Author Topic: Case study- Future plan to make FIRE Happen earlier  (Read 737 times)

texxan1

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Case study- Future plan to make FIRE Happen earlier
« on: May 16, 2018, 10:18:00 PM »
so little background.... High income earner for last few years (over 300k) before that I made 100k per year

I had planned on 2022 FIRE, but now I'm planning on 2020 at 48 years old- single

So help me with analyzing my plan.

Current stats
401k                                                    635000
vanguard after tax brokerage account     618000
House- Paid for HCOL area value            500000
cash in various accounts                        75000
maxing 401k plus 7% company match
20k per month going to vanguard brokerage account 70/30
Renting current house for 2800 per month, while I slow travel Thailand on my time off. So using the 2800 per month to live on while not at work.. Currently work one month on one month off
side gig- Ice vending machine--- split income with partner - 25k a year

So the new plan is as follows
FIRE Jan 2020

Adjusted values for FIRE\\

401k should be at 700k at fire date- Assuming 6% and maxing input till then
Company pension taken at 48 years old on fire date would be transferred into 401k  - 270k
That should give me 970k in 401 at 48 years old... Let it ride till 60  so should be at 2mil figuring 6%

Vanguard should be around 850k on fire date

So my plan would be to live off the vanguard account for the first 12 years of fire.... I am making an assumption with no side gigs of living off 50k a year... I will have two side gigs, and with whatever each of these make I will adjust to not take anything out of my vanguard unless I have good reason too

with these assumptions, I think that I will have roughly 2.5m at 60 years old including 401k which will have grown and whats left from the vanguard account..... Thoughts?

I live in a hcol area just for taxes (texas coast) so my annual taxes and insurance for my house is 10k.....other than taxes, one of my side gigs (fishing guide) is pretty expensive hobby/side gig but I figure just doing 80 days a year would net me 25k after all bills, gas , boat maintenance and all etc

I have a cash account not listed above with enough money for me to buy a new truck, and I currently have a new boat that is payed for in the states just waiting on for when I come back... In process of the build on it now

Oh also, my company will be giving me a retirement medical package of 9800 a year.. To pay for doctors, dentist, premiums etc.... I haven't figure enough of that out, but will be researching it more in the coming months

so if you guys could take a look at my plan and tear it apart for what I'm missing\\

Everything I check and analyze says that its easily doable with a nice comfortable life, but I feel like I'm just missing something... I never made the assumption I could leave early from work, thought I was going to have to work all my life so didn't plan as I really should have.. But going from 100k a year, to 300k a year for the last few years have giving me some huge insight to what I can do

Also, the above does not take into account social security or a small pension from my last company that I worked for in my late20s/30s

Thanks

Tex

2Cent

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #1 on: May 17, 2018, 05:26:13 AM »
I think the only thing you're missing is that you could probably FIRE today if you wanted. Especially as a single there are not that many risk factors outside your control. If you really want to double check, just make a worst case budget where you live a minimalist life and a dream budget where you go for all your dream projects (sailing around the world type stuff). Then you can see what are the concrete things you're still working for and if they're worth it. My guess is that you could probably already do everything you wanted and will even continue saving in retirement.

2Birds1Stone

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #2 on: May 17, 2018, 09:37:08 AM »
You could easily FIRE right now.

reeshau

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #3 on: May 17, 2018, 04:53:25 PM »
What you have not detailed is your current expenses, and how that relates to your expected $50k retirement budget.  Your numbers are all round figures, so the details could be very telling / make all the difference.

From what I can infer:

Income:  $300k

Expenses:
Max 401k: $18k
Vanguard@ $20k / month:  $240k
House taxes: $10k
Stated subtotal:  $268k

Estimates:
Federal income taxes: $78k (single, standard deduction)
Medical insurance:??
Other expenses: ??

So, I subtotal $348k in expenses, before you have lived: utilities, food, hobbies, etc.  Is this really in line with your current reality?

I ask this because it seems you are ready to reward yourself with a few toys (new truck, new boat) but plan a pretty modest lifestyle, particularly for a HCOL area.  It is a big challenge to drop down from $300k income to $50k income.  While your statements and balances say you are a long way there, you do need to be honest with yourself about the goal.

Another question:  If you try this out, how easily can you get back into work?  Maybe you take a year off and see, as an alternate to connecting your credit card to Mint or doing an Excel budget.  (I'm assuming you would not view either of these as fun, since you haven't tried yet)

 

texxan1

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #4 on: May 17, 2018, 09:10:27 PM »
I have not detailed my current expenses as I have no budget.... I do not pay US federal taxes, as I don't live in the US... I set myself up with a total budget of 2800 US a month, of which I spend about 1500 and that is just every other month, since my work time all food/healthcare and living expenses are paid for by my company//  Equally, all my flights around the world for time off are paid for by my company

I based my FIRE budget the following...

Annual
House taxes and ins  10000
Electric                     1500
Food                         5000
house gas                 200
cell                           700
internet                    600
truck/boat gas/ins    10000
insurance                 1000
water/sewer             2000
discretionary            10000

These numbers above are based on what I was spending before I started slow travel in Asia on my time off...... I have pretty detailed reports of past accounts. So I know a good number to base them off of but this is in no way a bare bones FIRE budget...

My current actual bills are as follows
ATT cell     $52
medical/dental/vision   $14

All the rest of my monthly bills are what I choose to spend when in southeast asia... I don't do anything extravagant there and its pretty cheap to live... However, I don't base anything for FIRE on that because it will not even match up


Once I leave this high paying career path, I will not be able to get back into it... AT ALL... unless I started as a lowely scrum with another company... This is why I want to have all my dots to alighn before I take the plunge

As for my Toys that I want... let me give a simple explanation of that.. I knew when I went to take this time to travel on my time off, I sold a lot of things that I owned including one of my boats.. Which I took the money and put into an account to have a new one built (50k) and I sold my truck and set that to a separate account so I had money to buy a new truck when I got back to the states... All of this was preplanned, as my goal is to do my side fishing guide gig when I pull the plug, as in reality that's the thing I most enjoy in life and I did it for 15 years before taking this little side break.   

I hope this gives some kind of idea

reeshau

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #5 on: May 18, 2018, 07:44:35 AM »
.... I do not pay US federal taxes, as I don't live in the US...

Not to get off on a tangent, but where you live has nothing to do with Federal income taxes, at least if you are a citizen.  The FEIE for 2018 is only $104k.  The US is a global tax country, so unless you are working for the military or are paying even higher taxes in the country where you work (i.e. Western Europe) then you do owe them.  You would owe state taxes, too, but of course your US residence is in Texas.

I make this point not just as an aside, but because you may have a big surprise when you do come back, if you aren't right with this.  And even without that, you have US assets which the IRS could go after for back taxes.

Other than that, then yes a budget based on your past living experience is a good place to start.  As you say, you don't have health insurance in that list, and while you don't have a starting point, there is a lot written about how expensive it is, and how fast its rising.  What you may find is that you may want to continue to slow travel for a year after you quit, so that your AGI has a chance to settle down before you get your premiums.


texxan1

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #6 on: May 18, 2018, 10:07:50 AM »
Reeshau,

Thanks for your comments, i should have explained better in the beginning... I do have US taxes, but i dont pay them.. My company pays all my taxes in the countries that i work in and the US

as for health insurance, yes that is the unknown for us all and it does worry me... Ive read alot, and still dont understand it.. There is always the option for me to slow travel in the first year

Cheers

reeshau

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Re: Case study- Future plan to make FIRE Happen earlier
« Reply #7 on: May 18, 2018, 04:12:33 PM »
Wow, that is a sweet job.  I have seen employers cover either / or, but both is pretty amazing.  Good luck on your decision!