Author Topic: Case Study: Can I Retire with ~800k and no debt?  (Read 19109 times)

curious_george

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Case Study: Can I Retire with ~800k and no debt?
« on: July 06, 2018, 07:58:33 AM »
32 Year old, married, 3 kids age 9, 8, and 3. Live in the Midwest. I was wondering if I could consider myself financially independent or not? Also looking for feedback on how we can improve our financial situation. Thanks!

Debts:

None

Income:

~100k/year software engineer
Spouse stays at home

Assets:

Taxable - ~450k (invested in vanguard VTI and various REITs)
Non-taxable - ~230k (invested 100% equities, split between VTI and VEU)
Paid off house - ~120k
A couple of old cars and whatnot I have but don't count as they are not significant in value. No emergency fund. Have credit cards and margin account but have never had an emergency that required them to be used.

Expenses per year:

Property Taxes   2845.6
Sanitation   720
Electricity   1800
Groceries   10400
Car Insurance   360
Car gas/depreciation   1400
House Maintenance   1800
Internet   180
School Expenses   2070 (food, fees, etc)
Cell Phones   120
Misc   2400 (gifts, entertainment, eating out)
Healthcare ??? (~3600 estimated based on premium for ACA plan + max out of pocket + putting kids on CHIP)


gpyros85

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #1 on: July 06, 2018, 08:10:10 AM »
I think financially you are in an awesome position!

However, you really have 630k investable assists which with 4% could give you 27k/year.

Healthcare is your big ď?Ē

Also, the kids will get more expensive and we could be teetering in a potential recession soon.

You are definitely barebones FI!

If you keep this up I definitely donít see you I working past 40. I would feel more comfortable if you did a few more years in the workforce.

ysette9

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #2 on: July 06, 2018, 09:01:29 AM »
I calculate your expenses as $27.7k per year and at a 4% withdrawal rate you would have $27.2k per year retirement income. Personally I might drop down to part time for just a bit longer to give you a little extra padding, or perhaps give you a chance to test-drive FI expenses so you can be certain your spending won’t be higher. But overall this is fantastic and it looks like you are in great shape. Enjoy!

BTW, your internet is crazy expensive, even for us poor Americans who have crappy choices. Can you get that down?

poniesandFIRE

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #3 on: July 06, 2018, 09:21:22 AM »
Looks like you're very close, if not there, on considering yourself barebones FI.

Do you intend to help with the kid's college expenses? Healthcare is definitely a big question. Any major house repair projects needed in the near future (new roof, etc.?)

I think, if it were me, I would do at least one to two more years fulltime and then drop down to part time and/or retire. Do you foresee any lifestyle changes that might change the budget once you do retire, like travelling more?

YttriumNitrate

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #4 on: July 06, 2018, 10:07:32 AM »
BTW, your internet is crazy expensive, even for us poor Americans who have crappy choices. Can you get that down?

$180 a year is expensive?

ysette9

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #5 on: July 06, 2018, 10:28:40 AM »
BTW, your internet is crazy expensive, even for us poor Americans who have crappy choices. Can you get that down?

$180 a year is expensive?
Sheesh, I’m sorry. I had a brain short and thought that was monthly.

LifeHappens

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #6 on: July 06, 2018, 10:36:31 AM »
I calculate your expenses as $27.7k per year and at a 4% withdrawal rate you would have $27.2k per year retirement income. Personally I might drop down to part time for just a bit longer to give you a little extra padding, or perhaps give you a chance to test-drive FI expenses so you can be certain your spending wonít be higher. But overall this is fantastic and it looks like you are in great shape. Enjoy!
I agree. You're close, but not ready for retirement yet. I would call you FI and you could certainly downshift or say "FU" to a job that isn't working for you anymore, but I don't see a way for you to retire from all paid work forever.

I guess I would be curious to know more about your goals, because you have many options available to you. Do you want to take a sabbatical? Downshift? Do an epic trip while the kids are young? Start your own business?

ysette9

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #7 on: July 06, 2018, 10:42:01 AM »
To be clear why I say I would work a bit longer in this situation: spending $27k/year is awesome but it doesn’t have much fat in it. Which means that if SHTF, you don’t have a lot of wiggle room to decrease spending temporarily. I fully plan on pulling the plug once we hit 4%/25x, or even before then, but our budget has lots of fluff in it that we could trim if we have some bad market years in a row or some unexpected expense pop up.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #8 on: July 06, 2018, 11:09:24 AM »
@ysette9 - This is a good point. There isn't really a lot of fat in the budget currently - which is one reason why I'm still working full time. I'm having an internal debate with myself at the moment with respect to the "how much is enough" question.

@LifeHappens - I enjoy reading and doing research. My goal is to do independent research into psychological matters, outside the realm and constraints of an academic setting. I'm a naturally curious person so this is basically like a form of entertainment for me. I don't enjoy travelling - and I don't foresee doing research on these things having any sort of monetary benefit in the future. Sometimes people in academic settings are constrained because they can only do research on things where there is grant money available. Thus why I want to remove the financial question from the equation.

@poniesandFIRE - No plans to pay for kids college expenses. My goal is to instill a good work ethic and financial knowledge into my children and let them make their own way in life. If my kids are successful it will be because of their own hard work and effort, not because they won the successful parents lottery. I don't foresee any major home repairs or lifestyle changes in retirement.

LifeHappens

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #9 on: July 06, 2018, 11:12:48 AM »
@LifeHappens - I enjoy reading and doing research. My goal is to do independent research into psychological matters, outside the realm and constraints of an academic setting. I'm a naturally curious person so this is basically like a form of entertainment for me. I don't enjoy travelling - and I don't foresee doing research on these things having any sort of monetary benefit in the future. Sometimes people in academic settings are constrained because they can only do research on things where there is grant money available. Thus why I want to remove the financial question from the equation.
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Will your research require self-funding? You'll have to account for that in your FIRE budget. Also, would you be willing to do some part-time work while pursuing your research part-time as well? If you could get enough paid work to cover your family's expenses, you could very reasonably downshift now.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #10 on: July 06, 2018, 11:27:20 AM »
@LifeHappens

Perhaps research isn't the right word to use. I plan on spending a lot of time doing introspection, meditation, reading, playing games, hiking and perhaps writing and whatnot. I'm not planning on doing research in the traditional sense of the word, but mostly learning more about my own mind and how to alter mental processes in a predictable manner, the effects of different diet and meditation on things like memory and feelings, etc. It's not going to be formal in any way. I don't expect it to cost much beyond the occasional book or two. But yes - it would be nice if I had some money for this hobby, as it were.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #11 on: July 06, 2018, 11:39:44 AM »
@LifeHappens - Another thought, in respect to part time work. I have considered this, however, I haven't found any part time software development positions in my area. And it seems to me that working full time as a software developer for a while longer would be more enjoyable than working part time at a retail store for several years. Perhaps I just haven't thought of a part time job that would be enjoyable enough to take me away from software development. .

LifeHappens

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #12 on: July 06, 2018, 11:46:02 AM »
@LifeHappens - Another thought, in respect to part time work. I have considered this, however, I haven't found any part time software development positions in my area. And it seems to me that working full time as a software developer for a while longer would be more enjoyable than working part time at a retail store for several years. Perhaps I just haven't thought of a part time job that would be enjoyable enough to take me away from software development. .
Makes sense. I was just prompting you to consider other options. The idea of downshifting, which some people jokingly call Barista FIRE, seems to be getting more popular. I've done it myself, going from working two contracts to a single contract. If it's an idea that interests you, maybe start looking for remote work.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #13 on: July 06, 2018, 11:57:28 AM »
@LifeHappens - Oh yeah, it is an excellent idea. And I think for a lot of people that can eliminate a lot of the stress from work, while giving them more time to relax, run errands, etc. My current job is pretty stress free though, but if this job ever ends for whatever reason then I would definitely look for remote or part time work for my next job.   

Bicycle_B

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #14 on: July 06, 2018, 07:38:17 PM »
curious_george, I agree with other posters that you can consider yourself just barely FIRE but would be wise to work longer.

Reason #1 for this is that you are reasonably comfortable in your job. Reason #2 is that your job pays well and you could add a lot of safety layer in a few short years. If you can continue working comfortably, at this point I would do so. As a target, at least research the current cost of the ACA policies without subsidy, and consider saving enough to cover that cost.

Reason #3 is that I suspect the next 5 to 10 years will be a historically rare time in which employees prosper but investors suffer. Without too many details (rising interest rates, high PEs, the Fed's predictions of a strong economy plus factors that suggest investors will be the ones getting the short end for once), my personal theory is that now to 5 or 10 years from now is an exceptionally beneficial time to be an earner instead of living off investments. So I double down on reasons 1 and 2 because of these "timing" factors. MMM doesn't emphasize timing, so this is just my personal two cents.

Congrats on getting to a good position. I think you can legitimately consider yourself a SWAMI from now until the day to you leave your job.

Finances_With_Purpose

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #15 on: July 07, 2018, 09:49:10 PM »
I calculate your expenses as $27.7k per year and at a 4% withdrawal rate you would have $27.2k per year retirement income. Personally I might drop down to part time for just a bit longer to give you a little extra padding, or perhaps give you a chance to test-drive FI expenses so you can be certain your spending wonít be higher. But overall this is fantastic and it looks like you are in great shape. Enjoy!

BTW, your internet is crazy expensive, even for us poor Americans who have crappy choices. Can you get that down?

Basically this.  You're there if you bring in even a *little* each year.  You may consider all the worlds in between full-time income and FI/RE.  You could easily go part-time or switch jobs for a few years, leave your savings alone, and come out FI easily.  All you really need to do is augment for a number of years (probably not many) to be fully FI.  You also haven't counted social security/etc. in here, so you may be closer than it appears.  But to be safest, I would find a way to supplement your investment income for a few years at least to be sure that you're there.  That also would allow you to coast into FI whenever your investments are riding high with less risk. 

As @Bicycle_B pointed out, I would be wary of going full FI/RE today since the market is well overdue for some kind of correction, and that's the most dangerous thing to happen to you early in FI years.  I would either bolster a little or just switch to something you enjoy more (target = $30k income), even if it pays way less. 

ltt

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #16 on: July 08, 2018, 05:11:22 AM »
32 Year old, married, 3 kids age 9, 8, and 3. Live in the Midwest. I was wondering if I could consider myself financially independent or not? Also looking for feedback on how we can improve our financial situation. Thanks!

Expenses per year:

Property Taxes   2845.6
Sanitation   720
Electricity   1800
Groceries   10400
Car Insurance   360
Car gas/depreciation   1400
House Maintenance   1800
Internet   180
School Expenses   2070 (food, fees, etc)
Cell Phones   120
Misc   2400 (gifts, entertainment, eating out)
Healthcare ??? (~3600 estimated based on premium for ACA plan + max out of pocket + putting kids on CHIP)

H/C - max OOP could be up to $10k-$14k per year
Dental ?
Eye Exams/Glasses ?
Prescriptions ?
Water Bill ?
Clothing ?
Travel/Vacations ?
Homeowner's Insurance ?
Vehicle Registration ?
Vehicle Maintenance ?
College/community college/trade school savings ?

former player

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #17 on: July 08, 2018, 05:23:38 AM »
I don't foresee any major home repairs or lifestyle changes in retirement.

You are 32 and presuming you are in good health you probably have a life expectancy of at least another 60-70 years, if not more.  Even if your house is brand new today and you don't leave it until you are carried out, you are probably going to have to replace the roof at least twice, the side sewer or septic at least once, repaint or stain multiple times, etc. etc.

Agree with this: your current budget makes no allowance for future capital expenditures: house repairs, appliance replacement, car replacement, electronic replacement/upgrade.  It also assumes future good health: I'm not talking here about medical insurance and direct medical costs but the costs with accrue to less than perfect health and strength at some point in the future when paid assistance is required, even if it's just someone to mow the lawn.

What is your wife's view on the long-term future?  Might she want to go into the workplace at some point?  No reason why the two of you shouldn't trade off work between the two of you.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #18 on: July 08, 2018, 05:14:51 PM »
Thanks for your feedback everyone!

To provide some more explanation here for some of the other questions that have come up.

First - car repairs and vehicle registrations. I drive old, fuel efficient cars. I've been maintaining my own vehicles for the past 16 years and have all the tools, experience, and garage space to tackle just about any job. I've replaced CV axles, inner tie rods, timing belts, water pumps, brake pads and rotors, spark plug wires, exhaust systems, O2 sensors, oil, coolant, rethreaded spark plug holes and so on. I also know/am related to several mechanics that will lend me their more specialty tools. I paid $1,200 dollars for one of the cars 12 years ago, which gets about 40 mpg. We drive 8,000 miles per year because my work is close to home. I say all of this to say - the car repairs, depreciation, fuel, and registration fees are all included in the $1,400 /year. If you look at my actual costs for the past 16 years of driving, this number is actually below what my costs have been historically.

For home repairs - I do all of my own home repairs. I used to buy foreclosed houses and flip them. I've replaced everything from roofs, to water heaters, to furnaces, to drywall, to flooring, to toilets and sinks. I have also ran electrical wiring and plumbing on a number of occasions. Mostly because copper thieves seem to love ripping out pipes and wiring in the foreclosed houses in my area. While this isn't something that I do anymore for money, I still have all the tools and expertise available. I say all of this to say - the $1,800 /year is my estimate for these repairs on my primary residence. Based on my actual costs from previous jobs and living in my current house for the past few years this number is actually conservative I think.

H/C - max OOP on the silver plan I quoted is $1,200 because it includes cost sharing subsidies. With the roth conversions I have room to modify how much taxable income I show on the tax return. This plan also includes dental and vision. The premium that I would be paying is ~$150 /month due to ACA tax credit. Of course this is based on the ACA hanging around...

Eye glasses/exams. I buy eye glasses once a year from zenni optical. They cost $20. The exams are included in the insurance above.

Dental - This is included in the plan I was looking at...however, some things do require co-pays. Perhaps I should increase the healthcare budget to account for this. hmmm...

Prescription - I haven't been to the doctor in 16 years, and the only reason I went then was to get a physical for work. We eat mostly fruits, vegetables, nuts, whole grains, and drink water. The little ones also drink milk. We occasionally eat chicken. We exercise and have exercise equipment at home. None of us are on any sort of prescription medicines or have any sort of health problems, outside of my need for glasses. The body performs very well if you take care of it. My grandpa is 97 years old and the social security administration demanded to interview him because they thought it was so strange that someone is 97 without a single billing to medicare. They thought he was dead and we were scamming them. Jokes on them - He still builds sheds when he's not chopping firewood.

Water bill - Our water comes from the ground. It's clean and tastes amazing. Some people call this a well, but I call it "magic".

Clothing - Garage sales + thrift store + family members. This is included in the misc budget. In the past decade I've spent about $20 for clothes for myself - this was mostly for socks and boxers. All of my shirts and pants have been given to me from family/gifts etc. If someone doesn't know what to buy me or kids I just tell them to buy clothes. I usually pay about $1-2 dollars per pair of shoes from garage or estate sales. Honestly I like the estate sales better for shoes because all you need is one dead guy who has your size shoe and you're golden for years. Most people die with way too many shoes...

Travel/vacations - Vacation? I don't understand what this word means. But no - we've never done that. We do travel to visit family and friends though. Some of our family members have boats and live near bodies of water. They may also have additional houses and places for us to stay. Is this what you mean? If so - see Car gas/depreciation expense. We don't travel very much - and I don't expect this to change in the future.

Homeowner's insurance - I've never met anyone who has lost their house to a fire/flood/tornado. On the flip side, I have met many people who lost their house to the bank. I don't live in a flood plain. The wiring is all up to code and we don't have any candles in the house. We don't smoke. We have fire extinguishes on both floors. Someday in the future - if the economy collapses and my house burns down at the same time, then I'll just go back to flipping houses for a while. Or go back to work in an office somewhere. Or my wife will go back to work. I honestly don't see this as much of a risk. Worst case scenario I can buy another foreclosed house in my area for 60k or so and fix it up like I did with my current house. I'm sure I will get face punched a few times for this answer though.

College/Community/trade school savings - If my children are successful it will be because of their own hard work and effort, not because they won the "I have successful parents" lottery. Frankly - I think success depends more on your ability to learn, adapt, think critically about decisions, work hard and so on more than a piece of paper with your name on it. Of course I try and keep this opinion to myself. There are a lot of people who went to expensive colleges who tend to disagree with my opinion on this matter.

The wife - She said she would be willing to go back to work somewhere in the future. We've been together for 15 years and she has always been completely on board with everything.

Thanks for your feedback everyone! I think based on the feedback I will work a few more years (FMY?). The general consensus seems that it is too dangerous for me to retire yet. And since I enjoy my job it doesn't really matter that much anyway.




 




Bicycle_B

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #19 on: July 08, 2018, 08:42:36 PM »
Very impressive answers, curious_george.

former player

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #20 on: July 09, 2018, 12:38:43 AM »
I think we have found that rare creature: the wild-raised perfect mustachian.

Our work here is done, people.

Bicycle_B

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #21 on: July 09, 2018, 12:02:44 PM »
A further thought: you might buy some term life insurance. Part of the reason your costs are so low is skilled labor that you perform yourself. If you die in some freak accident (drunk driver, lightning strike, etc), term insurance would give your wife a way to pay for those needed tasks that you are no longer doing.

There is also the possibility that a freak accident could incapacitate you, but leave you alive. Not sure the best way to cover this, other than substantial extra savings. I guess it does show one additional benefit of working those few extra years.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #22 on: May 25, 2019, 07:27:59 AM »
Well - it has been almost another year since the original post. We've made some changes that have impacted our expenses, and our assets look different now. Everything else is still the same. Same job, family structure, etc. We sold a car and changed some of our shopping habits, which is reflected in the expenses.

Updated Assets:

Taxable = 510k
Non-taxable = 275k
House = 120k

Total Invested Assets = 785k
Total Networth = 905k

Updated Expenses (Annual Amount):

Taxes (Property + state income tax on dividends)   3130
Sanitation   720
Electricity   1800
Groceries   7800
Car Insurance   280
Travel (gas, car maintenance, depreciation)   1300
House Maintenance   1800
Internet   180
Healthcare   4800
School Expenses   2370
Cell Phones   120
Misc   2400

Total Annual Expenses = $26,700
Withdrawal Rate = 3.4%

What do you guys think? Is it time to retire or should I keep working a few more years?

former player

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #23 on: May 25, 2019, 08:38:54 AM »
You are FI according to the MMM calculations, you are practical, resourceful and a self-starter.

I think you should do whatever you and your wife want to do.

FIREstache

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #24 on: May 25, 2019, 09:05:15 AM »

"Misc   2400 (gifts, entertainment, eating out)"

So, that misc is where you put your discretionary spending.  I separate my gifts and charity into a different line items, but as a single person, I have very little discretionary spending, about $500/yr in recent years.  For FIRE, I'm ramping my discretionary spending budget up to $25,000+ per year while maintaining a 3.5% SWR because I'll have so much more time to enjoy entertainment, eating out, vacations, etc.  I have my own case study here with more detail on that.

It looks to me like you are going to be leaving yourself really short here, even though you said you haven't been traveling much.

With a big family, I would think you should have a lot more discretionary spending in FIRE than a single guy like me, who is planning on $25K+ despite currently spending close to $500/yr on it.

Steeze

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #25 on: May 25, 2019, 09:17:17 AM »
I agree that you are FI by any measure. My only hesitation, as others have mentioned, is if unforeseen events cause expenses to increase due to you not being able to do so much of your own labor. Also the health care thing could change quickly, and end of life care may be required down the road.

I say pull the plug if you want to take the time off, but keep your head up for opportunities to make money in ways that are agreeable to you, and be flexible if your situation changes. Enjoy your family while they are still young and living with you.

Congrats on your FI, frugality, and self reliance!
« Last Edit: May 25, 2019, 09:20:17 AM by Steeze »

mistymoney

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #26 on: May 25, 2019, 10:32:22 AM »
You're doing great, and are very self-sufficient, however I do think your glasses are a bit too rosy.

Doing roofing in your 20s or 30's vs 60s or 70s is a huge difference - I wouldn't recommend it! And an old school friend's father was a professional roofer - and died falling off a roof. If you must roof - please up your life insurance.

While it would be great if everyone continued on super healthy - it would be prudent not to count on that. With 3 kids - anything could happen. Even if highly genetically blessed, accidents happen, beyond anyone's control, and months in hospital or permanent disabilities can occur.

Also - your kids are pretty young. they are going to grow and require a lot more food at some point.


You could definitely try coasting at this point, but please don't plan for 70 years of best case scenario.

curious_george

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #27 on: May 25, 2019, 10:59:46 AM »
Out of curiosity, for the people who are hesitant, how much invested assets would you recommend for someone like myself to retire comfortably?

Steeze

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #28 on: May 25, 2019, 01:01:21 PM »
An exact figure is difficult - you are already FI as you know. If work is ruining your life then quit! 100% you don’t really need the money anymore assuming things stay the same. If work is ok for you then why not hang in there and make sure you have a large margin for error? Or something in between. If you are compelled to take time off do it! Just be flexible enough to jump back in if you need.

FWIW we are at aroumd 3k/mo. spend and are planning on 1.5MM invested + a paid off house. Why? I am using our un-subsidized health insurance premium figures and assuming we hit OOP Max every year, and am planning on very expensive end of life care at 15k/mo. Additionally I am including a healthy travel budget to include minimum 1 extended trip abroad each year (DW is from China). Also my parents are in their 60’s with no savings, old cars, and a mortgage. - I am basing my numbers off of a 60k/yr spend a living to 100 even though I’m only at about 40k now.

The difference for us to go from 1MM and probably be fine to 1.5MM and definitely be fine is about 3 extra years of work in corporate. I think it is a fair trade. I’ll also probably still work in some capacity, I can’t image not making money ever again, it’s too much fun. Maybe just do something completely different like renovating houses or something.

« Last Edit: May 25, 2019, 01:07:03 PM by Steeze »

FIREstache

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #29 on: May 25, 2019, 07:30:44 PM »

I've got lower monthly expenses in a household of one, and I feel like $1.4M is about right because I want sufficient discretionary funds for FIRE on top of my regular expenses.  If I was a family of 5, I would definitely want a higher figure, probably in the $1.6M to $2M range, and that's for a 55 year old FIREee.  I would bump that up a few hundred K for someone in their 30's.

MrThatsDifferent

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #30 on: May 26, 2019, 02:06:13 AM »
Well - it has been almost another year since the original post. We've made some changes that have impacted our expenses, and our assets look different now. Everything else is still the same. Same job, family structure, etc. We sold a car and changed some of our shopping habits, which is reflected in the expenses.

Updated Assets:

Taxable = 510k
Non-taxable = 275k
House = 120k

Total Invested Assets = 785k
Total Networth = 905k

Updated Expenses (Annual Amount):

Taxes (Property + state income tax on dividends)   3130
Sanitation   720
Electricity   1800
Groceries   7800
Car Insurance   280
Travel (gas, car maintenance, depreciation)   1300
House Maintenance   1800
Internet   180
Healthcare   4800
School Expenses   2370
Cell Phones   120
Misc   2400

Total Annual Expenses = $26,700
Withdrawal Rate = 3.4%

What do you guys think? Is it time to retire or should I keep working a few more years?

These are your expenses now. What will your retirement expenses look like? What will the expenses be when the kids are gone?

Hula Hoop

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #31 on: May 26, 2019, 02:56:41 AM »
I wouldn't be so fast to dismiss health care expenses, particularly as you live in the US.  You haven't been to the doctor in 16 years but you're 32!  Life is long and all kinds of unforeseen things can happen.  When I was 32 I was also extremely healthy with great cholesterol, blood pressure, perfect teeth (no cavities!) etc etc.  Then at 36 I had a health crisis that nearly killed me and spent almost 2 months in hospital.  I survived but the experience changed me, humbled me and made me much more understanding of others' health issues.  While in hospital, I shared a room with a 39 year old women who was dying of cancer. 

Not to be all doom and gloom but I find self-congratulation about good health (especially from a very young person) to be distasteful.  I may have been a bit like that myself at your age as I just hadn't had enough life experience.  Also, my two grandmas lived to 103 and 98 respectively.  However, my life expectancy is much shorter due to my major health issue.  Unfortunately, that's just life.

Luckily for me, my stay in hospital and treatment was free as I don't live in the US.  However, if something similar were (God forbid!) to happen to you or any other member of your family, it would put a huge spanner in the works.  If I were you, I wouldn't FIRE on such a lean budget as you never know what the future holds.
« Last Edit: May 26, 2019, 02:58:45 AM by Hula Hoop »

happy

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #32 on: May 26, 2019, 04:47:55 AM »
Well done OP on creating such a stash at your age and your family of 5 expenses of <27k a year. On the face of it, the maths works, but the one disadvantage of working the math on such a low spend and with so much life ahead of you, is, as others have said, that it doesn't leave you with much buffer if life throws you an expensive curve ball.

You are clearly a resourceful problem solver, and if you have no objections to possibly needing to go back to work, or your wife going to work, and you are in a hurry to retire you could do so. I'm a cautious soul, so personally I'd work a little longer whilst things are going well, particularly if you find work ok..and head towards a stash of around 1.2mm ie 40k @3.3%. Or work part-time to cover your expenses +/-adding to your stash whilst your stash compounds.

BeanCounter

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #33 on: May 26, 2019, 04:52:05 AM »
We are currently running the numbers over and over to see if we can both pull the plug. We have similarly aged kids and thatís the biggest wild card. Your kids are just at the tail end of being cheap. It doesnít appear that you have anything in the budget for orthodontist bills, music lessons, car insurance for new drivers, sports or additional school fees that crop up. Clothes get more expensive as they approach middle school. Teenagers eat more. Broken bones are more likely. Our budget for kids stuff has increased significantly as they have gotten older and I foresee it getting worse before it gets better.
I would wait until you have more.

BeanCounter

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #34 on: May 26, 2019, 04:58:03 AM »
Out of curiosity, for the people who are hesitant, how much invested assets would you recommend for someone like myself to retire comfortably?
With your current expenses, I think you could do it on $1M of invested assets. That gives you some wiggle room. I donít think it will take you that long to get there either.

Malkynn

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #35 on: May 26, 2019, 06:12:27 AM »
I wouldn't be so fast to dismiss health care expenses, particularly as you live in the US.  You haven't been to the doctor in 16 years but you're 32!  Life is long and all kinds of unforeseen things can happen.  When I was 32 I was also extremely healthy with great cholesterol, blood pressure, perfect teeth (no cavities!) etc etc.  Then at 36 I had a health crisis that nearly killed me and spent almost 2 months in hospital.  I survived but the experience changed me, humbled me and made me much more understanding of others' health issues.  While in hospital, I shared a room with a 39 year old women who was dying of cancer. 

Not to be all doom and gloom but I find self-congratulation about good health (especially from a very young person) to be distasteful.  I may have been a bit like that myself at your age as I just hadn't had enough life experience.  Also, my two grandmas lived to 103 and 98 respectively.  However, my life expectancy is much shorter due to my major health issue.  Unfortunately, that's just life.

Luckily for me, my stay in hospital and treatment was free as I don't live in the US.  However, if something similar were (God forbid!) to happen to you or any other member of your family, it would put a huge spanner in the works.  If I were you, I wouldn't FIRE on such a lean budget as you never know what the future holds.

All of THIS.

As someone who was literally in the ER a few days ago, has had multiple emergency surgeries, who has an MRI tomorrow morning, and a biopsy of a tumour that they've given me 50-50 odds of being cancer, I find the notion laughable.

The above are all for separate health issues, none of which have anything to do with lifestyle.

Yes, A LOT of very common ailments are avoidable, but that doesn't change the fact that if someone manages to not have *any* health issues, that's a matter of luck.

That said, I don't think that fear of health issues should motivate anyone to work longer in a job they aren't loving. If anything, I think it should motivate them to leave sooner.

Shit can happen, your health and life can be taken away very, very easily and quickly. Your body can decide to say "fuck you" to whatever plans you have.

It's critical to try and live your best life *now*.

OP, you have a ton of money and are young and healthy. Almost no one has that, so don't waste it, do something!

So what, you don't have enough money to retire and never work again, but who cares?

Drop to part time, or work on contracts a few months a year, or quit completely for awhile and figure out later how to generate the small amount of income you need to survive while letting your 'stache grow to a mountainous size.

You have so many options available to you, I envy your position!

Full FIRE, with no future earning ever again is just one extreme and tremendously rare path, that you don't need to take if it's not the best path for you.

MMM didn't even take that path.

Do whatever you want because you can.
That said, I think it's insane not to get medical check ups.
Just sayin'

six-car-habit

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #36 on: May 26, 2019, 09:22:21 AM »
 Good job dropping your groceries expenses down over $ 200 a month in the past year !

whywork

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #37 on: May 27, 2019, 05:57:51 PM »
I am in the same boat as you OP.

We are a family of two kids (9 and 5) and I am currently at 800K odd. While I can keep my expenses anywhere from 27K to 36K, on book a 1M will sound good. I want to pay for my kids college and want some excess amount above the bare minimum FIRE number so that it can grow while I rest. So I am targeting 1.5M plus a 200K for a paid home which I'll buy once I retire by moving to a low COL area. If you are not looking to pay for kids college then 1.2 to 1.3 M should be good for you to FIRE

If your current job lost your passion, how about switching to reignite the passion for a bit longer?

FLOW

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #38 on: May 27, 2019, 07:05:43 PM »
Your kids are 9, 8, and 3.  How confident are you that they're going to be happy wearing hand-me-downs or thrift shop stuff until they exit the house?  Might they ever want to play in traveling sports clubs?     

I mean it's your household (and your wife's) to run as you please. But at some point, those tiny people might start wanting things that are different than what you want... They might even want to go on vacation.

former player

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #39 on: May 28, 2019, 02:16:58 AM »
I'm terribly sorry, I seem to have wandered into the wrong forum.  I thought this was the MMM forum, which lives by the 4% rule and by MMM's wisdom as to how it applies.

To the OP, if you have concerns I recommend reading back over MMM's blog, as he has answers there for the points raised above.

blingwrx

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #40 on: June 08, 2019, 11:42:54 PM »
I agree with everyone else your budget is too lean, kids get more expensive as they get older, they'll need cars, cell phones and want expensive video games, computers, clothes ect. And eventually you'll need to pay for a major car repair or replacement or major home repair. You don't want to retire and live frugal the rest of your life, definitely save enough to give your self some breathing room. With all the extra time you'll have you should take some vacations and enjoy life.

You should work a bit longer if the job is bearable, but if you're just bored I think you can make a change and find a full time remote job where you work from home. You might even get a big pay bump if you're good at what you do. 100k isn't particularly high for a software engineer in a major city. So perhaps you can work for a company that's in a major city and the salaries may be 150k and higher as long as you're good at what you do. Another option is to downshift and work part time but not many places are looking to hire part time software engineers. Most people in this field will turn to self employment and freelance or work short contracts. Companies these days are always looking to save money and not have to pay big salaries and benefits, so the freelance market now is in high demand. I use sites like upwork to find work. Currently I just do freelancing part time at home and I'm just coasting to FIRE. I get a lot of time back working part time on my schedule and not having to commute to work. The money is less since i work less hours and no benefits but i guess it's just a trial run of how i'll manage health insurance in FIRE.

ericrugiero

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #41 on: June 10, 2019, 08:44:38 AM »
I'm terribly sorry, I seem to have wandered into the wrong forum.  I thought this was the MMM forum, which lives by the 4% rule and by MMM's wisdom as to how it applies.

To the OP, if you have concerns I recommend reading back over MMM's blog, as he has answers there for the points raised above.

+1

I'm surprised more people aren't giving the green light.  My opinion is you are set to do whatever you want.  There is some risk if you plan to retire and never earn anything again.  That risk is higher because you really don't have much room in your budget to cut spending if the market tanks.  On the other hand, you can easily earn some additional money in the future if you need it.  Flip a house every year or two and you add additional padding to your stache.  Work part time doing something you enjoy if you run short.  Chances are good you will earn some money in the future just because you want to. 

The biggest risks I see are:
- You pass away - Term life insurance is cheap.  Maybe get a $300,000 policy for 15 years.  (should be ~$150/year)
- You are disabled and can't work - Some kind of disability insurance maybe? 
- Major health issues for you or your family
- The market drops right after you pull the plug and you can't cut your budget much.

The risks aren't that high and if you and your wife are both able to earn money if needed that offsets most of the risk.

letsdoit

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #42 on: June 10, 2019, 08:48:14 AM »
are you ok with moving to Laos?

Luz

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #43 on: June 23, 2019, 05:30:08 PM »
I wouldn't be so fast to dismiss health care expenses, particularly as you live in the US.  You haven't been to the doctor in 16 years but you're 32!  Life is long and all kinds of unforeseen things can happen.  When I was 32 I was also extremely healthy with great cholesterol, blood pressure, perfect teeth (no cavities!) etc etc.  Then at 36 I had a health crisis that nearly killed me and spent almost 2 months in hospital.  I survived but the experience changed me, humbled me and made me much more understanding of others' health issues.  While in hospital, I shared a room with a 39 year old women who was dying of cancer. 

Not to be all doom and gloom but I find self-congratulation about good health (especially from a very young person) to be distasteful.  I may have been a bit like that myself at your age as I just hadn't had enough life experience.  Also, my two grandmas lived to 103 and 98 respectively.  However, my life expectancy is much shorter due to my major health issue.  Unfortunately, that's just life.

Luckily for me, my stay in hospital and treatment was free as I don't live in the US.  However, if something similar were (God forbid!) to happen to you or any other member of your family, it would put a huge spanner in the works.  If I were you, I wouldn't FIRE on such a lean budget as you never know what the future holds.

100% agree. I'd change the OP's quote from this: "The body performs very well if you take care of it" to this "The body has the best chance of performing very well if you take care of it"  The original statement insinuates that people's health issues are their own fault. Even lifestyle-related diseases are more complex than simple cause and effect. It's so annoying when people make such ignorant statements at other's expense.
Also, I may be missing something, but Medicaid has asset limits, right? Not sure if your assets will be on the "countable" list, but I'd check that out before assuming that your kids will be covered under CHIP.
« Last Edit: June 23, 2019, 05:37:09 PM by Luz »

BicycleB

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #44 on: June 23, 2019, 11:27:46 PM »
@curiousgeorge, I think your situation is very good.

Re buffer, the range of 150k to 400k further leaps to mind. That said, you are better than 4% withdraw rate already. The real question, as others have stated, is whether you  prefer to insulate yourself fully against any need for future employment, or would be comfortable accepting a small risk of needing employment in order to pursue your desires immediately.

I think you posted early on that your intent in FIRE is to freely follow your own path of investigating certain things. It seemed from reading your statements that you wanted not to have financial needs directing you. My guess is that the buffer will ensure that - that you're so efficient now, unexpected things that are small in most people's budgets would have a big % increase in your cost structure (think of Malkynn's cancer example...even a small % of that expense could be a large % compared to your current spend). The buffer would let you handle one or two of things like that.

It's perfectly possible that you will indeed earn more later, even if you quit today. Your wife might too sometime. You may go farther in your investigations by starting now instead of delaying. It's a judgment call.

I imagine you'll live a typical 80 years. To me 2 more years in the saddle is small to give yourself solid security for the remaining 46 years, based on your desire to really be free to follow your own path. But very very easily, it could turn out you don't need to toil another day at today's job. We won't know the "perfect" answer until later.

If you hadn't specified that you wanted to not need to work again, I'd say quit today.

Omy

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #45 on: June 24, 2019, 12:12:33 AM »
This reminds me of MMM's blog "Money and Confidence are Interchangeable."

I have plenty of money, but my lack of confidence has kept me working at least 5 years longer than necessary. OP is technically FI and has lots of confidence...go for it!

kenner

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #46 on: June 24, 2019, 12:34:17 AM »
I wouldn't be so fast to dismiss health care expenses, particularly as you live in the US.  You haven't been to the doctor in 16 years but you're 32!  Life is long and all kinds of unforeseen things can happen.  When I was 32 I was also extremely healthy with great cholesterol, blood pressure, perfect teeth (no cavities!) etc etc.  Then at 36 I had a health crisis that nearly killed me and spent almost 2 months in hospital.  I survived but the experience changed me, humbled me and made me much more understanding of others' health issues.  While in hospital, I shared a room with a 39 year old women who was dying of cancer. 

Not to be all doom and gloom but I find self-congratulation about good health (especially from a very young person) to be distasteful.  I may have been a bit like that myself at your age as I just hadn't had enough life experience.  Also, my two grandmas lived to 103 and 98 respectively.  However, my life expectancy is much shorter due to my major health issue.  Unfortunately, that's just life.

Luckily for me, my stay in hospital and treatment was free as I don't live in the US.  However, if something similar were (God forbid!) to happen to you or any other member of your family, it would put a huge spanner in the works.  If I were you, I wouldn't FIRE on such a lean budget as you never know what the future holds.

100% agree. I'd change the OP's quote from this: "The body performs very well if you take care of it" to this "The body has the best chance of performing very well if you take care of it"  The original statement insinuates that people's health issues are their own fault. Even lifestyle-related diseases are more complex than simple cause and effect. It's so annoying when people make such ignorant statements at other's expense.
Also, I may be missing something, but Medicaid has asset limits, right? Not sure if your assets will be on the "countable" list, but I'd check that out before assuming that your kids will be covered under CHIP.

Yeah...both of my mother's parents lived to be into their 90s (one is still going).  There's one of their parents that I didn't meet who died in her late 70s, the others all made it to their 80s.  My mother was dead before 50 courtesy of cancer #2 despite meeting all of your criteria for healthy diet and excercise.  If you're happy with your margin then by all means go for it, but assuming excercise and fruits and vegetables somehow guarantees your health is beyond naive.

civil4life

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #47 on: June 27, 2019, 03:05:03 PM »
How do you only pay $120 a year for phone and $180 for internet????  Just Curious.

This past year not including the home you added $165k to your stash.  It is really hard to say what is a good number, like others have said your kids and you are still very young.  If it were me, I would plan to work the rest of this year.  Then work long enough next year to max out your tax advantage accounts for the year.  Just my 2 cents.

MoneyGoatee

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #48 on: June 27, 2019, 03:49:01 PM »
There needs to be a post-retirement budget, instead of just going by the pre-retirement budget and thinking it will work for retirement too.  E.g., What does he pay for medical insurance now, and what will he pay when he no longer works?  Also, when he doesn't work, that gas cost has got to come down.  When his kids get older, will the expenses be higher?  What income tax will he pay after retirement, since he has mostly taxable funds?

Cassie

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Re: Case Study: Can I Retire with ~800k and no debt?
« Reply #49 on: July 09, 2019, 02:52:44 PM »
I would work a few more years. Kids get more expensive as they age.  2 of my 3 needed braces. They werenít cheap.