Financial Independence Daily FI discussion thread - August 04, 2019 |
- Daily FI discussion thread - August 04, 2019
- Top reasons parents don’t discuss wealth with their children, but should
- Are you rich? (NYT Article)
- (mass) Layoff = Mini RE
- Is there a subreddit / community for people who want to take regular sabbaticals rather than completely stop working? (delayed full RE for lots of mini RE, empowered by FI?)
- Google Sheet to Compare NW Progress to Goal Timeline
- Are we there yet? Help me figure out the last half of our (financial) lives... 6 questions
- Are you using a roth conversion ladder for early retirement?
- Visualizing investment backtests
- Can I FatFIRE? Seems like most people there are in a different league.
- FI and Retired? Would you consider a variable withdrawal system based on 5% of your investment portfolio on January 1st of each year?
- How real is FIRE?
| Daily FI discussion thread - August 04, 2019 Posted: 04 Aug 2019 01:08 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]  |
| Top reasons parents don’t discuss wealth with their children, but should Posted: 04 Aug 2019 05:31 AM PDT Two-thirds of Americans who have at least $3 million in investable assets have not talked to their children about their wealth or never will, according to a Merrill Private Wealth Management study of 650 families.. Also discussed here. Top reasons for not discussing money with children:
But despite these reasons they say it's important to have discussions about wealth:
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| Posted: 04 Aug 2019 05:03 AM PDT You don't have to be rich to pursue FI, but we all have different definitions of rich. NYT put out an interesting tool to consider the question: are you rich? It is localized by metro area, which makes it more accurate. https://www.nytimes.com/interactive/2019/08/01/upshot/are-you-rich.html?smid=nytcore-ios-share I was pretty surprised to find we're in the top 5% pretty much everywhere except DC and SF. Did this tool change your perspective at all? [link] [comments]  |
| Posted: 04 Aug 2019 09:38 AM PDT So as title indicates got mass laid off - with almost 10 months payoff + separate payoff for insurance (COBRA). Best period in life so far. Not in hurry to join back workforce. Timing has been perfect as this is also summer vacation for kids - so full time enjoyment. [link] [comments]  |
| Posted: 03 Aug 2019 04:41 PM PDT I've been on the FIRE train since I got my first job out of college, but now that I'm in my mid-30s, I see and feel my body aging and I want to take regular, prolonged periods away from work to enjoy things now that I won't be able to enjoy as much later, like kickboxing, surfing, skiing, hiking, etc. I know you can do all of these and more well into old age, but it's different. I can't do these as aggressively or for as long as I used to, and I think it's only going to get worse. I've been saving and investing for years, but full retirement is still at least 10 years away (probably more). Rather than work full-time and race to quitting my job, I want to delay my time to total retirement in exchange for a 1-3 month sabbatical every 1-2 years. I had my first taste of it this summer. My full-time job ended in May and I spent June and July in my home city investing time into house projects and kickboxing training. I'm going back to work in a few weeks at a new job, and I'm hoping to do a mix of remote work and vacation for a month next year in a city overseas. A two-week vacation is nice, but I don't want a vacation, instead I want to experience living in another culture, and that takes at least one month. I'm happy to work while I'm there (I might like it more than being on vacation for a month or two), whether it's working locally or working remotely. It's common to change jobs every two years in my industry (software design and development), so I would like to take a sabbatical between job changes every two years. Or switch to a life of working six-month contracts followed by 1-2 months off. I've got my plan, so now I want to see if there are other people with this same mindset. Is there a term for this? A subreddit or community? [link] [comments]  |
| Google Sheet to Compare NW Progress to Goal Timeline Posted: 04 Aug 2019 12:02 PM PDT Hello, I'm not sure if others will find this worthwhile or not but I posted a chart I built in excel to the daily thread that helps me visualize how I am progressing on my FIRE goal. Someone asked how I made it, so I recreated it in google sheets if anyone is interested in using it. Here's the link to copy it. Just fill the yellow containers with your data and the chart will autopopulate (I put placeholders in the master that you can edit). If this isn't useful, sorry for the spam. Edit: Updated google sheet with extrapolation math to FI with current NW growth rate. [link] [comments]  |
| Are we there yet? Help me figure out the last half of our (financial) lives... 6 questions Posted: 04 Aug 2019 03:25 PM PDT Throwaway account... Background: We're doing okay financially. My wife and I are 48 and have 3 teen children. Net worth is $3.9 million, tied up in real estate, a small business and retirement accounts. We have very little available cash reserves (we put extra money into paying off mortgage and cars). We both work part-time at our business. No debt. We own an upper middle class home and 3 boring cars. We spend about $130k a year. Live in the US - flyover land mid-south. No pensions coming (just Social Security possibly starting at 62). The real estate rental income and business profits kick out about $275k a year to us. The business is pretty stable, doesn't require a lot of hands-on effort anymore, needs to be owned by a licensed professional in this industry, is worth about $1M (5 times EBIDA), and may be difficult to sell. Question 1) When do you think we can fully retire? (3 teens all entering college soon) Question 2) How much should we pay for our children's college? Question 3) How long should we stay on as absentee owners to the business to continue getting medical coverage and the shareholder profit distributions? Do we sell it a bit every year to a partner or just sell it outright when the time comes? Question 4) What should we be doing with the business now to prepare it for either 1) a sale, or 2) having us be 'deadbeat' owners / hands off? (We have a very good worker who is basically running the company now, but due to a lack of the right type of degree, cannot purchase the business.) Question 5) We have $2M in life insurance policies but think we can cancel them now. Agree? Question 6) What would keep you up at night with worry if you were me? [link] [comments]  |
| Are you using a roth conversion ladder for early retirement? Posted: 04 Aug 2019 12:15 PM PDT My plan in retirement is to move to a no income tax state, and slowly convert my TSP (fed 401k) to a roth IRA. This is a complicated decision for me.On the one hand I like the thought of paying my taxes now, while they're relatively low historically. On the other, the TSP is an exceptionally good 401k, and I really like the G Fund and it's risk free return. I expect to be in the 0% cap gains bracket, for as long as that lasts. It will be tricky managing income with regard to health insurance subsidies / cost sharing, but there's no telling how that will change in the future. Are you considering a roth conversion ladder to fund your early retirement? Any gotchas I should consider? [link] [comments]  |
| Visualizing investment backtests Posted: 04 Aug 2019 01:41 PM PDT I've been working on and off for a while on a tool to help visualize the standard "FIRE" timeline of saving up to a certain amount and then living off of withdrawals from that portfolio. I've used CFIREsim, FIREcalc, and others, and while many of those are quite feature-rich I've found them all a bit lacking (IMHO) in the visualization department. I've found a visualization method that I like, and implemented enough features that I think it may be useful to at least some portion of this sub. It's now hosted as a heroku app (free tier; sorry-not-sorry for slowness); explanation of available parameters, methodology, and what each part of the visualization represents here. tl;dr: it's a heatmap of portfolio balance and monthly spending over the course of both accumulation and withdrawal phases, with failure scenarios highlighted in red. I'm open to any feedback on things that would make it more usable (and any clarifications needed on the documentation), but realistically I'm not very likely to implement any nontrivial changes unless I find them personally useful. I may open-source if people are interested, but right now the code is a bit of a mess so I'm not exactly itching to put it on my public github and brag about it just yet. [link] [comments]  |
| Can I FatFIRE? Seems like most people there are in a different league. Posted: 04 Aug 2019 12:34 PM PDT Goals: Hoping to reach FatFIRE, but after looking around there, I feel like they're in a totally different league (i.e. many people w/ multimillions before 30). I recognize I'm very fortunate to have a good education and a good paying job. Given that, I'd like to reach FatFIRE so we can live comfortably while dramatically increasing the amount we can donate each year. Do I have a realistic chance of getting there, especially with only one high income? Target FatFIRE stats:
Background:
Current Finances:
Future finances:
TLDR:
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| Posted: 04 Aug 2019 04:07 AM PDT A group of us were talking about money and retirement and one friend told us that he does not worry about running out of money in retirement because he uses a percentage of remaining portfolio retirement withdrawal method. He withdraws 5% of his total retirement investment portfolio in January of each year. (He says he can pull out 5% safely vs the traditional 4% because he is taking 5% out of his total assets each year, as his net worth goes up and down based on stock market returns.) For example, if he had One Million Dollars on January 1st- his first full year of retirement- he would withdraw $50,000. That would be his only withdrawal for the year. In January of the next year, his second year of retirement- due to portfolio gains and loses, he now has $1.1 million dollars. Now he withdraws $55,000. In January of his third year of retirement, he looks at his assets and finds he only has $850,000 due to a tough bear market during the last 12 months. His third-year withdrawal will be $42,500.00. He can survive this lower distribution because he budgeted for years that his withdrawal would drop due to bear markets and he has a 50-50 portfolio which is likely to drop only up to 25% in even the worst market. He accepts this because he knows that over time the stock market will go up and over a retirement lifetime he will be able to spend more money using a variable withdrawal than a withdrawal system based on the first year's balance and inflation increases. What do you think of a percentage of remaining portfolio retirement withdrawal method 5% annual withdrawal vs a traditional 4% withdrawal program? (If your budget can take drops in withdrawals and resulting spending during bear markets.) Does my friend have his facts right when he says he can take 5% of the portfolio balance out each year USING A VARIABLE PERCENTAGE OF REMAINING PORTFOLIO WITHDRAWAL METHOD and never worry about running out of money? Here is an article about it: https://www.mymoneydesign.com/personal-finance-2/retirement/percentage-of-remaining-portfolio-retirement-strategy/ [link] [comments]  |
| Posted: 03 Aug 2019 01:39 PM PDT I am increasingly worried about both national and global economic instability, which I believe will be exacerbated as the realities of climate change continue to intensify. All of it makes me want to be as debt free and unbeholden to a job for income as possible, which is why I started following this sub and also r/leanfire. So, if a lot of FIRE depends on creating passive income, how real is that, really? My parents put a lot of money in the stock market to save for retirement and lost half their money in the recession. They are ok and made it to retirement, but I feel very uncertain about depending on interest or dividends to live. What if the stock market crashes again? Even if you simply have savings or a trust, your money has to at least be in a bank to earn interest, right? What if the bank goes under? Sorry if these are naive questions. [link] [comments]  |
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