Author Topic: Case Study: Have I attained FI, Are my RE plans realistic?  (Read 1838 times)

TheContinentalOp

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Case Study: Have I attained FI, Are my RE plans realistic?
« on: January 23, 2018, 08:08:38 AM »
52-year old divorced man living in a HCOL suburb of Philadelphia.

Last year I made $61,372 after taxes.

Additionally my employer 401-k match was $2213

So

Salary       $61,372
Expenses  -$23,650
Match        +2,213
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2017 Savings   $39935

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Last year I spent $23,650 with is pretty much in line with the previous two years ($24,540 in 2016) and ($23,725 in 2015)

Breaking down the expenses: (Totals may not add to 100% due to rounding)

Rent & Utilities $11,636   49%

Last time I got a lot of grief for spending such a high percentage on housing. In my defense, I have probably the cheapest apartment in town. I can walk to most everything: grocery store, post office, dentist, library, gym, produce market, library, doctor, etc. I bike 2.5 miles to work. I don't have internet, but am able to use the Wifi from the restaurant next door. (I am not a jerk about it. I don't stream anything). If I were to move to the next town over. It would be a little less convenient. I'd probably have to buy Internet service. I'd be subject to a 1% local income tax. Even with the lower rent, I'd come out about even.

Food (home) $2665  11%


I run/bike most every day so I need about 2600 calories keep me going.

Travel $2291 10%

Hiking trips in the Ozarks and Sierra Nevadas, plus a bike trip from Philly to North Carolina

Health 5% $1289

I pay $8.87 every two weeks for insurance. $10/mo for Planet Fitness. 1 ER visit. The Shingles Vaccine set me back $250.

Food (out)    $928  4%

This includes food on vacation and a bunch of dates. (I've given up on dating for now)

Gas & Tolls $770 3%

Entertainment $732 3%

Books, Library Fines, Movies, Redbox, Chess membership dues and entry fees, online dating site subscriptions, Steven Wright at Dover Downs.

Car Insurance/Registration/Inspection $671 3%


Bikes  $543 2%

I need to get better doing my at bike maintenance. My plan is to buy a cheap road bike of CraigsList and learn by fixing it up. I can change a tire or a brake pad.

Gifts/Cards $530 2%

Car Repairs/Maintenance $472 2%

Clothes 2% $455

Running shoes every 6 months. Got new hiking boots in July that should last me several years.

Laundry/Dry Cleaning $262 1%

Haircut/Grooming $219 1%

Home 1% $152

Stamps/Postage $30   0%

Phone $10  0%

I am on the FreedomPop $0.00/month plan. The ten dollars was for a new battery.

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Assets

I have $800,000 in savings:


$368,000    (401-k)
$249,000     (Taxable)
 $95,000     (IRA Rollover and Trad)
 $82,000     (Roth)
 $6000        (HSA)
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Stocks & Stock Funds    $567,000
Bond Funds                  $154,000
REITs                             $41000
Cash/MM                       $38000

I have a 2013 Ford Festiva with 38,000 miles, a touring bike for commuting and bike-camping and a folding mountain bike.

-----------------------------------

The big changes when I retire should be:


Rent. I am looking at first to the Shenandoah Valley or Tri-Cities are in Tennessee. Having checked on craigslist I think I am being very conservative by estimating $750 a month

Travel I am going to zero this out to come up with my base expenses

Internet - I suspect I will end up subscribing @ $60 month

Health -  With a $25,000 MAGI I priced a Bronze Plan for $0 (with the subsidy) and a Silver Plan for $187 (with the subsidy). I used to have a HDHP  before the ACA for $147/mo. I am going to budget $200 to start with. Also another $500 a year for dental and vision that I am currently not paying for.

Remaining over all expenses -5% based on the cheaper cost of living.

The total comes out to about $21500/year. Each additional $100/mo for health insurance (over $200) adds another $1200 to the total.

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So right now in a 4% plan I can spend $32,000 and a 3.5% plan I can spend $28,000. That gives me plenty of money to travel.

Right now the plan is to work two additional years and retire in March of 2020. Even at a 1% ROR wth my current savings rate I should end up with $900,000. That would be a $36,000 spend at 4% and $31,500 at 3.5%

In retirement part of the plan is to Hike the AT, and bike across America.  I will put my stuff in storage at my parents. I figure I on the trail I will spend no more than $1500 a month and on the bike no more than $1800 a month, so I can come in way under on my expenses for the first few years.

If everything stays on course, I'd like to bike across Australia and Europe before I get too old.

In addition to all of that I made $442 writing last year. (Selling short stories and self-publishing on amazon). I'd like to spend my free non-hiking, non- biking time writing. I think I am a decent writer and think that $5000 a year gross is not an unreasonable goal.

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Am I missing anything? Do my numbers check out?



August

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #1 on: January 23, 2018, 04:10:15 PM »
I think you are set up very well for age 52.

Is FreedomPop free forever?  Did you have to pay at lot to set that up initially?

Have you hiked on the AT before?  I wonder if your retirement plan is to complete the whole trail because you were unable to because of work.


Sun Hat

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #2 on: January 23, 2018, 06:05:00 PM »
That sounds like a great plan, both financially and for awesomeness.

Although I don't think that it'll impact your plans, you'll probably have to pay tax on some of your 4% (income tax for some, capital gains for others). I'm afraid that I can't help with the math, as I'm Canadian and our rates and rules differ.

reeshau

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #3 on: January 24, 2018, 08:26:47 AM »
Sun Hat,
You are right.  The base case starts with after-tax income, but the withdrawal plan doesn't include taxes--it's not apples-to-apples.  Of course, OP has a mix of tax-deferred, Roth, and taxable accounts.  It's a whole other question on how to mix these right to keep AGI low.  But as a worst case, you should multiple your withdrawal rate by 1 + tax rate, to understand how you sit for your spending plan and for taxes / ACA subsidy eligibility.

Acastus

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #4 on: January 24, 2018, 09:05:15 AM »
You will need to fund your own health insurance. Check your state or the federal ACA site for costs. It will be more than $17/month, maybe $100-300? You have extra built into your plan. You should still be OK.

FYI, 50% for housing & utilities is a red flag when folks get a financial checkup. Your budget looks good on paper. I think you need to keep an eye on this. Your location gives you a lot of low cost travel options, which is good.

TheContinentalOp

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #5 on: January 24, 2018, 11:55:00 AM »
Quote
Is FreedomPop free forever?  Did you have to pay at lot to set that up initially?

You can't get the free plan online. You have to sign-up for their cheapest plan (which I think is $15/mo.) then once you have the plan you have to call (and stay on hold a long time to downgrade)

I guess it's free forever, until they eliminate that plan.

I think the plan has 250 minutes, 250 text and 1 GB of data. You do NOT get voice mail or texting of photos. I got a Google Voice number that I give out to people are able to leave messages.

Quote
Have you hiked on the AT before?  I wonder if your retirement plan is to complete the whole trail because you were unable to because of work.

I have done parts here and there. All of MD. Longest was a week in the SNP. Yeah, I figure because of work I'll never be able to through-hike or bike across the country. So it's FIRE and do it in my 50s.

TheContinentalOp

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #6 on: January 24, 2018, 12:02:43 PM »
Quote
Although I don't think that it'll impact your plans, you'll probably have to pay tax on some of your 4% (income tax for some, capital gains for others). I'm afraid that I can't help with the math, as I'm Canadian and our rates and rules differ.

Good point. I do need to budget for taxes. I'll try and take advantage of the 0% rates for Dividends and Cap Gains, but I won't be able to do that with all my income.

Thanks

Bicycle_B

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Re: Case Study: Have I attained FI, Are my RE plans realistic?
« Reply #7 on: January 26, 2018, 01:02:07 PM »
You sound set.  Retirement awaits at the time of your choosing!

Life is uncertain, but your odds are excellent.  You are clearly looking at reasonable options.  Most likely you will continue to be reasonable, therefore you will spend the rest of your choosing wisely (or exultantly) among continued reasonable options.

Presumably you also have worked enough to qualify for Social Security when you reach that age.  Just another safety layer.  May your road be even more satisfying than you hope!

PS. Re bronze plans, I have heard that out of network expenses can be high.  If you're going to travel, even in the US (such at Appalachian Trail), do your research to determine best options.  Possibly look into travel insurance as well or instead, since the new tax bill gives you options.
« Last Edit: January 26, 2018, 01:36:21 PM by Bicycle_B »