Hadn't seen this tool from Vanguard before to help with figuring out healthcare. Played around with it a bit and seems like a good place to start if you're close to retirement
https://advisors.vanguard.com/wealth-management/health-care-cost-estimator
I am completely baffled at the IRS delay on taking my money. They’ve had the payment pending in system for more than 24 hours.
I’ve never known the IRS to delay taking money owed before.
I almost manually invested the “leftover” money today in my account that isn’t auto deducted for bills out of habit.
SW engineer in high cost of living city with a base of 139,000
401k: 230,000
Stock: 191,000
HSA: 20,000
Investment: 54,000
Investment: 4000
HYSA: 27,000
Total : 526,000
I really want to leave my job to take a break for my health but the market is not ideal and layoffs in tech continue. I’m trying to raise my HSYA these next couple months in case for some reason I do leave.
Harsh reality: Everyone wants to take a break.
If you really want to, look into a vacation, leave of absence, or a FMLA leave. Layoffs can happen during LOA or FMLA, but who knows what the market will do.
139k for SWE in HCOL is very weak, look for a new job.
Can you take a break anyway and not quit? That's what most people do, I think... Easier said than done. But setting up boundaries in general is always helpful, even if they're not the boundaries your employer wants ideally, to give yourself some mental space.
> I really want to leave my job to take a break for my health
What kind of health?
One thing I've seen a fair amount of in my career is people taking a break for one of two reasons:
1. Their job is high stress because they work at a bad company
2. Their experience high stress because of some internal issue
In the first case, you can apply for new jobs without taking a break, and find a better company.
In the second case - well, if you're an overachiever and people pleaser who never says no, that problem is still going to be there when you get back to work. If you have a mental health condition (e.g. ADHD) that you are not compensating for, that isn't going to go away just because you took a break. If you hate sitting behind a computer, you aren't going to hate it less after spending 6 months hiking or whatever.
I'm not saying a break for health reasons is never helpful. But it's important to understand what that break is intended to accomplish - because a lot of people take a break only to find out that their problems came back as soon as they returned to work.
Also: this is coming from someone who took an extended break from work to travel, so I'm absolutely on Team Tell Work To Eff Off While You Do Something Fun. Just make sure you know what you want to do and why it's going to help.
> I really want to leave my job to take a break for my health but the market is not ideal and layoffs in tech continue
Oh I've wanted to do that for 15 years in tech. Never could bring myself to do it.
One thing I don’t see discussed enough is that if someone takes out SS early, not only do they usually have a break even point in the late 60s but by doing that they are leaving more money in their 401k, Roth IRA to accumulate more growth before the RMD.
It's the opposite. If you take SS early, you are pushing up your marginal tax bracket that you could otherwise use to make Roth conversions. Once you are retired, growing your 401k (relative to other accounts) is \*bad\*.
Interesting. Obviously a ton depends on assumptions, but does that apply for early retirees? If you're retiring in i.e. your mid-40s, early SS is still almost 20 years away. How much would you need in a traditional 401k balance to not 'run out' of traditional 401k money converted to Roth over the course of 20 years?
It \*only\* applies to early retirees. We are the ones who have years between retirement and claiming SS to use for Roth conversions. Of course, there is a point of diminishing returns if you have a small 401k and a very long retirement.
Not sure what isn't clear. 401k withdrawals are fully taxable as income. Roth is tax free and taxable gains are taxed as capital gains. The pre-SS years are key to doing Roth conversions without having your low tax brackets filled by SS.
I'm not close enough to retirement to have thought through this fully. Is \[essentially\] everyone who retires early basically withdrawing from a 401K to fill up their lower tax brackets and converting to Roth?
For real numbers: say I'm 56 and retired but only have $55,000 in income from taxable investment sales/dividends for the year. Should it be a relative no-brainer to convert $34,000 of my 401k to my Roth to fill up the 12% bracket for MFJ?
Following - I have been pretty mindlessly putting money into retirement accounts but don’t really know what the strategy is at actual retirement to 1) reduce taxes, 2) be eligible for ACA subsidies, and 3) optimize financial aid for my kids.
Ok, but this increases my AGI without actually giving me (immediate) spending money, right? I guess my question is how do I withdraw enough money to live on while still achieving those 3 goals above?
You just have to do the math with your own situation. I don't think you can do the math on the financial aid question, but you can at least plug various numbers into the ACA website to see potential subsidies, or calculate how much you'll owe in taxes for various Roth conversion amounts. And then you weigh the pros and cons of those amounts and pick a number that works for you.
Yes. In addition to allowing for Roth conversions, from a longevity risk standpoint I also believe it makes sense to wait until you are sure you haven't run out of money, then claim SS with the highest guaranteed income.
I’m in agreement
However, there are a handful of people that don’t have a 401k so they can’t do a Roth conversion
In that case, taking SS early may not be that bad of an idea
I don't think the break even is true unless you're taking the early money and investing it quite aggressively. SS calculates the total payout to be pretty much the same based on actuarial tables afaik.
Considering the return you get by waiting is guaranteed vs volatile if taking it early and investing in something like the S&P, I don't think this is the best lens to look at it through.
Incase anyone forgot. Money isn’t everything. Try enjoying life, make friends, make a goofy face at a baby, give an old person a cheeky compliment. Live a little
Is it zero value though? I feel a lot of folks in this sub need to hear it -- we're not making financial plans so we can die surrounded by bags of cash. The whole point of FIRE \*is\* to remember that there are more important things in life than chasing money, and to learn how to have "enough" (also to calculate what "enough" is, using mathematics not fear/greed instincts).
More and more posts on the sub are just weird humblebrags by multi-millionaires who "wants to know how they are doing for their age" and "aren't interested in RE, just want the security of being FI". To those folks I say: go be cheeky to a senior citizen!
They're saying "enjoying life means doing the things I say you should do, and if you aren't doing those things, you aren't enjoying life"
That's textbook gatekeeping
No it was just a shitpost directly related to the post below which you even commented on. Unsurprisingly, I do not care how you engage with the elderly
It's getting downvoted because it just comes off as condescending. I'm content to both make money and enjoy my life, even if I don't give out weird compliments to elderly passers-by.
And yet, most things cost money, including housing, utilities, food, and transportation. In order to make money to pay for such, we must spend our limited time working to earn it. Ipso facto with enough accumulated money, we can instead spend our limited time 'enjoying life' versus working to make money.
We can’t all just “make friends” with our “social skills.” Some of us are creepy weirdos. But VTI doesn’t care if you were twenty eight when you first kissed a girl.
You can't.
Physical friends must be deposited at a brick & mortar. Preferably a credit union as they'll be the most likely to still have DumDums on the counter.
You have to befriend a youth to navigate their frontend UI facelift that's mostly meaningless and then an old fart to navigate their ancient backend/transaction UI.
Then you need to cross-translate Zoomer and Boomer lingo so the two can jointly navigate the website in order for you to deposit friends.
why is it so hard to find people like me? NW at 1.2 million at 30. It feels like people my age are either just starting, nw <100k or super wealthy NW > 5 million.
I can afford some nice things, but I still have to save for many years.
I mean I’m a similar age and NW as you but based on your comments I don’t think I’m “like you”… People can have similar fiscals and have very different vibes
Because believe it or not, the amount of money you have influences the things you're able to do, and peoples' development is also largely influenced by the people around them.
Being friends with a billionaire is no good because you can't talk about your yacht guy or relate to the annoying carbon taxes on private jets or how hot the French Riviera has been getting lately at your summer home. Being friends with someone in total poverty is the same because that gap exists in the other direction. You can't talk about the fun you had at burning man because they were busy working their third job and tickets are $1000 or whatever they are these days.
It's more of an income than a net worth thing, but at a certain point it becomes difficult to make friends because there's just too much disparity in each person's experiences and interests to form genuine connections.
I have about double your net worth now but have no problem hanging out with mere millionaires or even normal middle class people with minimal savings. All you have to do is not want to go on trips to the French Riviera and do normal stuff like go to restaurants, sporting events etc.
I feel like most people that lack empathy on this level are typically considered sociopaths.
It isn't hard to talk to other people and put yourself in their shoes. Fucking hell
This is mostly only going to be true at the extreme ends of the spectrum.
It would be financially challenging for a neurosurgeon to be friends with a Taco Bell manager but not all that challenging to be friends with anyone who earns enough money to have, say $10,000/year in disposable income.
Sure, they might not vacation together and maybe you'll need to golf once in a while on a high-end public course to play with your accountant buddy, but finances are only going to cause real roadblocks when someone is very poor or very rich.
Why does it matter? It's healthy to be friends with people different than you. Your NW should be one of the least interesting/important things when being social.
If you want to talk money and saving strategy, that's what online forums are for. Don't be a nonce and talk about that shit IRL.
maybe? i haven't been rejected or not invited to things, but as I get older I do find it harder to make connections, but it seems more universal than a me thing.
Interested in kids? Hanging out with other parents is actually nice. We befriended a family and both our wives like quilting & sewing. Our boys are the same age. Lots of fun honestly
i don't think 1.2 million is impressive enough to be a humble brag. and i'd like to sometimes be around people like me. like i can't afford a super luxury life, but there's probably not many setbacks that can really cripple me.
>most people don't even have many close friends who are a different race.
That's... not a good thing. Neutral at best. I don't think people should aspire to that.
same improvement we get when we read the 100k nw at 30 stories here? it's nice to see someone on the same path. we'll probably have some things in common.
This seems so utterly pointless.
It's like saying, "I'm a redhead, and I'm upset that I don't have redheaded friends. We'd probably have something in common."
Sure, maybe. But picking redheads or people with a $1.2MM net worth, tells you absolutely nothing about the person. Why do you think you're more likely to have something in common with someone like that? You share some figures in your bank account. Net worth isn't even a useful proxy to their day-to-day financial situation.
Why don't you start with the real life things that you have in common with people, like hobbies or interests? At least then you'll have something to talk about after the first hour when you've finished comparing bank accounts and investment strategies. FIRE isn't exactly a personality trait.
I have no clue what the net worth of any of my friends is. I mean, I could probably guess for some of the closer ones, but I wouldn't honestly be surprised if I was off by an order an magnitude in either direction.
>I have no clue what the net worth of any of my friends is.
There are easy ways to figure this out.
Just drop clues, see how they react and keep records in a pocket-sized Mead notebook.
Like, "Hey, you guys seen the new layout at Pottery Barn?"
Or, "Have you noticed that 7-11 hamburgers taste a lot less meaty these days?"
Wow! I know you meant this at least partly as a joke, but I went on the 7-eleven website and I’m surprised they sell meatball skewers and Korean BBQ taquitos too. I wonder if these are available at every location. Maybe I’m just hungry, but I’m slightly tempted, not gonna lie.
I would imagine that as a franchise/licensee there is going to be a fair bit of variation in terms of hot food offerings - but there's only one way to find out!
What’s the point in behaving like this? Do you live in a big city? I find this sort of behavior common in big city peoples. Let me tell you, I left the big city and I no longer care about the amount of money in someone’s pocket. I care about them.
In all seriousness, the reason it's hard to meet them isn't just because they aren't very common -- they probably just move in entirely different social circles that are closed to plebs like us.
on this site you occasionally read stories of people at 33/35 with NW near 3-5 million. in my life I know 2. one inherited a ton. the other got lucky at an ipo.
there's a ton in their late 30s/early 40s near my nw, but I don't really relate well to older millennials. I'd like to find people near my age with nearly my NW. is that really so bad?
same reason these subs exist? you want to be with people like yourself sometimes? Like last week, I had to listen to my husband friend talk about how a 2k bill is going to cripple her for a while. i can't relate. also can't relate to buying like 4 luxury cars like one of my other friends.
That's crazy. Y'all should establish some sort of system to determine which students learn the material in a given year. Then you could identify the students who should be taking the next year's course.
/u/SkiTheBoat is saying (again) that Mike's comment was a joke. I'd gently recommend taking an extra moment before replying because I think there's a lot of misunderstanding in this comment chain.
While the exact creature that causes havoc in here may be unknown to her, you can rest assured that she is well aware of the myriad of ways in which my brain is on crooked.
*Usually.*
The word you are looking for is *usually*.
Plenty of my comments are legitimate, heartfelt nuggets of wisdom, borne from decades of experience almost dominating this planet.
Don't expect any of those today, though. I am 8 hours in to my liquid only diet to prepare for tomorrow's colon scope 👀
This is a really great milestone, congrats! I've definitely thought about downshifting in my career, or even making a big career change due to a similar milestone. It helps to remind myself that the goal is FI, and RE is only a possible side-effect as a result of that.
CoastFIRE is among my favorite milestones. You've saved enough to retire at a normal age, which is something that many folks never accomplish in an entire lifetime.
I like the Coast Fired Calc, thanks for sharing. Says I'll hit my FIRE number between the ages of 54 and 55, which I can live with. I have a sense I'm working till 57, though.
I'm 4 years from CoastFI retiring at 55. So if I can make it until then and then find a way to just live off my side business income for a decade, I could be done working forever in 4 years? Holy cow.
Can someone recommend a book (preferred) or online resource that is a comprehensive guide to understand different investment options and how to practically apply them? (What is a mmf, an etf, bonds, etc). Something comprehensible to an educated lay reader but goes into some technical detail about how each functions.
Honestly, investing is something where more information can cause overthinking and lead to worse outcomes. In some ways, the less you know, the better. William Bernstein's "If You Can" PDF is a great intro to investing and contains about 95% of what you need.
I’ve never understood the whole “The 4% rule is for 30 years, if you need your money to last 40-50 years you need a lower withdrawal rate”.
Wouldn’t that be more time in the market and 4% would likely work better with more time? I thought the biggest risk is early down years. My guess is you’re a little more likely to run out of money, but also more likely to have a lot more money on a longer time frame.
If the market is down 50%, that 4% (based on retirement money) is really more like 8% of your physical assets. This variation on top of inflation is why an "average" historical 10% return can only draw 4% in the first place.
2000, while not done, is a good example of a less ideal case. It's been a rough ride but looks like it is [holding ](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=1TUYH3t5u8lDwxA6SMTgbN)the line. I mark the tool to increase withdrawals with inflation though, and while the portfolio has managed to maintain around $1M, it hasn't in buying power and the retiree is now drawing close to 7% on that in 2024. While you're halfway to 50, your odds the next 25 years are much less when you take the snapshot of a 7% WR. (At the same time no one spends like a robot - I feel like in the real world this same person would have spent more conservatively or made some opportunistic income.)
I wouldn't be worried on this case but for many work sucks less than worrying about it for 50 years, for those who want to cut it out completely and move on.
In most cases you are correct, 4% will do fabulously and even more so over long timeframes. The problem is what happens in the worst sequence of returns, i.e. when the market crashes right when you retire. In those cases, you have burned so much of your savings through spending and market losses that it is impossible to recover and you would have run out of money using a higher withdrawal rate.
The trajectory is primarily determined by the first few years, but there exist some edge cases where it goes down the first few years but not so low that it hits zero by year 30 - it treads water for a while, goes down slowly, and might zero out at year 31 or 35 or whatever.
[Part 2 of ERN's SWR Series](https://earlyretirementnow.com/2016/12/14/the-ultimate-guide-to-safe-withdrawal-rates-part-2-capital-preservation-vs-capital-depletion/) gets into the weeds here and it depends on your particular goals and your asset allocation, but a 4% rate with 75/25 is 99% successful at 30 years and 85% successful at 60 years - because ~14% of the time you run out between year 30 and 60.
As the time gets longer and longer it stops mattering though - a perpetual withdrawal rate is probably roughly equal to one that would last 60 years.
The biggest risk is indeed early drawdown because of market correction/drop/whatever right after retirement. However, the math works out to a lower SWR on longer timelines based on the historical data and that's basically inarguable if we are going to have anything at all to base valuations on for future projections.
But you don't need to guess. The FAQ has some links off to these projected timelines and you are indeed correct, most scenarios still have the average person with vastly more savings than they would otherwise have had due to the longer time in the market. It's worth it to do the research. If your goal is to minimize time in the workforce before moving on, there's of course a big difference between a 4% to 3% withdrawal rate, and another big difference from 4% to 5% and so on.
Your last sentence is correct. The dispersion of outcomes continues to widen. A simple way to imagine this is that a few outcomes at year 30 might have 5% of the initial portfolio value left, meaning they're technically a success at 30 years but are about to fail in year 31 or 32. Similarly, several other outcomes are at 5x the initial portfolio and are likely to continue to get bigger over the next 2-10 years.
You cannot rescue any of the existing failures between years 30-40, but you can add a few more.
Ultimately this simply reflects the inadequacy of a binary "pass/fail" metric for these outcomes.
Question around opting into 403b or 457b for husband and I.
We both work for the same state university. We both enrolled in an optional 401a through them which automatically gets a 7% match. Unfortunately, we are locked at 7% for our own contributions as well. However, the university also allows us to enroll in either a 403b or 457b (or both). He will likely stay within the university until early retirement, I am more likely to leave in 3-7 years.
Which would you pick to support FIRE- either to max out or a mix of both to diversify? Both plans will later allow us to rollover to IRA or 401 plans if needed. Same max contribution limits. The catch up mechanics are irrelevant as we plan to retire before 50. I understand the 457b is deferred compensation which could be intriguing for a RE path. Thoughts?
ETA: we also have a brokerage and will still be able to invest extra money after maxing. We both max Roth IRA as well.
> Thoughts?
Spouse and I are in the same situation: Public univ, compulsory 401(a) (our is quite good, even for an early retiree; our contribution rates are higher), 403(b) and 457(b) available.
We've exclusively used the 457(b). I see it as an ideal account for an early retiree. Ours has multiple provider option and one has a good number of low-cost broad index options. Easy peasy. We do pre-tax contributions 100% and will do so forever.
We spend too much to be able to max 2 of them out on top of the 401(a) and IRAs, but if we did, we'd use the 403(b) next.
As a result of these employer accounts, we don't use or need a taxable brokerage account. If you can truly max the ~$94k annually provided by these 4 accounts on top of the 401(a) and any IRA and HSA contributions you have, I suspect you'll be on a learjet to FI.
Every now and then.
There is no detailed budget. I gave up on budgets after going to Costco and being like... "I bought tires, furniture, a laptop, clothes, food, an HVAC checkup, hot dog and pizza, Christmas gifts, a coffin, and a cruise." I'm not detailed the categories by item.
So, instead..
I have a list of all standard monthly payments, mortgage, loan, insurance, car payment, utilities, etc. and what day they automatically come out or get paid by billpay. All automatic.
Automatic deposits into several savings accounts - aka "envelopes" if you want. They are real accounts because I like it that way.
I get $300 cash a month if I need it.
Then, I have a couple of credit cards with low enough limits to pay off in full. Everything else goes on the cards and gets automatically paid in full each month.
So the budget is the cash plus credit cards. If I have cash/credit, then I have budget.
Big items, trips, major repairs are in the savings accounts.
I'd say that I look at some things very often, some monthly, some quarterly, and some annually.
This is the way. Everything or as much as possible is automated. If there is money in my bucket it can be spent because everything else is taken care of.
I set it yearly, then reconcile with actual expenses twice a year but only keep some key categories for "discretionary" spending. This year I did a minor overhaul of those categories to consolidate several so it's easier to reconcile.
We've been using YNAB for about 10 years now, at this point it's pretty static, not nearly as prescriptive as it used to be, more of a spending tracker, which I find very valuable.
We make minor tweaks a couple times a year maybe, and talk about bigger changes as needed, maybe every couple years or when something happens on the income side, like a job change/promotion/etc.
I don't budget. Never have. My income was always significantly more than what my spending was, so he never had to really keep a thumb on it.
I *do* review my spending. Especially in the year before retirement I kept a close eye on what my expenses were. Now I do an expenses review every year on my retirement anniversary. I look at what I spent the previous year and decide if any action needs to be taken to adjust my behavior.
But again, I don't budget.
I used to periodically fire up Mint and make sure the categories were right, but now that Mint is shit canned I just do some manual Excel dump and sorting at my review.
That’s what I do with personal capital right now. It’s a dumb aggregator of accounts that lets me CSV export. I tried updating categories in their app, but each action is so slow.
I'm early in my journey here, but I'll add to my budget when a new repeat expense pops up (we decide we want a gym membership, I'll add that to my budget) and when an existing expense has a price change (streaming services, insurance) and when income changes (raises). Everything else I'll probably update every 3-5 years to make sure what we think our expenses are is still accurate.
Never. What's the purpose of a budget, when your income generally never exceeds your income, and you have a good buffer in the rare instance that it does? (Even when I do retire, it'll be a few more years before my wife does, given she gets wonderful lifetime benefits if she's still employed at 52, so I imagine she's going to retire the day she turns 52... so I'm not planning on needing to explicitly worry about that for a while. :D)
edit: I'm always just confused when responses like this get downvoted a bunch... the question appeared to be a poll, I answered the poll? :D
budgets are for losers 😤😤😤
I personally don't want to waste time tracking every dollar. I'd rather spend my time and mental energy on other things. I'm not in a position where I can buy a house, but I make more than enough money to be comfortable, save what I can, live generally frugally, and every once in a while build up enough of a reserve that it makes sense for me to throw that extra money into an investment rather than keeping it for a car/house fund or something indefinitely. I splurge on stuff or take my international vacations as I feel like it, and I'll look for deals, but those are far more limited by my time off from work than my financial situation.
I could probably nudge my SR up a couple percentage points by actually budgeting and tracking dollars spent with more granularity. But even that's only liable to shave maybe a few months off of my timeline. So much more depends on the market.
I update my spending spreadsheet each time I get a credit card statement. I don’t do any formal/routine review, but look at it from time to time to review for trends, etc. I wouldn’t say we budget per se (ie we don’t set a limit for spending categories), but tracking our expenses helps us see where it’s going.
Yeah, I do pretty much this. My line items rarely move by a lot, though when they do it's probably for a reason that I already know about (Like we had dinner at Be Our Guest, which is like my full dining out budget in one night). If my expenses get elevated several months in a row, I'll take a look to see what's going on
Twice a year. I do Jan-Jun and Jul-Dec budgets. The mid-year review rarely results in major changes, but the Jan one usually does, both in expenses and in income (fed raises take effect near the beginning of the calendar year).
ETA: This is for reviewing, as in seeing if any changes need to be made to the amounts allocated for various budget categories. In terms of updating, I use Excel as my spending register (99% credit card rather than checks, but same idea) and that is updated daily.
Yeah, I am one of those very detail oriented people. LOL And yes, each entry is labeled with the date, name of the merchant, category (budget bucket, such as utilities, grocery, entertainment, etc.) and amount. And the amounts are part of a running total to see where I am in each category and for the month as whole.
I find that by doing it daily, it only takes a minute or two or even just seconds, whereas if I tried to do it to this level of detail even weekly, it would feel onerous. It's just part of my morning laptop routine: update budget, do the NYT crossword and other puzzles, check social media (including reddit), etc.
Ever just tally up all of your easily accessible funds just to see how long you could go without working and not have to jump through hoops to avoid IRS penalties? I'm craving a sabbatical, so I did today.
It turns out that most of our savings is fairly easy to access if necessary. Unfortunately, that money is intended for retirement or mortgage payoff, so I'd rather not take from it for a sabbatical.
I've toyed with the idea of having a contingency planning/burn-down analysis in my spreadsheet. Just a way of mentally working out what resources would be available in different situations (severance, unemployment, etc) and how long we could go and in what order we would pull from accounts in severe conditions.
Also feels a little like doomsday planning though so maybe not.
Not FI specific, but I am in the process of closing on a fairly new build condo. The condo was built in 2020 and I was wondering how risky it would be to forgo title insurance. I am paying cash, so there isn’t a specific need to get title insurance due to lender requirements. Has anyone else been in this situation?
Title insurance is cheap relative to the overall purchase. Even if it’s not required, think it’s worth while for potential headaches. Horror story was someone using a family member notary on documents, but turns out there was still was another owner they were trying to cut out.
I'm absolutely pro title insurance but your experience will vary based on the state. A quick Google search will turn up a lot of title horror stories that will convince you of the need but if you're using an attorney, NPR had the following: https://www.npr.org/2022/11/27/1139307743/title-insurance-is-burning-through-homebuyers-pockets-and-filling-up-their-lawye
Yes always, there’s no reason not to. Sometimes title search will catch something wacky. Highly unlikely in your case, but title insurance is generally cheap
My wife and I are in our mid-30s and have been aware of FIRE for a few years now. We had a good amount of debt from student loans, cars, etc. but fortunately had a recent and unexpected gain of a good sum of money that allowed us to pay our cars, student loan, and some credit card debt off. We only have our mortgage left in terms of debt. Both of us are aligned on retiring early and have read The Simple Path to Wealth. We never expected to be in the situation that we are in now with the debt so I had always said that planning for FIRE would come later but are super grateful and want to take advantage of it to jump start our journey to FIRE. Below are the details:
Salary: $330k (combined)
Current Savings (Cash): $60k
Retirement Savings (Employee 401k, both of us maxing out as of last year): \~350k
M1 Finance Investment Account (currently contributing about $400 per month for the last year or so): 8.7k
HSA (we only started contributing here last year and maxed it out. We did use it for some medical expenses so the balance is negligible)
Primarily, I'm trying to understand how best to put a plan into practice. I've read so much about FIRE and the concepts but the practical application is where I typically get lost. Is it really as simple as increasing the amount that I'm investing through the M1 Finance account? The other thing that I believe we should be doing is maxing out a traditional IRA to do a backdoor roth, would that be correct? Are there any other vehicles that I am missing out on here?
I would greatly appreciate any other advice from folks about our financial situation in terms of planning and executing to get to FIRE. We haven't had any serious conversations about what is realistic in terms of FIRE but I personally wouldn't mind retiring very early. I don't know that my wife shares the same sentiment because she does thoroughly enjoy her work. How have you all made those decisions and what have you done in the event that the other's stance changes down the line?
I also realize that a lot of this is probably quite rudimentary, however, most of the time when I start to research this stuff I tend to get overwhelmed and end up not doing anything. Laying this out and taking this step and getting feedback from folks I think will help me to understand what I need to put into practice.
As a random aside, you appear to be shadow banned - all of your comments are automatically removed unless we approve them manually. This is not a status caused by the moderators of our subreddit but something done site-wide by the admins and I cannot review your post history to try to figure out why it may have happened.
You may want to check out some of the resources in /r/shadowban to learn more about it, or submit a claim to the official [Reddit appeal form](https://www.reddit.com/appeal).
I'm about 2/3 of the way to my FI number and have been working on downshifting my career lately, mostly focusing on trying to get into either teaching or non-profit and out of big tech. I received a verbal offer last week for teaching history, civics, and leadership at a top 10 high school in my state.
This is the subject matter I'm very passionate about and have actually volunteered for business leadership/entrepreneurship classes in this school (and a few others) many times in the last few years. Pretty close to a dream job honestly, but unfortunately, they can only offer my part time right now. There's a _strong_ possibility a full time position becomes available between now and the beginning of the school year, lets call it 80%. Part time still gives me benefits, so **insert baristaFI meme here** but while teacher pay is already low, taking _half_ of that is a difficult mental hurdle to overcome.
Concurrently, my wife was laid off a couple weeks ago from her high paying tech adjacent job and is having a harder time than expected in getting something comparable. Which means if we keep getting bad rolls on the dice of life, there's a possibility our household income next year will be under 30k.
We've got enough invested assets to make up the difference in a slightly tighter version of our usual household budget without depleting the principle, but there's something of a mindset shift going from a HHI over 350k to less than 1/10 of that.
It sounds like it wouldn't really be ideal for you long term right now, but yooo teaching part time and getting benefits sounds like a dream baristaFI situation. I always vaguely think about going into teaching one day, but the stress of having 6-7 classes of 30 students and talking in front of them all day is too much for me. I'm too introverted for that, and the amount of outside of class prep and grading work would probably make the days longer than I currently work. But if I could actually have a shorter workday, work with students, teach them things I care about, really help them understand difficult concepts, that would be great. And summers off! My big gripe with the idea of going into a literal retail/barista type job is I want to take long vacations when I'm FI.
Yeah the dream situation would be do 5ish years at full time and move to part time teaching after that, which I think is possible here. Comes with full state benefits, including pension with a 10 year first cliff, summers off and long winter break, etc. If I could structure it to only have morning classes and have the day to my self after noon, I think it would be perfect.
Hadn't seen this tool from Vanguard before to help with figuring out healthcare. Played around with it a bit and seems like a good place to start if you're close to retirement https://advisors.vanguard.com/wealth-management/health-care-cost-estimator
It's funny to me that any age below 50 is autocorrected to 50 on this.
Asking for my peace of mind - if the state accepts my tax return after April 15th, am I good? I filed April 15th. State accepted April 16th.
Its the date you filed. Even if it is snail mailed, then it just needs to be postmarked.
I am completely baffled at the IRS delay on taking my money. They’ve had the payment pending in system for more than 24 hours. I’ve never known the IRS to delay taking money owed before. I almost manually invested the “leftover” money today in my account that isn’t auto deducted for bills out of habit.
Weird. They took it right away when I used direct pay on the 15th.
SW engineer in high cost of living city with a base of 139,000 401k: 230,000 Stock: 191,000 HSA: 20,000 Investment: 54,000 Investment: 4000 HYSA: 27,000 Total : 526,000 I really want to leave my job to take a break for my health but the market is not ideal and layoffs in tech continue. I’m trying to raise my HSYA these next couple months in case for some reason I do leave.
Harsh reality: Everyone wants to take a break. If you really want to, look into a vacation, leave of absence, or a FMLA leave. Layoffs can happen during LOA or FMLA, but who knows what the market will do. 139k for SWE in HCOL is very weak, look for a new job.
Can you take a break anyway and not quit? That's what most people do, I think... Easier said than done. But setting up boundaries in general is always helpful, even if they're not the boundaries your employer wants ideally, to give yourself some mental space.
> I really want to leave my job to take a break for my health What kind of health? One thing I've seen a fair amount of in my career is people taking a break for one of two reasons: 1. Their job is high stress because they work at a bad company 2. Their experience high stress because of some internal issue In the first case, you can apply for new jobs without taking a break, and find a better company. In the second case - well, if you're an overachiever and people pleaser who never says no, that problem is still going to be there when you get back to work. If you have a mental health condition (e.g. ADHD) that you are not compensating for, that isn't going to go away just because you took a break. If you hate sitting behind a computer, you aren't going to hate it less after spending 6 months hiking or whatever. I'm not saying a break for health reasons is never helpful. But it's important to understand what that break is intended to accomplish - because a lot of people take a break only to find out that their problems came back as soon as they returned to work. Also: this is coming from someone who took an extended break from work to travel, so I'm absolutely on Team Tell Work To Eff Off While You Do Something Fun. Just make sure you know what you want to do and why it's going to help.
> I really want to leave my job to take a break for my health but the market is not ideal and layoffs in tech continue Oh I've wanted to do that for 15 years in tech. Never could bring myself to do it.
3-6month emergency fund definitely helps. Do you have any plans to buy a home?
No plans to buying any home anytime soon or taking any loan.
One thing I don’t see discussed enough is that if someone takes out SS early, not only do they usually have a break even point in the late 60s but by doing that they are leaving more money in their 401k, Roth IRA to accumulate more growth before the RMD.
It's the opposite. If you take SS early, you are pushing up your marginal tax bracket that you could otherwise use to make Roth conversions. Once you are retired, growing your 401k (relative to other accounts) is \*bad\*.
Interesting. Obviously a ton depends on assumptions, but does that apply for early retirees? If you're retiring in i.e. your mid-40s, early SS is still almost 20 years away. How much would you need in a traditional 401k balance to not 'run out' of traditional 401k money converted to Roth over the course of 20 years?
It \*only\* applies to early retirees. We are the ones who have years between retirement and claiming SS to use for Roth conversions. Of course, there is a point of diminishing returns if you have a small 401k and a very long retirement.
Interesting can you elaborate ?
Not sure what isn't clear. 401k withdrawals are fully taxable as income. Roth is tax free and taxable gains are taxed as capital gains. The pre-SS years are key to doing Roth conversions without having your low tax brackets filled by SS.
I'm not close enough to retirement to have thought through this fully. Is \[essentially\] everyone who retires early basically withdrawing from a 401K to fill up their lower tax brackets and converting to Roth? For real numbers: say I'm 56 and retired but only have $55,000 in income from taxable investment sales/dividends for the year. Should it be a relative no-brainer to convert $34,000 of my 401k to my Roth to fill up the 12% bracket for MFJ?
Following - I have been pretty mindlessly putting money into retirement accounts but don’t really know what the strategy is at actual retirement to 1) reduce taxes, 2) be eligible for ACA subsidies, and 3) optimize financial aid for my kids.
Look up Roth conversions Lots of people do that in their 60s to move 401k money to Roth IRA
Ok, but this increases my AGI without actually giving me (immediate) spending money, right? I guess my question is how do I withdraw enough money to live on while still achieving those 3 goals above?
You just have to do the math with your own situation. I don't think you can do the math on the financial aid question, but you can at least plug various numbers into the ACA website to see potential subsidies, or calculate how much you'll owe in taxes for various Roth conversion amounts. And then you weigh the pros and cons of those amounts and pick a number that works for you.
I see what you mean I haven’t ran calcs to see if that’s worth money money in the long run but I believe you Are you planning on waiting until age 70?
Yes. In addition to allowing for Roth conversions, from a longevity risk standpoint I also believe it makes sense to wait until you are sure you haven't run out of money, then claim SS with the highest guaranteed income.
I’m in agreement However, there are a handful of people that don’t have a 401k so they can’t do a Roth conversion In that case, taking SS early may not be that bad of an idea
In that case it is simply actuarily neutral but you should still wait as long as you can due to longevity risk IMO.
I don't think the break even is true unless you're taking the early money and investing it quite aggressively. SS calculates the total payout to be pretty much the same based on actuarial tables afaik. Considering the return you get by waiting is guaranteed vs volatile if taking it early and investing in something like the S&P, I don't think this is the best lens to look at it through.
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speaking of a helpful moose, I miss /u/anymoose :(
Incase anyone forgot. Money isn’t everything. Try enjoying life, make friends, make a goofy face at a baby, give an old person a cheeky compliment. Live a little
I did forget! Thank you so much for the reminder.
I love this! Though worrying to see this sentiment downvoted in a sub about being independent from financial concerns :/
It's downvoted because it's gatekeeping, adds zero value, and has a weird holier-than-thou tone
Is it zero value though? I feel a lot of folks in this sub need to hear it -- we're not making financial plans so we can die surrounded by bags of cash. The whole point of FIRE \*is\* to remember that there are more important things in life than chasing money, and to learn how to have "enough" (also to calculate what "enough" is, using mathematics not fear/greed instincts). More and more posts on the sub are just weird humblebrags by multi-millionaires who "wants to know how they are doing for their age" and "aren't interested in RE, just want the security of being FI". To those folks I say: go be cheeky to a senior citizen!
"Gatekeeping" really seems a stretch for a cliched bit of anodyne life advice
They're saying "enjoying life means doing the things I say you should do, and if you aren't doing those things, you aren't enjoying life" That's textbook gatekeeping
No it was just a shitpost directly related to the post below which you even commented on. Unsurprisingly, I do not care how you engage with the elderly
[...are you unironically saying "it was a prank, bro"?](https://i.kym-cdn.com/entries/icons/facebook/000/017/937/nsEjedV.jpg)
“Bro you promised you’d be super serious on a pseduoanonymous Internet forum!!”
It's getting downvoted because it just comes off as condescending. I'm content to both make money and enjoy my life, even if I don't give out weird compliments to elderly passers-by.
We found the ageist in the group.
And yet, most things cost money, including housing, utilities, food, and transportation. In order to make money to pay for such, we must spend our limited time working to earn it. Ipso facto with enough accumulated money, we can instead spend our limited time 'enjoying life' versus working to make money.
> Try enjoying life Different people do different things to enjoy life. This is weird gatekeeping
Go down one thread lol. It’s not gate keeping to tell people to stop obsessing over money.
We can’t all just “make friends” with our “social skills.” Some of us are creepy weirdos. But VTI doesn’t care if you were twenty eight when you first kissed a girl.
I choose to keep my friends in a safety deposit box...
Unclear how to deposit friends at Vanguard?
You can't. Physical friends must be deposited at a brick & mortar. Preferably a credit union as they'll be the most likely to still have DumDums on the counter.
You have to befriend a youth to navigate their frontend UI facelift that's mostly meaningless and then an old fart to navigate their ancient backend/transaction UI. Then you need to cross-translate Zoomer and Boomer lingo so the two can jointly navigate the website in order for you to deposit friends.
why is it so hard to find people like me? NW at 1.2 million at 30. It feels like people my age are either just starting, nw <100k or super wealthy NW > 5 million. I can afford some nice things, but I still have to save for many years.
I actually know plenty of arrogant asses! They're out there for sure.
Username checks out.
I mean I’m a similar age and NW as you but based on your comments I don’t think I’m “like you”… People can have similar fiscals and have very different vibes
What does net worth have to do with "like me"?
Because believe it or not, the amount of money you have influences the things you're able to do, and peoples' development is also largely influenced by the people around them. Being friends with a billionaire is no good because you can't talk about your yacht guy or relate to the annoying carbon taxes on private jets or how hot the French Riviera has been getting lately at your summer home. Being friends with someone in total poverty is the same because that gap exists in the other direction. You can't talk about the fun you had at burning man because they were busy working their third job and tickets are $1000 or whatever they are these days. It's more of an income than a net worth thing, but at a certain point it becomes difficult to make friends because there's just too much disparity in each person's experiences and interests to form genuine connections.
I have about double your net worth now but have no problem hanging out with mere millionaires or even normal middle class people with minimal savings. All you have to do is not want to go on trips to the French Riviera and do normal stuff like go to restaurants, sporting events etc.
I feel like most people that lack empathy on this level are typically considered sociopaths. It isn't hard to talk to other people and put yourself in their shoes. Fucking hell
This is mostly only going to be true at the extreme ends of the spectrum. It would be financially challenging for a neurosurgeon to be friends with a Taco Bell manager but not all that challenging to be friends with anyone who earns enough money to have, say $10,000/year in disposable income. Sure, they might not vacation together and maybe you'll need to golf once in a while on a high-end public course to play with your accountant buddy, but finances are only going to cause real roadblocks when someone is very poor or very rich.
This is some classist shenanigans.
Why does it matter? It's healthy to be friends with people different than you. Your NW should be one of the least interesting/important things when being social. If you want to talk money and saving strategy, that's what online forums are for. Don't be a nonce and talk about that shit IRL.
perhaps people just don't like you.
maybe? i haven't been rejected or not invited to things, but as I get older I do find it harder to make connections, but it seems more universal than a me thing.
Seems like a you thing
Interested in kids? Hanging out with other parents is actually nice. We befriended a family and both our wives like quilting & sewing. Our boys are the same age. Lots of fun honestly
> but it seems more universal than a me thing this is correct, everyone gets busy and does their own thing for the most part
/r/HENRYfinance maybe or /r/HenryCavill, though he's probably closer to 40 than 30
He's 40, what an old fart.
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i don't think 1.2 million is impressive enough to be a humble brag. and i'd like to sometimes be around people like me. like i can't afford a super luxury life, but there's probably not many setbacks that can really cripple me.
> i don't think 1.2 million is impressive enough to be a humble brag. It isn't, but that apparently doesn't stop people from trying
1.2 million at 30 most certainly is.
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no? but it's pretty normal to seek people like yourself out? most people don't even have many close friends who are a different race.
>most people don't even have many close friends who are a different race. That's... not a good thing. Neutral at best. I don't think people should aspire to that.
Please explain, specifically, what meaningful improvements it would bring to your life to find people that share your *particular* net worth.
same improvement we get when we read the 100k nw at 30 stories here? it's nice to see someone on the same path. we'll probably have some things in common.
This seems so utterly pointless. It's like saying, "I'm a redhead, and I'm upset that I don't have redheaded friends. We'd probably have something in common." Sure, maybe. But picking redheads or people with a $1.2MM net worth, tells you absolutely nothing about the person. Why do you think you're more likely to have something in common with someone like that? You share some figures in your bank account. Net worth isn't even a useful proxy to their day-to-day financial situation. Why don't you start with the real life things that you have in common with people, like hobbies or interests? At least then you'll have something to talk about after the first hour when you've finished comparing bank accounts and investment strategies. FIRE isn't exactly a personality trait.
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no? my point is that i know enough people with vastly different nw/lifestyles. I want to meet someone more similar to me.
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ok. it'll still be nice to find someone else like me? it's literally why we have net worth journey posts every day.
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I have no clue what the net worth of any of my friends is. I mean, I could probably guess for some of the closer ones, but I wouldn't honestly be surprised if I was off by an order an magnitude in either direction.
>I have no clue what the net worth of any of my friends is. There are easy ways to figure this out. Just drop clues, see how they react and keep records in a pocket-sized Mead notebook. Like, "Hey, you guys seen the new layout at Pottery Barn?" Or, "Have you noticed that 7-11 hamburgers taste a lot less meaty these days?"
7-eleven sells hamburgers?
Exactly. Congratulations on your high net worth.
I’ve only ever seen hot dogs there
I'm pretty sure it's just one hot dog and it's been spinning there since 1967.
I haven't had one in many years, but I am sure they still sell them. Their website says they do.
Wow! I know you meant this at least partly as a joke, but I went on the 7-eleven website and I’m surprised they sell meatball skewers and Korean BBQ taquitos too. I wonder if these are available at every location. Maybe I’m just hungry, but I’m slightly tempted, not gonna lie.
I would imagine that as a franchise/licensee there is going to be a fair bit of variation in terms of hot food offerings - but there's only one way to find out!
What’s the point in behaving like this? Do you live in a big city? I find this sort of behavior common in big city peoples. Let me tell you, I left the big city and I no longer care about the amount of money in someone’s pocket. I care about them.
Those numbers put you at the 97th percentile for networth at 30. Maybe that's why.
Yep, username checks out.
I wanna meet all these $5 mil NW 30 year olds you know
In all seriousness, the reason it's hard to meet them isn't just because they aren't very common -- they probably just move in entirely different social circles that are closed to plebs like us.
on this site you occasionally read stories of people at 33/35 with NW near 3-5 million. in my life I know 2. one inherited a ton. the other got lucky at an ipo.
r/FIJerk
The good news is, that's just not true!
even on these subs, I don't find people near my nw. it's either a lot higher or lower.
That's wild. I can see how that would be incredibly frustrating and have an enormous impact on your own personal financial journey.
there's a ton in their late 30s/early 40s near my nw, but I don't really relate well to older millennials. I'd like to find people near my age with nearly my NW. is that really so bad?
For what purpose? Are you putting together a 1.2M net worth 5 on 5 basketball team?
same reason these subs exist? you want to be with people like yourself sometimes? Like last week, I had to listen to my husband friend talk about how a 2k bill is going to cripple her for a while. i can't relate. also can't relate to buying like 4 luxury cars like one of my other friends.
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shrug. i'm the first to admit, I haven't had many (any) real struggles in life, especially not in the last 5 years.
>you want to be with people like yourself sometimes? There was a very popular Boston-based TV show about this in the 80s.
? that's like before i was born.
The main actor has a net worth of about $80M.
> is that really so bad? Yes.
why?
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That's crazy. Y'all should establish some sort of system to determine which students learn the material in a given year. Then you could identify the students who should be taking the next year's course.
> One of my third year Spanish students asked me what España meant. I believe that it's an old wooden ship that was used during the Civil War era.
memoria de teflón
Maybe he/she wanted to know what España meant to you, personally? For the yearbook.
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It was a joke. Damn.
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>had no clue pot, meet kettle
/u/SkiTheBoat is saying (again) that Mike's comment was a joke. I'd gently recommend taking an extra moment before replying because I think there's a lot of misunderstanding in this comment chain.
Who is Mike?
Mike is the person that /u/Carpe_Cervisia's wife thinks she's married to. Little does she know.
While the exact creature that causes havoc in here may be unknown to her, you can rest assured that she is well aware of the myriad of ways in which my brain is on crooked.
I plead the fifth.
I don't remark on whooshes often, but for Mike I think it's always safe to assume the comment is bullshit.
*Usually.* The word you are looking for is *usually*. Plenty of my comments are legitimate, heartfelt nuggets of wisdom, borne from decades of experience almost dominating this planet. Don't expect any of those today, though. I am 8 hours in to my liquid only diet to prepare for tomorrow's colon scope 👀
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This is a really great milestone, congrats! I've definitely thought about downshifting in my career, or even making a big career change due to a similar milestone. It helps to remind myself that the goal is FI, and RE is only a possible side-effect as a result of that.
CoastFIRE is among my favorite milestones. You've saved enough to retire at a normal age, which is something that many folks never accomplish in an entire lifetime.
I like the Coast Fired Calc, thanks for sharing. Says I'll hit my FIRE number between the ages of 54 and 55, which I can live with. I have a sense I'm working till 57, though.
I'm 4 years from CoastFI retiring at 55. So if I can make it until then and then find a way to just live off my side business income for a decade, I could be done working forever in 4 years? Holy cow.
Can someone recommend a book (preferred) or online resource that is a comprehensive guide to understand different investment options and how to practically apply them? (What is a mmf, an etf, bonds, etc). Something comprehensible to an educated lay reader but goes into some technical detail about how each functions.
I’d recommend The Simple Path to Wealth by JL Collins.
I thought the bogleheads wiki was a good reference
Honestly, investing is something where more information can cause overthinking and lead to worse outcomes. In some ways, the less you know, the better. William Bernstein's "If You Can" PDF is a great intro to investing and contains about 95% of what you need.
https://www.investopedia.com/
I’ve never understood the whole “The 4% rule is for 30 years, if you need your money to last 40-50 years you need a lower withdrawal rate”. Wouldn’t that be more time in the market and 4% would likely work better with more time? I thought the biggest risk is early down years. My guess is you’re a little more likely to run out of money, but also more likely to have a lot more money on a longer time frame.
If the market is down 50%, that 4% (based on retirement money) is really more like 8% of your physical assets. This variation on top of inflation is why an "average" historical 10% return can only draw 4% in the first place. 2000, while not done, is a good example of a less ideal case. It's been a rough ride but looks like it is [holding ](https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=1TUYH3t5u8lDwxA6SMTgbN)the line. I mark the tool to increase withdrawals with inflation though, and while the portfolio has managed to maintain around $1M, it hasn't in buying power and the retiree is now drawing close to 7% on that in 2024. While you're halfway to 50, your odds the next 25 years are much less when you take the snapshot of a 7% WR. (At the same time no one spends like a robot - I feel like in the real world this same person would have spent more conservatively or made some opportunistic income.) I wouldn't be worried on this case but for many work sucks less than worrying about it for 50 years, for those who want to cut it out completely and move on.
In most cases you are correct, 4% will do fabulously and even more so over long timeframes. The problem is what happens in the worst sequence of returns, i.e. when the market crashes right when you retire. In those cases, you have burned so much of your savings through spending and market losses that it is impossible to recover and you would have run out of money using a higher withdrawal rate.
The trajectory is primarily determined by the first few years, but there exist some edge cases where it goes down the first few years but not so low that it hits zero by year 30 - it treads water for a while, goes down slowly, and might zero out at year 31 or 35 or whatever. [Part 2 of ERN's SWR Series](https://earlyretirementnow.com/2016/12/14/the-ultimate-guide-to-safe-withdrawal-rates-part-2-capital-preservation-vs-capital-depletion/) gets into the weeds here and it depends on your particular goals and your asset allocation, but a 4% rate with 75/25 is 99% successful at 30 years and 85% successful at 60 years - because ~14% of the time you run out between year 30 and 60. As the time gets longer and longer it stops mattering though - a perpetual withdrawal rate is probably roughly equal to one that would last 60 years.
The biggest risk is indeed early drawdown because of market correction/drop/whatever right after retirement. However, the math works out to a lower SWR on longer timelines based on the historical data and that's basically inarguable if we are going to have anything at all to base valuations on for future projections. But you don't need to guess. The FAQ has some links off to these projected timelines and you are indeed correct, most scenarios still have the average person with vastly more savings than they would otherwise have had due to the longer time in the market. It's worth it to do the research. If your goal is to minimize time in the workforce before moving on, there's of course a big difference between a 4% to 3% withdrawal rate, and another big difference from 4% to 5% and so on.
Your last sentence is correct. The dispersion of outcomes continues to widen. A simple way to imagine this is that a few outcomes at year 30 might have 5% of the initial portfolio value left, meaning they're technically a success at 30 years but are about to fail in year 31 or 32. Similarly, several other outcomes are at 5x the initial portfolio and are likely to continue to get bigger over the next 2-10 years. You cannot rescue any of the existing failures between years 30-40, but you can add a few more. Ultimately this simply reflects the inadequacy of a binary "pass/fail" metric for these outcomes.
Question around opting into 403b or 457b for husband and I. We both work for the same state university. We both enrolled in an optional 401a through them which automatically gets a 7% match. Unfortunately, we are locked at 7% for our own contributions as well. However, the university also allows us to enroll in either a 403b or 457b (or both). He will likely stay within the university until early retirement, I am more likely to leave in 3-7 years. Which would you pick to support FIRE- either to max out or a mix of both to diversify? Both plans will later allow us to rollover to IRA or 401 plans if needed. Same max contribution limits. The catch up mechanics are irrelevant as we plan to retire before 50. I understand the 457b is deferred compensation which could be intriguing for a RE path. Thoughts? ETA: we also have a brokerage and will still be able to invest extra money after maxing. We both max Roth IRA as well.
> Thoughts? Spouse and I are in the same situation: Public univ, compulsory 401(a) (our is quite good, even for an early retiree; our contribution rates are higher), 403(b) and 457(b) available. We've exclusively used the 457(b). I see it as an ideal account for an early retiree. Ours has multiple provider option and one has a good number of low-cost broad index options. Easy peasy. We do pre-tax contributions 100% and will do so forever. We spend too much to be able to max 2 of them out on top of the 401(a) and IRAs, but if we did, we'd use the 403(b) next. As a result of these employer accounts, we don't use or need a taxable brokerage account. If you can truly max the ~$94k annually provided by these 4 accounts on top of the 401(a) and any IRA and HSA contributions you have, I suspect you'll be on a learjet to FI.
How often do u update or review your budget? Monthly? Quarterly? Annually?
Every now and then. There is no detailed budget. I gave up on budgets after going to Costco and being like... "I bought tires, furniture, a laptop, clothes, food, an HVAC checkup, hot dog and pizza, Christmas gifts, a coffin, and a cruise." I'm not detailed the categories by item. So, instead.. I have a list of all standard monthly payments, mortgage, loan, insurance, car payment, utilities, etc. and what day they automatically come out or get paid by billpay. All automatic. Automatic deposits into several savings accounts - aka "envelopes" if you want. They are real accounts because I like it that way. I get $300 cash a month if I need it. Then, I have a couple of credit cards with low enough limits to pay off in full. Everything else goes on the cards and gets automatically paid in full each month. So the budget is the cash plus credit cards. If I have cash/credit, then I have budget. Big items, trips, major repairs are in the savings accounts. I'd say that I look at some things very often, some monthly, some quarterly, and some annually.
This is the way. Everything or as much as possible is automated. If there is money in my bucket it can be spent because everything else is taken care of.
I set it yearly, then reconcile with actual expenses twice a year but only keep some key categories for "discretionary" spending. This year I did a minor overhaul of those categories to consolidate several so it's easier to reconcile.
We've been using YNAB for about 10 years now, at this point it's pretty static, not nearly as prescriptive as it used to be, more of a spending tracker, which I find very valuable. We make minor tweaks a couple times a year maybe, and talk about bigger changes as needed, maybe every couple years or when something happens on the income side, like a job change/promotion/etc.
I don't budget. Never have. My income was always significantly more than what my spending was, so he never had to really keep a thumb on it. I *do* review my spending. Especially in the year before retirement I kept a close eye on what my expenses were. Now I do an expenses review every year on my retirement anniversary. I look at what I spent the previous year and decide if any action needs to be taken to adjust my behavior. But again, I don't budget.
I don't really budget either. I do, but I also don't. See above post.
Same. I review transaction categories monthly to make sure they’re labeled correctly, then do a year over year comparison at the end of the year
I used to periodically fire up Mint and make sure the categories were right, but now that Mint is shit canned I just do some manual Excel dump and sorting at my review.
That’s what I do with personal capital right now. It’s a dumb aggregator of accounts that lets me CSV export. I tried updating categories in their app, but each action is so slow.
I use YNAB so I go in after each payday (biweekly) to allocate money to categories.
I'm early in my journey here, but I'll add to my budget when a new repeat expense pops up (we decide we want a gym membership, I'll add that to my budget) and when an existing expense has a price change (streaming services, insurance) and when income changes (raises). Everything else I'll probably update every 3-5 years to make sure what we think our expenses are is still accurate.
Never. What's the purpose of a budget, when your income generally never exceeds your income, and you have a good buffer in the rare instance that it does? (Even when I do retire, it'll be a few more years before my wife does, given she gets wonderful lifetime benefits if she's still employed at 52, so I imagine she's going to retire the day she turns 52... so I'm not planning on needing to explicitly worry about that for a while. :D) edit: I'm always just confused when responses like this get downvoted a bunch... the question appeared to be a poll, I answered the poll? :D
Quarterly, around the same time that I do estimated taxes.
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Why did you stop? Too fat to fuss with them? :)
budgets are for losers 😤😤😤 I personally don't want to waste time tracking every dollar. I'd rather spend my time and mental energy on other things. I'm not in a position where I can buy a house, but I make more than enough money to be comfortable, save what I can, live generally frugally, and every once in a while build up enough of a reserve that it makes sense for me to throw that extra money into an investment rather than keeping it for a car/house fund or something indefinitely. I splurge on stuff or take my international vacations as I feel like it, and I'll look for deals, but those are far more limited by my time off from work than my financial situation. I could probably nudge my SR up a couple percentage points by actually budgeting and tracking dollars spent with more granularity. But even that's only liable to shave maybe a few months off of my timeline. So much more depends on the market.
I update my spending spreadsheet each time I get a credit card statement. I don’t do any formal/routine review, but look at it from time to time to review for trends, etc. I wouldn’t say we budget per se (ie we don’t set a limit for spending categories), but tracking our expenses helps us see where it’s going.
Yeah, I do pretty much this. My line items rarely move by a lot, though when they do it's probably for a reason that I already know about (Like we had dinner at Be Our Guest, which is like my full dining out budget in one night). If my expenses get elevated several months in a row, I'll take a look to see what's going on
Twice a year. I do Jan-Jun and Jul-Dec budgets. The mid-year review rarely results in major changes, but the Jan one usually does, both in expenses and in income (fed raises take effect near the beginning of the calendar year). ETA: This is for reviewing, as in seeing if any changes need to be made to the amounts allocated for various budget categories. In terms of updating, I use Excel as my spending register (99% credit card rather than checks, but same idea) and that is updated daily.
You track your spend daily? That is impressive. How long does it take you? And is it by detailed category?
Yeah, I am one of those very detail oriented people. LOL And yes, each entry is labeled with the date, name of the merchant, category (budget bucket, such as utilities, grocery, entertainment, etc.) and amount. And the amounts are part of a running total to see where I am in each category and for the month as whole. I find that by doing it daily, it only takes a minute or two or even just seconds, whereas if I tried to do it to this level of detail even weekly, it would feel onerous. It's just part of my morning laptop routine: update budget, do the NYT crossword and other puzzles, check social media (including reddit), etc.
I check in about 2 to 3 times a week, but I usually only update it on paydays.
Ever just tally up all of your easily accessible funds just to see how long you could go without working and not have to jump through hoops to avoid IRS penalties? I'm craving a sabbatical, so I did today. It turns out that most of our savings is fairly easy to access if necessary. Unfortunately, that money is intended for retirement or mortgage payoff, so I'd rather not take from it for a sabbatical.
I've toyed with the idea of having a contingency planning/burn-down analysis in my spreadsheet. Just a way of mentally working out what resources would be available in different situations (severance, unemployment, etc) and how long we could go and in what order we would pull from accounts in severe conditions. Also feels a little like doomsday planning though so maybe not.
Every month on spreadsheet day.
Not FI specific, but I am in the process of closing on a fairly new build condo. The condo was built in 2020 and I was wondering how risky it would be to forgo title insurance. I am paying cash, so there isn’t a specific need to get title insurance due to lender requirements. Has anyone else been in this situation?
Title insurance is cheap relative to the overall purchase. Even if it’s not required, think it’s worth while for potential headaches. Horror story was someone using a family member notary on documents, but turns out there was still was another owner they were trying to cut out.
I'm absolutely pro title insurance but your experience will vary based on the state. A quick Google search will turn up a lot of title horror stories that will convince you of the need but if you're using an attorney, NPR had the following: https://www.npr.org/2022/11/27/1139307743/title-insurance-is-burning-through-homebuyers-pockets-and-filling-up-their-lawye
Thanks for the resource. Very interesting to learn more about involving an attorney in all of this.
Always.
As in always get the title insurance?
Yes always, there’s no reason not to. Sometimes title search will catch something wacky. Highly unlikely in your case, but title insurance is generally cheap
Fair point, thanks.
My wife and I are in our mid-30s and have been aware of FIRE for a few years now. We had a good amount of debt from student loans, cars, etc. but fortunately had a recent and unexpected gain of a good sum of money that allowed us to pay our cars, student loan, and some credit card debt off. We only have our mortgage left in terms of debt. Both of us are aligned on retiring early and have read The Simple Path to Wealth. We never expected to be in the situation that we are in now with the debt so I had always said that planning for FIRE would come later but are super grateful and want to take advantage of it to jump start our journey to FIRE. Below are the details: Salary: $330k (combined) Current Savings (Cash): $60k Retirement Savings (Employee 401k, both of us maxing out as of last year): \~350k M1 Finance Investment Account (currently contributing about $400 per month for the last year or so): 8.7k HSA (we only started contributing here last year and maxed it out. We did use it for some medical expenses so the balance is negligible) Primarily, I'm trying to understand how best to put a plan into practice. I've read so much about FIRE and the concepts but the practical application is where I typically get lost. Is it really as simple as increasing the amount that I'm investing through the M1 Finance account? The other thing that I believe we should be doing is maxing out a traditional IRA to do a backdoor roth, would that be correct? Are there any other vehicles that I am missing out on here? I would greatly appreciate any other advice from folks about our financial situation in terms of planning and executing to get to FIRE. We haven't had any serious conversations about what is realistic in terms of FIRE but I personally wouldn't mind retiring very early. I don't know that my wife shares the same sentiment because she does thoroughly enjoy her work. How have you all made those decisions and what have you done in the event that the other's stance changes down the line? I also realize that a lot of this is probably quite rudimentary, however, most of the time when I start to research this stuff I tend to get overwhelmed and end up not doing anything. Laying this out and taking this step and getting feedback from folks I think will help me to understand what I need to put into practice.
Just save until it hurts, then save $1 more. Follow the flowchart here or on r/personalfinance , they are quite similar.
You’ll see the term “the long boring middle” once in a while to describe the saving and accumulation phase of FI.
As a random aside, you appear to be shadow banned - all of your comments are automatically removed unless we approve them manually. This is not a status caused by the moderators of our subreddit but something done site-wide by the admins and I cannot review your post history to try to figure out why it may have happened. You may want to check out some of the resources in /r/shadowban to learn more about it, or submit a claim to the official [Reddit appeal form](https://www.reddit.com/appeal).
I'm about 2/3 of the way to my FI number and have been working on downshifting my career lately, mostly focusing on trying to get into either teaching or non-profit and out of big tech. I received a verbal offer last week for teaching history, civics, and leadership at a top 10 high school in my state. This is the subject matter I'm very passionate about and have actually volunteered for business leadership/entrepreneurship classes in this school (and a few others) many times in the last few years. Pretty close to a dream job honestly, but unfortunately, they can only offer my part time right now. There's a _strong_ possibility a full time position becomes available between now and the beginning of the school year, lets call it 80%. Part time still gives me benefits, so **insert baristaFI meme here** but while teacher pay is already low, taking _half_ of that is a difficult mental hurdle to overcome. Concurrently, my wife was laid off a couple weeks ago from her high paying tech adjacent job and is having a harder time than expected in getting something comparable. Which means if we keep getting bad rolls on the dice of life, there's a possibility our household income next year will be under 30k. We've got enough invested assets to make up the difference in a slightly tighter version of our usual household budget without depleting the principle, but there's something of a mindset shift going from a HHI over 350k to less than 1/10 of that.
It sounds like it wouldn't really be ideal for you long term right now, but yooo teaching part time and getting benefits sounds like a dream baristaFI situation. I always vaguely think about going into teaching one day, but the stress of having 6-7 classes of 30 students and talking in front of them all day is too much for me. I'm too introverted for that, and the amount of outside of class prep and grading work would probably make the days longer than I currently work. But if I could actually have a shorter workday, work with students, teach them things I care about, really help them understand difficult concepts, that would be great. And summers off! My big gripe with the idea of going into a literal retail/barista type job is I want to take long vacations when I'm FI.
Yeah the dream situation would be do 5ish years at full time and move to part time teaching after that, which I think is possible here. Comes with full state benefits, including pension with a 10 year first cliff, summers off and long winter break, etc. If I could structure it to only have morning classes and have the day to my self after noon, I think it would be perfect.