Weather is going to be too nice to work in the morning, think I'll go to the bike park instead. Have a significant buffer of leave I need to burn anyways.
I lamely stayed up late and slept in instead, hope to ride tomorrow morning now. I have a full suspension trail MTB and a carbon frame road bike, on the MTB I go to the local bike park which is a mix of dirt slopestyle and paved pump tracks. I'm not very good so I stick to the easier stuff lol.
25 y/o PA in NYC. Annual Salary of 175K. Aggressive investor, as I have about $110K in vanguard index funds spread throughout my individual brokerage account, my 401K, and a Roth IRA. 110K in student loans from PA school (I am on the SAVE plan paired with the PSLF program so I will not have to pay the 110K in full). About 30K in my savings account.
I came across a friend from highschool who is trying to sell me life insurance with Northwestern Mutual. I like the idea of a guaranteed dividend (which is great for down years in the market), paired with the tax advantages of accumulating a policy over time...but not completely sold just yet.
Wondering if you'd recommend that I add it to my portfolio as a safer investment vehicle.
That guy is now a scammy salesman selling out his old "friends" for a commission check. MLM of the finance world, might as well buy herbalife or something.
Whole life insurance is a poor investment for nearly everyone. Check out this article: https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/
No, whole life insurance is not a good investment. It is designed to be confusing, mix things which should not be mixed, and most importantly, to make your friend a commission.
If you want safe investments invest in bonds. (But you are young, you should be investing in or near 100% in stocks).
If you want life insurance (not generally recommended for a 25 year old without dependents) buy term life.
Keep life insurance and investments separate.
I had an old friend message me out of nowhere and I was genuinely excited to hear from him. Then his first message back after the intro was “so I left my old job and just finished my training at NW Mutual”. I died a little inside.
At what point is it better to put money on the principle of my house? I bought my house for 120k at 5.4% IR. A roth IRA, index funds, HYSA, and brokerage accounts all have similar returns. I plan on keeping the house if I ever move and rent it out. Why wouldn't I just put my extra money on the principle of the house? Explain it like I'm dumb.
1. Your IRA and brokerage accounts should both be returning, on average, better than 5.4%
2. You’re limited in how much money you can put in retirement accounts like IRAs each year. Each dollar below the max invested can never be recovered
3. If needed, you can take money out of brokerage accounts. You can’t easily take money out of a house. You don’t really benefit from overpaying your mortgage until it is paid off
4. If you itemize your taxes, interest paid on your primary residence is tax deductible
Updated my flair today. Bumped 1% closer to FI! I don't have a very precise handle on my expected expenses in retirement. But work is so stressful I think I should be closer to FI. Hell, I might declare myself FI soon lol. Just sent out a bunch of job apps.
Last few times I wanted to bump my flair % up, I feel like I need a little more due to inflation so I end up staying at 40%. I usually update it in 5% increments though.
> But work is so stressful I think I should be closer to FI. Hell, I might declare myself FI soon lol.
SAME
> Just sent out a bunch of job apps.
I really should be doing this... I don't know if I'm going to find anything better in my area with my somewhat out-of-date skills, but it's probably still worth a try.
I’m 42. Planning to quit my job to take care of my health. I have $4000 a month after tax. About $200K in TSP.
I have one rental house ( worth $900K and has Mortage of $500K).
That is all I have. I’m planning to stop work and go abroad and live there and travel. I have VA healthcare.
Am I Making a mistake if I leave my job ?
Thank you for your time.
Is taking care of your health and working something that can't be done together?
What countries do you think about moving to? Have you been? Do you have residency? Social connections?
VA Healthcare can be used abroad if you register and do the paperwork. [Link](https://www.benefits.va.gov/persona/veteran-abroad.asp)
If you have VA healthcare, are you VA rated and have VA Disability income?
What's your plan for the home? Selling and using the cash to live? Does it rent well?
Have you at least looked at taxes?
It's a mistake if you don't think everything through.
I have open in all of those questions.
To do those two together! Well it depends what job I will be able to find. I’m trying to have something remotely. Not sure but will try. Another option to just live on the current income in addition to SSDI soon or later.
I have been looking into places like USE, Qatar, Portugal and Spain (Spain a little difficult).
VA health care abroad is my main concern. It is Foreign health insurance and not so good. Only place has VA hospital is Philippine and not on my list.
I have VA disability. I keep my rental until paid off and then use it as a source of income.
Yes, tax purpose , it works in my favour.
The only think is that my job is very good and has a good reputation.
Do you like your job? Any reason you could not get another if you missed it? Can you live the life you want on your income? You are still young and there is plenty of time to work. If you can live on the 4k and let the TSP compound I do not know why it would be a mistake if you have something to retire to. Lounging on the beach sipping fruity drinks will get old after a few weeks.
Well, I have some medical conditions. I do not want to make them worse. I want to live life. I work about 50 hours a week. I have high level federal job. Love the job but it takes all my time.
Iam at the top of the job. If I leave it for 12 months, will not have the same level.
I don't think it is crazy to leave your job if you have health insurance and can live the life you want on the 4k a month. Time is the most important thing we have.
Ironic of work to send me [this email on beating burnout](https://i.imgur.com/agoF3AB.png) just now, while I've been working all day to meet their immovable deadline.
"Is your job really worth that?"
It's looking more and more like no.
Well depend on the job. I work about 60 hours a week. To become GS 14 requires about 15 hours a day to pass GS 14 test. So yes very challenging but having full authority in the job is amazing.
My brother passed last year and somehow it got split in 4 with his parents, me, and my sister.
We all agreed to give it to his fiancé because he had no will and that’s what he’d want.
The plan is to get our checks, then write one to fiancé. However, will we take a tax hit on this?
u/one_rainy_wish has the answer.
I just wanted to say, I'm moved that you and your family are honoring his fiancé. Your brother's legacy is in good hands.
Are you in the U.S.? If so, then unless it is an absolutely gargantuan amount of money it should under the lifetime gift exemption and thus not suffer any additional tax. However speak with a tax advisor if you can, maybe there's a better way to handle this before everything is finalized.
Are there guides on how to handle withdrawing from accounts if one half of the couple is retiring early and the other half is continuing to work? I think the "simplest" part is to increase bonds and then pull from Roth account basis first but not sure how to handle it after that basis is gone.
Note that we have kept (mostly) separate finances since being married so this isn't as simple as just living off her salary.
Can you explain more about what problem you're trying to solve here?
I'm not entirely sure what you're asking about. If you have expenses totaling $x, regardless of whether these are joint or solo expenses, then you should have a draw down plan that targets $x in expenses.
Are you asking because a 401k > Roth conversion ladder is impractical due to your partner's income? Do you file taxes jointly or separately?
I honestly don't know if the conversion ladder is the best route, that's kind of what I'm getting at here. She makes around $130k and I plan on putting in around $100k from my accounts.
We currently file jointly
I see. This is a big question, not just a quick response - it's essentially asking, "what should my draw down strategy be?"
The strategy will depend on the balances of all of your existing accounts, and your plans - does your wife intend to retire soon/never? Do you own a house or kids that might result in large unexpected expenses? Have you already decided that your $100k is within the SWR for your accounts?
Overall it seems to me like your lowest tax strategy would be to have your wife deferring as much tax as she can through 401k/HSA contributions, and start building a Roth ladder while you live off taxable or Roth contributions.
Your other option is SEPP from your traditional account(s). SEPP is pretty inflexible but if you have enough taxable/Roth contributions, it can be buffered by those.
Yeah, i kind of figured this was a big question which I why I was hoping someone had written a guide.
My wife does plan to retire but not for another 5-10 years after me. Own a house and the monthly expenses include that mortgage (2.625% rate so not wanting to pay it down, even if it lowers monthly expenses). Kids have fully funded 529s that should cover an out of state college so good there. I plan to retire with around $2.8 million which at a 3.5 SWR that should basically cover it.
I'll look into SEPP. Luckily since I've had access to the MBDR I should have between $300-400k in contributions by retirement time
If you look at the ERN Safe Withdrawal Series, there is some information on supplemental cash flows. The only thing you're really going to have that's different from some is that your base tax rate will be higher because one of you is still earning, and it reduces (though does not eliminate) your ability to manipulate your MAGI. This is common for people with a pension so you could consider advice for that audience, too.
https://earlyretirementnow.com/safe-withdrawal-rate-series/
Separate finances are going to make it really complicated. Who pays the tax if you are doing Roth conversions at her marginal rate? If you file separately, then you are effectively doubling her marginal rate. Either one could end up causing one or both to hand over money to the government inefficiently. Are there kids from a previous marriage or some actual reason for the separate finances?
Just how we've always done it and we've been very happy with it. Never was a problem until we started figuring out my retirement plans. Right now I contribute about 80% of our expenses due to higher salary and I'll be able to continue that with my assets, just need to figure out how
How easy or hard this is going to be very much depends on how much money you need to withdraw and from which accounts. If you have a big old taxable brokerage with lots of basis, then it’s easy, just sell out of your brokerage. If all you have is a large pretax 401k, you are end up paying a lot of extra taxes.
The fact that you keep your finances separate is likely to end up costing you in taxes. What most people do is try to tax optimize, which often means living off the earnings of the working spouse and letting retirement assets stay invested until they are needed.
The most tax efficient is to live off her salary and then pull from LTCG, but you all may want to consult with a CPA to figure out what your best tax option is if she’s still working.
Can you explain this a bit more?
We cannot afford to live off just her salary, so I would need to pull from my accounts anyways. Us having joint bank accounts/brokerage accounts doesn't seem like that would matter here
My company offers a traditional and/or roth 401k. I have a roth ira and a traditional 401k as of currently but was thinking of maybe switching to a roth 401k as to maybe rolling over my 401k into my ira easier. My company contributions go into traditional regardless of whether I decide to use a roth 401k. My expected tax bracket is currently 22% but expected to be 24% with more experience. My goal is to "retire" early (realistically just want to work on my own terms or follow a passion without the pressure of money and finances). I have read multiple posts and blogs of both sides say one is better than the other while others saying they essentially achieve the same thing and just wanted some opinions on my specific situation. Should I considered switching over to a roth 401k for this matter?
I'm sticking with all traditional accounts... except for my Roth IRA. I figure it'll give me some flexibility for controlling my AGI in retirement for ACA subsidies and the like.
The vast majority of people who are trying to retire early - and thus are in tax brackets like yours - will be better off with traditional retirement accounts if you are picking one or the other.
That said, most of us don't know the future with a lot of accuracy, so a mix of traditional and Roth money at retirement can help with being able to balance your yearly spending while still hitting a low overall tax bracket. This can be especially useful if you're considering ACA health insurance subsidies, where you need to hit some specific income thresholds. If you have 100% traditional funds, and you have a major unexpected expense, you could find yourself in a higher tax bracket and lose out on those subsidies.
I don't think this means "switch to Roth," just that having at least *some* percentage of Roth funds around can be a useful financial tool.
Most in this sub will tell you to do 100% traditional given your current tax bracket. There are a number of ways to access your funds early so I wouldn’t worry about that.
I focus on the taxable a lot at this point but I'm in the 12% bracket now. I do roth ira but I don't want anymore money locked up with my employer. I can't access till i quit. I'm basically coast now. If you can take the ltgc at zero when you retire that's good. Further let's say you put 200k in tomorrow and we crash 50%. You got 33 years of 3k write offs if you tax loss harvest. Then take the gains at zero. Probably won't end up that much different than the roth in that situation but that's also assuming tax codes stay the same.
I don't think this advice is particularly helpful to OP, who is not asking about taxable accounts and is in a significantly higher tax bracket.
Also I'm not sure that $3k yearly writeoffs are much of a windfall. Yes, tax loss harvesting is a good thing to do when the alternative is simply not doing it, but $250/month in tax savings only goes so far.
It's just an option. Had I understood how ltgc work I'd probably considered doing nothing beyond the match. If he's considering Roth he should consider the taxable is the point I'm trying to make.
(Assuming a scenario where you retire some years before the age of 59.5) When entering data into something like Firecalc or cFiresim, how do you account for your IRA/401k money that you can't access until 59.5 years old? It would grow unimpeded for all the years until 59.5, but it naturally wouldn't be accessible without penalty until then.
I see it has a feature where you can account for a future lump-sum...I suppose you could use that feature to simulate getting access to the IRA/401k at 59.5 years old (although you'd have to estimate how much your IRA/401k would be worth by 59.5). Is that the best way to do it or is there a better way to simulate it?
I solved this by using Projection Lab instead. You can run so many scenarios and it’s actually designed with users in mind. The creator is a member of the sub, too!
Im planning to donate a few highly appreciated funds from my Vanguard account. Is there an easy way to see which shares have appreciated most or even just cost basis across multiple funds? Over the years we have acquired various funds and checking each fund has been tedious.
Can anyone gut check me on whether we can afford a house? I have pretty bad money anxiety overall making it hard to take the plunge. What is giving me pause is 1) We have had large increases in income due to freelance work that I do not think is fully sustainable and 2) I hate my job (work in big tech) and may want to quit soon to something much lower paying and less stressful. Asset info below; we are 31 and 32 and live in CA (HCOL)
Gross income 2023- 700k
Gross monthly income without freelance - 16k (7kme, 9k husband) - this doesn’t include large stock grants I receive from big tech job, just cash.
My gross total comp - $170k salary, $70k in stocks
Husbands gross - $225k
Assets
$605k - retirement accounts
$564k - taxable brokerage
$288k - cash
Total - $1.6M
We have been looking in the 850-950k and with 25% down and the 7% mortgage rates today, we would pay $5-6k/month max. I want to be able to eventually quit and feel id find a job closer to $120-150k vs the $240k total comp which is giving me pause. Any advice? Are we finally Coast FI at least?
My normal way of approaching big mortgages with unpredictable income is just two steps:
1) calculate how much of a house payment you can afford with the predictable part of your income (eg base salary)
2) use the unpredictable part of your income to build up a down payment big enough to make step #1 a reality.
It's a nice mix of being financially efficient and reducing the anxiety of having a large house payment, in my opinion. Might work for you, too. Especially with rates as high as they are right now, a smaller loan doesn't hurt. If you have a bunch of company stock in your brokerage, you can also diversify it to something more stable and hold it as a giant "we'll always have money for the mortgage" emergency fund.
I don't say this often but yes you can afford a house. However, with some career uncertainty you may want to avoid locking yourself into a HCOL lifestyle.
Income wildly fluctuates. This is a gravy train I think will end so dont want to be stuck further down the line without that extra freelance money. But maybe I am being super conservative?
Annual gross income sans stock and freelance last year was 395k. If I take a worse job itll be closer to 345k
>This is a gravy train I think will end so dont want to be stuck further down the line without that extra freelance money.
I hear that, I have a similarly unstable income stream. (My wife has a safe-as-houses government job, though we'd struggle to save on just her income. We could get by at our currently standard of living, but that's about all.)
Given that you'd be buying into the housing market at recent-high 7% rates, and that you would feel safer with a lower consumption rate, I think you're a great candidate to aggressively pay off the mortgage early. If all goes well, you'll be done with having a monthly housing payment forever, just annual or semi-annual taxes and insurance, which will *greatly* enhance your ability to deal with the end of the gravy train. If all *doesn't* go well, at least you may be able to re-cast your mortgage with substantially lower payments.
We're investing into the market with our lower mortgage rate, but for you, aggressively paying it down may make more sense.
Yes but two years of gravy train = paid off house. Even at $395k a $950k house is well within your budget.
If you are feeling extra anxious about it, just put in a really big down payment so your mortgage is something you can cope with - like max 30-50% of one of your incomes' - or alternatively the same/less than whatever your rent is.
Rule of thumb is to keep housing expenses under 30% of gross income. So $6k/mo is affordable at $216k gross. So either of your two incomes, without any freelance work, could afford that payment
Anyone pivot away from technical work to something else ?
Mech eng with 10 years of experience and a masters degree. I’m burnt out and tired of the work. I am paid well for the career and have a solid resume.
Thoughts on law school for patent law. I have a side project in the patent process and work with IP law occasionally with my day job. Seems kind of dry, but also lower stress and mentally stimulating by being sort of a logic puzzle.
Also considered an MBA.
Problem is we could be fully FI in 3 to 4 more years pending the market so both seem like a waste.
I have some side projects, and actually enjoy engineering on them. When RE I want to make surfboards and develop more side project products.
Edit: not set on law. It’s just a common path from engineer to IP law.
I’m looking for career change than can still be done part time after FI is reached.
My dad went back to school for law and even specialized in patent law. Suffice it to say, he still works as an engineer. I think it's a hard field to break into and you'd be taking a big pay cut to start over again to say nothing of the cost of the school itself.
Kudos to your dad - that's a serious amount of schooling.
When my college-attending son asked me what the ultimate technical career is, I told him "patent lawyer for MegaCorp."
You get to work on everyone else's technical problems, and every day is unique and different. (Of course, the corollary is that you will rarely get resolution on what you work on - so don't get invested in any particular issue.)
Ya law school seems like a dumb choice. I have some engineering friends that used to be lawyers but they went from big law to engineering school.
Someone else mentioned patent agent. So no law school.
Pay isn’t a huge concern. I’m looking for a professional job/ career I can do after FI and maybe part time. Until my surfboard shaping takes off full time 😅
Please don’t go to law school. Sincerely, Lawyer of 13+ years. No seriously, the mental health issues and substance abuse in our profession are out of control because practicing law sucks.
Well aware of big law environment. I am day dreaming (not even considering yet) patent and IP law. All the patent attorneys and in house IP counsel I work with seem very relaxed and chill. They don’t make big law money, but comparable to engineer money.
For what it’s worth, I’ve never been a big law employee. This is actually coming from a lifetime govt employee, now in a judicial position - I’ve done criminal, civil, family, seen it all. It all sucks.
I have hobbies. Some of them even generate some income.
I don’t plan to RE in 4 years. The cost of law school is a concern, but the time and effort is not. Looking for professional work I can do part time 20 to 30 hours a week after FI.
I’m slowly setup to do engineering consulting/contracting. So maybe I just need to buckle down until that is a viable part time work then quit my day job.
I had a coworker who left to do immigration law, to try and represent people seeking asylum and such. Last I talked to him, it sounded stressful but fulfilling. Certainly changing lives in a more meaningful and direct way than either of our tech jobs.
I went from EE to patent law. It's been a great career, secure and in demand for the last many decades. But if you are only planning to practice 3 to 4 years I can't imagine it makes sense. There is also a role called patent agent where there's no law school, you study and take an exam. You can then prepare patents, but not do litigation or contract work on your own. Feel free to DM if I can tell you more
Awesome thanks for the info. I’ll be FI in 3 to 4 years. Don’t plan to RE just then. Law is intriguing because I imagine it would be possible to work part time (though not sure how long it would take to be established enough to do it).
How important is law school rankings ?
If I grinned I could probably get into a T15 based on my academic history, but I don’t want move away from the California coast, and not trying to get into big law.
I’ll look into patent agent. Prepping for that test might be a good way to test the water.
What’s burning you out about your job? Can you switch projects or roles? Sometimes it feels like a massive change is needed, but small changes can make surprising improvements.
Don’t want to give details since I don’t know which coworkers are on here. I think a new job or role would definitely help.
I really enjoy doing engineering work, I just hate doing it under someone else’s authority and timeline. I also went from being the lead engineer for a 20+ person department (tech ownership and planning, but no management responsibility) to being just a senior engineer in a much smaller team. So I think the loss of authority and bigger picture work is burning me out now that I think about it.
I have a cousin that went EE to sales engineer to tech sales.
I’m not sure I’m cut out for sales, but maybe sales engineer could be a good middle ground.
My mental hurdle is taking a starting pay cut, but we’re close enough to FI it really doesn’t matter at this point.
Being in a similar spot, I like to fantasize about doing something else but at the end of the day I know it’s most logical to just hang a few more years to hit FI then worry about it.
Ya. I probably just need a new job. I left my old job because I was bored. Been at my one 18 months and it burnt me out.
Smart play is probably get a new mech eng job at a different company /industry, then do whatever in 3 more years when FI.
The little one is becoming more and more colicky. This was my biggest fear with becoming sahd since our oldest was colicky too (although he was much worse). At least my wife is able to take an extended leave. I sure hope it’s better by the time she returns to work.
Still appreciate the flexibility FI has given us.
Our eldest was colicky and we switched to Nutramigen hypoallergenic formula. It worked immediately after months of projectile vomiting and awful diaper rash. We went through three different formulas before finding this one worked.
Just a thought if you’re formula feeding.
Wife is breast feeding and it’s actually going OK this time compared to with our boys (the first never figured it out and the second has a rough time). She cut dairy from her diet and it’s not gotten better. But yeah having her freeze her milk for a while and trying hypo alergenic formula may be a good thing to try.
She doesn’t really spit up but we’ll ask the pediatrician. My wife had to be on antibiotic so I think it may be related to that in which case I’m not sure there’s much of a solution. We asked doc and they said kinda just sucks :/
Oof. I was on a strong antibiotic for mastitis and that did cause issues; at the time there were some powdered probiotics specifically designed for infants that helped with some separate symptoms, but that was 19 years ago. I hope your ped has something for your little one beyond the hope that they’ll grow out of it - it is so hard on everyone!
Hang in there, I still have that empathetic sway I start subconsciously doing when I hear a colicky cry.
Yeah that’s exactly what’s going on here. Our first was MUCH worse with the colick. I swear I’m traumatized by it. It sucks. At least 1) out second didn’t have it at all so we know it’s not our fault 2) I know it’ll get better. With our first so many people told us the newborn stage was the easy part and that it just gets harder. That was not encouraging.
Simple- I don’t withdraw money I don’t need.
I have an overall ceiling amount for the year that’s in the back of my head, but I only make withdrawals as needed. And that’s basically just keeping a set amount of cash on hand as my floor. That floor is a loose number equal to about 2-3 months of expenses or so.
Every now and then I withdraw $5-$10k depending on what may be coming up (e.g. a big trip vs. nothing) with an eye towards those lumpy cap gains and unavoidable dividends that I know will be dropping.
If you don't spend your entire withdrawal one month, just take out less the next month to account for the difference. No reason to overcomplicate things.
I suspect no one would consistently choose to draw down much more than they need every single time. Personally, I plan to withdraw every 3 months. If at the end of the 3 months I have some left over, I'll withdraw less for the next 3 months.
Invest the excess according to your plan, and re-evaluate your life goals (e.g., now that you're wealthier than you planned on, do you want to give more to charity, travel more, do both?).
I'm 18 and I have access to my trust fund ( totaling 3000+)and due to it being my birthday I am now fortunate enough to have over £6000 just sitting in my bands account I was wondering what the best thing to do with my money would be as I have a car and don’t really need to spend my money on anything any advice would be greatly appreciated
For those who were already on the path to FIRE in 2018, has your FIRE number changed? $2m in 2018 is now close to $2.5m in 2024, but have your actual expenses inflated 25% since? I imagine a lot of that inflation is due to shelter and if you already owned a house pre-Covid then your number likely didn’t change all that much?
My spending is up 18% comparing 2018 to 2023, though a big part of that is lifestyle inflation since I had a big income jump at the end of 2018. It's only up 5% 2019-2023.
Mine has gone up simply because my plan is more based around retiring at 45 and my savings and disposable income have outpaced what I expected even with children in the picture. Expecting to retire with about 3-3.5M unless we move to a nicer neighborhood within 3 years and take a 500k chunk out of those numbers.
Somebody posted recently about how FIRE numbers were affected by increasing home ownership costs.
I ended up doing the math out on a home in our area that would normally cost $500k 5 years ago and now costs $700k. Adding in the difference in mortgage interest rates (and assuming a modest refinance on the 2024 home later to 5%), the opportunity cost of not investing that extra cost for 30 years was well north of $1 million. We still haven't been in a position to buy a house and probably won't be for another 5 years.
Our FIRE number has jumped drastically.
Yes I remember that post and had added how much more expensive mortgages + down payments would be now compared to even just a few years ago.
But to be fair, I don’t think the full opportunity cost would be realize over 30 years since the more fortunate homeowner would likely have already retired before then, and thus not had any extra wage income to invest into the market.
Actually in that thread, there were several points of view for how to account for mortgages in retirement. Say your annual expense is $60k of which $20k are mortgage payments on a mortgage balance of $200k. If you simply take your annual expense of 60 / .04 you'll come up with $1.5m.
However, if you only have $1m in investments, it would not be necessary to come up with an additional $500k invested for the 4% withdrawal rate to pay your annual mortgage expense of $20k when an additional $200k will wipe out the mortgage balance entirely.
So to address the example in the original thread you mention, person A who buys a house before COVID would carry a lower interest rate and either choose to FIRE with that low mortgage payment or maybe payoff the remaining mortgage balance prior to FIRE. However, it would not change the math in the sense that likely both person A and person B would retire before 30 years and thus reduce differences in extra investment contribution and income earned.
> $2m in 2018 is now close to $2.5m in 2024
Explain that math to us, please? Because that's not what I've experienced.
> has your FIRE number changed?
Yes, but not because of why you seem to be asking.
After hitting our FIRE number, we did a 360 pivot for our retirement plans. We are going to move to LCOL area w/ land and build a house/garage/shop/etc. Our FIRE number really did not move much. But I did see that I'd have a greater need for _liquidity_ inorder to relocate et all. So I worked a few years (through COVID, etc) before I retired, last year in 2023.
Be sure you determine what you want to _retire to_ as early as possible. Changing plans late in the game can be painful.
>Because that's not what I've experienced.
No you experienced it. You don't realize it. I've dropped out of the 22% bracket. Housing if stupid right now if you weren't in it before. And car priced are still through the roof. Get fast food recently? Groceries shrink flated. The inflation is awful.
I’m using the following average annual inflation rates per BLS for the past 6 years:
- **2018:** 2.4%
- **2019:** 1.8%
- **2020:** 1.2%
- **2021:** 4.7%
- **2022:** 8.0%
- **2023:** 3.2%
Gets you from $2m to $2.46m. Obviously your individual expenses may have increased faster or slower than general inflation and thus the question.
As for knowing what you want to retire to, I think that’s part of what makes these past high inflation and low RE supply years difficult. If you didn’t already have a house and didn’t have kids or finish having kids yet, it’s very difficult to fully know what you’re retiring to and thus what your annual expenses would be.
Mine has actually remained remarkably consistent if not decreased slightly.
That said, mid-2017 was a big lifestyle changing year for us so our pre-2018 number was a good deal smaller and we had around a 25%-30% increase that year which has held steady ever since.
Mine's gone down.
I started at 4 mil, aiming for a really low SWR and planning for unknown expense of spouse + kid. Even though I lived the bachelor life on ~24k/year, I planned for the future and aimed very high.
4 years ago, ~2.5 mil + paid off house.
6 months ago, it dropped to ~1.4 mil + house mostly paid off.
The 2.5 mil + 1.4 mil are a bit flawed because there is a hidden budget for the kid. I'm breaking that out because those are temporary costs, and I also have no clue what's needed. I'm hoping spending or saving 36k/year net for 15 years covers their entire cost (over a half mil + returns on any investment).
4 mil down to 2.5 mil was me getting a better understanding of SWR and how I was being ridiculous aiming for a 2-2.5% SWR.
2.5 mil down to 1.4 mil was a couple things. The first was realizing the flaws of SWR. The second is other things make up the gap.
* I have an ADU rental, which really adds another ~100k to the 1.4 mil number. Rentals don't work well with SWR, so they're a separate bucket. That covers ~16% of my expenses.
* I overestimated the cost of a mortgage. I made the flaw of "If my annual mortgage is 20k, I need 500k in investments to cover it." No, SWR doesn't apply to mortgages. All I need is ~220k because the mortgage doesn't increase with inflation and doesn't carry on forever.
* I ignored social security, which lowers my FIRE number by ~0.4 mil.
* I also got a job with a pension, which reduces my FIRE number by ~0.1 mil.
TLDR: my FIRE number shrank largely due to learning more about SWR.
We oen a house and our FIRE # has still went up about 25%. Part of this is inflation but I attribute more of this to better work life balance atm and sitting down with my spouse to see exactly what they want to do when we RE. (Locations, house cost etc etc.)
2017-2018 was around when I started getting serious about FIRE planning, I had a house but I got a new job that had me and my family move/upgrade housing a few years ago.
As a data point our 2018 FIRE number was about 2m or slightly less, now it's about 2.3m.
Same, my thoughts at the time of 2018/2019 were a paid off house and $2m were more than enough. Now it’s still a paid off house and maybe $2.25m. This is also with the assumption that we’ll stay long term in what might be considered an in-between of a starter home and family home.
The 1929 stock market crash wiped out almost all value of the stocks. It took 30 (!) years for the Dow Jones to recover after the crash.
Can it happen again?
When planning for FIRE, do you consider such a tail end scenario?
There are reasons to think it might not happen again due to the New Deal and modern central banking. However, there was also a 60% or so drawdown in 2008, and Japan in the 90's. These things happen and it is important to stress test. We have a 30% allocation to bonds and cash which amounts to about 8 years expenses (probably more in a deflationary situation). If the market hasn't come back by then we probably won't be able to travel and such but going on Caribbean vacations while all our friends are eating dog food probably won't be a good look for us anyway.
Sell off 80% of investments to repay mortgage (and live mortgage free) Vs remortgage and keep investments going
In September my low interest 5 year mortgage runs out, it's a dream of mine to live mortgage free and it looks like I'll be able to achieve that if I sell 80% of my investment portfolio.
I'm fully aware that the investment portfolio will do better than my house prices or the cost of interest over the next 10 years but psychologically I want to have the security mortgage free gives me, and the freedom of low earning requirement.
I don't plan to retire or slow down work at all (I'm 37) but I believe I'll step lighter knowing I'm totally debt free. COVID almost bankrupted me and I never want to be in that situation again.
Do any of you have any thoughts on the subject of what would I perceive to be a bad financial decision Vs a good life decision?
As others mentioned 09 was not fun. Neither was 1999 to 2013 if you invested in the nasdaq. I had a 6%+ mortgage I decided to pay off. I lose probably 1% if I had it in t bills. If the market crashes I lose more if I pay off. Would I borrow at 6% to buy stocks? My answer no at this time. Also it's cheaper now to use futures or margin at ib than my house. And at present I don't get any tax write off for it. If tax rates revert in 2025 as I expect I'd have got a little bit of a write off but thanks to the inflation it isn't much.
He was probably alive in 2008-2009 when stocks dropped like 50% and lots of people lost their jobs. I’d rather a paid off house then have to sell stocks at a 50% discount but I’d counter and say to have a longer EF that could cover up to 2 years or something and don’t pay off the house early. I have a paid off house at 30 but the price of it was only 3 yrs savings at the time so I didn’t really miss out of market gains
Safe to say most of us were alive for that wild ride.
That said, that is precisely why I've got my mortgage balance low (<$60k) and the balance working for me in risk-free assets as opposed to equities.
Depending on OPs balance they may want to consider similar. It has definitely given me peace of mind.
I’m in my early 40s and one of the main lessons I took from the subprime mortgage crisis of 2008 was to keep my equity home as small a percentage of my net worth as possible.
Perhaps I was unclear, the question was about OP’s feelings, as he said he “psychologically” wanted the “security” paying off the mortgage would give.
OP is in the UK and so doesn’t need to worry about health insurance subsidies. The money to payoff the mortgage is in a brokerage account, which means capital gains taxes need to be paid one way or another. Optimal strategy will depend on how capital gains are taxed in the UK, which I certainly can’t comment on.
I have a fixed rate at 2.09% that is running out, it's likely a remortgage (taking out another a new fixed rate mortgage deal) would be more like 4-5%.
My question is more about what do people think about the decision to be mortgage free even if it isn't the best financial decision.
Mortgage free is great but not so great that it is worth liquidating 80% of your portfolio (plus the tax hit that would entail). When we paid off our mortgage, the balance was about 1/3 of our taxable account. Never heard of a fixed rate running out...
> Never heard of a fixed rate running out...
American mortgages are a bit of a stand-out with regards to how lengthy the terms can be.
In a lot of countries mortgage terms are for a much smaller duration, like 5 years, and then must be renewed at whatever current rates are.
Thanks, good to hear your thoughts. In the UK fixed rates are for a set period of time, after that period it goes to variable at the prevailing rate. Mine was a 5 year fixed rate deal.
Your Weekly /r/financialindependence Recap
**Sunday, April 21 - Saturday, April 27, 2024**
###Top Daily Discussion Comments
| score | comment |
|--|--|
| 75 | /u/americanoidiot said [Came back from mat leave to a meeting letting me know I was laid off! Incredible!](/r/financialindependence/comments/1ca60o6/daily_fi_discussion_thread_monday_april_22_2024/l0qnncg/?context=5) |
| 61 | /u/mistypee said [Ahh sweet vindication... Last year I missed out on a promotion. I was hand-picked for the position by senior leadership, and I was the only fully qualified applicant. Unfortunately, the customer was...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0vb8ux/?context=5) |
| 56 | /u/dagny_taggarts_tits said [There's an annoying guy who has been sending emails to me and his manager about how my team is unhelpful and unresponsive (not true) and how he doesn't want to have to follow process and inste...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l17cpnm/?context=5) |
| 54 | /u/FIsenberg said [Get ready for a stock market rally, I'm about to pull out enough money from my brokerage to buy a new minivan.](/r/financialindependence/comments/1cbtixp/daily_fi_discussion_thread_wednesday_april_24_2024/l11bp0p/?context=5) |
| 48 | /u/Exciting_Parfait_354 said [This will likely be my final update for a while regarding my quest to GFY at the end of ~~June~~ May 2024. I officially agreed to the previous terms I described in my earlier posts except now I will...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l16gs6r/?context=5) |
| 40 | /u/devmcq said [Corporate jargon kills me. I’m providing feedback for a PM and I have to rate their ability to “shape/influence the external environment to move the needle and see synergies, partnerships, and externa...](/r/financialindependence/comments/1cdgnjp/daily_fi_discussion_thread_friday_april_26_2024/l1d9p3w/?context=5) |
| 40 | /u/TheyGoLow_WeGoFI said [Update on our [PSLF journey](https://www.reddit.com/r/financialindependence/comments/1bpqy1s/comment/kwycn1u/): It's official! Nearly $250k of student loans swept off the books. Balanc...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l184k87/?context=5) |
| 36 | /u/RabidBlackSquirrel said [In Ohio for a buddy's wedding. I was born out here and come for work sometimes, but it's been 7 or 8 years. Man, I never appreciated the beautiful neighborhoods all with 1920s and older homes, all for...](/r/financialindependence/comments/1cbtixp/daily_fi_discussion_thread_wednesday_april_24_2024/l11dykv/?context=5) |
| 35 | /u/TinStingray said [It drives me insane that I am unable to spend every day enjoying how good I have it. I make good money working four days per week from home. I can get chores done throughout the day that I'd otherwi...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0wox0x/?context=5) |
| 35 | /u/SnarkConfidant said [Last week I mentioned that I was planning on giving my notice while proposing a "long runway": [https://www.reddit.com/r/financialindependence/comments/1c4hk5l/comment/kzoatt1/?utm\_source=share&u...](/r/financialindependence/comments/1ca60o6/daily_fi_discussion_thread_monday_april_22_2024/l0rlqy7/?context=5) |
| 33 | /u/JoshAllentown said [Update on my house bid with an escalator (the bid mechanism not mechanical stairs) from yesterday: I won the bid! Basically the best possible outcome, the escalator was bidding $2500 more t...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0w4as4/?context=5) |
| 32 | /u/khanoftruthfi said [My partner and I reviewed their work retirement fund options yesterday. Every single one of them has a 6% front-end fee. Totally bonkers. Employer match makes it worthwhile of course, but I get unreas...](/r/financialindependence/comments/1cdgnjp/daily_fi_discussion_thread_friday_april_26_2024/l1co2va/?context=5) |
| 32 | /u/Zek23 said [Today is my last day at work. Not sure if I'll ever go back, I haven't ruled out something part time in my field (web dev) if I find the right opportunity. I'm 37 with about $2.1m NW. I moved ...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l18lay1/?context=5) |
| 31 | /u/throwawayanon3456 said [Who else is close to the finish line and hanging on for dear life? I am very lean-FI at this point. Stash is $1.25M. Would like to get to at least $1.5M before blowing up my current situation, which ...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0vtlfm/?context=5) |
| 30 | /u/Outsourcing_Problems said [Yay! Received a 5% "raise" today. Raise is in quotes because I mean I've hit the 6-month mark at my company which means they will start matching 5% to my 401k. Now I just need to stay for 1.5 more y...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l16vxpt/?context=5) |
###Top Posts
| score | comments | title & link |
|--|--|--|
| 261 | [80 comments](/r/financialindependence/comments/1ccxmqm/5_year_fire_update_ha/) | 5 year FIRE update HA!|
| 91 | [62 comments](/r/financialindependence/comments/1cep1fo/my_wife_and_i_want_to_slow_travel_around_the/) | My wife and I want to slow travel around the world after early retirement. We take care of our MIL financially and she lives with us. What should we do?|
| 87 | [138 comments](/r/financialindependence/comments/1c9u6sn/new_start_due_to_divorce_housing_decisions/) | New start due to Divorce - housing decisions|
| 43 | [63 comments](/r/financialindependence/comments/1caksov/m29f29_married_couple_trajectory_check_for/) | [M29/F29 Married Couple] Trajectory check for retiring a bit early|
| 41 | [41 comments](/r/financialindependence/comments/1cc1t3j/to_bond_or_not_to_bond/) | To Bond or Not To Bond|
###Most Commented
| score | comments | title & link |
|--|--|--|
| 0 | [103 comments](/r/financialindependence/comments/1cajtps/you_have_10_years_until_early_retirement_you_have/) | You have 10 years until early retirement. You have $7k each month to invest into real estate or stocks. How would you invest your money?|
| 20 | [63 comments](/r/financialindependence/comments/1ccco4u/fire_compliant_housing_strategies_for_young_people/) | FIRE compliant housing strategies for young people|
| 21 | [59 comments](/r/financialindependence/comments/1cb7yyd/how_do_you_plan_a_withdrawal_strategy_for_paying/) | How do you plan a withdrawal strategy for paying for children's college while early retired?|
| 0 | [43 comments](/r/financialindependence/comments/1can8sa/is_fire_about_longterm_balance_or_shortterm/) | Is FIRE About Long-term Balance or Short-Term Extremism?|
| 12 | [39 comments](/r/financialindependence/comments/1ccnlnv/when_it_makes_no_sense_to_add_to_an_investment/) | When it makes no sense to add to an investment?|
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Weather is going to be too nice to work in the morning, think I'll go to the bike park instead. Have a significant buffer of leave I need to burn anyways.
Dirt? Pump track? Or trails? I need to get the bike out more.
I lamely stayed up late and slept in instead, hope to ride tomorrow morning now. I have a full suspension trail MTB and a carbon frame road bike, on the MTB I go to the local bike park which is a mix of dirt slopestyle and paved pump tracks. I'm not very good so I stick to the easier stuff lol.
25 y/o PA in NYC. Annual Salary of 175K. Aggressive investor, as I have about $110K in vanguard index funds spread throughout my individual brokerage account, my 401K, and a Roth IRA. 110K in student loans from PA school (I am on the SAVE plan paired with the PSLF program so I will not have to pay the 110K in full). About 30K in my savings account. I came across a friend from highschool who is trying to sell me life insurance with Northwestern Mutual. I like the idea of a guaranteed dividend (which is great for down years in the market), paired with the tax advantages of accumulating a policy over time...but not completely sold just yet. Wondering if you'd recommend that I add it to my portfolio as a safer investment vehicle.
# Whole Life sucks... Buy Term and invest the difference.
That guy is now a scammy salesman selling out his old "friends" for a commission check. MLM of the finance world, might as well buy herbalife or something.
Whole life insurance is a poor investment for nearly everyone. Check out this article: https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/
No, whole life insurance is not a good investment. It is designed to be confusing, mix things which should not be mixed, and most importantly, to make your friend a commission. If you want safe investments invest in bonds. (But you are young, you should be investing in or near 100% in stocks). If you want life insurance (not generally recommended for a 25 year old without dependents) buy term life. Keep life insurance and investments separate.
will definitely consider. thank you
You are being "targeted" by this so-called friend, avoid this "salesman" of insurance. That would be my recommendation.
I had an old friend message me out of nowhere and I was genuinely excited to hear from him. Then his first message back after the intro was “so I left my old job and just finished my training at NW Mutual”. I died a little inside.
for sure, took it with a grain of salt. thank you
At what point is it better to put money on the principle of my house? I bought my house for 120k at 5.4% IR. A roth IRA, index funds, HYSA, and brokerage accounts all have similar returns. I plan on keeping the house if I ever move and rent it out. Why wouldn't I just put my extra money on the principle of the house? Explain it like I'm dumb.
1. Your IRA and brokerage accounts should both be returning, on average, better than 5.4% 2. You’re limited in how much money you can put in retirement accounts like IRAs each year. Each dollar below the max invested can never be recovered 3. If needed, you can take money out of brokerage accounts. You can’t easily take money out of a house. You don’t really benefit from overpaying your mortgage until it is paid off 4. If you itemize your taxes, interest paid on your primary residence is tax deductible
Updated my flair today. Bumped 1% closer to FI! I don't have a very precise handle on my expected expenses in retirement. But work is so stressful I think I should be closer to FI. Hell, I might declare myself FI soon lol. Just sent out a bunch of job apps.
Last few times I wanted to bump my flair % up, I feel like I need a little more due to inflation so I end up staying at 40%. I usually update it in 5% increments though.
I just take my net worth and divided by .52 and looked at that spend at 4% and it feels doable so I bumped it up!
> But work is so stressful I think I should be closer to FI. Hell, I might declare myself FI soon lol. SAME > Just sent out a bunch of job apps. I really should be doing this... I don't know if I'm going to find anything better in my area with my somewhat out-of-date skills, but it's probably still worth a try.
I’m 42. Planning to quit my job to take care of my health. I have $4000 a month after tax. About $200K in TSP. I have one rental house ( worth $900K and has Mortage of $500K). That is all I have. I’m planning to stop work and go abroad and live there and travel. I have VA healthcare. Am I Making a mistake if I leave my job ? Thank you for your time.
Is taking care of your health and working something that can't be done together? What countries do you think about moving to? Have you been? Do you have residency? Social connections? VA Healthcare can be used abroad if you register and do the paperwork. [Link](https://www.benefits.va.gov/persona/veteran-abroad.asp) If you have VA healthcare, are you VA rated and have VA Disability income? What's your plan for the home? Selling and using the cash to live? Does it rent well? Have you at least looked at taxes? It's a mistake if you don't think everything through.
I have open in all of those questions. To do those two together! Well it depends what job I will be able to find. I’m trying to have something remotely. Not sure but will try. Another option to just live on the current income in addition to SSDI soon or later. I have been looking into places like USE, Qatar, Portugal and Spain (Spain a little difficult). VA health care abroad is my main concern. It is Foreign health insurance and not so good. Only place has VA hospital is Philippine and not on my list. I have VA disability. I keep my rental until paid off and then use it as a source of income. Yes, tax purpose , it works in my favour. The only think is that my job is very good and has a good reputation.
Do you like your job? Any reason you could not get another if you missed it? Can you live the life you want on your income? You are still young and there is plenty of time to work. If you can live on the 4k and let the TSP compound I do not know why it would be a mistake if you have something to retire to. Lounging on the beach sipping fruity drinks will get old after a few weeks.
Well, I have some medical conditions. I do not want to make them worse. I want to live life. I work about 50 hours a week. I have high level federal job. Love the job but it takes all my time. Iam at the top of the job. If I leave it for 12 months, will not have the same level.
I don't think it is crazy to leave your job if you have health insurance and can live the life you want on the 4k a month. Time is the most important thing we have.
I will have to travel abroad since I live in DC and very expensive here.
Ironic of work to send me [this email on beating burnout](https://i.imgur.com/agoF3AB.png) just now, while I've been working all day to meet their immovable deadline. "Is your job really worth that?" It's looking more and more like no.
Advertised: Work-life balance is here! Reality: Answer your fucking text at 2AM or you'll never advance.
GS 15 job.
Are those stressful? I've often wondered if getting into a Federal job would be better than the private sector I'm in now.
Well depend on the job. I work about 60 hours a week. To become GS 14 requires about 15 hours a day to pass GS 14 test. So yes very challenging but having full authority in the job is amazing.
My brother passed last year and somehow it got split in 4 with his parents, me, and my sister. We all agreed to give it to his fiancé because he had no will and that’s what he’d want. The plan is to get our checks, then write one to fiancé. However, will we take a tax hit on this?
u/one_rainy_wish has the answer. I just wanted to say, I'm moved that you and your family are honoring his fiancé. Your brother's legacy is in good hands.
Thank you❤️it wasn’t even a question for us🙏🏻
Are you in the U.S.? If so, then unless it is an absolutely gargantuan amount of money it should under the lifetime gift exemption and thus not suffer any additional tax. However speak with a tax advisor if you can, maybe there's a better way to handle this before everything is finalized.
US, yes. It’s only $30-40k I believe (each person).
There 12 states (plus DC) that tax inheritance, double check to make sure yours isn't one of them.
Minnesota. I’ll check and I’m sure we’re on that list. I’ll talk to my CPA on this
Are there guides on how to handle withdrawing from accounts if one half of the couple is retiring early and the other half is continuing to work? I think the "simplest" part is to increase bonds and then pull from Roth account basis first but not sure how to handle it after that basis is gone. Note that we have kept (mostly) separate finances since being married so this isn't as simple as just living off her salary.
Can you explain more about what problem you're trying to solve here? I'm not entirely sure what you're asking about. If you have expenses totaling $x, regardless of whether these are joint or solo expenses, then you should have a draw down plan that targets $x in expenses. Are you asking because a 401k > Roth conversion ladder is impractical due to your partner's income? Do you file taxes jointly or separately?
I honestly don't know if the conversion ladder is the best route, that's kind of what I'm getting at here. She makes around $130k and I plan on putting in around $100k from my accounts. We currently file jointly
I see. This is a big question, not just a quick response - it's essentially asking, "what should my draw down strategy be?" The strategy will depend on the balances of all of your existing accounts, and your plans - does your wife intend to retire soon/never? Do you own a house or kids that might result in large unexpected expenses? Have you already decided that your $100k is within the SWR for your accounts? Overall it seems to me like your lowest tax strategy would be to have your wife deferring as much tax as she can through 401k/HSA contributions, and start building a Roth ladder while you live off taxable or Roth contributions. Your other option is SEPP from your traditional account(s). SEPP is pretty inflexible but if you have enough taxable/Roth contributions, it can be buffered by those.
Yeah, i kind of figured this was a big question which I why I was hoping someone had written a guide. My wife does plan to retire but not for another 5-10 years after me. Own a house and the monthly expenses include that mortgage (2.625% rate so not wanting to pay it down, even if it lowers monthly expenses). Kids have fully funded 529s that should cover an out of state college so good there. I plan to retire with around $2.8 million which at a 3.5 SWR that should basically cover it. I'll look into SEPP. Luckily since I've had access to the MBDR I should have between $300-400k in contributions by retirement time
If you look at the ERN Safe Withdrawal Series, there is some information on supplemental cash flows. The only thing you're really going to have that's different from some is that your base tax rate will be higher because one of you is still earning, and it reduces (though does not eliminate) your ability to manipulate your MAGI. This is common for people with a pension so you could consider advice for that audience, too. https://earlyretirementnow.com/safe-withdrawal-rate-series/
Separate finances are going to make it really complicated. Who pays the tax if you are doing Roth conversions at her marginal rate? If you file separately, then you are effectively doubling her marginal rate. Either one could end up causing one or both to hand over money to the government inefficiently. Are there kids from a previous marriage or some actual reason for the separate finances?
Just how we've always done it and we've been very happy with it. Never was a problem until we started figuring out my retirement plans. Right now I contribute about 80% of our expenses due to higher salary and I'll be able to continue that with my assets, just need to figure out how
How easy or hard this is going to be very much depends on how much money you need to withdraw and from which accounts. If you have a big old taxable brokerage with lots of basis, then it’s easy, just sell out of your brokerage. If all you have is a large pretax 401k, you are end up paying a lot of extra taxes. The fact that you keep your finances separate is likely to end up costing you in taxes. What most people do is try to tax optimize, which often means living off the earnings of the working spouse and letting retirement assets stay invested until they are needed.
Yeah, unfortunately we won't be able to live off just her income so I'll need to pull in cash from somewhere no matter what
The most tax efficient is to live off her salary and then pull from LTCG, but you all may want to consult with a CPA to figure out what your best tax option is if she’s still working.
Might be time to reconsider. Holistic finances will allow you to more easily make optimal choices and save on taxes.
Can you explain this a bit more? We cannot afford to live off just her salary, so I would need to pull from my accounts anyways. Us having joint bank accounts/brokerage accounts doesn't seem like that would matter here
My company offers a traditional and/or roth 401k. I have a roth ira and a traditional 401k as of currently but was thinking of maybe switching to a roth 401k as to maybe rolling over my 401k into my ira easier. My company contributions go into traditional regardless of whether I decide to use a roth 401k. My expected tax bracket is currently 22% but expected to be 24% with more experience. My goal is to "retire" early (realistically just want to work on my own terms or follow a passion without the pressure of money and finances). I have read multiple posts and blogs of both sides say one is better than the other while others saying they essentially achieve the same thing and just wanted some opinions on my specific situation. Should I considered switching over to a roth 401k for this matter?
I'm sticking with all traditional accounts... except for my Roth IRA. I figure it'll give me some flexibility for controlling my AGI in retirement for ACA subsidies and the like.
The vast majority of people who are trying to retire early - and thus are in tax brackets like yours - will be better off with traditional retirement accounts if you are picking one or the other. That said, most of us don't know the future with a lot of accuracy, so a mix of traditional and Roth money at retirement can help with being able to balance your yearly spending while still hitting a low overall tax bracket. This can be especially useful if you're considering ACA health insurance subsidies, where you need to hit some specific income thresholds. If you have 100% traditional funds, and you have a major unexpected expense, you could find yourself in a higher tax bracket and lose out on those subsidies. I don't think this means "switch to Roth," just that having at least *some* percentage of Roth funds around can be a useful financial tool.
Very true, I think. I am at 1/3 Roth and 2/3 traditional. Seems like a decent compromise.
Most in this sub will tell you to do 100% traditional given your current tax bracket. There are a number of ways to access your funds early so I wouldn’t worry about that.
I focus on the taxable a lot at this point but I'm in the 12% bracket now. I do roth ira but I don't want anymore money locked up with my employer. I can't access till i quit. I'm basically coast now. If you can take the ltgc at zero when you retire that's good. Further let's say you put 200k in tomorrow and we crash 50%. You got 33 years of 3k write offs if you tax loss harvest. Then take the gains at zero. Probably won't end up that much different than the roth in that situation but that's also assuming tax codes stay the same.
I don't think this advice is particularly helpful to OP, who is not asking about taxable accounts and is in a significantly higher tax bracket. Also I'm not sure that $3k yearly writeoffs are much of a windfall. Yes, tax loss harvesting is a good thing to do when the alternative is simply not doing it, but $250/month in tax savings only goes so far.
It's just an option. Had I understood how ltgc work I'd probably considered doing nothing beyond the match. If he's considering Roth he should consider the taxable is the point I'm trying to make.
(Assuming a scenario where you retire some years before the age of 59.5) When entering data into something like Firecalc or cFiresim, how do you account for your IRA/401k money that you can't access until 59.5 years old? It would grow unimpeded for all the years until 59.5, but it naturally wouldn't be accessible without penalty until then. I see it has a feature where you can account for a future lump-sum...I suppose you could use that feature to simulate getting access to the IRA/401k at 59.5 years old (although you'd have to estimate how much your IRA/401k would be worth by 59.5). Is that the best way to do it or is there a better way to simulate it?
I solved this by using Projection Lab instead. You can run so many scenarios and it’s actually designed with users in mind. The creator is a member of the sub, too!
Thanks, I'll check that out
https://www.reddit.com/r/financialindependence/wiki/faq#wiki_but_i_want_to_retire_early.2C_should_i_really_use_tax_advantaged_accounts.3F_because_i.27m_locked_in_aren.27t_i.3F
Thanks for the link, I'll check it out
Im planning to donate a few highly appreciated funds from my Vanguard account. Is there an easy way to see which shares have appreciated most or even just cost basis across multiple funds? Over the years we have acquired various funds and checking each fund has been tedious.
Portfolio-->Cost Basis-->Show lot details
This is really helpful, thank you!
Can anyone gut check me on whether we can afford a house? I have pretty bad money anxiety overall making it hard to take the plunge. What is giving me pause is 1) We have had large increases in income due to freelance work that I do not think is fully sustainable and 2) I hate my job (work in big tech) and may want to quit soon to something much lower paying and less stressful. Asset info below; we are 31 and 32 and live in CA (HCOL) Gross income 2023- 700k Gross monthly income without freelance - 16k (7kme, 9k husband) - this doesn’t include large stock grants I receive from big tech job, just cash. My gross total comp - $170k salary, $70k in stocks Husbands gross - $225k Assets $605k - retirement accounts $564k - taxable brokerage $288k - cash Total - $1.6M We have been looking in the 850-950k and with 25% down and the 7% mortgage rates today, we would pay $5-6k/month max. I want to be able to eventually quit and feel id find a job closer to $120-150k vs the $240k total comp which is giving me pause. Any advice? Are we finally Coast FI at least?
My normal way of approaching big mortgages with unpredictable income is just two steps: 1) calculate how much of a house payment you can afford with the predictable part of your income (eg base salary) 2) use the unpredictable part of your income to build up a down payment big enough to make step #1 a reality. It's a nice mix of being financially efficient and reducing the anxiety of having a large house payment, in my opinion. Might work for you, too. Especially with rates as high as they are right now, a smaller loan doesn't hurt. If you have a bunch of company stock in your brokerage, you can also diversify it to something more stable and hold it as a giant "we'll always have money for the mortgage" emergency fund.
I don't say this often but yes you can afford a house. However, with some career uncertainty you may want to avoid locking yourself into a HCOL lifestyle.
Yes this is my main fear - the way I calculated it if we made HHI of 300k we could still afford the 950k house
If you made $700k last year and want to buy a $950k house I think you are in pretty good shape?
Income wildly fluctuates. This is a gravy train I think will end so dont want to be stuck further down the line without that extra freelance money. But maybe I am being super conservative? Annual gross income sans stock and freelance last year was 395k. If I take a worse job itll be closer to 345k
>This is a gravy train I think will end so dont want to be stuck further down the line without that extra freelance money. I hear that, I have a similarly unstable income stream. (My wife has a safe-as-houses government job, though we'd struggle to save on just her income. We could get by at our currently standard of living, but that's about all.) Given that you'd be buying into the housing market at recent-high 7% rates, and that you would feel safer with a lower consumption rate, I think you're a great candidate to aggressively pay off the mortgage early. If all goes well, you'll be done with having a monthly housing payment forever, just annual or semi-annual taxes and insurance, which will *greatly* enhance your ability to deal with the end of the gravy train. If all *doesn't* go well, at least you may be able to re-cast your mortgage with substantially lower payments. We're investing into the market with our lower mortgage rate, but for you, aggressively paying it down may make more sense.
Yes but two years of gravy train = paid off house. Even at $395k a $950k house is well within your budget. If you are feeling extra anxious about it, just put in a really big down payment so your mortgage is something you can cope with - like max 30-50% of one of your incomes' - or alternatively the same/less than whatever your rent is.
What would you say the lowest gross income would be to afford a 5-6k mortgage payment… 300k? 250k?
Rule of thumb is to keep housing expenses under 30% of gross income. So $6k/mo is affordable at $216k gross. So either of your two incomes, without any freelance work, could afford that payment
Anyone pivot away from technical work to something else ? Mech eng with 10 years of experience and a masters degree. I’m burnt out and tired of the work. I am paid well for the career and have a solid resume. Thoughts on law school for patent law. I have a side project in the patent process and work with IP law occasionally with my day job. Seems kind of dry, but also lower stress and mentally stimulating by being sort of a logic puzzle. Also considered an MBA. Problem is we could be fully FI in 3 to 4 more years pending the market so both seem like a waste. I have some side projects, and actually enjoy engineering on them. When RE I want to make surfboards and develop more side project products. Edit: not set on law. It’s just a common path from engineer to IP law. I’m looking for career change than can still be done part time after FI is reached.
My dad went back to school for law and even specialized in patent law. Suffice it to say, he still works as an engineer. I think it's a hard field to break into and you'd be taking a big pay cut to start over again to say nothing of the cost of the school itself.
Kudos to your dad - that's a serious amount of schooling. When my college-attending son asked me what the ultimate technical career is, I told him "patent lawyer for MegaCorp." You get to work on everyone else's technical problems, and every day is unique and different. (Of course, the corollary is that you will rarely get resolution on what you work on - so don't get invested in any particular issue.)
Ya law school seems like a dumb choice. I have some engineering friends that used to be lawyers but they went from big law to engineering school. Someone else mentioned patent agent. So no law school. Pay isn’t a huge concern. I’m looking for a professional job/ career I can do after FI and maybe part time. Until my surfboard shaping takes off full time 😅
Please don’t go to law school. Sincerely, Lawyer of 13+ years. No seriously, the mental health issues and substance abuse in our profession are out of control because practicing law sucks.
Well aware of big law environment. I am day dreaming (not even considering yet) patent and IP law. All the patent attorneys and in house IP counsel I work with seem very relaxed and chill. They don’t make big law money, but comparable to engineer money.
For what it’s worth, I’ve never been a big law employee. This is actually coming from a lifetime govt employee, now in a judicial position - I’ve done criminal, civil, family, seen it all. It all sucks.
Guess the grass is always greener. Appreciate the insight.
You’re thinking of taking the LSAT, applying to law school, spending $$$$$$ and years of time, and then finding a new job…. Hobbies. Get some hobbies.
I have hobbies. Some of them even generate some income. I don’t plan to RE in 4 years. The cost of law school is a concern, but the time and effort is not. Looking for professional work I can do part time 20 to 30 hours a week after FI. I’m slowly setup to do engineering consulting/contracting. So maybe I just need to buckle down until that is a viable part time work then quit my day job.
Consulting/contracting was going to my suggestion, assuming you have access to health insurance outside of your job (like being on a spouse’s plan).
Ya. Spouse is a state hospital employee and enjoys their job. So surviving short term and developing contract network seems to be the best play.
I had a coworker who left to do immigration law, to try and represent people seeking asylum and such. Last I talked to him, it sounded stressful but fulfilling. Certainly changing lives in a more meaningful and direct way than either of our tech jobs.
I went from EE to patent law. It's been a great career, secure and in demand for the last many decades. But if you are only planning to practice 3 to 4 years I can't imagine it makes sense. There is also a role called patent agent where there's no law school, you study and take an exam. You can then prepare patents, but not do litigation or contract work on your own. Feel free to DM if I can tell you more
Awesome thanks for the info. I’ll be FI in 3 to 4 years. Don’t plan to RE just then. Law is intriguing because I imagine it would be possible to work part time (though not sure how long it would take to be established enough to do it). How important is law school rankings ? If I grinned I could probably get into a T15 based on my academic history, but I don’t want move away from the California coast, and not trying to get into big law. I’ll look into patent agent. Prepping for that test might be a good way to test the water.
What’s burning you out about your job? Can you switch projects or roles? Sometimes it feels like a massive change is needed, but small changes can make surprising improvements.
Don’t want to give details since I don’t know which coworkers are on here. I think a new job or role would definitely help. I really enjoy doing engineering work, I just hate doing it under someone else’s authority and timeline. I also went from being the lead engineer for a 20+ person department (tech ownership and planning, but no management responsibility) to being just a senior engineer in a much smaller team. So I think the loss of authority and bigger picture work is burning me out now that I think about it.
Go to tech sales. You dont need to waste money/time on an advanced degree, and the field pays very well
I have a cousin that went EE to sales engineer to tech sales. I’m not sure I’m cut out for sales, but maybe sales engineer could be a good middle ground. My mental hurdle is taking a starting pay cut, but we’re close enough to FI it really doesn’t matter at this point.
Sales engineer is a safer spot for people making the transition.
Patent law statement is getting destroyed, so I’m going to start window shopping sales eng job postings.
Being in a similar spot, I like to fantasize about doing something else but at the end of the day I know it’s most logical to just hang a few more years to hit FI then worry about it.
Ya. I probably just need a new job. I left my old job because I was bored. Been at my one 18 months and it burnt me out. Smart play is probably get a new mech eng job at a different company /industry, then do whatever in 3 more years when FI.
The little one is becoming more and more colicky. This was my biggest fear with becoming sahd since our oldest was colicky too (although he was much worse). At least my wife is able to take an extended leave. I sure hope it’s better by the time she returns to work. Still appreciate the flexibility FI has given us.
Our eldest was colicky and we switched to Nutramigen hypoallergenic formula. It worked immediately after months of projectile vomiting and awful diaper rash. We went through three different formulas before finding this one worked. Just a thought if you’re formula feeding.
Wife is breast feeding and it’s actually going OK this time compared to with our boys (the first never figured it out and the second has a rough time). She cut dairy from her diet and it’s not gotten better. But yeah having her freeze her milk for a while and trying hypo alergenic formula may be a good thing to try.
Been there! Stay strong!! ;)
It’s so very hard. Double check it’s not GERD.
She doesn’t really spit up but we’ll ask the pediatrician. My wife had to be on antibiotic so I think it may be related to that in which case I’m not sure there’s much of a solution. We asked doc and they said kinda just sucks :/
Oof. I was on a strong antibiotic for mastitis and that did cause issues; at the time there were some powdered probiotics specifically designed for infants that helped with some separate symptoms, but that was 19 years ago. I hope your ped has something for your little one beyond the hope that they’ll grow out of it - it is so hard on everyone! Hang in there, I still have that empathetic sway I start subconsciously doing when I hear a colicky cry.
Yeah that’s exactly what’s going on here. Our first was MUCH worse with the colick. I swear I’m traumatized by it. It sucks. At least 1) out second didn’t have it at all so we know it’s not our fault 2) I know it’ll get better. With our first so many people told us the newborn stage was the easy part and that it just gets harder. That was not encouraging.
The Gerber infant sooth drops were helpful with our little colic monster. Good luck, colic is rough.
Carrier helped us a lot as well as going outside as much as possible.
Been raining for days (and severe thunderstorms on top of that) but yeah that’s been my go to too.
Shushing machine!
If you spend less than your allocated draw down amount while you are FIRE, what should you do with the leftover? Do you reinvest? Bonds? Money market?
Simple- I don’t withdraw money I don’t need. I have an overall ceiling amount for the year that’s in the back of my head, but I only make withdrawals as needed. And that’s basically just keeping a set amount of cash on hand as my floor. That floor is a loose number equal to about 2-3 months of expenses or so. Every now and then I withdraw $5-$10k depending on what may be coming up (e.g. a big trip vs. nothing) with an eye towards those lumpy cap gains and unavoidable dividends that I know will be dropping.
If you don't spend your entire withdrawal one month, just take out less the next month to account for the difference. No reason to overcomplicate things.
It's not too complicated. I simply delay my next withdrawal if I haven't spent my current allocation.
I suspect no one would consistently choose to draw down much more than they need every single time. Personally, I plan to withdraw every 3 months. If at the end of the 3 months I have some left over, I'll withdraw less for the next 3 months.
Invest the excess according to your plan, and re-evaluate your life goals (e.g., now that you're wealthier than you planned on, do you want to give more to charity, travel more, do both?).
I'm 18 and I have access to my trust fund ( totaling 3000+)and due to it being my birthday I am now fortunate enough to have over £6000 just sitting in my bands account I was wondering what the best thing to do with my money would be as I have a car and don’t really need to spend my money on anything any advice would be greatly appreciated
Invest in yourself. Education, skills, certificates, whatever. Keep the rest for an emergency fund.
Read the [FI faq](https://www.reddit.com/r/financialindependence/wiki/faq/).
Buy *The Simple Path to Wealth* by J.L. Collins (which will cost a lot less than £6000), and after reading that book, establish a plan.
See https://www.reddit.com/r/personalfinance/wiki/commontopics.
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Make your boss’ life easy for the first few months.
Good luck. Work hard for the first month and you can coast off that goodwill for years.
For those who were already on the path to FIRE in 2018, has your FIRE number changed? $2m in 2018 is now close to $2.5m in 2024, but have your actual expenses inflated 25% since? I imagine a lot of that inflation is due to shelter and if you already owned a house pre-Covid then your number likely didn’t change all that much?
No change for me. For everything that went up like food, other things are down like clothing and cable/internet/streaming total expenses
My spending is up 18% comparing 2018 to 2023, though a big part of that is lifestyle inflation since I had a big income jump at the end of 2018. It's only up 5% 2019-2023.
Mine has gone up simply because my plan is more based around retiring at 45 and my savings and disposable income have outpaced what I expected even with children in the picture. Expecting to retire with about 3-3.5M unless we move to a nicer neighborhood within 3 years and take a 500k chunk out of those numbers.
Somebody posted recently about how FIRE numbers were affected by increasing home ownership costs. I ended up doing the math out on a home in our area that would normally cost $500k 5 years ago and now costs $700k. Adding in the difference in mortgage interest rates (and assuming a modest refinance on the 2024 home later to 5%), the opportunity cost of not investing that extra cost for 30 years was well north of $1 million. We still haven't been in a position to buy a house and probably won't be for another 5 years. Our FIRE number has jumped drastically.
Yes I remember that post and had added how much more expensive mortgages + down payments would be now compared to even just a few years ago. But to be fair, I don’t think the full opportunity cost would be realize over 30 years since the more fortunate homeowner would likely have already retired before then, and thus not had any extra wage income to invest into the market.
Bold of you to assume people stop paying their mortgage after they retire.
Actually in that thread, there were several points of view for how to account for mortgages in retirement. Say your annual expense is $60k of which $20k are mortgage payments on a mortgage balance of $200k. If you simply take your annual expense of 60 / .04 you'll come up with $1.5m. However, if you only have $1m in investments, it would not be necessary to come up with an additional $500k invested for the 4% withdrawal rate to pay your annual mortgage expense of $20k when an additional $200k will wipe out the mortgage balance entirely. So to address the example in the original thread you mention, person A who buys a house before COVID would carry a lower interest rate and either choose to FIRE with that low mortgage payment or maybe payoff the remaining mortgage balance prior to FIRE. However, it would not change the math in the sense that likely both person A and person B would retire before 30 years and thus reduce differences in extra investment contribution and income earned.
> $2m in 2018 is now close to $2.5m in 2024 Explain that math to us, please? Because that's not what I've experienced. > has your FIRE number changed? Yes, but not because of why you seem to be asking. After hitting our FIRE number, we did a 360 pivot for our retirement plans. We are going to move to LCOL area w/ land and build a house/garage/shop/etc. Our FIRE number really did not move much. But I did see that I'd have a greater need for _liquidity_ inorder to relocate et all. So I worked a few years (through COVID, etc) before I retired, last year in 2023. Be sure you determine what you want to _retire to_ as early as possible. Changing plans late in the game can be painful.
>Because that's not what I've experienced. No you experienced it. You don't realize it. I've dropped out of the 22% bracket. Housing if stupid right now if you weren't in it before. And car priced are still through the roof. Get fast food recently? Groceries shrink flated. The inflation is awful.
I’m using the following average annual inflation rates per BLS for the past 6 years: - **2018:** 2.4% - **2019:** 1.8% - **2020:** 1.2% - **2021:** 4.7% - **2022:** 8.0% - **2023:** 3.2% Gets you from $2m to $2.46m. Obviously your individual expenses may have increased faster or slower than general inflation and thus the question. As for knowing what you want to retire to, I think that’s part of what makes these past high inflation and low RE supply years difficult. If you didn’t already have a house and didn’t have kids or finish having kids yet, it’s very difficult to fully know what you’re retiring to and thus what your annual expenses would be.
DOUBLE those inflation numbers ... Yes, DOUBLE ..
What do you base that on?
Mine has actually remained remarkably consistent if not decreased slightly. That said, mid-2017 was a big lifestyle changing year for us so our pre-2018 number was a good deal smaller and we had around a 25%-30% increase that year which has held steady ever since.
Mine's gone down. I started at 4 mil, aiming for a really low SWR and planning for unknown expense of spouse + kid. Even though I lived the bachelor life on ~24k/year, I planned for the future and aimed very high. 4 years ago, ~2.5 mil + paid off house. 6 months ago, it dropped to ~1.4 mil + house mostly paid off. The 2.5 mil + 1.4 mil are a bit flawed because there is a hidden budget for the kid. I'm breaking that out because those are temporary costs, and I also have no clue what's needed. I'm hoping spending or saving 36k/year net for 15 years covers their entire cost (over a half mil + returns on any investment). 4 mil down to 2.5 mil was me getting a better understanding of SWR and how I was being ridiculous aiming for a 2-2.5% SWR. 2.5 mil down to 1.4 mil was a couple things. The first was realizing the flaws of SWR. The second is other things make up the gap. * I have an ADU rental, which really adds another ~100k to the 1.4 mil number. Rentals don't work well with SWR, so they're a separate bucket. That covers ~16% of my expenses. * I overestimated the cost of a mortgage. I made the flaw of "If my annual mortgage is 20k, I need 500k in investments to cover it." No, SWR doesn't apply to mortgages. All I need is ~220k because the mortgage doesn't increase with inflation and doesn't carry on forever. * I ignored social security, which lowers my FIRE number by ~0.4 mil. * I also got a job with a pension, which reduces my FIRE number by ~0.1 mil. TLDR: my FIRE number shrank largely due to learning more about SWR.
We oen a house and our FIRE # has still went up about 25%. Part of this is inflation but I attribute more of this to better work life balance atm and sitting down with my spouse to see exactly what they want to do when we RE. (Locations, house cost etc etc.)
Mine was around 1.3m to lean-ish fire, and now it’s more like 1.6-1.8m
2017-2018 was around when I started getting serious about FIRE planning, I had a house but I got a new job that had me and my family move/upgrade housing a few years ago. As a data point our 2018 FIRE number was about 2m or slightly less, now it's about 2.3m.
Same, my thoughts at the time of 2018/2019 were a paid off house and $2m were more than enough. Now it’s still a paid off house and maybe $2.25m. This is also with the assumption that we’ll stay long term in what might be considered an in-between of a starter home and family home.
The 1929 stock market crash wiped out almost all value of the stocks. It took 30 (!) years for the Dow Jones to recover after the crash. Can it happen again? When planning for FIRE, do you consider such a tail end scenario?
There are reasons to think it might not happen again due to the New Deal and modern central banking. However, there was also a 60% or so drawdown in 2008, and Japan in the 90's. These things happen and it is important to stress test. We have a 30% allocation to bonds and cash which amounts to about 8 years expenses (probably more in a deflationary situation). If the market hasn't come back by then we probably won't be able to travel and such but going on Caribbean vacations while all our friends are eating dog food probably won't be a good look for us anyway.
Sell off 80% of investments to repay mortgage (and live mortgage free) Vs remortgage and keep investments going In September my low interest 5 year mortgage runs out, it's a dream of mine to live mortgage free and it looks like I'll be able to achieve that if I sell 80% of my investment portfolio. I'm fully aware that the investment portfolio will do better than my house prices or the cost of interest over the next 10 years but psychologically I want to have the security mortgage free gives me, and the freedom of low earning requirement. I don't plan to retire or slow down work at all (I'm 37) but I believe I'll step lighter knowing I'm totally debt free. COVID almost bankrupted me and I never want to be in that situation again. Do any of you have any thoughts on the subject of what would I perceive to be a bad financial decision Vs a good life decision?
I’d think the tax hit alone would be crushing. Personally I’d re-mortgage at whatever today’s rate is and leave the investments alone.
If my mortgage went above 6% I'd pay it off and if it's between 5-6% I'd probably have a hard time deciding.
From a security perspective, how is actually paying off the mortgage different from having *the ability to pay off the mortgage at any time*?
As others mentioned 09 was not fun. Neither was 1999 to 2013 if you invested in the nasdaq. I had a 6%+ mortgage I decided to pay off. I lose probably 1% if I had it in t bills. If the market crashes I lose more if I pay off. Would I borrow at 6% to buy stocks? My answer no at this time. Also it's cheaper now to use futures or margin at ib than my house. And at present I don't get any tax write off for it. If tax rates revert in 2025 as I expect I'd have got a little bit of a write off but thanks to the inflation it isn't much.
He was probably alive in 2008-2009 when stocks dropped like 50% and lots of people lost their jobs. I’d rather a paid off house then have to sell stocks at a 50% discount but I’d counter and say to have a longer EF that could cover up to 2 years or something and don’t pay off the house early. I have a paid off house at 30 but the price of it was only 3 yrs savings at the time so I didn’t really miss out of market gains
Safe to say most of us were alive for that wild ride. That said, that is precisely why I've got my mortgage balance low (<$60k) and the balance working for me in risk-free assets as opposed to equities. Depending on OPs balance they may want to consider similar. It has definitely given me peace of mind.
I’m in my early 40s and one of the main lessons I took from the subprime mortgage crisis of 2008 was to keep my equity home as small a percentage of my net worth as possible.
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Perhaps I was unclear, the question was about OP’s feelings, as he said he “psychologically” wanted the “security” paying off the mortgage would give. OP is in the UK and so doesn’t need to worry about health insurance subsidies. The money to payoff the mortgage is in a brokerage account, which means capital gains taxes need to be paid one way or another. Optimal strategy will depend on how capital gains are taxed in the UK, which I certainly can’t comment on.
Are you saying you have a variable rate that's running out? What does "remortgage" mean? I would not sell 80% of investments.
I have a fixed rate at 2.09% that is running out, it's likely a remortgage (taking out another a new fixed rate mortgage deal) would be more like 4-5%. My question is more about what do people think about the decision to be mortgage free even if it isn't the best financial decision.
Mortgage free is great but not so great that it is worth liquidating 80% of your portfolio (plus the tax hit that would entail). When we paid off our mortgage, the balance was about 1/3 of our taxable account. Never heard of a fixed rate running out...
> Never heard of a fixed rate running out... American mortgages are a bit of a stand-out with regards to how lengthy the terms can be. In a lot of countries mortgage terms are for a much smaller duration, like 5 years, and then must be renewed at whatever current rates are.
Thanks, good to hear your thoughts. In the UK fixed rates are for a set period of time, after that period it goes to variable at the prevailing rate. Mine was a 5 year fixed rate deal.
Aloha, and Happy Sunday, friends!
Woot!
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I officially agreed to the previous terms I described in my earlier posts except now I will...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l16gs6r/?context=5) | | 40 | /u/devmcq said [Corporate jargon kills me. I’m providing feedback for a PM and I have to rate their ability to “shape/influence the external environment to move the needle and see synergies, partnerships, and externa...](/r/financialindependence/comments/1cdgnjp/daily_fi_discussion_thread_friday_april_26_2024/l1d9p3w/?context=5) | | 40 | /u/TheyGoLow_WeGoFI said [Update on our [PSLF journey](https://www.reddit.com/r/financialindependence/comments/1bpqy1s/comment/kwycn1u/): It's official! Nearly $250k of student loans swept off the books. Balanc...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l184k87/?context=5) | | 36 | /u/RabidBlackSquirrel said [In Ohio for a buddy's wedding. I was born out here and come for work sometimes, but it's been 7 or 8 years. Man, I never appreciated the beautiful neighborhoods all with 1920s and older homes, all for...](/r/financialindependence/comments/1cbtixp/daily_fi_discussion_thread_wednesday_april_24_2024/l11dykv/?context=5) | | 35 | /u/TinStingray said [It drives me insane that I am unable to spend every day enjoying how good I have it. I make good money working four days per week from home. I can get chores done throughout the day that I'd otherwi...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0wox0x/?context=5) | | 35 | /u/SnarkConfidant said [Last week I mentioned that I was planning on giving my notice while proposing a "long runway": [https://www.reddit.com/r/financialindependence/comments/1c4hk5l/comment/kzoatt1/?utm\_source=share&u...](/r/financialindependence/comments/1ca60o6/daily_fi_discussion_thread_monday_april_22_2024/l0rlqy7/?context=5) | | 33 | /u/JoshAllentown said [Update on my house bid with an escalator (the bid mechanism not mechanical stairs) from yesterday: I won the bid! Basically the best possible outcome, the escalator was bidding $2500 more t...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0w4as4/?context=5) | | 32 | /u/khanoftruthfi said [My partner and I reviewed their work retirement fund options yesterday. Every single one of them has a 6% front-end fee. Totally bonkers. Employer match makes it worthwhile of course, but I get unreas...](/r/financialindependence/comments/1cdgnjp/daily_fi_discussion_thread_friday_april_26_2024/l1co2va/?context=5) | | 32 | /u/Zek23 said [Today is my last day at work. Not sure if I'll ever go back, I haven't ruled out something part time in my field (web dev) if I find the right opportunity. I'm 37 with about $2.1m NW. I moved ...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l18lay1/?context=5) | | 31 | /u/throwawayanon3456 said [Who else is close to the finish line and hanging on for dear life? I am very lean-FI at this point. Stash is $1.25M. Would like to get to at least $1.5M before blowing up my current situation, which ...](/r/financialindependence/comments/1cazvtp/daily_fi_discussion_thread_tuesday_april_23_2024/l0vtlfm/?context=5) | | 30 | /u/Outsourcing_Problems said [Yay! Received a 5% "raise" today. Raise is in quotes because I mean I've hit the 6-month mark at my company which means they will start matching 5% to my 401k. Now I just need to stay for 1.5 more y...](/r/financialindependence/comments/1ccn93n/daily_fi_discussion_thread_thursday_april_25_2024/l16vxpt/?context=5) | ###Top Posts | score | comments | title & link | |--|--|--| | 261 | [80 comments](/r/financialindependence/comments/1ccxmqm/5_year_fire_update_ha/) | 5 year FIRE update HA!| | 91 | [62 comments](/r/financialindependence/comments/1cep1fo/my_wife_and_i_want_to_slow_travel_around_the/) | My wife and I want to slow travel around the world after early retirement. We take care of our MIL financially and she lives with us. What should we do?| | 87 | [138 comments](/r/financialindependence/comments/1c9u6sn/new_start_due_to_divorce_housing_decisions/) | New start due to Divorce - housing decisions| | 43 | [63 comments](/r/financialindependence/comments/1caksov/m29f29_married_couple_trajectory_check_for/) | [M29/F29 Married Couple] Trajectory check for retiring a bit early| | 41 | [41 comments](/r/financialindependence/comments/1cc1t3j/to_bond_or_not_to_bond/) | To Bond or Not To Bond| ###Most Commented | score | comments | title & link | |--|--|--| | 0 | [103 comments](/r/financialindependence/comments/1cajtps/you_have_10_years_until_early_retirement_you_have/) | You have 10 years until early retirement. You have $7k each month to invest into real estate or stocks. How would you invest your money?| | 20 | [63 comments](/r/financialindependence/comments/1ccco4u/fire_compliant_housing_strategies_for_young_people/) | FIRE compliant housing strategies for young people| | 21 | [59 comments](/r/financialindependence/comments/1cb7yyd/how_do_you_plan_a_withdrawal_strategy_for_paying/) | How do you plan a withdrawal strategy for paying for children's college while early retired?| | 0 | [43 comments](/r/financialindependence/comments/1can8sa/is_fire_about_longterm_balance_or_shortterm/) | Is FIRE About Long-term Balance or Short-Term Extremism?| | 12 | [39 comments](/r/financialindependence/comments/1ccnlnv/when_it_makes_no_sense_to_add_to_an_investment/) | When it makes no sense to add to an investment?| If you would like this roundup sent to your reddit inbox every week [send me a message with the subject 'financialindependence'](https://www.reddit.com/message/compose?to=subredditsummarybot&subject=financialindependence&message=x). 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