Author Topic: Have you achieved FI on $400K ish ??  (Read 7415 times)

jooles

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Have you achieved FI on $400K ish ??
« on: November 10, 2016, 01:52:22 PM »
I want to believe I can pull the trigger before I  get to $750k.  I am working to craft a reasonable and sustainable plan.  But I'd like some input.  Have any of you achieved early retirement financial independence on around $400k.  What do you have your money invested in and what's the details of the annual nut? 
« Last Edit: November 10, 2016, 02:02:02 PM by jooles »

TexasRunner

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Re: Have you achieved FI on $400K ish ??
« Reply #1 on: November 10, 2016, 02:19:54 PM »
I think you'll find a lot more ideas and similarities at the "Extreme Early Retirement" forum.  I'm not over there but I know there are several who have FIRE'd at about that number.

http://earlyretirementextreme.com/

This thread may be of use:  http://forum.earlyretirementextreme.com/viewtopic.php?f=3&t=7870

soccerluvof4

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Re: Have you achieved FI on $400K ish ??
« Reply #2 on: November 10, 2016, 03:02:01 PM »
Some on here have but you would have to show your numbers/age etc.. for someone to really give you a breakdown.

Retire-Canada

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Re: Have you achieved FI on $400K ish ??
« Reply #3 on: November 10, 2016, 04:24:53 PM »
I want to believe I can pull the trigger before I  get to $750k.  I am working to craft a reasonable and sustainable plan.  But I'd like some input.  Have any of you achieved early retirement financial independence on around $400k.  What do you have your money invested in and what's the details of the annual nut?

I'm shooting for higher numbers than yours, but I am in the same boat in the sense I am not nearly to my goal [~62% of the way there] and I don't want to keep working like this. My solution is to shift to part time once I've hit around ~70% of my target and enjoy lots of free time just earning enough to pay my bills and letting my 'stash grow on its own until it hits my eventual goal. My thought is that working 50% FT will give me tons more free time now and that will be a great transition to FIRE.

Perhaps you can do something similar?

Libertea

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Re: Have you achieved FI on $400K ish ??
« Reply #4 on: November 11, 2016, 06:52:28 AM »
http://velociraptor.cc/transparency/

Technically, he's really more semi-retired since he also actively trades options.  BUT, he is able to support himself either via his investment income or via his options (meaning, he earns his full yearly expenses in each way, for a total of double his yearly spending from both of them put together).

Slee_stack

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Re: Have you achieved FI on $400K ish ??
« Reply #5 on: November 11, 2016, 10:45:23 AM »
According to http://forum.mrmoneymustache.com/ask-a-mustachian/retiring-with-$750k/, you don't even have a chance with $750K.

...not that I believe that personally.

Retire-Canada

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Re: Have you achieved FI on $400K ish ??
« Reply #6 on: November 11, 2016, 11:22:48 AM »
According to http://forum.mrmoneymustache.com/ask-a-mustachian/retiring-with-$750k/, you don't even have a chance with $750K.

...not that I believe that personally.

Ya that's crazy talk. $750K USD is a lot of money.

Financial.Velociraptor

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Re: Have you achieved FI on $400K ish ??
« Reply #7 on: November 11, 2016, 09:31:52 PM »
http://velociraptor.cc/transparency/

Technically, he's really more semi-retired since he also actively trades options.  BUT, he is able to support himself either via his investment income or via his options (meaning, he earns his full yearly expenses in each way, for a total of double his yearly spending from both of them put together).

w00t!   SHout out to me!!!

Seriously, if you use options right, 8% is the correct SWR instead of 4%.  Asset classes matter!

cakie

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Re: Have you achieved FI on $400K ish ??
« Reply #8 on: November 11, 2016, 11:42:54 PM »
I am still early in the journey, but once I get to ~50% FI, planning to spend some time being a nomad (e.g. Woofing, helpx). I figure if I can cover expenses with odd jobs, i don't need to save anymore after that, compounding will take care of it after about a decade (can go back to work if I get bored).

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Trifele

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Re: Have you achieved FI on $400K ish ??
« Reply #9 on: November 13, 2016, 04:57:00 AM »
Yes, my brother FIREd on less than $400k.   He is hardcore frugal, and keeps his spending at about $11k per year. (He feels like he lives comfortably.  He tells me he could get it down to $9000 if he had to.)   If you can do that, then FIREing on that amount is no problem.

soupcxan

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Re: Have you achieved FI on $400K ish ??
« Reply #10 on: November 13, 2016, 05:16:16 AM »
I can't see it being sustainable in the US if you're far away from SS/Medicare. Healthcare costs alone will eat that pretty fast. And $16k/year is the poverty line for a family of two, so even if it worked, I can't see it being very enjoyable.

marty998

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Re: Have you achieved FI on $400K ish ??
« Reply #11 on: November 13, 2016, 12:53:00 PM »
I can't see it being sustainable in the US if you're far away from SS/Medicare. Healthcare costs alone will eat that pretty fast. And $16k/year is the poverty line for a family of two, so even if it worked, I can't see it being very enjoyable.

Poverty line is usually set with reference to median income, not necessarily a spending line that puts you in poverty or not.

Today's society would suggest if you can't afford a TV or phone then you are in poverty, but neither of these are basic needs. Or a car, or dinner at a restaurant or substitute whatever non-food, non-shelter, non-utility item of choice you like.

I agree with you though. $16k would not be very enjoyable for a family. And leaves nothing for big capital expenditures that are occasionally required.

Davids

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Re: Have you achieved FI on $400K ish ??
« Reply #12 on: November 13, 2016, 02:28:53 PM »
Single without ever wanting/having kids on a frugal lifestyle can be done. I would be very concerned about a potential medical issue that could arise as you get older. Maybe wait it out and get in the $600K-$700K range before pulling the trigger to give yourself some buffer because $400K is real tight.

oldtoyota

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Re: Have you achieved FI on $400K ish ??
« Reply #13 on: November 14, 2016, 08:02:34 AM »
According to http://forum.mrmoneymustache.com/ask-a-mustachian/retiring-with-$750k/, you don't even have a chance with $750K.

...not that I believe that personally.

Ya that's crazy talk. $750K USD is a lot of money.

We don't have healthcare here though. I'm not sure $750K covers a long-term medical emergency, so $400K would not either.

People mention these part-time jobs. What I've found is that the hourly wage was too low for part-time jobs as to make them not worth it for me.

Personally, I'd not retire with so little but we don't know your age or expenses so it's hard to say for sure.

Retire-Canada

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Re: Have you achieved FI on $400K ish ??
« Reply #14 on: November 14, 2016, 08:34:40 AM »
We don't have healthcare here though. I'm not sure $750K covers a long-term medical emergency, so $400K would not either.

Personally, I'd not retire with so little but we don't know your age or expenses so it's hard to say for sure.

Canada doesn't have free health care despite the rumours/myths. What we do have is a single payer system for emergency care [ER, surgery, doctor's visits] and even that we have to pay for in addition to income taxes at least in BC where I live. You also have to pay for rehab, therapy, medical equipment, home care, drugs and lots of other medical costs around a long term illness.

For the sake of argument let's say the 'stash was $1M or $1.3M wouldn't you be able to come up with a long-term/critical illness scenario that would not be sustainable using the typical 4% SWR?

If my choice is stop working now at a reasonable 'stash size or work another 10yrs to have far more than I need to cover a potential medical emergency that may not happen I'll take my chances. Partially because I can war-game scenarios where that extra savings/investment $$ still won't be enough and partially because I think working FT at a stressful job - especially a desk job...is likely to be a root cause of medical problems. Not being chained to a desk is a better "insurance policy" against health care costs than working a lot more to have more money to deal with health care costs.

I'm 47, but you give me $750K USD when I was 30 and I would have retired as well. That is a ton of money at any age.

Retire-Canada

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Re: Have you achieved FI on $400K ish ??
« Reply #15 on: November 14, 2016, 08:54:31 AM »
People mention these part-time jobs. What I've found is that the hourly wage was too low for part-time jobs as to make them not worth it for me.

I could earn $15/hr without trying too hard PT. At 20hrs/wk that's ~$1300/month or $15,600/yr.

With a bit more work I could be up in the $30-$50/hr range doing management work. You can't dial that up as fast as a $15/hr job, but if I needed/wanted some extra cash in FIRE I'd get a lower paying job I didn't hate first and then shop around for something that paid better and fit my desired PT schedule. The beauty with FIRE is you have the free time to make stuff happen and solve problems because you aren't chained to a desk 8-10hrs+/day.

I wouldn't be excited to go back to work for $15/hr...at least not for another 20yrs or so. Later in life I could see a fun PT job as being desirable for staying connected to the community and getting out of the house. When I am younger I'd only go back to work for $15/hr if I felt I needed to. Maybe my stash took more of a beating in a market crash than I feel comfortable with or I want to buy something/do something extravagant that's not budgeted for. In that case $15/hr for a specific period of time wouldn't bother me.

In my career the mature semi-retired person has often been the ideal hire for many positions that were not full-time. They were responsible, skilled, easy to train and flexible because they didn't need full-time hours to live on.


soupcxan

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Re: Have you achieved FI on $400K ish ??
« Reply #16 on: November 19, 2016, 12:39:08 PM »
I'm 47, but you give me $750K USD when I was 30 and I would have retired as well. That is a ton of money at any age.

In the US, I don't see how $750k could cover a 30 year old with a wife and child.

There's a lot of people who like to say "if only I had $X I would retire" yet only a handful actually do it.

Retire-Canada

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Re: Have you achieved FI on $400K ish ??
« Reply #17 on: November 19, 2016, 02:29:56 PM »
There's a lot of people who like to say "if only I had $X I would retire" yet only a handful actually do it.

Top up my portfolio to $750USD and I will happily become a guinea pig! ;)

The MMM folks are two adults + 1 kid who spend less than the 4% WR on $750K annually in the US. I don't recall what age they retired, but I think it was fairly young.

If you head over to the ERE forum there would be a whole bunch of people that are retiring on a lot less than $750K.

I wouldn't retire on $400K USD, but I have no doubt I could if I had to.

Classical_Liberal

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Re: Have you achieved FI on $400K ish ??
« Reply #18 on: November 19, 2016, 03:38:31 PM »
The MMM folks are two adults + 1 kid who spend less than the 4% WR on $750K annually in the US. I don't recall what age they retired, but I think it was fairly young.

This is so true, people forget this guys story.  Two years after he pulled the plug, a guy who touts being 100 percent stocks in his liquid investments saw the market crash more than 50%.  On top of that, his side business as a builder saw the RE market bubble burst while sitting on a large unsalable house with his partner entangling him in a legal mess. All the while he has new, very young son at home. This is the nightmare scenario keeping people up at night who are afraid to FIRE.

Yet, 8 years later here he is, accidently making 400K on a hobby job and giving away 100K because he has way too much. Call it a Straw Man or an outlier, but still, perhaps we have become a little to boglehead conservative around here.

If you head over to the ERE forum there would be a whole bunch of people that are retiring on a lot less than $750K.


I like ERE as a reality check.  They look at spending differently than I have my whole life. It's not just optimizing, rather it's a mindset of spending ONLY when it is the sole efficient means to an end (ie when you can't reasonably replicate the outcome yourself in an effective and timely manner).  It's not everyone's cup of tea, but I'm getting more & more into that thought process

arebelspy

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Re: Have you achieved FI on $400K ish ??
« Reply #19 on: November 19, 2016, 07:19:17 PM »
Following!

This thread may be of use:  http://forum.earlyretirementextreme.com/viewtopic.php?f=3&t=7870

Thanks for the link!  I only check in with the ERE forums time to time, and didn't bother with a thread of that title, but it was nice reading the through update from Jacob--I wasn't aware he was back to retired (from trading) as of about a year ago now.

I personally think 400k is a little low.  Not that one can't live on 4% of that... 16k a year is plenty.  But the problem is that there's very little buffer for major unexpected stuff.  A single major heathcare issue that costs you 50k, for example (say, ambulance ride and emergency surgery for an accident), cuts out too big of a chunk of your stache..  you're now down to 350k, and your 16k withdrawal is now a 4.6% WR.  Still possible, but getting scarier.  A few issues like that, and you're in trouble.

The same issues can happen when you have 1MM, but they're a smaller percent of your stache.

There's also the problem that a lot of times a lower budget (say 10, 15k, whatever) has the fat trimmed out, whereas a higher one (30, 40k) may have stuff more easily cut--vacations, for example.  So if something does go wrong, there's more wiggle room for the higher budget.

Are those things worth working longer for?  Not necessarily.  Can it be done on 400k?  Absolutely.

I just think it's a little tight for me, personally, even if I was only spending 3% of that (12k/yr).  It's not the budget that's infeasible for me, it's the wiggle room/unexpected stuff that I'd worry about at that level.
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gerardc

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Re: Have you achieved FI on $400K ish ??
« Reply #20 on: November 19, 2016, 09:54:36 PM »
I personally think 400k is a little low.  Not that one can't live on 4% of that... 16k a year is plenty.  But the problem is that there's very little buffer for major unexpected stuff.  A single major heathcare issue that costs you 50k, for example (say, ambulance ride and emergency surgery for an accident), cuts out too big of a chunk of your stache..  you're now down to 350k, and your 16k withdrawal is now a 4.6% WR.  Still possible, but getting scarier.  A few issues like that, and you're in trouble.

What are those "major unexpected things" I hear people complain about all the time? You can get insurance for all those risks.

The 16k should be an average, if your expenses are 14k, 18k, 16k, ... from year to year, that's fine too.

The only uninsurable major expenses I can think of would be a marriage or kids, but that's not exactly an accident (hopefully).

arebelspy

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Re: Have you achieved FI on $400K ish ??
« Reply #21 on: November 19, 2016, 11:08:12 PM »
You can get insurance for all those risks.

Theoretically, yes.  Practically, maybe not.

And even if you can, it may be prohibitively expensive to do so, meaning that your low budget becomes unrealistic when doing so.

And if you insure against ALL of these unlikely events, you're likely wasting money versus self insuring... but it will be nice when the one that could wipe you out doesn't because of the insurance.

Self-insurance is the way to go on most things.  The problem with it is, as in my post, that when you self insure and take the big hit, your stache isn't big enough to then maintain a reasonable SWR after that.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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gerardc

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Re: Have you achieved FI on $400K ish ??
« Reply #22 on: November 19, 2016, 11:39:11 PM »

Theoretically, yes.  Practically, maybe not.

And even if you can, it may be prohibitively expensive to do so, meaning that your low budget becomes unrealistic when doing so.

And if you insure against ALL of these unlikely events, you're likely wasting money versus self insuring... but it will be nice when the one that could wipe you out doesn't because of the insurance.

Self-insurance is the way to go on most things.  The problem with it is, as in my post, that when you self insure and take the big hit, your stache isn't big enough to then maintain a reasonable SWR after that.

What if paying insurance premiums = One More Year, but more padding for self-insuring = Two More Years ?

It all depends on your flexibility. If you're flexible to get back to work, self-insuring is the way to go, because you can walk the fine line of risk and not oversave, plus you "save" the insurance company average profits.

arebelspy

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Re: Have you achieved FI on $400K ish ??
« Reply #23 on: November 20, 2016, 12:17:16 AM »
If you're flexible to get back to work

Sure.  I'm discussing the scenario where you don't make any more money, but live off your stache.

A lower stache has a higher probability of failure, even at the same withdrawal rate as a higher stache, due to the unexpected event problem (the same event costing the same dollar amount is a larger percent of a smaller portfolio) and the budget flexibility problem.

If you're willing to go back to work, you can "ER" off of $0.  You just need to go back right away.  ;)

It's all a sliding scale, but I was talking the case of ER failure: either running out of money, or having (not wanting) to earn more money.

There's TONS of ways to make ER work, most of them revolving around flexibility.  More money tends to give you more flexibility though (not always, but usually).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Metric Mouse

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Re: Have you achieved FI on $400K ish ??
« Reply #24 on: November 20, 2016, 04:35:52 AM »
I can't see it being sustainable in the US if you're far away from SS/Medicare. Healthcare costs alone will eat that pretty fast. And $16k/year is the poverty line for a family of two, so even if it worked, I can't see it being very enjoyable.

Poverty line is usually set with reference to median income, not necessarily a spending line that puts you in poverty or not.


And there's also a very big difference living on $16k/year when that's all the money you have at your disposal  compared to someone who lives on $16k/year but may have a high NW with many paid for material goods such as a house, a newer car, electronics, etc... as well as the ability to draw on the $400k stash or tap into some of the NW (home equity loan? Sell and downsize?) if ever needed.

Great points. Having a paid off down-town condo and a brand new car and a time share in Ibiza retiring on $16K/year is a bit different than a renter with a bicycle trying to make the same numbers work.

happy

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Re: Have you achieved FI on $400K ish ??
« Reply #25 on: November 20, 2016, 05:39:19 AM »
Enjoyed the ERE link. Also following.

limeandpepper

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Re: Have you achieved FI on $400K ish ??
« Reply #26 on: November 20, 2016, 08:30:19 PM »
Seems like we have digressed from the original question...

Have any of you achieved early retirement financial independence on around $400k.  What do you have your money invested in and what's the details of the annual nut?

I'd be curious about any answers pertaining to that.

Going with the sidetracked discussion though, I'd retire if I had a paid-off property in addition to the $400k. I'm not sure I would retire completely with $400k on its own without a paid-off property, but it would make me comfortable enough to greatly reduce time spent working, like I might just work a few months a year, or a couple days a week, or try out self-employment and start a small eBay business, or something.

Eco_eco

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Re: Have you achieved FI on $400K ish ??
« Reply #27 on: November 20, 2016, 08:54:13 PM »
My lifestyle expenses (married with 2 kids) and choice of location meant I needed 750k to FIRE (with a basic income).

However, I have a friend who FIRED at age 32 with about $400,00k in assets. His main asset was a flat in London that he rented out plus some cash. He kept his lifestyle costs very low by travelling the world and mainly staying with friends and family. For a few years he was living off around 10k a year.

I'm not sure it it will be sustainable in the long term - he's relying too much on others to subside his choice of lifestyle.

Cassie

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Re: Have you achieved FI on $400K ish ??
« Reply #28 on: November 21, 2016, 06:25:25 AM »
Many people with careers can do some consulting to earn extra $ and I think that ends up happening more then people think it will.  It seems like I am reading all the time about opportunities for work knocking at their door.