Financial Independence Daily FI discussion thread - November 27, 2020 |
- Daily FI discussion thread - November 27, 2020
- Dealing with chronic anxiety in FIRE
- Calculating SWR With Large Expected Social Security Benefit
- Weekly FI Frugal Friday thread - November 27, 2020
- I’m 26, Male, with two associates degrees and with good money management I’m only 3,500 in debt. I don’t really anything about being “rich” I would just like to make $15.00 a hour.
- This year I am grateful for $1M at age 32
| Daily FI discussion thread - November 27, 2020 Posted: 27 Nov 2020 12:09 AM PST 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]  |
| Dealing with chronic anxiety in FIRE Posted: 27 Nov 2020 04:20 AM PST I haven't reached RE yet, however as someone who's had the chance to take a break in my career, I realized that a lot of my anxiety was in me, not necessarily in my work. I used to think work was what woke me up at night, but realized that my mind is naturally anxious and then anything really took work's place in my mind - sometimes much more concerning stuff. As such, the motivation to drop work to feel more at peace isn't something I'll achieve in RE. Maybe the problem is just me here, not my career nor my clients. And in a way, that anxiety is easier because it's not really existential. So I'm getting to a stage where I'm thinking doing some work on the side to coast my way through (even beyond FIRE) might be a better option - keep my mind busy, find reasons to look at other problems than my own, etc. I was wondering if others here were struggling with this and/or found ways to deal with it? [link] [comments]  |
| Calculating SWR With Large Expected Social Security Benefit Posted: 26 Nov 2020 08:44 PM PST I realize this is probably "in the weeds" for all those except the few out there in a similar situation as we are: Those retired or retiring in their 50s with a sizable Social Security balance...and trying to figure out how much to add to the 3.5% (or 3.25%) safe withdrawal rate (SWR) we apply to our net investable assets exclusive of the SS. The purpose of this post is to share our approach and see if others have any other methods they might find useful. It probably also goes without saying that poking holes in our thinking is fair game and appreciated :-). Some stats: >>M/57 and F/52 retired early 2019 >>$1.9M net worth >>$1.6M Investable Assets (which we use to calculate our SWR...the remainder of NW being our home which we own outright). >>$75k/yr (today's dollars) Expected Social Security at m/70 f/65 with net present value (NPV) of $1.2M. >>30 year horizon. (Our plan is to make certain that the surviving spouse will have paid for home, $43k/yr SS + residual portfolio which will not allow to dip below at least a few hundred thousand dollars. >>We plan to recalculate our SWR annually with a strong commitment to reducing spending if our investable assets drop substantially. We are in a fortunate position in that we would be ok with 75% of our current budget if conditions required it. This does allow us to take on a bit more risk in choosing a SWR. If you retire very early, the SS doesn't add much to your SWR. If you retire later, you can just add your SS benefit you're already receiving to your SWR. But we're in the middle, where we have to span 13 more years to SS but want to work out a SWR that will be fairly flat for our entire retirement (though it will be funded mostly from our investments for the next 13 years and mostly from SS after that). We've used three methods to perform these calculations. Interestingly, they all tell a similar story (which I guess is good). (Of course we're bracing for any possible cuts to Social Security...and will adjust accordingly. But every year that goes by seems to make it more likely the changes won't affect our demographic...or if so, not much. I'm not of the opinion it will be politically feasible to just apply a 25% or whatever cut to those on SS or those close to receiving it.) Here's what we used for SWR to reach our $105k budget for next year: 1) Backing into SWR via trial/error on Firecalc.com. This method yields a SWR of around $95k (5.9%) flat or $105 to start backing down to $85K in the out years. (The "success rate" we were shooting for here was 95%+. This seems comfortable in that we're ready to reduce our budget as soon as next year if the market dips.) 2) Using the NPV of our Social Security account ($1.2M) as additive to our Investable Assets ($1.6M) and applying 3.5% = $98k SWR. (I realize the SS account underperforms bonds in terms of asset allocation on average, though by pacing inflation it's actually currently significantly outperforming any "safe" bonds or other fixed income investments. Still this probably suggests that this estimate is a little high and a somewhat lower SWR should be used. 3) ERN's tool. (https://earlyretirementnow.com/2017/07/19/the-ultimate-guide-to-safe-withdrawal-rates-part-17-social-security/) It also yielded the most generous SWR of 6.3% when we calculated it last year. ERN show three levels of risk. The lowest level resulted in 5.4% SWR, the middle 6.3% and the riskiest 6.8%. We used the middle and that works out to around $104k SWR. (Note: ERN's shortest retirement period was 40 years, which we used.) We're at the higher end of these estimates with a $105k budget for 2021....but feel that's offset by the fact we're not locking in a spending number for more than a year. We plan to 100% start over determining our SWR for 2022 with effectively no minimums. This also will effectively stretch our retirement horizon to a new 30 years each year, adding safety. Any other tools out there you're using? Are we looking at this wrong in any way? It's not too late to lower that budget for 2021! :-) [link] [comments]  |
| Weekly FI Frugal Friday thread - November 27, 2020 Posted: 27 Nov 2020 12:09 AM PST Please use this thread to discuss how amazingly cheap you are. How do you keep your costs low? How do become frugal without taking it to the extremes of frupidity? What costs have you realized could be cut from your life without pain? Use this weekly post to discuss Frugality in general. While the Rules for posting questions on the basics of personal finance/investing topics are more relaxed 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]  |
| Posted: 27 Nov 2020 04:31 PM PST I'm 26, Male, no kids or SI, with two associates degrees "one in math and another in design engineering" and with good money management skills I'm only 3,500 in debt. I don't really anything care about being "rich" I would just like to make $15.00 a hour. I don't really have any savings due to COVID. My honest dream is to build a mini house on some land, which I recently inherited from my grandma. Is there any decent ideas that could help me with this goal? [link] [comments]  |
| This year I am grateful for $1M at age 32 Posted: 25 Nov 2020 04:27 PM PST Hello FIRE People! First, you all have been a constant source of Now... the goods. Current rounded breakdowns of my personal net worth: $85,000 cash $15,000 car equity $130,000 real estate equity $10,000 in bonds (mutual funds) $390,000 in stock (mutual funds) $270,000 in individual stocks (small positions in tech that grew exponentially - mainly Tesla *shocked Pikachu face*) $100,000 in crypto (small investment that grew exponentially) Total: approximately $1,000,000 How? Tons of amazing opportunity, a genuine love of technology (and great jobs in the tech industry), a ton of luck, steadfast frugality, and relentless investing... Step by step:
Alright... so... what? Are my take-a-ways going to be that different than everyone else's? Not really but here is my spin on it anyways.
TL;DR: Went to a state school and utilized whatever combination of resources I could to graduate college without debt. Found a reasonably lucrative job and supportive, frugal spouse. Lived cheaply/"house hacked" and enjoyed people/animals/cheap hobbies. Invested as much and as early as possible in broad based mutual funds. YOLOed a few bucks on crypto and tech stocks and held on for dear life (got lucky and had it grow a lot). Overall, saved over $1M in the 10 years since college and became a walking FIRE stereotype. OH WAIT. I forgot. Am I fucking myself yet? I mean... Am I going to go fuck myself? Not yet! With a combined net worth of ~$1.6M, my spouse and I consider ourselves generally financially independent (as of the last couple months) but I like my job and want plenty of buffer since a large part of our net worth is in extremely volatile investments. We have been lucky because during the pandemic we have stayed healthy and been able to work from home, which has been a nice change of pace for us. My spouse is currently pregnant so she is going to quit first! We are going to see how she feels after maternity leave but she basically is welcome to leave her job whenever she feels ready (she has worked her ASS off). I will likely follow when I no longer enjoy my work or we have hit a combined NW in the early $2 million range. I hope to FIRE by age 35 with at least a $70,000 a year budget (3.5% withdrawal rate) in the suburbs. Thank you for all the advice over the years and for reading my long post! [link] [comments]  |
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