Author Topic: Switch to 0% savings rate?  (Read 1497 times)

beekeeper

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Switch to 0% savings rate?
« on: August 10, 2018, 05:51:47 AM »
Can I stop saving money if my stash is already 60% of FIRE? I mean, work to pay the bills but without excess for saving, and rely on portfolio appreciation to take care of the rest? Do some people take this "scenic route" in order to spend more time with their kids?

terran

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Re: Switch to 0% savings rate?
« Reply #1 on: August 10, 2018, 06:05:30 AM »

starguru

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Re: Switch to 0% savings rate?
« Reply #2 on: August 10, 2018, 06:25:04 AM »
You can do whatever you want.  The trade off to this approach is it will take more time to reach FIRE. If/when the next downturn comes you’ll be at potentially much less than 60. 

I myself am not going all out to reach fire at all costs.  I just want to save enough to support the lifestyle I want before traditional FIRE age.


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boarder42

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Re: Switch to 0% savings rate?
« Reply #3 on: August 10, 2018, 06:36:33 AM »
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Put your current stache in here and assume 5-7% returns on it and see how long it takes to reach fi. At 7% it takes 8 years for 600k to get to 1MM so assuming you're planning a 4% swr that's what you're looking at.

jlcnuke

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Re: Switch to 0% savings rate?
« Reply #4 on: August 10, 2018, 08:45:15 AM »
Can I stop saving money if my stash is already 60% of FIRE? I mean, work to pay the bills but without excess for saving, and rely on portfolio appreciation to take care of the rest? Do some people take this "scenic route" in order to spend more time with their kids?

Have you adjusted your "number" for the additional spending needs? I mean, if you're going to start spending all your pay instead of saving some of it, that costs more money, which means you need to replace more money in retirement to keep that level of spending up. So if you're 60% towards replacing $XX,XXX spending in retirement, you're at less than 60% towards replacing $XX,XXX + the new spending amount you're going to adjust to.

Raenia

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Re: Switch to 0% savings rate?
« Reply #5 on: August 10, 2018, 08:53:20 AM »
Can I stop saving money if my stash is already 60% of FIRE? I mean, work to pay the bills but without excess for saving, and rely on portfolio appreciation to take care of the rest? Do some people take this "scenic route" in order to spend more time with their kids?

Have you adjusted your "number" for the additional spending needs? I mean, if you're going to start spending all your pay instead of saving some of it, that costs more money, which means you need to replace more money in retirement to keep that level of spending up. So if you're 60% towards replacing $XX,XXX spending in retirement, you're at less than 60% towards replacing $XX,XXX + the new spending amount you're going to adjust to.

Not the OP, but I'm pretty sure the idea is to decrease pay, not increase spending.  Most people who want to coast-FIRE plan to downshift to part-time or take a lower stress job with less pay, which just covers (current) expenses without additional for savings.  OP mentioned spending more time with kids, so most likely the part-time route.

Malkynn

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Re: Switch to 0% savings rate?
« Reply #6 on: August 11, 2018, 05:29:40 AM »
Can I stop saving money if my stash is already 60% of FIRE? I mean, work to pay the bills but without excess for saving, and rely on portfolio appreciation to take care of the rest? Do some people take this "scenic route" in order to spend more time with their kids?

Yes, many of us do, even if we donít have kids.
For some of us, today is just as important as tomorrow, if not more so.

If itís right for you then of course you can do it.
Grinding to reach FIRE is just *one* option, itís not *the* option.
Iím nowhere near 60% FI and I dropped to part time two years ago because itís right for me.

boarder42

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Re: Switch to 0% savings rate?
« Reply #7 on: August 11, 2018, 06:22:48 AM »
My daughter is 4 weeks old and I'm down to 4 day weeks and plan to stick with it.  My calcs show this will cost me 1 extra calendar year worst case. But for the next 5-6 years I will get more days off with Friday off than the total days worked that last year. And we're only about 35% to where we want to be

Malkynn

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Re: Switch to 0% savings rate?
« Reply #8 on: August 11, 2018, 06:24:15 AM »
My daughter is 4 weeks old and I'm down to 4 day weeks and plan to stick with it.  My calcs show this will cost me 1 extra calendar year worst case. But for the next 5-6 years I will get more days off with Friday off than the total days worked that last year. And we're only about 35% to where we want to be

Congrats on the baby!!

boarder42

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Re: Switch to 0% savings rate?
« Reply #9 on: August 11, 2018, 08:35:36 AM »
My daughter is 4 weeks old and I'm down to 4 day weeks and plan to stick with it.  My calcs show this will cost me 1 extra calendar year worst case. But for the next 5-6 years I will get more days off with Friday off than the total days worked that last year. And we're only about 35% to where we want to be

Congrats on the baby!!

Thanks

Retire-Canada

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Re: Switch to 0% savings rate?
« Reply #10 on: August 11, 2018, 08:13:33 PM »
Can I stop saving money if my stash is already 60% of FIRE? I mean, work to pay the bills but without excess for saving, and rely on portfolio appreciation to take care of the rest? Do some people take this "scenic route" in order to spend more time with their kids?

I downshifted to PT and was planning to coast to FIRE working ~3 days a week at 8hrs per day. I had an opportunity to work a bit more on second contract and decided to go for it so that only lasted ~6 months. Although I had downshifted a year or so ago also for a few months.

Ultimately once you get your portfolio built up to a reasonable % of your target value it can get their on its own. The trade off is working less, but saving less and having more free time now vs. working harder and accelerating towards FIRE faster. Having done both there is no wrong answer.

I guess the only formulation of your proposition I wouldn't be down with is working FT and not saving and just blowing the extra money instead of saving it. My issue with this is that you end up working more [which I think sucks] and you get used to spending more than your FIRE budget which can lead to some adjustment pains when you retire.

Hargrove

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Re: Switch to 0% savings rate?
« Reply #11 on: August 11, 2018, 10:41:45 PM »
I calculate the real, diminishing value of my continuing to work frequently. It's pretty encouraging!

My first year of tracking was of infinite value, as my net worth went positive and established a FIRE date from none.
My second year I got a large raise, and substantially accelerated FIRE.
My third year I got another large raise! Again accelerated FIRE, but much less so proportionately, and a some of the advance in savings came from ROI.

And so on.

Once you're at 60%, you're moving the needle substantially less than the needle moves itself, which is awesome! Doing anything at all I enjoy, for peanuts, is vastly preferable to me over getting a moneyhose for work I hate, but I don't want to pay for it with 30 years of financial stress. The reason I'm interested in FIRE is to scale back and be able to focus on a future family and more enjoyable work. My most lucrative career prospects are just not what I want to do at all, so I frequently check the FIRE-value of this year's work vs last year's.

des999

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Re: Switch to 0% savings rate?
« Reply #12 on: August 13, 2018, 07:39:44 AM »
This is most likely what I'll do, but as someone mentioned earlier, be careful not to spend the excess money (assuming you keep the same job) while you 'coast'.

I would most likely go to part time to keep income coming in for bills, whilst my stache grows.  But, I've often thought about keeping my higher income and travelling/spending a lot over the next 5-7 years while we are younger and able to do more extreme travel.  I go back and forth, both have merit.  I think if I just spent the extra on travel only, knowing that in my fire I can travel cheaper/less often I could keep my current spend in fire.  But, still have to be careful not to get accustomed to that extra monies.  :)

beekeeper

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Re: Switch to 0% savings rate?
« Reply #13 on: August 13, 2018, 11:47:00 AM »
See the first few results here: https://www.google.com/search?q=coast+fi+site%3Aforum.mrmoneymustache.com

Thank you for the keyword. I have now come upon "coast fi" and "barista fi" as names for ideas that I had been fishing for in various threads.

Definition from a reddit thread https://www.reddit.com/r/leanfire/comments/8uarlt/what_is_the_difference_between_coast_fire_and/:

Quote
Coast FIRE = you have enough in your retirement accounts that without any further contributions it will grow into enough to cover your "traditional" retirement. Now you only need to earn enough to cover your current expenses. i.e. if you were making $80k and saving 50% for retirement, now you only need to earn $40k to cover your expenses pre-traditional retirement.

Barista FIRE = the 4% rule on your investments kicks off x% of your current expenses and you can work a part time job to cover the remainder.

Are people doing these things? How does it work out?

Prairie Stash

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Re: Switch to 0% savings rate?
« Reply #14 on: August 13, 2018, 02:06:38 PM »
It works quite well. My wife retired already, I'll be following. We haven't gone to 0% SR, but I'm trying to get it lower. She was at 60% of full time before she left, so that she could achieve a better balance. I'm using a combination of saved holidays and other tricks to get down to 80%, I'll evaluate in a few months and hopefully go down to 80% officially (then 60% after a year?)

One of the weird intangibles is the value of my work benefits. If I stretch out my working career I get to keep them longer (obviously), but the value of the benefits per hour work becomes larger. For example, if I claim $1000 in medical/year and work 2000 hours, its value is $0.50/hour. If I work half time the value is $1/hour. In a lot of ways the reduced hours and longer timeframe is more profitable.

At 2 years from FIRE a person going to half time would likely need to work 3 years, its a great trick. In scenario A thats 4000 hours of work left, scenario B its 3000. For some they need large chunks of time to travel (regular FIRE) for others they just need a few more hours in a week and Coast-Fire is the way to go (me). THere are two main reason, the first is compound interest picking up the slack. The second is my marginal tax rate is lower, I pay less in taxes the less I work (but its not proportional).

MrGville

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Re: Switch to 0% savings rate?
« Reply #15 on: August 13, 2018, 06:00:05 PM »
I've thought about doing exactly what OP is considering.  Save up enough where we never have to save again, and then work "fun" jobs where we combine to make like $25k a year to cover our base expenses.  Sounds tempting now because it would enable us to quit our cubicle jobs a lot earlier.