Financial Independence Daily FI discussion thread - June 09, 2020 |
- Daily FI discussion thread - June 09, 2020
- Why a sabbatical may be better than FIRE
- At crossroads - need some perspective
- I made this spreadsheet that calculates potential CoastFIRE timelines, including monthly/yearly targets to hit CoastFIRE after x years
- FIRE Journey for One Veteran
- How will you mitigate sequence of returns risk during the first years of FIRE? Term annuities, trading options, etc.
- Example CoastFIRE Plan - Life Goals & Financial Needs by Age
| Daily FI discussion thread - June 09, 2020 Posted: 09 Jun 2020 01:07 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]  |
| Why a sabbatical may be better than FIRE Posted: 09 Jun 2020 04:44 PM PDT Taking a year-long sabbatical made me realize a few things:
Take time off while you're still relatively young and adventurous. I was a little bit past my 40th birthday but still had a lot of my energy and was in great shape which paid off as I did many physical activities I won't be able to do when I'm older. 2 Quitting work forever may not be for you. After a few months of travel, I grew a bit restless and wanted to come home and achieve great things again. Taking time off re-energized me and created a thirst to learn new things. I worked for the same company but eventually left and I've achieved things at my new company I could only dream of before. I also realized I wasn't ready to quit work completely. I still like the feeling of accomplishment and winning. There's more but that's what I have for now. Key note: traveling the world is only possible in a post-pandemic world but there's plenty of time to plan it now. [link] [comments]  |
| At crossroads - need some perspective Posted: 09 Jun 2020 11:00 AM PDT 39M single with a 4M net worth. I am in a high paying but high-stress career. I went on some amazing vacations over the years, but otherwise the net worth came at the cost of social life, work-life balance, and 55 extra pounds in weight. I have an uncle who was found dead on his desk by his secretary at work last week at the age of 62. This has been quite a wake-up call. I know that I am due for a change and I already started to look into part-time/consulting options. However, I struggle with the concept of slowing down when I am still young and at the peak of my knowledge and experience. It somehow feels like a failure when most of my colleagues are still going at 100%. There is an unspoken stigma that comes with early retirement or even part time work in my field. I wonder if anyone else has been struggling with similar issues or has trouble with getting rid of the ''golden handcuffs''. For those who broke free, any regrets? [link] [comments]  |
| Posted: 09 Jun 2020 01:01 AM PDT I couldn't find anything that did this exactly, and I really like seeing all the numbers laid out. Hopefully someone finds it useful: https://docs.google.com/spreadsheets/d/1sUaJEr5ZLaNhhZwS9Fsdtyf-U10UOIDPsv5JZYPIRzE/edit?usp=sharing So in the example, you're starting with 250k and want to FIRE in 20 years with $2.5m. The chart shows you how much you'd have to save to hit CoastFIRE at any given year. For example, to hit CoastFIRE in just 1 year, you'd have to scrounge together $529,511.82, and then you're free to let that sit and not put in another dime for the next 19 years. It's fairly self explanatory other than maybe the "Automatic Yearly Savings": these are savings that are automatically deducted from the paycheck (e.g. 401ks inc. company match, HSAs, etc). Personally I like seeing the "active" target savings number once these are removed, especially since I don't typically think of 401k/HSA/etc on a monthly level, but YMMV. The yearly savings target includes compounding interest calculations. The monthly savings target is just the yearly target divided by 12. Let me know if there are any corrections and suggestions! EDIT: /u/USROASTOFFICE has another resource with a similar angle to check out: https://www.reddit.com/r/financialindependence/comments/9it9ke [link] [comments]  |
| Posted: 09 Jun 2020 08:22 AM PDT Good Morning FI, I am a former Army Officer, and current IT workerbee (well specifically Information Assurance Operations which is fancy for some SCRUM/AGILE planning and testing). Just sharing my current FIRE journey encase it helps another Veteran or person trying to figure it out like the rest of us. Also, currently aged 26 because age reference. BLUF: Insert chart here My current lay of the land: Total money I have, that's mine, completely mine =$102,538 Brokerage = $68,392 -VTSAX = $59,020 -VFWAX = $9372 Roth IRA = $19,146 -VTTSX = 19,146 Emergency Fund =$15,000 Background: Worked my butt off (like most people) during Uni to complete my Bachelors Degrees (Social Sciences yay) at a state school. Graduated with approx. $10,000 in student loans. This was back in 2015, and had NO idea what I wanted to do for the rest of my life. So, I commissioned in the US Army, and got my life together. Had some fun, paid off my student loans, and crushed my first Masters Degree on the Army's dime. I grew up in a military family, but financial literacy was learned mainly by my parent's failures. Upside down on their first house, credit card debt, and eventually bankruptcy. But their honesty as I grew up, and lessons learned taught me a ton and brought a healthy respect for the power of credit. First generation college student, and so Social Sciences made sense. I was going to change the world! Then graduation approached, and while all of my friends were getting offers from the Big 4, Money Managers, ect. I was still playing Skyrim. I really credit the Army to getting my head on straight. I left the Army the end of last year, and transitioned into an IT/IA role. I had an income drop. From being a junior Officer in the Army my total take home everyone month equaled out to about $75K. But, right now I am making $65k, and SO much happier. I'm also double dipping with the Reserves so there's my healthcare. My Wife's a CPA, and makes a decent living too so we're on our way. My rule is to save around $20-30k each year depending on the mood of what's going on. Retirement is set to around 48-50 based on however I feel about work. I love IT/IA, and the route I have with my career, but I'm also going to school for my MBA (thank you GI Bill), so we'll see where life takes me. I don't really use a tracker for my monthly expenses anymore since my bills and investments are automated at this point. I have enough fun money to eat out, go to a movie, or a yearly trip or two. So, to anyone in the Service who's on the edge of jumping ship to civi land it's doable. The grass isn't always greener in or out, but we grow where we're planted. [link] [comments]  |
| Posted: 09 Jun 2020 05:49 PM PDT Sequence of returns risk is a concern during the first years of early retirement, especially since you could be waiting 20-30 years until your pension kicks in. Have you taken any measures to mitigate the risk of excessive losses during those first years? EarlyRetirementNow suggests a bond glidepath, but I think that has only worked in the past when interest rates were high compared to today. The other two possibilities I can think of are: 1) A term annuity for 10 or 20 years. This would have higher returns than a life annuity. 2) Trading options to mitigate large downturns early on. I haven't done any estimations of whether it would be cost-effective. Are there other alternatives? What do you plan to do? [link] [comments]  |
| Example CoastFIRE Plan - Life Goals & Financial Needs by Age Posted: 08 Jun 2020 04:43 PM PDT TLDR: Look at my CoastFIRE Plan: https://imgur.com/a/h9rQsNk I'm here to share a sketch of my Coast FIRE plan for others to get some inspiration. I break out my remaining years in 5 or 10 year chunks of time and reflect a little bit on what my life might be like and what I might want to accomplish and do with my time. I then consider what kind of cost of living it might take and what kind of income I might be able to make. This is backed up with data from FireCalc I occasionally write about CoastFIRE. People disagree on what this means. To me, this means dropping out of your full-time career/job as soon as you safely can to explore more meaningful ways of making money and to spend more time on life goals. One way CoastFIRE reduces risk is by maintaining your income making potential and employability while you experiment with mini-retirements and lifestyle changes. CoastFIRE avoids the sudden exit from over-worked HCOL lifestyle into full-retirement, with less external structure & meaning. Here's my CoastFIRE Plan: https://imgur.com/a/h9rQsNk Note that I am aiming for CoastFIRE starting with $1m at 45. I'm single, no kids. Currently 39. I'd be happy exiting with $750k. I could probably make a run for it with $500k. I'll keep re-assessing my goals and financial situation as time goes on. Sometimes life changes directions drastically & plans have to be thrown away. Again, I'm offering my personal planning for inspiration/discussion. Your scenarios will be different, but if you work through your own intentions and financial situation, you'll see what your opportunities are for yourself. You definitely can CoastFIRE with less net worth than I'm aiming for. Though, I do believe that Coasting into LeanFIRE is a bit overly risky. Instead, I think it's best to hit your LeanFIRE Number before you Coast. I also think ExpatFIRE is risky (you should always keep the option of retiring in your home country). I think it's best to target a "normal" cost of living in retirement (not a frugal/lean retirement), knowing you may end up a little lean or a little fat depending on a ton of unknowns that will unfold in your life. The FireCalc scenario I use is here [link] [comments]  |
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