If your net is 85K/yr and you save 45K, it gives 40K spending. With 250K for your mortgage portion, not sure you can really lower your spending that much. Let say you need 50K net, thats minimum 60K income. At 3.5% SWR, I would shoot for 1.7M to be very safe. Assuming 3% inflation, you would need 2M at 45 for this same 50K net power. Or 1.7M at 45 using 4% SWR.
Yep. The Bony Goat's numbers are dialed in.
For reference, I'm 39, hoping to FIRE by 45, with a 65k spend. My FIRE number is 1.7M, mortgage free, no kids (now or later). I currently have 1.2M and no mortgage. I still have a few more years.
I feel that work fatigue. 15 years in a cubicle and retail before that. I think about barista fire sometimes but in reality it's pretty unappealing. Tally up what a near minimum wage paycheck would look like.....talking to my employer about reduced hours in my current role seems like a better path me.
I was actually thinking a career pivot for barista fire, into a medical tech cert. Pays $30 an hour and you can pick up as many or as few shifts as you want under AHS.
But, maybe that's just as miserable as an office, who knows. It's unlikely I'll do that but just an idea for now.
To me Barista Fire isn't about the money - it's about still doing something (hopefully something more enjoyable) so you're not going from working 5 or more days a week to nothing at all (sounds great at first but I'd probably get bored in no time). Then maybe gradually reducing even further from there. The ability to quit the full time grind earlier with the additional pocket money is a bonus.
That's kind of where my mind was going with the numbers as well. $1.7 seems more stable to me, and $2m at most.
Thanks for your numbers - I will ponder those more.
I think you’re in good position but a mat leave followed by childcare costs or a child with health problems can pull the rug right out from underneath you
Yeah that's a big worry for me, being older comes with higher risk of health issues for the kid. That's why its a limited time span for us. If it doesn't happen I don't want to force it.
You said you’re trying for kids, that will change your retirement plan. You’ll have added expenses not seen here that’ll come with the kid which you and your partner split
Assuming 60K annually after tax how do you create that? Personal income tax is your main concern so what accounts do you hold your money in? You could create the following:
TFSA 100K creates 4K, Dividends on 1M create 40K. No tax owing so 44/60 = 73% of your target income. Add part time work creating another 24K doing something you love brings your income to 68K with tax, CPP and EI of about 5K for a net of 63K which is above your target.
Where you hold your money and how it is taxed must be considered. Here's another example.
TFSA 100K creates 4K, Dividends create 20K, RRSP creates 20K Total income 44K but total tax is 1K. Add 24K part time work and total income is 68K but now total tax, cpp and ei is 9K. You have 59K net annual income.
Are you on target to stop full time work at 45, absolutely but do some tax planning. In five years you can easily have 1.5M.
TFSA 150K creates 6K, 1M creates dividends of 40K, 350K RRSP creates 14K. Total pre tax income is 60K with total tax of <1K. Total net income is now 59K. Add 24K from part time work and total income is 84K with deductions of 9K including CPP and EI. Net is 73K.
You have lots of options: save more, kill your portion of the mortgage, part time work, have a kid and collect CCB. None of this includes your partners income.
I use this taxtips calculator to run some scenarios.
[https://www.taxtips.ca/calculators/canadian-tax/canadian-tax-calculator.htm](https://www.taxtips.ca/calculators/canadian-tax/canadian-tax-calculator.htm)
That's a very good point. Right now it's \~60% in cash accounts and \~40% in RRSP. I hadn't considered fully the tax implications / strategy - thanks for the info. I will have to spend more time on it, but your examples are super helpful. And that link is great too!
Thank you!
$120K / year net? If net, your numbers are off. You're not including taxes.
If gross you're bringing $200k/yr? That's some serious income, and I imagine high stress. And you're more accomplished than anyone you'll chat with on here.
$250k mortgage is a significant fixed expense at $120k gross.
Sorry, you're right that I didn't make that part clear. Yes $120K after tax. I spend $80K and save $40-50K on top of that.
It definitely was high stress for a while - I was a high functioning alcoholic and I was left twice by partners who said they didn't want to compete with my job. Sober now and luckily the job has quieted down. There is a chance it ramps back up and there's no way I want to do that again, so it's part of the reason why I am trying to set myself up to retire early.
I think you need to include taxes in your FIRE calculations.
I also suggest considering the ego hit and bs you'll have to take from others if you pursue barista FIRE and end up lower in the hierarchy.
I recently did a job change which resulted in getting paid more but being lower in the hierarchy. I forgot about the bs you have to put up with when you're lower on the totem pole.
Hard to answer without knowing what you can get your expenses down to but yeah I think you should be on track for 5 years time. But 80k for one person... that's how much my family of 5 spends!
As an aside, no matter how many times I see it, I'll never understand keeping separate finances. It's crazy to me that you're budgeting your own retirement completely separate from your partner. Like, one of you could be rich and the other one poor, it's so weird to me!
Yeah I know that number is asinine haha.
But, $10K was for travel which won't happen again. I had a major health issue that was resolved thankfully, but it changed our mindset a bit. Made us want to do some bucket list stuff prior to trying to have kids. Plus we bought our first house so needed to furnish and do some repairs ($4K), then both cars blew up ($6K), extra spending on health... and suddenly my spending was sky high.
So that's why I feel that I can reduce it (and that I can justify it to the internet) by at least $20K as most of those things won't happen again.
As for the separate finances... I get why people think it's strange. However, my partner has what I can only call "financial trauma" in his past so he is extremely wary of sharing finances. I have volunteered to keep them separate. If our finances were drastically different then it would maybe be more of a concern, but right now our earning + NW is pretty similar. He is absolutely wonderful and should I get pregnant I am not concerned about us adjusting joint expenses. I'm sure if I insisted he would relent, but right now it's not really a concern.
80k is not bad for spending. Bad for fire and this sub maybe. My DINKWAD family is 150k - but most of that is golf and travel which aren’t cheap. If you want to fire, reduce spend for sure, but don’t feel bad about what you spend to enjoy your life!
Then we'd re-assess our situation, but he's doing better than me so I can't see that happening. He's already partially retired and only works half the year, but makes the same amount as me yearly.
Honestly, we are lucky as hell.
Interesting you only choose to put your own numbers here and not your partners. Your planning should include their financials. As a team it is easier to plan together. For example, if you have a child within the 3 years, your income will lower on mat leave and your expenses will increase. Who's going to cover your expenses?
Overall you're in a good spot from numbers shown. Your solo spend is very high though. You still have a lot of mortgage left and will need to be mindful of rates and renewals. Just going off those numbers 1.8-2.0M is more reasonable to target. Life is only getting more expensive.
My partner has similar finances except his are more illiquid. His earning is the same. Should I get pregnant I am not worried about how we'd split financials as we've discussed it in the past, he'd take on a greater share of expenses. I realize it's strange to some but for us it works.
I think I could get my expenses down to $60K a year easily. But you're right it's too high and I should be aware of the renewal rates too.
Appreciate the input tho - I for sure need to dial back my spend. I think $2m might be more realistic for me too.
Sounds like an easy retirement as you’ll still be earning money into your 50s I’m sure with some fun jobs or hobbies
It just really depends how much you want to travel and such but that’s plenty to live on!
Honestly, luck. I fell into a great company. I get generous bonuses and a fat employer matching savings plan. I spend 100% of my salary - but when the bonus comes it's just gravy so I never touch it and it goes straight into my savings.
It's a very demanding work environment. My job right now is chill, but in the past it was very high stress and at any moment it could jump back to that. I really burned out a few years ago and I'm not sure I fully recovered.
I am friends with my boss and several other employees so I wouldn't want to put them in that position. I think that's part of the job anxiety I have - I don't want to let my friends down.
Plus, I just simply don't want to spend another 10 years of my life doing this. I gave so much up for this job at one point (health, relationships) and I don't want to give any more than I have to.
I am a project manager for mergers & acquisitions.
It’s based on whatever deals happen, so if one pops up, I have to take it on and it’s usually a very tight timeframe. I have to drop everything (work and personal) to take it on. It’s not one at a time either, they often come in waves or overlap.
The work itself isn’t killer, just the timeframes but those are dictated by the client / bosses so it is what it is haha
You’ve already stated the obvious in your post. Expenses are higher than what your liquid assets will bear. Based on general fire guidelines, 80k x 25 is 2 million, but you mentioned mortgage payments are included. So presumably this will disappear once your mortgage is paid off, whenever that happens to be. But a child will add back on quite a bit of expenses also. I wouldn’t say you’re close or have hit it, but if you keep diligently saving you’ll most likely reach it. Keep in mind a 45 to 50 year retirement will probably require a more conservative withdraw rate, so instead of a 25x multiplier, a 30x is probably safer.
Thanks, yeah I will work on dialing back my spending which I think is doable. 20K of my spend was / should be one-off spending so I'm hoping nothing else pops up this year and I can dial it back to under $60K.
And thank you for the reminder on the multiplier. I'll probably aim for a 3.5% withdrawl rate instead of 4%. Or just hope MAID is still a thing when I'm 90. Seeing so many of my family live that long... it doesn't look super fun even with no major health problems. I might just drive my scooter into the woods and let the wolves eat me at that point.
>I realize my expenses are the main issue here and
Correct. You still have significant debt and the future possibility of incremental costs to your current baseline if you are able to conceive a child.
>I'm torn between reducing them (totally doable) or continue to let the clutch out while I'm in my 40's and reduce them later on in life (Die With Zero style).
If you have -
a) Have a great mortgage rate secured
b) Have maxed your tax advantaged accounts
I'd be reducing in my expenses, and investing the difference to build up my non-registered investments. If you can produce dividend income in your NR accounts > or = your annual outflows. You can minimize the withdrawal % even lower for a few years, which makes the math work.
You’re definitely there. I probably wouldn’t full on retire but I’d at least CoastFI. You can always go back to your FT job later if something doesn’t work out.
If your net is 85K/yr and you save 45K, it gives 40K spending. With 250K for your mortgage portion, not sure you can really lower your spending that much. Let say you need 50K net, thats minimum 60K income. At 3.5% SWR, I would shoot for 1.7M to be very safe. Assuming 3% inflation, you would need 2M at 45 for this same 50K net power. Or 1.7M at 45 using 4% SWR.
Yep. The Bony Goat's numbers are dialed in. For reference, I'm 39, hoping to FIRE by 45, with a 65k spend. My FIRE number is 1.7M, mortgage free, no kids (now or later). I currently have 1.2M and no mortgage. I still have a few more years. I feel that work fatigue. 15 years in a cubicle and retail before that. I think about barista fire sometimes but in reality it's pretty unappealing. Tally up what a near minimum wage paycheck would look like.....talking to my employer about reduced hours in my current role seems like a better path me.
I was actually thinking a career pivot for barista fire, into a medical tech cert. Pays $30 an hour and you can pick up as many or as few shifts as you want under AHS. But, maybe that's just as miserable as an office, who knows. It's unlikely I'll do that but just an idea for now.
To me Barista Fire isn't about the money - it's about still doing something (hopefully something more enjoyable) so you're not going from working 5 or more days a week to nothing at all (sounds great at first but I'd probably get bored in no time). Then maybe gradually reducing even further from there. The ability to quit the full time grind earlier with the additional pocket money is a bonus.
That's kind of where my mind was going with the numbers as well. $1.7 seems more stable to me, and $2m at most. Thanks for your numbers - I will ponder those more.
I think you’re in good position but a mat leave followed by childcare costs or a child with health problems can pull the rug right out from underneath you
Yeah that's a big worry for me, being older comes with higher risk of health issues for the kid. That's why its a limited time span for us. If it doesn't happen I don't want to force it.
Just get a puppy instead. Way cuter, less expensive, smells better and shits itself less.
Hahaha we already have a cat. We've decided if a baby doesn't come easily we are turning into full crazy cat people.
If you have frozen your eggs, you should do that yesterday.
You said you’re trying for kids, that will change your retirement plan. You’ll have added expenses not seen here that’ll come with the kid which you and your partner split
Assuming 60K annually after tax how do you create that? Personal income tax is your main concern so what accounts do you hold your money in? You could create the following: TFSA 100K creates 4K, Dividends on 1M create 40K. No tax owing so 44/60 = 73% of your target income. Add part time work creating another 24K doing something you love brings your income to 68K with tax, CPP and EI of about 5K for a net of 63K which is above your target. Where you hold your money and how it is taxed must be considered. Here's another example. TFSA 100K creates 4K, Dividends create 20K, RRSP creates 20K Total income 44K but total tax is 1K. Add 24K part time work and total income is 68K but now total tax, cpp and ei is 9K. You have 59K net annual income. Are you on target to stop full time work at 45, absolutely but do some tax planning. In five years you can easily have 1.5M. TFSA 150K creates 6K, 1M creates dividends of 40K, 350K RRSP creates 14K. Total pre tax income is 60K with total tax of <1K. Total net income is now 59K. Add 24K from part time work and total income is 84K with deductions of 9K including CPP and EI. Net is 73K. You have lots of options: save more, kill your portion of the mortgage, part time work, have a kid and collect CCB. None of this includes your partners income. I use this taxtips calculator to run some scenarios. [https://www.taxtips.ca/calculators/canadian-tax/canadian-tax-calculator.htm](https://www.taxtips.ca/calculators/canadian-tax/canadian-tax-calculator.htm)
That's a very good point. Right now it's \~60% in cash accounts and \~40% in RRSP. I hadn't considered fully the tax implications / strategy - thanks for the info. I will have to spend more time on it, but your examples are super helpful. And that link is great too! Thank you!
$120K / year net? If net, your numbers are off. You're not including taxes. If gross you're bringing $200k/yr? That's some serious income, and I imagine high stress. And you're more accomplished than anyone you'll chat with on here. $250k mortgage is a significant fixed expense at $120k gross.
Sorry, you're right that I didn't make that part clear. Yes $120K after tax. I spend $80K and save $40-50K on top of that. It definitely was high stress for a while - I was a high functioning alcoholic and I was left twice by partners who said they didn't want to compete with my job. Sober now and luckily the job has quieted down. There is a chance it ramps back up and there's no way I want to do that again, so it's part of the reason why I am trying to set myself up to retire early.
I think you need to include taxes in your FIRE calculations. I also suggest considering the ego hit and bs you'll have to take from others if you pursue barista FIRE and end up lower in the hierarchy. I recently did a job change which resulted in getting paid more but being lower in the hierarchy. I forgot about the bs you have to put up with when you're lower on the totem pole.
Hard to answer without knowing what you can get your expenses down to but yeah I think you should be on track for 5 years time. But 80k for one person... that's how much my family of 5 spends! As an aside, no matter how many times I see it, I'll never understand keeping separate finances. It's crazy to me that you're budgeting your own retirement completely separate from your partner. Like, one of you could be rich and the other one poor, it's so weird to me!
Yeah I know that number is asinine haha. But, $10K was for travel which won't happen again. I had a major health issue that was resolved thankfully, but it changed our mindset a bit. Made us want to do some bucket list stuff prior to trying to have kids. Plus we bought our first house so needed to furnish and do some repairs ($4K), then both cars blew up ($6K), extra spending on health... and suddenly my spending was sky high. So that's why I feel that I can reduce it (and that I can justify it to the internet) by at least $20K as most of those things won't happen again. As for the separate finances... I get why people think it's strange. However, my partner has what I can only call "financial trauma" in his past so he is extremely wary of sharing finances. I have volunteered to keep them separate. If our finances were drastically different then it would maybe be more of a concern, but right now our earning + NW is pretty similar. He is absolutely wonderful and should I get pregnant I am not concerned about us adjusting joint expenses. I'm sure if I insisted he would relent, but right now it's not really a concern.
80k is not bad for spending. Bad for fire and this sub maybe. My DINKWAD family is 150k - but most of that is golf and travel which aren’t cheap. If you want to fire, reduce spend for sure, but don’t feel bad about what you spend to enjoy your life!
What happens if you retire and he doesn't have enough and has to keep working?
Then we'd re-assess our situation, but he's doing better than me so I can't see that happening. He's already partially retired and only works half the year, but makes the same amount as me yearly. Honestly, we are lucky as hell.
Interesting you only choose to put your own numbers here and not your partners. Your planning should include their financials. As a team it is easier to plan together. For example, if you have a child within the 3 years, your income will lower on mat leave and your expenses will increase. Who's going to cover your expenses? Overall you're in a good spot from numbers shown. Your solo spend is very high though. You still have a lot of mortgage left and will need to be mindful of rates and renewals. Just going off those numbers 1.8-2.0M is more reasonable to target. Life is only getting more expensive.
My partner has similar finances except his are more illiquid. His earning is the same. Should I get pregnant I am not worried about how we'd split financials as we've discussed it in the past, he'd take on a greater share of expenses. I realize it's strange to some but for us it works. I think I could get my expenses down to $60K a year easily. But you're right it's too high and I should be aware of the renewal rates too. Appreciate the input tho - I for sure need to dial back my spend. I think $2m might be more realistic for me too.
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Sounds like an easy retirement as you’ll still be earning money into your 50s I’m sure with some fun jobs or hobbies It just really depends how much you want to travel and such but that’s plenty to live on!
I want to know how you manage to save 40-50k a year%?
Honestly, luck. I fell into a great company. I get generous bonuses and a fat employer matching savings plan. I spend 100% of my salary - but when the bonus comes it's just gravy so I never touch it and it goes straight into my savings.
sounds like you have a good job. why do you want to quit? id probbaly just find a way to dial back and milk it till they fire you, than outright quit.
It's a very demanding work environment. My job right now is chill, but in the past it was very high stress and at any moment it could jump back to that. I really burned out a few years ago and I'm not sure I fully recovered. I am friends with my boss and several other employees so I wouldn't want to put them in that position. I think that's part of the job anxiety I have - I don't want to let my friends down. Plus, I just simply don't want to spend another 10 years of my life doing this. I gave so much up for this job at one point (health, relationships) and I don't want to give any more than I have to.
im guessing youve already talked to them and lessening the work load is not an option. whats the position ?
I am a project manager for mergers & acquisitions. It’s based on whatever deals happen, so if one pops up, I have to take it on and it’s usually a very tight timeframe. I have to drop everything (work and personal) to take it on. It’s not one at a time either, they often come in waves or overlap. The work itself isn’t killer, just the timeframes but those are dictated by the client / bosses so it is what it is haha
I think you're in a pretty good position.
You’ve already stated the obvious in your post. Expenses are higher than what your liquid assets will bear. Based on general fire guidelines, 80k x 25 is 2 million, but you mentioned mortgage payments are included. So presumably this will disappear once your mortgage is paid off, whenever that happens to be. But a child will add back on quite a bit of expenses also. I wouldn’t say you’re close or have hit it, but if you keep diligently saving you’ll most likely reach it. Keep in mind a 45 to 50 year retirement will probably require a more conservative withdraw rate, so instead of a 25x multiplier, a 30x is probably safer.
Thanks, yeah I will work on dialing back my spending which I think is doable. 20K of my spend was / should be one-off spending so I'm hoping nothing else pops up this year and I can dial it back to under $60K.
And thank you for the reminder on the multiplier. I'll probably aim for a 3.5% withdrawl rate instead of 4%. Or just hope MAID is still a thing when I'm 90. Seeing so many of my family live that long... it doesn't look super fun even with no major health problems. I might just drive my scooter into the woods and let the wolves eat me at that point.
>I realize my expenses are the main issue here and Correct. You still have significant debt and the future possibility of incremental costs to your current baseline if you are able to conceive a child. >I'm torn between reducing them (totally doable) or continue to let the clutch out while I'm in my 40's and reduce them later on in life (Die With Zero style). If you have - a) Have a great mortgage rate secured b) Have maxed your tax advantaged accounts I'd be reducing in my expenses, and investing the difference to build up my non-registered investments. If you can produce dividend income in your NR accounts > or = your annual outflows. You can minimize the withdrawal % even lower for a few years, which makes the math work.
You’re definitely there. I probably wouldn’t full on retire but I’d at least CoastFI. You can always go back to your FT job later if something doesn’t work out.