I am 46, married to SAHM with 3 children (16,12,8) and am currently winding down my business and am planning to take on a half-time consulting role with my largest past client, greatly reducing my number of hours on the clock & risk while still working from home. I hope the consulting role works out well (that it does leave me with all the time I want to now be spending with the family and on other things, and that the stress will be much less than with the business), and if it does it will provide me with enough income to cover our spending plus for the next few years I may do it. But I know this is my last rodeo in the corporate world, so if it doesn’t turn out to be the good position I’m hoping for I’ll be pulling the trigger to FIRE, so want to be sure I’m prepared as of today.
Here is the breakdown of what I have:
Taxable accounts - $2M (cost basis around $1.5M)
Traditional IRA/401ks - $450k
Roth IRAs/Roth 401ks - $350k
Total Investments to draw from - $2.8M
Paid for Home – $300k
DAF - $110k – Created during two abnormally high income years, will use this in FIRE for charitable donations
529s for 3 kids - $380k – I consider this fully funded for all and plan is in one way or another give the kids any leftover money they are able to not spend on college while still getting a degree.
We’ll likely grow old in the current home. After we finished paying it off and the business grew we did a couple remodels that gave it the outdoor living space that made it great.
My current investment breakdown is 90% VASGX (VG LifeStrategy 80/20 fund) and 10% VMMXX (Vanguard Prime Money Market), giving me basically a 72 equity/18 bond/10 cash portfolio. I always thought I’d end up with less cash as I’d move this business profit into investments, but given the money market is starting to return more than 2% now, bonds still seem they are bound to fall, and I’m getting close to FIRE so the cash buffer seems nice, and back testing doesn’t seem to show it having much difference on overall return, it is just where I have naturally fallen to.
The plan is to draw $25k/quarter out of the taxable portfolio for spending. This would be only about a 3.6% SWR but I consider it to be more like 4% after considering about $10k/year of spending I will not be regularly withdrawing but will eventually need to go to car replacement/roof/etc type spending over time (basically the big expenditures that are ‘regular’ but occur less frequently than annually).
I kinda like looking at my current investments as 2 pots for 2 very different time periods. The $2M taxable will need to cover about the next 20 years. Over those years I’ll be getting about $40k in taxable dividends and maybe another $20k in gains recognized each year, so that’ll still give me room to be rolling over significant traditional retirement funds to roth funds over those years without incurring federal tax. Over a period of 20 years I’d think I could easily get it all over into Roth IRAs. I then see that $800k in retirement accounts as a different pot of money to be used for age 67 and after, a very different looking spending period given kids all grown, SS avail, & medicare. Using FIrecalc and considering the $800k as its own entity (eventually tax free as all moved to ROths), along with approx. $36k/year in SS for me and spouse, and now with the help of Medicare (health insurance is a huge expense for me currently), even if the taxable money is exhausted by then through poor markets the same spending should be covered by what those retirement accounts will grow to.
Any advice/observations/concerns welcomed.