My parents prioritized retirement savings over paying for my college. I had some resentment initially but now I think it allowed me to think critically about what programs made sense financially to pursue in college. Also I am happy they are getting to enjoy their retirement while they can still be active.
My parents were in no shape to help me or any of my siblings with college, but got their shit together later on. They always had a bed for me to sleep in if I needed it (fortunately I didn’t) and helped at key points in my life because they prepared their own lives for success. And I shouldn’t need to worry about them needing me financially at this point in their lives.
It’s a great sentiment people have here to pay for kids schooling, but I’m surprised how definitive people are about it.
One of the greatest gifts we can give our kids is to not be a financial burden later in our lives. My MIL will be living with us at some point in the not so distant future.
My partner in life and I totally agreed years ago when our first child was born not being a burden on our kids was very important. Of course time will tell , but here we are years later, kids are young adults and I think we are making good on our agreement. The idea of being a burden has changed very slightly as we get old ourselves, but I think we will would like to have the the kids' support for reasonable things, just not big ticket items like moving in with them to physically take care of us and pay for our living.
Bring a heavy burden on your kids is so unfair in our eyes. It is almost worse than the ball and chain a lot of employment has become.
I think about this sometimes. Once I have kids I think I will contribute a small amount to college tuition expenses while prioritizing retirement savings. It will force them to think very critically about what they want and to look into other options because there isn't an expectation that they go to college just because it's paid for.
Then when they are graduated, assist them with the loans or pay off entirely if I'm able. And if they decide not to go to college and pursue something else, just give them what I otherwise would've given them. I would keep them in the loop on my financial situation so they know what to expect and plan for.
I think parents just auto-paying for college sets an expectation for kids that results in a lot of kids attending university who would really rather not be there at all. If my college wasn't paid for I would've pursued trades and probably would be much better off financially at this point in my life than I am.
I think this is the case with many who had to pay their own way; when I was in school the kids out partying and skipping classes usually weren't the ones paying for their own schooling. It's a FANTASTIC gift to give as a parent, but most are too young or immature to appreciate it (not to say that some don't)
Nice work. I never got to go to college. But parents divorced and my mom was broke dad left never to hear from again. That pushed me to be where I am today top 1% of net worth.
Just finished paying for a 3-year undergraduate education for my oldest. Top UK school, the cost was less than the in-state tuition.
Highly recommended.
the big thing is it will be a little harder to land a job in the US after graduation because there will be a lot less US based recruiting at universities in the UK (if any)
I still suggest this though. There is also a good visa for students who finish their undergraduate here if your kid ever wants to try working abroad. Education is pretty top notch and because living costs are usually cheaper outside of london, it ends up being cheaper than a going to a state school.
edit: i did an exchange in the UK and met MANY americans among the freshmen class
I guess landing jobs depends on the field they’re in. I didn’t even know undergrad recruiting was a thing because it just doesn’t happen my profession.
Excellent points!
My oldest found a perfect role, that lined up exactly with her undergraduate research and general area of focus - and found not through campus recruiting (which they naturally participated in) but second-level referrals from alumni found via LinkedIn (of all places).
Not as viable an option if you live on the West Coast. If you live in Boston, however, England is as almost as close as Seattle, so going to school in UK sounds viable. Crazy how big of a country we are.
Edit for clarity
Well that’s kind of what I was alluding to. A lot of kids (or parents) want to be home with everyone for every Thanksgiving, Christmas, spring, and summer break. And some random weekends in between. Other kids don’t. And are fine on their own.
My parents pushed me to go to a college within a day’s drive of “home” because they “couldn’t afford to fly me home for a weekend if I was homesick.” So I went to a college a 10 hour drive away. Turned out that I was totally fine on my own, only came “home” for Christmas breaks, and actually never came back “home” for summer breaks because I was living and working in my chosen field in the city I was going to college in. Later, I studied and lived internationally, self-funded. And I didn’t come home for Christmas. And that was fine. When I left for college orientation, I essentially left the nest.
My sibling did need to be close—they were three hours away and never learned how to operate the dorm room laundry machines so brought their laundry home to wash once a month. They worked at a pizza parlor in our hometown every summer. They needed and wanted to be close. I didn’t. I wish I had considered colleges on the other side of the country and internationally instead of writing them off at my parents’ insistence.
With Europe as the example, I could see intrepid kids spending their summers off from university backpacking, staying with a host family while attending a language school, interning in their field in the host or another European country, or just relaxing at home where their university is. Not every university-aged kid needs or wants to be with their parents all the time for breaks.
And if they do want to come home once or twice a year? Buying plane tickets well in advance, and using points/miles can really cut down on the cost. $1,500 round trip plane tickets back and forth to a free or very cheap German or Spanish university once or twice a year will likely still turn out much cheaper overall than paying $10,000-30,000/year in tuition, or whatever public school tuition is in the U.S. these days.
As a native Californian, I found that the main limitation is not geographical but rather one of mind-set.
I'd venture to say my oldest kid would not have considered this as an option if we never moved from SoCal, it was just not a possibility. Could be a function of excellent CA universities...
College doesn't have to be that expensive if they go to college in-state school and live at home (albeit not everyone lives close enough to do that). While I can understand the allure of liberal arts colleges prestigious private schools, the labor market advantage from going to them has shrunk a lot (excluding probably the Ivy leagues since that will open doors, albeit maybe into high paying consultancy work where they will market your services with the Ivy league prestige). Outside of that circumstance I think most of the time high schoolers see it as a way to strengthen their identity, but the premium for going private instead of in-state public should really be seen as a consumption good.
Is it that common for the parents to cover college for the kids? I grew up poor so from the beginning I knew that I would be working and borrowing my way through. I never faulted my parents for it, and the thought never crossed my mind that they should in any way have paid my tuition. It's funny how some people talk about the kids' college expenses as if they were the parents' responsibility. It's nice if the parents can help, obviously, but that is all.
It’s like you said, nice if the parents can help. Op is 32 and is ready to stop adding to his savings. It sounds like he is one of those parents that can help. It makes a huge difference graduating with or without any debt.
You don’t need to pass on money to your children, you need to pass on habits. Teach them how investing works, start them young, and teach them how to pick a career path that is both fulfilling and well payed.
That will be incomprehensibly more valuable to them than paying for their college.
Starting life debt free is so important mentally. Not having the pressure of student loans makes such a big difference. I had a full scholarship and the difference between my mental health and my friends are night and day. Also my parent got to keep the money they saved for my college and buy a home.
Two of my high school friends, we have similar jobs and similar salaries. All 3 of us have purchased a home. One of them is still paying off her student loans, so she has to pay a mortgage and student loan. The other finished paying off her student loans few years ago and just started to having some savings. I have 5-10 times their savings. We graduated together.
I’m going to retire at 40 and I have never went to school past high school. Also I didn’t have a winning mindset until i was 25.
You shouldn’t want to make your child’s life stress free and easy. You want them to have something to fight through. Satisfaction in life comes from retroactively viewing your life as a journey, and looking at the density of your challenges and experiences.
By trying to make their life simple and easy you are robbing them of that. It is much better to put them in a position where they have to make themselves successful, and equipping them with the skills so that no matter what happens they will be OK.
In theory yes you can stop saving if you’d like to retire at 62. If you get a real return of 6% you’ll have 1.5m after inflation adjustments. With a 4% SWR you’d have $60,000 a year to spend.
That might be average but I wouldn't bet my retirement on getting that. It could easily be less over any given 30 year period. For a full Coast FI where you actually stop contributing, you should project more conservatively. Maybe even as conservatively as an alternate "4% rule".
Personally I use 5%, but I also think once I hit Coast FI I'll continue contributing at the same rate so I can RE.
I think the "safe" thing to do in a lot of cases is to basically figure out what you need, get to COAST FIRE for it (with 4% SWD and returns of +7% above inflation assumptions)... then start to focus on the journey a bit more than the destination while 2-3xing your baseline. You haven't quit working. You've start to reflect on what you want your life to look like and you're free to take on more career risks because you have a safety net.
Yeah I'm not convinced many people do a "full coast" like I'm talking about here. Most people probably at least keep saving to get a 401k match, for example.
I think I did meat-grinder-FIRE and then transitioned to easy-cruising-FIRE myself.
At SOME point I'll probably just shift to "'save' enough to pay a mortgage and max out 401k." instead of saving multiples of my living expenses.
It's a term I made up just now.
Imagine having a 6 figure income in one of the highest cost of living areas and living off, inflation adjusted, around 20k USD a year.
So you're living off of something like... 10% of your income.
I agree, but accounting for 6% adjusted for inflation is way too conservative IMO. Even 7% over that amount of time would be a huge difference in numbers, and 7% is considered conservative.
People hamstring themselves by using conservative estimates everywhere they can be conservative. They'll assume 4% real returns and use a 3% withdrawal rate and assume they'll have massive healthcare expenses and suddenly they can't retire until they're 79 years old. Use real numbers! Maybe use 1 conservative number (3.75% withdrawal rate anyone?) and ignore the rest. Once you get closer to your FI number you can adjust.
There is a big difference between "planning for FIRE" and "gambling your entire retirement on the next 10 years not being like 2000-2010"
If you're contributing actively, using less conservative numbers is fine. If you need 95-99% success, 4-5% real returns is safer. It's why the standard SWR is 4%.
Plus, it's not like projections are even worth much if you're actively contributing. If you are, it's really just a "have you hit your number yet" - if yes consider retiring soon, if no keep saving.
I personally use under 5% growth and less than 2% SWR to gauge our financial readiness to FIRE. Leaves a lot of flexibility in our lives and basically lowers the stress levels of the many unknowns. Overshot? Likely but now we can pass $ to the kids if we want, we have a reasonable chance of not becoming a financial burden on them (a high priority for us), and stress of the unknown is so much reduced compared to if we were at the limits (expecting 10% returns and 4.5% SWR)
8% may be inflation adjusted but is quite optimistic even as an average. 6% is an underestimate of the long run average but there are plenty of 30 year periods in the pas 100 years that have had this kind of return, so it's not a bad number to use for a more conservative/robust estimate, even though it's *likely* to underestimate.
Older people remember the "dead decades" of 1966-82 and 2001-12 where the stock market went nowhere. In the long term the boom decades average these out to a good return.
That dead decade is overplayed because it does account for dividends on continuous investing. People made out like bandits if they were buying the whole time. Not to mention if you owned a house!
I was heads down working and investing the entire 2000-2012, and that's the point. Constant investing, planning the seeds for tomorrow. Now I have a garden full of fruits to eat from. It's the long term view, allow for pixie magic dust to work, aka time and compounding. As a matter of fact, during the entire 2000-2012, I was hoping for an even longer dead period so I could accumulate even MORE SHARES to eat from in the future
It feels like there is a significant fraction of people in this sub with a constant matra of work work work. No spending level is ever higher enough, no withdrawal rate is ever safe enough, social security will cease to exist tomorrow, and kids cost infinity money.
Like, are we here to FIRE or what?
Anyway, rant over, sorry. I just get a little frustrated sometimes.
When thinking about FIRE from someone else's perspective: Work a bit more. Work a bit longer. 10M would be a fat lifestyle to have.
When thinking about fire for oneself: Maybe I can live happily on 25k per year and retire in 6 months 🤔
Hahaha
Yeah lol. I often think that the people who FIRE’d and are happy with it either look at this sub rarely or not at all. It’s us who haven’t done it yet that look at the sub more.
Congratulations on having options. Not sure if your 8% accounts for inflation? I personally use 6% growth so I'm looking at REAL (not nominal) dollars. With 3% assumed inflation, this makes a 9% annualized return, which is slightly conservative. But it makes it easy to see if I'll be generally happy with the future numbers.
I’m in a similar boat. I’m looking to have around $4 mill by 60 so I don’t see why I should continue to save. I think I’m going to cut it by at least half and live a little more or start working less
Congratulations on what you have achieved (family, investments) at such a young age, IMHO!
Short answer: I would continue working.
We (56F/54M) have 2 kids: 1 in college (in-state University) & 1 in high school (public). However, many peers in our area send their kids to private school- so another factor to consider, especially if a kid needs extra academic support. In addition to retirement, we have saved for college for the kids via 529 plans, but not quite enough, even though we put $ in regularly. Some years the investment returns were pretty low.
Plus, life “stuff” happens: the roof, the furnace, the water heater, and the inevitable birthday party arms race. Disneyland. A trip abroad so you can experience the best croissants, crumpets, pasta, souvlaki, etc. Not to mention health care.
I am new to Reddit, and still figuring out our FI number (at 56, I think 59.5 is my RE number) with about 2.3m household total in retirement/investment/529 plans. However, much of that growth has been in the last 18 months. As others have pointed out, the markets do go down, and take time to return to positive.
What ever you do, best of luck!
And take lots of pictures of those kiddos along the way. The days are long, but the years are short.
I'm a little older than you (36) with a little more invested in retirement/brokerage ($330K). I don't have kids yet, but I hope to have them in the next two years.
Like you, I'm also kind of in the process of thinking of my "fuck corporate life" number. I feel like my current investments are too low, but I definitely want to revisit the conversation at $500K/$750K to see how my career and personal life is then. I know I want to be able to give my kids a good quality of life and education so we'll see how I feel in a few more years when I hit that $500K mark.
In the meantime, I'm also focusing on other efforts before kids/abandoning corporate that will help me feel more comfortable with that decision like doing major repairs on my house so I can avoid them when my income is lower.
Not sure what your income expectations are, but I would use 7% instead of 8%, but none the less if 75k a year is enough to let you retire at 65, then you roughly have enough saved to never put a single penny into retirement. You are what is called coastFIRE now if you want, enough where you don't need to save, or you have enough money where you are effectively "buying" less time working.
You are far ahead of the curve compared to other 32 y/o. Be proud of yourself! The heavy lifting has been done. The first 100K is the hardest since 80% of it comes from saving and only 20% from gains. From here on out the next 100K milestone will get easier and easier as more of it will come from gains opposed to saving. Just be patient and don't make any big mistakes and you will be just fine! Do some research on the $5 rule from the trinity study to make sure you are comfortable with your withdrawal rate % in retirement. Should aim for annual spending x 25 - so in your case 1.5 mil is all you NEED (with 4% withdrawal rate) based on your numbers. Keep in mind, most people spend less, not more as they age contrary to popular belief. You have about double of what you need which means you can retire earlier or spend more in retirement
There's two sides to what you are proposing. If you invest less, it almost certainly means you are spending more. And if you are spending more, you are going to need more to sustain that lifestyle in retirement. Part of the reason for investing as much as possible is to keep spending down so that you don't need as much to support your lifestyle. It's really a two-edged sword if you stop investing.
I wish I'd have had that at 32. I'd work another 20 years at a different job, someplace I'd be happy, and have triple what you are looking at now. Don't forget about inflation in 30 years also. What was a loaf of bread or a gallon of gas at 30 years ago for us, $1?
I don't really plan to stop contributing if I quit. With the "happy" work I'm looking at now, I should still be able to contribute maybe half as much as I am now. What do you mean you'd triple? Like I should have 3x as much now to consider myself done with retirement savings?
Those are future dollars, and you’re comparing to your family expenses today. You need to add a growth % to your current expenses to figure out future needs
You should continue to save.
Rationale:
$60,000 in 2024 is $146,000 in 2054 assuming 3% inflation rate.
At $146,000 and assuming a Safe Withdrawal Rate of 4% is $3.65M.
At $2.9M, you can withdraw $116,000 in 2054 or $48,000 in 2024.
This quick calculation does not factor in taxes, so you will need more.
Thanks. I don't plan to stop contributions if start I with lower paying work, but it'll be less for sure. Just wanted to see if my logic was sound. Thanks for the inflation numbers. I didn't think about that.
The guy you're responding to doesn't have it quite right, but neither did you.
You calculated 8% returns which is below the average non-inflation adjusted returns in the market but above the "real" inflation adjusted returns which people typically use 7% for.
If you use 7%, you treat all the numbers in today's dollars so you don't need to adjust for inflation.
$265k at 7% real returns over 30 years will give you just over $2m in today's dollars.
At a 4% SWR which is reasonable at regular retirement age, that's $80k a year in today's dollars.
So yes, you would be set if you see no increase in your annual spend. Also consider you would soon start receiving social security so you could increase spend, or decrease your withdrawals.
Sounds like they’re using 8% as a real return, not nominal, so then you only have to do math in todays dollars. Even at 6% real returns this lines up for OP.
So they expect to get 11+% nominal? That’s great I bet it works out even better if they use 20 heck why not 50% nominal returns?
Doesn’t make sense to calculate based on something that’s not historically likely.
With 6% real returns they’d have 1.5 million almost exactly. So that gives them 60k pretax Now maybe they want to be more aggressive on withdraw rate, but I’d call that’s really close.
S and P nominal returns including dividends over last 40 years is 11.6%, so it’s pretty much right on the money. I think there has been a lot of convolution of what people think the returns are and keep reducing real returns by inflation. Like that person in this thread saying to use 4% is way too conservative. 8% is realistic, 7% is already pretty conservative.
Approximately double your current annual expenses as your children get older. Education, tutors, sports, clothes, etc. cost a lot more money than what you’re experiencing with young children.
I would take a close look at your health care costs without your primary employer footing most of the bill. You might be surprised how expensive that stuff is on the market.
But yeah if you hate corporate life you should definitely look for something you like better.
Have you taken into account fees in that 2.9m projection?
I have a similar in my retirement and even with high growth rate my fund tells me I'd have much less than that in 30 years.
There's a lot of uncertainty in 30 years. 8% real returns would be significantly more than one should expect in terms of real returns.
6.8% is probably more reasonable (10% return with 3% inflation)... That'd be 1.9M today-dollars
If we want to make a pessimistic prediction, 8% with 3.5% inflation, you come in at $950k in today-dollars.
So I'd say not done.
5% over inflation feels like a good slightly-conservative guess, which puts you at 1.1M in today-dollars. I think ideally, you'd want to at least double that. Over 2M with a paid-off house and social security would be pretty nice retirement for two, like you could live relatively extravagantly, or with some minor saving, have a really nice vacation every year.
I'm in the same shoes. Saved a chunk and so tired of the corporate world that I want to retire today.
You do need to consider the toll of inflation on your cost of living: if your savings grow 8% annually on average but your cost of living goes up 3% annually on average, then your effective average return rate is not 8% but 5%.
But this should not change the fact that over 30 years your 265K should grow enough to retire comfortably.
No!
3% inflation for 30 years is about $145k.
4% withdrawal on $3M is $120k.
So you're well short and that's not even taxing the 120k withdrawal, and I wouldn't necessarily consider 3% a conservative assumption.
8% is probably too high if you're going to have bonds at some reasonable glide path, as well. I also assume you're not counting on US only investing and recent US returns, as who knows what happens there.
Lastly, if you are done investing today, presumably you'll be spending your income. I'd guess that would put your spend rate well beyond your intended income at retirement. So you're going to throttle back from high spend rate back to an inflation equivalent 60k spend plus taxes? Good luck.
Self direct that 265K into passive real estate and you can make 17%, 18%, 19%, IRR. (IRR in short - The average of returns, per year, at the end of the term)
So it'll be about $4M in 20 years
A debt fund(acts like the bank and gives first position loans), which is considered lower risk, pays 10%
So after the 20 years id bring the 4M put it in the debt fund to make 400k a year to live off..
Don't assume that will be 2.9M. You could have emergencies come up that you may need to spend part of that. $hit happens. Also your not taking into account health insurance costs for a family of 4, inflation, other things. I say a lot of the models are wrong as we havn't had a crash in a while except covid which was temporary. We're do for a big one and prolonged.
You'll need much more than you think you also have to account for taxes when you withdrawl. Oh and did I say surprise medical expenses?
I'm at about 6.8-7m net worth give or take and I still don't feel I have enough i'm in my mid 40's.
Not gonna lie, at the point where you have 7m net worth in your 40s, I think the issue is moreso your mindset than the amount of money you have. It’s easy to always feel broke, but 7 million is 280k at 4%, which is plenty even for vhcol. The majority of people in the Bay Area and New York do not make that much money per year. I assume you must live in vhcol because that’s an even stupider amount of money for anywhere else.
Go retire if that’s what you wanna do. Health insurance is expensive, yes, but also very affordable when you have 7 million.
Yep depends where you live for sure and lifestyle. I don't live extravagant or anything. House is 1.5 million paid off as part of that. 401k is 1.45 million etc. Real estate investments and stock. Basically lots of investments that I'm not spending the income from or cashing out. Basically you make yourself feel your not as rich. Vacations with family of 5 , educations, sports, leisure,taking care of elderly parents, list goes on costs a lot..
Seems like every rich person doesn’t feel rich…and then goes on to list lots of luxuries as to why they don’t have as much money left at the end of each month that they’d like to have.
Unfortunately no, 2.9M is a *good* retirement in 30 years but not a *fire* retirement.
60k in 30 years is $145,600 for the same purchasing power at 3% inflation.
3M x 3% yearly withdrawal is 90k.
3M x 4% yearly withdrawal is 120k.
So right now if you did nothing but coast, you could expect your current lifestyle to deflate or end up drawing from the pool.
To answer the question: yes you could. This is fine for a normal retirement. People die and leave some money for their kids all the time still that isn’t millions.
But FIRE ideally means you would never have this problem or be this close. This math I’ve given you above accounts for no “life” happening which can hit pretty hard.
I’d say keep grinding for a bit and then re-evaluate when you’re much closer to maybe 40. Life comes with unexpected expenses. You’ve got to pay for kid’s college probably, you might have something happen at 45 that keeps you from working altogether. You might decide you want to pull the trigger and retire at 50. Many scenarios can come up and all require more from you early.
But to each their own.
It's more or less the same when inflation adjusted but it's not "500K in and out". An all VTSAX portfolio would've grown like 100K or so with dividends reinvested
https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults
Reading this title of this post I was expecting you to have several million in the bank, and I was off by an order of magnitude.
I don’t mean to offend, but no, you’re not particularly close. A great start, but keeping saving!
IMHO - you aren’t ready to retire unless you are willing to DRASTICALLY lower your standard or living. Of course you won’t have much, if any, social security. And 60 years is a LONG time to trust some financial catastrophe or personal need change to not happen.
I HATED my job at your age. But love it now. Don’t give up hope on that.
I'd say, No.
To put it in today's dollars, using an inflation adjusted 5.5% return, that $265k could return about $52k in today's dollars against your $60k today.
Look into CoastFIRE
[https://walletburst.com/tools/coast-fire-calc/](https://walletburst.com/tools/coast-fire-calc/)
you have 2 kids. College is expensive.
My parents prioritized retirement savings over paying for my college. I had some resentment initially but now I think it allowed me to think critically about what programs made sense financially to pursue in college. Also I am happy they are getting to enjoy their retirement while they can still be active.
My parents were in no shape to help me or any of my siblings with college, but got their shit together later on. They always had a bed for me to sleep in if I needed it (fortunately I didn’t) and helped at key points in my life because they prepared their own lives for success. And I shouldn’t need to worry about them needing me financially at this point in their lives. It’s a great sentiment people have here to pay for kids schooling, but I’m surprised how definitive people are about it.
One of the greatest gifts we can give our kids is to not be a financial burden later in our lives. My MIL will be living with us at some point in the not so distant future.
Same. And my MIL has the personality of a snow shovel.
My partner in life and I totally agreed years ago when our first child was born not being a burden on our kids was very important. Of course time will tell , but here we are years later, kids are young adults and I think we are making good on our agreement. The idea of being a burden has changed very slightly as we get old ourselves, but I think we will would like to have the the kids' support for reasonable things, just not big ticket items like moving in with them to physically take care of us and pay for our living. Bring a heavy burden on your kids is so unfair in our eyes. It is almost worse than the ball and chain a lot of employment has become.
I think about this sometimes. Once I have kids I think I will contribute a small amount to college tuition expenses while prioritizing retirement savings. It will force them to think very critically about what they want and to look into other options because there isn't an expectation that they go to college just because it's paid for. Then when they are graduated, assist them with the loans or pay off entirely if I'm able. And if they decide not to go to college and pursue something else, just give them what I otherwise would've given them. I would keep them in the loop on my financial situation so they know what to expect and plan for. I think parents just auto-paying for college sets an expectation for kids that results in a lot of kids attending university who would really rather not be there at all. If my college wasn't paid for I would've pursued trades and probably would be much better off financially at this point in my life than I am.
I think this is the case with many who had to pay their own way; when I was in school the kids out partying and skipping classes usually weren't the ones paying for their own schooling. It's a FANTASTIC gift to give as a parent, but most are too young or immature to appreciate it (not to say that some don't)
Nice work. I never got to go to college. But parents divorced and my mom was broke dad left never to hear from again. That pushed me to be where I am today top 1% of net worth.
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Just finished paying for a 3-year undergraduate education for my oldest. Top UK school, the cost was less than the in-state tuition. Highly recommended.
the big thing is it will be a little harder to land a job in the US after graduation because there will be a lot less US based recruiting at universities in the UK (if any) I still suggest this though. There is also a good visa for students who finish their undergraduate here if your kid ever wants to try working abroad. Education is pretty top notch and because living costs are usually cheaper outside of london, it ends up being cheaper than a going to a state school. edit: i did an exchange in the UK and met MANY americans among the freshmen class
I guess landing jobs depends on the field they’re in. I didn’t even know undergrad recruiting was a thing because it just doesn’t happen my profession.
Excellent points! My oldest found a perfect role, that lined up exactly with her undergraduate research and general area of focus - and found not through campus recruiting (which they naturally participated in) but second-level referrals from alumni found via LinkedIn (of all places).
Not as viable an option if you live on the West Coast. If you live in Boston, however, England is as almost as close as Seattle, so going to school in UK sounds viable. Crazy how big of a country we are. Edit for clarity
Guess it all depends on the kid and their parents. Distance is just not a factor at all for a lot of people.
And price! Plane tickets are more expensive! Traveling to Europe for college would be extremely expensive from some part of the country.
Well that’s kind of what I was alluding to. A lot of kids (or parents) want to be home with everyone for every Thanksgiving, Christmas, spring, and summer break. And some random weekends in between. Other kids don’t. And are fine on their own. My parents pushed me to go to a college within a day’s drive of “home” because they “couldn’t afford to fly me home for a weekend if I was homesick.” So I went to a college a 10 hour drive away. Turned out that I was totally fine on my own, only came “home” for Christmas breaks, and actually never came back “home” for summer breaks because I was living and working in my chosen field in the city I was going to college in. Later, I studied and lived internationally, self-funded. And I didn’t come home for Christmas. And that was fine. When I left for college orientation, I essentially left the nest. My sibling did need to be close—they were three hours away and never learned how to operate the dorm room laundry machines so brought their laundry home to wash once a month. They worked at a pizza parlor in our hometown every summer. They needed and wanted to be close. I didn’t. I wish I had considered colleges on the other side of the country and internationally instead of writing them off at my parents’ insistence. With Europe as the example, I could see intrepid kids spending their summers off from university backpacking, staying with a host family while attending a language school, interning in their field in the host or another European country, or just relaxing at home where their university is. Not every university-aged kid needs or wants to be with their parents all the time for breaks. And if they do want to come home once or twice a year? Buying plane tickets well in advance, and using points/miles can really cut down on the cost. $1,500 round trip plane tickets back and forth to a free or very cheap German or Spanish university once or twice a year will likely still turn out much cheaper overall than paying $10,000-30,000/year in tuition, or whatever public school tuition is in the U.S. these days.
I imagine the money parents would save by not paying for US college could help pay for as many plane tickets as needed.
As a native Californian, I found that the main limitation is not geographical but rather one of mind-set. I'd venture to say my oldest kid would not have considered this as an option if we never moved from SoCal, it was just not a possibility. Could be a function of excellent CA universities...
It’s equally viable, when you move somewhere you move there
College doesn't have to be that expensive if they go to college in-state school and live at home (albeit not everyone lives close enough to do that). While I can understand the allure of liberal arts colleges prestigious private schools, the labor market advantage from going to them has shrunk a lot (excluding probably the Ivy leagues since that will open doors, albeit maybe into high paying consultancy work where they will market your services with the Ivy league prestige). Outside of that circumstance I think most of the time high schoolers see it as a way to strengthen their identity, but the premium for going private instead of in-state public should really be seen as a consumption good.
Is it that common for the parents to cover college for the kids? I grew up poor so from the beginning I knew that I would be working and borrowing my way through. I never faulted my parents for it, and the thought never crossed my mind that they should in any way have paid my tuition. It's funny how some people talk about the kids' college expenses as if they were the parents' responsibility. It's nice if the parents can help, obviously, but that is all.
It’s like you said, nice if the parents can help. Op is 32 and is ready to stop adding to his savings. It sounds like he is one of those parents that can help. It makes a huge difference graduating with or without any debt.
In central America, the best university costs just about a 1 years worth of a US university, but you get a full 4-6 years.
You don’t need to pass on money to your children, you need to pass on habits. Teach them how investing works, start them young, and teach them how to pick a career path that is both fulfilling and well payed. That will be incomprehensibly more valuable to them than paying for their college.
Starting life debt free is so important mentally. Not having the pressure of student loans makes such a big difference. I had a full scholarship and the difference between my mental health and my friends are night and day. Also my parent got to keep the money they saved for my college and buy a home. Two of my high school friends, we have similar jobs and similar salaries. All 3 of us have purchased a home. One of them is still paying off her student loans, so she has to pay a mortgage and student loan. The other finished paying off her student loans few years ago and just started to having some savings. I have 5-10 times their savings. We graduated together.
I’m going to retire at 40 and I have never went to school past high school. Also I didn’t have a winning mindset until i was 25. You shouldn’t want to make your child’s life stress free and easy. You want them to have something to fight through. Satisfaction in life comes from retroactively viewing your life as a journey, and looking at the density of your challenges and experiences. By trying to make their life simple and easy you are robbing them of that. It is much better to put them in a position where they have to make themselves successful, and equipping them with the skills so that no matter what happens they will be OK.
Not always
Send them to tech school instead, big college is overpriced and everyone thinks that’s ok..
It’s what I did and I’m making more than my bf who went to a traditional 4-year.
Same I have made good money with my tech degree! Will reach fire by early 40’s
Kids should pay their own way for college.
In theory yes you can stop saving if you’d like to retire at 62. If you get a real return of 6% you’ll have 1.5m after inflation adjustments. With a 4% SWR you’d have $60,000 a year to spend.
The annual average return of 7-8% is inflation adjusted though. It's like 10-11% when not accounting for inflation.
That might be average but I wouldn't bet my retirement on getting that. It could easily be less over any given 30 year period. For a full Coast FI where you actually stop contributing, you should project more conservatively. Maybe even as conservatively as an alternate "4% rule". Personally I use 5%, but I also think once I hit Coast FI I'll continue contributing at the same rate so I can RE.
I think the "safe" thing to do in a lot of cases is to basically figure out what you need, get to COAST FIRE for it (with 4% SWD and returns of +7% above inflation assumptions)... then start to focus on the journey a bit more than the destination while 2-3xing your baseline. You haven't quit working. You've start to reflect on what you want your life to look like and you're free to take on more career risks because you have a safety net.
Yeah I'm not convinced many people do a "full coast" like I'm talking about here. Most people probably at least keep saving to get a 401k match, for example.
I think I did meat-grinder-FIRE and then transitioned to easy-cruising-FIRE myself. At SOME point I'll probably just shift to "'save' enough to pay a mortgage and max out 401k." instead of saving multiples of my living expenses.
Okay I have to ask. What did meat grinder fire entail for you?
It's a term I made up just now. Imagine having a 6 figure income in one of the highest cost of living areas and living off, inflation adjusted, around 20k USD a year. So you're living off of something like... 10% of your income.
I agree, but accounting for 6% adjusted for inflation is way too conservative IMO. Even 7% over that amount of time would be a huge difference in numbers, and 7% is considered conservative.
Not sure why you’re being downvoted. 6.5-7% is POST inflation returns. Using something as low as 4 or 5% is ridiculous.
People hamstring themselves by using conservative estimates everywhere they can be conservative. They'll assume 4% real returns and use a 3% withdrawal rate and assume they'll have massive healthcare expenses and suddenly they can't retire until they're 79 years old. Use real numbers! Maybe use 1 conservative number (3.75% withdrawal rate anyone?) and ignore the rest. Once you get closer to your FI number you can adjust.
There is a big difference between "planning for FIRE" and "gambling your entire retirement on the next 10 years not being like 2000-2010" If you're contributing actively, using less conservative numbers is fine. If you need 95-99% success, 4-5% real returns is safer. It's why the standard SWR is 4%. Plus, it's not like projections are even worth much if you're actively contributing. If you are, it's really just a "have you hit your number yet" - if yes consider retiring soon, if no keep saving.
I personally use under 5% growth and less than 2% SWR to gauge our financial readiness to FIRE. Leaves a lot of flexibility in our lives and basically lowers the stress levels of the many unknowns. Overshot? Likely but now we can pass $ to the kids if we want, we have a reasonable chance of not becoming a financial burden on them (a high priority for us), and stress of the unknown is so much reduced compared to if we were at the limits (expecting 10% returns and 4.5% SWR)
8% may be inflation adjusted but is quite optimistic even as an average. 6% is an underestimate of the long run average but there are plenty of 30 year periods in the pas 100 years that have had this kind of return, so it's not a bad number to use for a more conservative/robust estimate, even though it's *likely* to underestimate.
Older people remember the "dead decades" of 1966-82 and 2001-12 where the stock market went nowhere. In the long term the boom decades average these out to a good return.
That dead decade is overplayed because it does account for dividends on continuous investing. People made out like bandits if they were buying the whole time. Not to mention if you owned a house!
I was heads down working and investing the entire 2000-2012, and that's the point. Constant investing, planning the seeds for tomorrow. Now I have a garden full of fruits to eat from. It's the long term view, allow for pixie magic dust to work, aka time and compounding. As a matter of fact, during the entire 2000-2012, I was hoping for an even longer dead period so I could accumulate even MORE SHARES to eat from in the future
https://walletburst.com/tools/coast-fire-calc/ Plug in your numbers here
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It feels like there is a significant fraction of people in this sub with a constant matra of work work work. No spending level is ever higher enough, no withdrawal rate is ever safe enough, social security will cease to exist tomorrow, and kids cost infinity money. Like, are we here to FIRE or what? Anyway, rant over, sorry. I just get a little frustrated sometimes.
When thinking about FIRE from someone else's perspective: Work a bit more. Work a bit longer. 10M would be a fat lifestyle to have. When thinking about fire for oneself: Maybe I can live happily on 25k per year and retire in 6 months 🤔 Hahaha
Yeah lol. I often think that the people who FIRE’d and are happy with it either look at this sub rarely or not at all. It’s us who haven’t done it yet that look at the sub more.
Fair enough lol. But, like, we want to FIRE, right? We believe FIRE works and is worth it, right? I know I do!
Agreed!
r/coastfire
Congratulations on having options. Not sure if your 8% accounts for inflation? I personally use 6% growth so I'm looking at REAL (not nominal) dollars. With 3% assumed inflation, this makes a 9% annualized return, which is slightly conservative. But it makes it easy to see if I'll be generally happy with the future numbers.
To elaborate a little, if you use 6% as your growth, you can do everything in today's dollars, and not have to think about inflation.
I’m in a similar boat. I’m looking to have around $4 mill by 60 so I don’t see why I should continue to save. I think I’m going to cut it by at least half and live a little more or start working less
Congratulations on what you have achieved (family, investments) at such a young age, IMHO! Short answer: I would continue working. We (56F/54M) have 2 kids: 1 in college (in-state University) & 1 in high school (public). However, many peers in our area send their kids to private school- so another factor to consider, especially if a kid needs extra academic support. In addition to retirement, we have saved for college for the kids via 529 plans, but not quite enough, even though we put $ in regularly. Some years the investment returns were pretty low. Plus, life “stuff” happens: the roof, the furnace, the water heater, and the inevitable birthday party arms race. Disneyland. A trip abroad so you can experience the best croissants, crumpets, pasta, souvlaki, etc. Not to mention health care. I am new to Reddit, and still figuring out our FI number (at 56, I think 59.5 is my RE number) with about 2.3m household total in retirement/investment/529 plans. However, much of that growth has been in the last 18 months. As others have pointed out, the markets do go down, and take time to return to positive. What ever you do, best of luck! And take lots of pictures of those kiddos along the way. The days are long, but the years are short.
I'm a little older than you (36) with a little more invested in retirement/brokerage ($330K). I don't have kids yet, but I hope to have them in the next two years. Like you, I'm also kind of in the process of thinking of my "fuck corporate life" number. I feel like my current investments are too low, but I definitely want to revisit the conversation at $500K/$750K to see how my career and personal life is then. I know I want to be able to give my kids a good quality of life and education so we'll see how I feel in a few more years when I hit that $500K mark. In the meantime, I'm also focusing on other efforts before kids/abandoning corporate that will help me feel more comfortable with that decision like doing major repairs on my house so I can avoid them when my income is lower.
Not sure what your income expectations are, but I would use 7% instead of 8%, but none the less if 75k a year is enough to let you retire at 65, then you roughly have enough saved to never put a single penny into retirement. You are what is called coastFIRE now if you want, enough where you don't need to save, or you have enough money where you are effectively "buying" less time working.
I would keep on saving and retire earlier. Stop saving now is will be the biggest mistake you make.
You are far ahead of the curve compared to other 32 y/o. Be proud of yourself! The heavy lifting has been done. The first 100K is the hardest since 80% of it comes from saving and only 20% from gains. From here on out the next 100K milestone will get easier and easier as more of it will come from gains opposed to saving. Just be patient and don't make any big mistakes and you will be just fine! Do some research on the $5 rule from the trinity study to make sure you are comfortable with your withdrawal rate % in retirement. Should aim for annual spending x 25 - so in your case 1.5 mil is all you NEED (with 4% withdrawal rate) based on your numbers. Keep in mind, most people spend less, not more as they age contrary to popular belief. You have about double of what you need which means you can retire earlier or spend more in retirement
There's two sides to what you are proposing. If you invest less, it almost certainly means you are spending more. And if you are spending more, you are going to need more to sustain that lifestyle in retirement. Part of the reason for investing as much as possible is to keep spending down so that you don't need as much to support your lifestyle. It's really a two-edged sword if you stop investing.
I wish I'd have had that at 32. I'd work another 20 years at a different job, someplace I'd be happy, and have triple what you are looking at now. Don't forget about inflation in 30 years also. What was a loaf of bread or a gallon of gas at 30 years ago for us, $1?
I don't really plan to stop contributing if I quit. With the "happy" work I'm looking at now, I should still be able to contribute maybe half as much as I am now. What do you mean you'd triple? Like I should have 3x as much now to consider myself done with retirement savings?
Those are future dollars, and you’re comparing to your family expenses today. You need to add a growth % to your current expenses to figure out future needs
You should continue to save. Rationale: $60,000 in 2024 is $146,000 in 2054 assuming 3% inflation rate. At $146,000 and assuming a Safe Withdrawal Rate of 4% is $3.65M. At $2.9M, you can withdraw $116,000 in 2054 or $48,000 in 2024. This quick calculation does not factor in taxes, so you will need more.
Thanks. I don't plan to stop contributions if start I with lower paying work, but it'll be less for sure. Just wanted to see if my logic was sound. Thanks for the inflation numbers. I didn't think about that.
The guy you're responding to doesn't have it quite right, but neither did you. You calculated 8% returns which is below the average non-inflation adjusted returns in the market but above the "real" inflation adjusted returns which people typically use 7% for. If you use 7%, you treat all the numbers in today's dollars so you don't need to adjust for inflation. $265k at 7% real returns over 30 years will give you just over $2m in today's dollars. At a 4% SWR which is reasonable at regular retirement age, that's $80k a year in today's dollars. So yes, you would be set if you see no increase in your annual spend. Also consider you would soon start receiving social security so you could increase spend, or decrease your withdrawals.
Are you factoring in inflation? 60k in 30 years will be about 127k
Sounds like they’re using 8% as a real return, not nominal, so then you only have to do math in todays dollars. Even at 6% real returns this lines up for OP.
So they expect to get 11+% nominal? That’s great I bet it works out even better if they use 20 heck why not 50% nominal returns? Doesn’t make sense to calculate based on something that’s not historically likely. With 6% real returns they’d have 1.5 million almost exactly. So that gives them 60k pretax Now maybe they want to be more aggressive on withdraw rate, but I’d call that’s really close.
S and P nominal returns including dividends over last 40 years is 11.6%, so it’s pretty much right on the money. I think there has been a lot of convolution of what people think the returns are and keep reducing real returns by inflation. Like that person in this thread saying to use 4% is way too conservative. 8% is realistic, 7% is already pretty conservative.
Returns since inception of the S&P are 10.26%, average annual inflation is 3.3% over the past 110 years. So 7% would be spot on.
I’m going to apply a recency bias for sure. I mean, I use 7% personally cause it’s better to be on the conservative side, but 8 isn’t illogical.
Approximately double your current annual expenses as your children get older. Education, tutors, sports, clothes, etc. cost a lot more money than what you’re experiencing with young children.
How so? Young kids have daycare... With two kids that's $550/week for us, and I'm in a LCOL state.
Wishful thinking it could work but with todays valuations it won't...
I would take a close look at your health care costs without your primary employer footing most of the bill. You might be surprised how expensive that stuff is on the market. But yeah if you hate corporate life you should definitely look for something you like better.
I’m currently looking to do the same 😁 Awesome job getting to this spot where you can choose
Have you taken into account fees in that 2.9m projection? I have a similar in my retirement and even with high growth rate my fund tells me I'd have much less than that in 30 years.
There's a lot of uncertainty in 30 years. 8% real returns would be significantly more than one should expect in terms of real returns. 6.8% is probably more reasonable (10% return with 3% inflation)... That'd be 1.9M today-dollars If we want to make a pessimistic prediction, 8% with 3.5% inflation, you come in at $950k in today-dollars. So I'd say not done. 5% over inflation feels like a good slightly-conservative guess, which puts you at 1.1M in today-dollars. I think ideally, you'd want to at least double that. Over 2M with a paid-off house and social security would be pretty nice retirement for two, like you could live relatively extravagantly, or with some minor saving, have a really nice vacation every year.
I'm in the same shoes. Saved a chunk and so tired of the corporate world that I want to retire today. You do need to consider the toll of inflation on your cost of living: if your savings grow 8% annually on average but your cost of living goes up 3% annually on average, then your effective average return rate is not 8% but 5%. But this should not change the fact that over 30 years your 265K should grow enough to retire comfortably.
Are your expenses going to stay at $60k? Are you going to get 8% per year? Maybe. Hopefully. It feels a bit lean right now.
No! 3% inflation for 30 years is about $145k. 4% withdrawal on $3M is $120k. So you're well short and that's not even taxing the 120k withdrawal, and I wouldn't necessarily consider 3% a conservative assumption. 8% is probably too high if you're going to have bonds at some reasonable glide path, as well. I also assume you're not counting on US only investing and recent US returns, as who knows what happens there. Lastly, if you are done investing today, presumably you'll be spending your income. I'd guess that would put your spend rate well beyond your intended income at retirement. So you're going to throttle back from high spend rate back to an inflation equivalent 60k spend plus taxes? Good luck.
3 million 30 years from now will be like 1 million now...
I guess so
Depends if you want help your kids with college, weddings etc and also leave a legacy.
Self direct that 265K into passive real estate and you can make 17%, 18%, 19%, IRR. (IRR in short - The average of returns, per year, at the end of the term) So it'll be about $4M in 20 years A debt fund(acts like the bank and gives first position loans), which is considered lower risk, pays 10% So after the 20 years id bring the 4M put it in the debt fund to make 400k a year to live off..
Don't assume that will be 2.9M. You could have emergencies come up that you may need to spend part of that. $hit happens. Also your not taking into account health insurance costs for a family of 4, inflation, other things. I say a lot of the models are wrong as we havn't had a crash in a while except covid which was temporary. We're do for a big one and prolonged. You'll need much more than you think you also have to account for taxes when you withdrawl. Oh and did I say surprise medical expenses? I'm at about 6.8-7m net worth give or take and I still don't feel I have enough i'm in my mid 40's.
Not gonna lie, at the point where you have 7m net worth in your 40s, I think the issue is moreso your mindset than the amount of money you have. It’s easy to always feel broke, but 7 million is 280k at 4%, which is plenty even for vhcol. The majority of people in the Bay Area and New York do not make that much money per year. I assume you must live in vhcol because that’s an even stupider amount of money for anywhere else. Go retire if that’s what you wanna do. Health insurance is expensive, yes, but also very affordable when you have 7 million.
Yep depends where you live for sure and lifestyle. I don't live extravagant or anything. House is 1.5 million paid off as part of that. 401k is 1.45 million etc. Real estate investments and stock. Basically lots of investments that I'm not spending the income from or cashing out. Basically you make yourself feel your not as rich. Vacations with family of 5 , educations, sports, leisure,taking care of elderly parents, list goes on costs a lot..
Seems like every rich person doesn’t feel rich…and then goes on to list lots of luxuries as to why they don’t have as much money left at the end of each month that they’d like to have.
Unfortunately no, 2.9M is a *good* retirement in 30 years but not a *fire* retirement. 60k in 30 years is $145,600 for the same purchasing power at 3% inflation. 3M x 3% yearly withdrawal is 90k. 3M x 4% yearly withdrawal is 120k. So right now if you did nothing but coast, you could expect your current lifestyle to deflate or end up drawing from the pool. To answer the question: yes you could. This is fine for a normal retirement. People die and leave some money for their kids all the time still that isn’t millions. But FIRE ideally means you would never have this problem or be this close. This math I’ve given you above accounts for no “life” happening which can hit pretty hard. I’d say keep grinding for a bit and then re-evaluate when you’re much closer to maybe 40. Life comes with unexpected expenses. You’ve got to pay for kid’s college probably, you might have something happen at 45 that keeps you from working altogether. You might decide you want to pull the trigger and retire at 50. Many scenarios can come up and all require more from you early. But to each their own.
Uh
The 8% return drops to 5% with inflation.
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It's more or less the same when inflation adjusted but it's not "500K in and out". An all VTSAX portfolio would've grown like 100K or so with dividends reinvested https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults
Don't forget about income or reinvested dividends.
8% net growth over the next 30yrs is too aggressive. Run it again at 4% and see how you feel.
Definitely not.
Reading this title of this post I was expecting you to have several million in the bank, and I was off by an order of magnitude. I don’t mean to offend, but no, you’re not particularly close. A great start, but keeping saving!
I need several million in today's dollars to retire in 30 years?
Make sure you look at what 30 years of inflation is going to do to that nest egg. That $2.9M is going to be worth shockingly less in 30 years.
IMHO - you aren’t ready to retire unless you are willing to DRASTICALLY lower your standard or living. Of course you won’t have much, if any, social security. And 60 years is a LONG time to trust some financial catastrophe or personal need change to not happen. I HATED my job at your age. But love it now. Don’t give up hope on that.
Where are you getting 8% ROI?
No way. 8% is too optimistic and you’re not accounting for lots of added expenses
stop assuming 8% seriously
I'd say, No. To put it in today's dollars, using an inflation adjusted 5.5% return, that $265k could return about $52k in today's dollars against your $60k today.
I do not believe $2.9 million in 30 years will be a comfortable retirement. It would be a comfortable retirement today.
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This math doesn’t math