Financial Independence Daily FI discussion thread - Friday, September 17, 2021 |
- Daily FI discussion thread - Friday, September 17, 2021
- Weekly FI Frugal Friday thread - September 17, 2021
- Anyone planning FIRE with young kids? HOW?! What about unknown future costs (College, etc...)?
- Calculating the most Tax Efficient investment account for Lean Fire
| Daily FI discussion thread - Friday, September 17, 2021 Posted: 17 Sep 2021 02:02 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]  |
| Weekly FI Frugal Friday thread - September 17, 2021 Posted: 17 Sep 2021 02:00 AM PDT 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]  |
| Anyone planning FIRE with young kids? HOW?! What about unknown future costs (College, etc...)? Posted: 17 Sep 2021 10:23 AM PDT Hey all, Lately I've been thinking about FIRE. Or maybe FIRSE (with the S standing for slightly, since the earliest might be age 58). My wife and I are in a reasonable position financially despite having a few lean years mixed in here and there. But we also have two kids, ages 8 and 10, who will presumably be going to college right around the time I'm going to be thinking about retiring (slightly) early! I personally think the student loan / tuition system is in dire need of blowing up and restructuring, and in some cases, we're starting to see that. (Some particularly wealthy institutions, like Stanford, offer completely free tuition for students below certain income thresholds). However, without knowing what the situation will be, how can one plan for retirement? For the record, I would not pay for 100% of my kids' college education even if I had the means to do so. My parents paid for a portion of my tuition, but I was on the hook for roughly half, which helped keep me accountable. But at the time, "half" meant that I graduated with only ~$30k of debt, which feels reasonable. I don't believe that six figures of debt is reasonable for most kids (unless you're in med school). I have already started 529 funds for both kids, but the amount in there will not be massively significant unless the financial picture changes substantially. At the same time, I have a decent amount of liquid assets (~$130k give or take) that I want to "protect" somewhat. That is, I don't want a school to look at my balance sheet and be like "Oh, you can pay $40k/year for each kid, np!" On the flip side, I don't want to seem broke and have the kids be forced to take on six figures of debt. When I look at my FIRE balance sheet, I see that I could "retire" at age 58 (I'm 44 now) with a $3k/month pension (or lump sum of $~500k), plus about $630k in my traditional 401k, and about $150,000 liquid cash. I would also have about $250,000 of mortgage debt remaining, but my home would likely be worth $2MM (currently worth $1MM). That makes me consider relocating to access some of that $1.7MM of net worth tied up in my home, and I would have some options that would be very affordable on that front (family property with existing homes, etc...) This isn't taking into account SS (which wouldn't pay out until later) or my wife's income (which is growing) at all. It feels too hard to know if any of this is reasonable given that I don't know WHERE the kids will want to go to college or have any idea of how much it will cost! Bottom line - is there anything I can be doing now to set myself up for the best possible outcome given the huge amount of unknowns? Other than following the usual investing flowchart? [link] [comments]  |
| Calculating the most Tax Efficient investment account for Lean Fire Posted: 16 Sep 2021 05:42 PM PDT For the purposes of this discussion, I am qualifying LEAN Fire as sub 40k or top of the Long-Term Capital Gains 0% tax rate. I am interested in your Lean Fire ideas and specifically if a Roth Conversion ladder or 72T is worth considering. I am writing this up to solidify my retirement plans. I understand we have three primary ways to invest for those intending to FIRE:
Although how do we decide which account we should be investing in depending on our retirement plans? What are your thoughts? These are mine: A. An Individual Brokerage account is better for Lean FIRE than a Roth IRA due to 0% Long-Term Capital gains tax rate being lower than most marginal federal + State tax rates. B. 401k Account investing is better but primarily because of the immediate tax reduction. The 401k After-Tax balance was only ~4% better in my example. ($30,400 401k Withdraw With Penalty vs $29,100 Taxable Account ). I am assuming a 12k deduction for the tax rates. 401k Account - Withdraw 30k PreTax 401k Withdraw 40k PreTax Taxable Account - Withdraw 30k C. Is a Roth Retirement ladder better than a Individual Brokerage Account? Lean Fire Implications: Roth Ira - Taxed more than Individual Brokerage account but principal can be withdrawn, used as a savings account. [link] [comments]  |
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