Can we FIRE?

[freeatlast]

I think we have enough to FIRE - DH disagrees. I'm waiting for DH to get a comfort level and working retail in the meantime cause I couldn't do my soul sucking corporate gig any longer!

Here's the stats:

Paid off house (HCOL): $600k with MIL unit that could be rented out for at least $850 if we went that route. Not currently rented.

Me: about to be 50 (OMG!)
2 paid off single family home rentals worth about $600k together and bringing in net $2700 a month
401(k): $500,000
Very small pension at 65: probably about $200

DH age 48:
1 rental worth $375,000 - owes $117k. rent covers expenses - renting at $1600
401(k) : $250,000
currently earning $100k

I think with health care we would need about $4000 a month to live on, plus we would like to do some traveling - not huge but maybe a couple of big trips a year. I can 72T my 401K. Or my thought was to sell one rental now at 50, live on that 10 years, sell second one when 60 live on that ten years, then we will have SS at 70 and can start tapping the 401K's.  Anyway, wondering if we reasonably have enough.....

Thanks!

[ysette9]

There are a lot of IFs here, but let’s go with what you have. If you truly only need $4k a month (track your expenses closely and think hard about what you need), and IF you can truly met $850 + $2700 from your rentals minis taxes and maintenance and vacancy and all that jazz, then you need your investments to kick in the additional $450/month that you are short. That requires an invested stash of $135k, which you are well beyond. If these numbers are solid I don’t see what you are waiting for.

[ixtap]

If your husband is at all reasonable, you are going to need concrete numbers, not "I think we need."

Have you tired creating a spreadsheet of your actual expenses and how you would cover them? Does it include funds for travelling?

It sounds like you need $4000 month to month. Does that include clothes? Car replacement? Roof replacement? Have you accounted for the roof repair on the rentals? Even "a few trips a year" is vague as fog. My husband and I recently spent $400 on a one week trip, all included and providing for another couple. My parents regularly spend $10k on 10-14 day trips.  If you are going to travel like them, a couple of times a year, you need to have nearly half again as much as your $4k/month budget. You have slightly more than 25x, in that case, but with a lot of it tied up in your own home.

I disagree with @ysette9 : if your numbers are solid, you are borderline and I can see where a spouse might need more convincing. However, you haven't given enough information to be at all confident in your numbers, so perhaps your husband sees it as a pipe dream with such vagueries.

[Car Jack]

What do you actually spend a year now?
Kids?
Upcoming big expenses?
What will health care cost you?  At least get a quote on insurance.

I don't think you're anywhere near close.  At double what you have, I still would question if you're there.  Sorry.

[DS]

Some simple estimated math based on selling rental properties:

Your houses: 600k
His houses: 258k (net)
Total: 858k

Your 401k: 500k
His 401k: 250k
Total: 750k

Grand Total: 1,608,000
4% Withdrawal: $64,320 / yr

Your estimated withdrawal rate: 48,000/yr
Surplus: $16,320 / yr or $1,360 / month


This is just based on the limited information provided, and even ignores the pension.

Another possible scenario: Sell your rentals and invest that money while your husband works a few more years until he feels comfortable and sees that everything is going well. Even more $$ invested.

[Car Jack]

DS, I like math (I'm an engineer, that's kinda required for me) but I don't like assuming that someone would sell the house that they would live in and use that as an asset to draw 4% off of.  So lop off $600k and maybe add in some rental income.  Also would have to be willing to sell the rental units.  HCOL still begs the question of what are the annual spending numbers and what big thing might come up, including health care. 

[DS]

DS, I like math (I'm an engineer, that's kinda required for me) but I don't like assuming that someone would sell the house that they would live in and use that as an asset to draw 4% off of.  So lop off $600k and maybe add in some rental income.  Also would have to be willing to sell the rental units.  HCOL still begs the question of what are the annual spending numbers and what big thing might come up, including health care.

Well the house they live in is an additional 600k, according to the first post, unless I misunderstood. So paid off house could be why the 4,000 / mo might seem low. Just some initial thoughts.

[Dicey]

I agree with @DS's approach above. I would also propose that you pull the plug and let him keep working. Be the example of how good post-FIRE life is and you might convince him to come out and play with you.

We did this for other reasons and it's worked out well. Really, really well because we live easily on DH's (less than $100k) income, so the rest of our money keeps growing magically. So much so, on another thread, I've been accused of oversaving.

There is lots of coverage on this topic here, but the Forum search engine is erm...terrible lacking weak useless worth what we pay for it. Use google to help you find other threads that contain lots of good input from others who've traveled down this road.

[Laura33]

Why sell your rentals?  They seem to be cash-flowing well -- looks like they are paying over 5% net, which seems pretty decent given the low risk profile.  The rentals alone cover all but about $1300/mo. of your estimated expenses; if you rent the MIL unit, that brings you down to needing $500 or so -- something your 401(k) alone would clearly cover.  So if your estimated expenses are accurate and complete (including things like long-term roof repairs), and if you have fully accounted for all of the rental expenses (including replacing dishwashers, vacancies, etc.), then you're in like Flynn -- even without your DH's contribution.

If you want to sell something, sell your DH's rental unit.  A rental that "pays for itself" is not a good investment -- a good investment is one that pays for itself and throws off cash every month.  He has fully half of his money locked up in an investment that is basically breaking even.  If he sells that and combines the money with the rest of his 401(k), you guys would have $1M in investable assets AND $3500/mo. rental income.  Many, many people here would FIRE with either one of the above; you have both.  So if your expenses are what you report them to be, you are more than fine.

[freya]

I can see two issues that could explain why your husband is hesitating, because they'd bother me too.  First, as others have said, you need to be much more specific about post-FIRE expenses.  These are likely going to be greater than your current expenses due to health insurance needs and unusual expenses you may not be accounting for, like replacing a car.  I personally include a 20% cushion plus health insurance costs plus taxes in my own FIRE planning, and perhaps your husband would want that too.

Second, you need a liquid stash in taxable.  You don't even have an emergency fund, per your post!  I'd say you need at minimum a 1 year emergency fund plus 5 years of expenses, to let you start a Roth pipeline.  You'd be almost there if you sell your husband's non-income-producing rental, and you could probably round out the rest within a year or two on your husband's salary alone.

Talk these over and let us know what happens??

[Acastus]

Your situation looks either good or borderline, and your true monthly expenses will determine where you stand. Spend a couple months tracking spending. Make sure to include everything you spend money on in a year to build your annual expense estimate - health insurance & expenses, taxes, gifts, travel (estimate), repairs x 4 properties, other annual or semiannual expenses (insurance).

Also, while a lot of us are relying on Obamacare to see us through, it is a big risk. The GOP is determined to kill it and replace it with tax cuts. You need a plan to cover an extra $10-15k for insurance if it, or whatever insurance you are using, falls through. It can be return to work, or cancel all vacations until age 65. But you should agree to something and write it down.