2019 04:27 PM PDT Anyone worried that their millions are at stake by getting into a car accident or some sort of negligence? I know some state have decent laws for protecting 401Ks and IRAs, but what about your taxable accounts? How do you protect your money if someone sues you? [link] [comments]  |
| Budgeting for hobbies, how little is too little? Posted: 22 Apr 2019 03:32 PM PDT I'm curious how people fit their hobbies into their budget. I am just starting to get into becoming financially responsible. My biggest hobby is working on my project car. I get really into it, whether it's cleaning or hands on work. Car parts, gas, and modifications can be quite pricey. I don't want to miss out on having fun and enjoying myself. That being said - I don't want to be dumping a lot of my funds into it. I am still young working 2 jobs; upto 65 hours a week. I am still trying to find a career to jump into. Any tips or advice from anyone would be greatly appreciated! Thank you! PS - I'm not sure if I am missing any information for you folks to help out! [link] [comments]  |
| About to FIRE - best Pension Option Decision? Posted: 22 Apr 2019 11:10 AM PDT I'm making myself crazy with this - thoughts? Husband is retiring next week and we still haven't signed the pension decision option sheet. We have modest retirement expectations and enough in assets to cover them - I'm still working part-time and we have about $2M (Cdn) including tax-deferred equities and rental properties. He has several pension option choices and we've narrowed choices down somewhat. We're both 51. The default option is 100%/50% where my husband is annuitant and I am the survivor. This pays $37,200/yr incl. extended health benefits and some other small perks. Our life expectancies are both good - calculators estimate early 90's, but who knows how life unfolds... We can choose a 100% survivor option which reduces the base pension to $35,900/yr. A 75% first death option reduces the pension by 25% on the death of either but keeps the pension at $37,200 per year until then. There's a 100%/75% option priced right in the middle. I like the idea of the 100% because I feel like it's his pension which he worked for so he shouldn't suffer because of me. We've been circling this for too long. I know this is a gut instinct sort of decision. Our crux seems to be that the 100% survivor gives us the liberty to not worry about our later years. We'll have Old Age money then plus my smaller pension and we'll have sold the rentals. The "peace of mind, fine no-matter what excepting the apocalypse" option is appealing. But will we be kicking ourselves for wasting $1300/yr until one of us dies on what is essentially life insurance which we don't need? How on earth do we come to a decision? [link] [comments]  |
| Roth v. Traditional: Conversion Ladders with one spouse still working Posted: 22 Apr 2019 09:41 AM PDT I know the Roth v. Traditional debate is a hot topic in the FIRE community and other financial circles. Historically I've fallen on the Roth side of those debates, wanting to leverage known tax rates (that currently seem a bit low). However, I'm currently having a rethink, and could use some input. I've been on a loose path to FIRE, or some form of FIRE, for a few years now. I've leveraged Roth-401k and Roth-IRA fairly heavily over the past ~5yrs. I'm feeling good about my progress (67% of the way to my goal), and could continue down this Roth heavy path. I've started to think a lot more about Roth Conversion Ladders... And how pre-tax money may be more beneficial if I tried to leverage those conversions. My partner likes her career field, and does not plan to retire anywhere near as early as I am planning. This I think may kill the main benefits of Roth Conversion Ladders, as we'll have her income to define our tax bracket. We will certainly slide down a tax bracket if I do retire early, so maybe it is still worth doing... Am I correct in thinking that I should be comparing our current tax bracket, with our future tax bracket when thinking about the Conversion Ladder option? Anything additional that I should consider? [link] [comments]  |
| Posted: 22 Apr 2019 03:39 PM PDT |
| How to fill out Form 8606 for previous year non-taxable tIRA contribution. Posted: 22 Apr 2019 11:32 AM PDT In 2017 I contibuted to a tIRA but didn't file my 8606. I have the 2017 form but am unclear which sections I need. Example: I had a rollover from a 401k worth 20k to that tIRA I had a non-deductible contribution of 500. I assume I put 500 as my contribution, but does my rollover count towards my basis? How do I calculate basis? [link] [comments]  |
| Posted: 22 Apr 2019 12:32 PM PDT Not putting links deliberately. But wanted to understand what the community here thought of him. Should I invest in his products to better myself? [link] [comments]  |
| Posted: 22 Apr 2019 11:26 AM PDT Long story short, I like a lot of the principles in FIRE but I don't plan to retire early. I'm 35 and have around 150k in retirement accounts. I own some private stock but there's no guarantees there. I also have a side business that brings in 10 to 15k a year. Sounds like the advantages to doing a pretax 401k are perfect for me. I've always been an after tax guy, but the more reading that I do tells me otherwise. I recently read the Guinea Pig experiment and that's really helped me push over the edge. Am I thinking right that I should do a pretax in order to reduce my taxable income every year? Does having no plans to retire early impact this? And thanks to this community for helping me realize that I'm not saving enough. It's been very inspirational to read through your threads the past week or so. [link] [comments]  |
| Posted: 22 Apr 2019 07:24 AM PDT Are there any brits on here? Are there any equivalent subreddits for british people? Mainly because I'm fairly financially illiterate as a baseline and it's only being exacerbated by talking about 401ks and iroths that aren't applicable to me (as far i realise) [link] [comments]  |
| Posted: 22 Apr 2019 01:22 AM PDT Details:
Plan: I'm a dual citizen. Thinking of downsizing into two small apartments, one in the US (small city) and one overseas (small town) - $200k each. Would travel between the two a few times a year, off-season, so about a grand each trip. I like both countries, and about six months a year in each would be wonderful. Retraining for a new career (nursing), but my heart isn't in it and I'm starting to resent my choice. Even if I finish the course, I doubt I'll do it as a job for long before I quit. I know the figures seem low, but would a life spent flitting between the US and Europe be feasible? Sure, I won't be living large and have a new car in each driveway, but I'm feeling increasingly drawn towards saying, "Fuck it," and seeing where life takes me. Living expenses of about $1.5k per month, including bills. Could easily bank $10k per year. Hobbies are cheap: reading, writing, hiking, low-budget road trips. My only luxury is the theater, which I spend about $100 on each month. Rarely eat out and I enjoy cooking. Switching between the two countries every few months would get the travel bug under control too. Oh, one child lives in the US, and the other is in Europe. I'd be able to see both more often. My only worry is that I'd be "wasting" my life by not working and helping people. Seems "selfish" or "lazy"? I'm someone who believes that there's enjoyment and fulfilment to be had in working and putting my life to good use. I could always temp in the US for a few months each year... Thoughts? [link] [comments]  |
| What does FIRE enable you to GIVE? Posted: 22 Apr 2019 10:55 AM PDT We hear a lot about what we are able to get as a result of FIRE or CoastFIRE or BsristaFIRE (lower stress, more free time), but I'd love to hear what folks on the sub are looking forward to being able to GIVE. For me, it's more time and attention to my family and friends, more community volunteer hours (I used to record audio versions of printed materials for blind/low vision readers, and would love to get back to that or something similar), and also being able to give the world more stories and books (easier to do more writing without a day job, or with a part-time day job). What are you looking forward to being able to give (more) as a result of FIRE-ing? [link] [comments]  |
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