Author Topic: FSO is done, ready to FIRE, need reality check  (Read 3481 times)

DoneFSO

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FSO is done, ready to FIRE, need reality check
« on: October 15, 2018, 07:39:55 AM »
Life Situation:  will be 40 by EOY next year (2019), which is my planned FIRE date.  No kids, no wife.

Gross Salary/Wages:  salary is from job, no side gigs or hustles.  fluctuates/depends on location.  Base is $96k.  Currently over $200k.

Individual amounts of each Pre-tax deductions:  401(k) (TSP) and Roth IRA are maxed every year, taxable depends

Other Ordinary Income:  N/A

Qualified Dividends & Long Term Capital Gains:  N/A

Rental Income, Actual Expenses, and Depreciation:  N/A

Adjusted Gross Income:  depends, per above

Taxes:  depends, per above

Current expenses:  Currently almost zero due to war zone pay and circumstances (chow hall, base housing, etc.).  expect post-FIRE expenses to be less than $20k/annual.

Expected ER expenses:  N/A

Assets:  TSP (~$320k) + Roth IRA (~$90k) + taxable accounts (~$240k) + bank accounts (~$12k) = total (~$662k)

Liabilities:  no debts, no car payments, no mortgages, no credit card balances

Specific Question(s):
Notes:
1.  will get pension ~$20k/annual starting at age 57
2.  will get SS ~$12k/annual starting at age 62
3.  will add ~$150k to cash, retirement accounts, and taxable account between now and FIRE date (December 2019) = $812k assets at FIRE date.  Of course, depending on market between now and then, could be less or more.
4.  anticipate post-FIRE expenses will be low, as I plan to build a cabin in the woods and live frugally.  Might build an abode house in the desert.  Anticipate outlay of $30k - $100k on land, cabin, hook ups, etc.
5.  plan for life post-FIRE is to sit on my porch, garden, read stack of books I have accumulated and not touched over 13 years, play all the computer games that came out over the past 13 years, care for pets, and generally live very simply

Questions:
1.  need reality check.  your thoughts on feasibility?
2.  Health insurance for me?  less than $200/month or so?  More?  Less?  A lot less?
3.  Pitfalls and blind spots I might be ignoring?

Thanks,

Done

Lady SA

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Re: FSO is done, ready to FIRE, need reality check
« Reply #1 on: October 15, 2018, 10:40:50 AM »
Have you actually created a spending plan for post-FIRE? One that includes small incidentals such as gifts, vacations, gas, clothing, fees, etc? FIRE is a function of both assets and spending; it seems you have an excellent understanding of your assets but your spending is still a bit fuzzy. For example, With a $200k military income, you say you are saving ~$150k of that in the next year. I'm not sure how your income is taxed because of your military service, so correct me if I'm wrong, but it sounds like you are currently spending a bit more than $0?

However, with the pension/SS kicking in at some point, you do have a safety net that many don't. The trick is knowing that your accumulated assets will bridge the gap between now and then. In order to determine that with any confidence, you also need a solid grasp of your projected spending. *If* your spending will truly be around $20k per year, then you should only need ~$500k in investments to generate that income indefinitely, and by the time you FIRE you will be well beyond that.

Have you also looked into medical costs? As you age, that will go up -- nursing and continuous care are not cheap. Something to consider. Your spending will likely increase by a lot later in life.

I wish you luck!
« Last Edit: October 15, 2018, 10:42:29 AM by Lady SA »

civil4life

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Re: FSO is done, ready to FIRE, need reality check
« Reply #2 on: October 15, 2018, 12:53:42 PM »
Are you military.  Will health coverage continue after retirement?  If you are taking retirement wouldn't your pension start immediately?

Definitely look at putting some numbers to your FIRE budget.  Also where will you be living?

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #3 on: October 15, 2018, 01:08:08 PM »
Have you actually created a spending plan for post-FIRE? One that includes small incidentals such as gifts, vacations, gas, clothing, fees, etc? FIRE is a function of both assets and spending; it seems you have an excellent understanding of your assets but your spending is still a bit fuzzy. For example, With a $200k military income, you say you are saving ~$150k of that in the next year. I'm not sure how your income is taxed because of your military service, so correct me if I'm wrong, but it sounds like you are currently spending a bit more than $0?

However, with the pension/SS kicking in at some point, you do have a safety net that many don't. The trick is knowing that your accumulated assets will bridge the gap between now and then. In order to determine that with any confidence, you also need a solid grasp of your projected spending. *If* your spending will truly be around $20k per year, then you should only need ~$500k in investments to generate that income indefinitely, and by the time you FIRE you will be well beyond that.

Have you also looked into medical costs? As you age, that will go up -- nursing and continuous care are not cheap. Something to consider. Your spending will likely increase by a lot later in life.

I wish you luck!

  • no spend plan.  basing on reports by others who are living lifestyle I want to live.
  • current spending is more than zero but not useful to go into, as my current situation is unique and will end when I leave this place.  For example, I don't pay for housing, utilities, food, or transportation here, and my income is more than double what it usually is.
  • income is taxed.  I am not military.
  • I am indeed curious about medical expenses.  I would like to learn more about health insurance from those who have FIRE'd already or who have a thorough understanding of health insurance for early retirees.  My current health insurance is a Cadillac plan, but I don't have major health issues.  That said, I am 38 and not getting younger.  Would love to learn more about health insurance post-FIRE.

Are you military.  Will health coverage continue after retirement?  If you are taking retirement wouldn't your pension start immediately?

Definitely look at putting some numbers to your FIRE budget.  Also where will you be living?

  • not military.
  • not retiring, technically-speaking.  resigning, technically-speaking.
  • health insurance will end 31 days after resignation.
  • federal employee under FERS system.  With more than 10 years of service, will still qualify for a pension at 57 if I resign.
  • hard to budget, given the circumstances, but will look into the details and speak more with individuals currently living the lifestyle.  Apropos, if any of you are doing something similar to what I want to do, I'd love to hear more about it.
  • don't know where I will be living yet.  It will be in the United States, in a rural, LCOL area.

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #4 on: October 16, 2018, 07:20:18 AM »
I did some research on health care costs, using California as a random model (although it is indeed one of the states I am considering FIRE'ing to).  Someone in my hypothetical future shoes (40 years old, single, male, $20k/annual income) could get a silver PPO plan for $80/month, according to Covered California, the official state "marketplace."  The plan in question would entail $15 visits, $5 generic drugs, and $650/$50 annual deductibles.  Great. 

I don't see the problem.  Am I missing something (besides, of course, assuming ACA won't be repealed)?

nessness

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Re: FSO is done, ready to FIRE, need reality check
« Reply #5 on: October 16, 2018, 08:44:52 AM »
I think you need to do a lot more research on what your expenses would be after retirement. Could you actually buy land in California and build a cabin with hook ups for under $100k? Also, let's say you have $300k in non-retirement accounts and spend $100k on your cabin - that leaves you $200k to last you 17 years until you start collecting your pension and can start withdrawing from your TSP without penalty. Have you done the math of what the SWR would be for that scenario?

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #6 on: October 16, 2018, 09:26:22 AM »
I think you need to do a lot more research on what your expenses would be after retirement. Could you actually buy land in California and build a cabin with hook ups for under $100k? Also, let's say you have $300k in non-retirement accounts and spend $100k on your cabin - that leaves you $200k to last you 17 years until you start collecting your pension and can start withdrawing from your TSP without penalty. Have you done the math of what the SWR would be for that scenario?

  • I would be able to buy property and build a home with any necessary hookups for under $100k, but likely not a cabin in the woods in California.  California scenario would be in the desert.  Cabin in the woods scenario would be in a different state.
  • Most of the $150k which will be added to my net worth before FIRE date of December 2019 will go to the taxable account, making the taxable account closer to $400k, but if I FIRE, I would probably withdraw from all accounts.  I would sell shares in my taxable account, 72(t) my TSP account, and withdraw contributions to the Roth IRA (if necessary).

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #7 on: October 16, 2018, 12:48:32 PM »
Regarding the spending plan for my intended lifestyle, the real expense of what I plan to do is in the startup costs, i.e. buying the land, buying the tools, buying the truck, clearing the trees, building the cabin, building the wood shed, installing the solar system, etc.  I am budgeting up to $150k for the startup costs, although I think actual costs will be far less ($75k or less), as my goals are modest:  a one-room cabin home (less than 600 square feet) on a few acres of land in a rural, LCOL area.  After the place is set up, expenses should be low -- essentially the cost of utilities (if applicable), cell phone and internet coverage, food, health insurance, and gas for the truck.

EDIT 1:  5 acres of mountain land in rural Virginia (where I have family and familiarity), with maintained road access and utilities -- and with no HOA or restrictions -- can be had for $20k.  I could build a log cabin on such a plot for $20k.  Taxes on such an arrangement would be very low.  VA's health plan exchange is not as robust as California's, given that VA relies on the federal exchange (but does play a role in plan management, apparently), but there are still attractive "silver" plans for someone like me for less than $200/month.

EDIT 2:  Thank you for your responses thus far; they have spurred me to look more closely into these issues.
« Last Edit: October 16, 2018, 03:08:20 PM by DoneFSO »

lhamo

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Re: FSO is done, ready to FIRE, need reality check
« Reply #8 on: October 16, 2018, 08:49:45 PM »
I worked with FSOs in my pre-FIREd life -- thank you for your service!

Strongly recommend you look at settling in states with good expanded Medicaid under the ACA, especially if you can be flexible about when/how you draw on your stash.  Here in WA the plan is excellent, at least in the greater Seattle area.  Probably would also be ok around larger population centers in E. Washington, though I have no direct experience with that.

Personally I would probably want to rent in the area I was planning to settle in before committing to buying land, building a cabin, etc.  That would give you a chance to try out the health care system and see what year-round conditions are like before sinking a bunch of money into a homestead.  Your up-front costs might be a bit higher, but it gives you a LOT more flexibility if things don't turn out to be what you want/expected.

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #9 on: October 17, 2018, 02:23:46 AM »
I worked with FSOs in my pre-FIREd life -- thank you for your service!

Strongly recommend you look at settling in states with good expanded Medicaid under the ACA, especially if you can be flexible about when/how you draw on your stash.  Here in WA the plan is excellent, at least in the greater Seattle area.  Probably would also be ok around larger population centers in E. Washington, though I have no direct experience with that.

Personally I would probably want to rent in the area I was planning to settle in before committing to buying land, building a cabin, etc.  That would give you a chance to try out the health care system and see what year-round conditions are like before sinking a bunch of money into a homestead.  Your up-front costs might be a bit higher, but it gives you a LOT more flexibility if things don't turn out to be what you want/expected.

Thanks for the message.  Starting this thread has been an eye-opener.  I knew health care was a major issue, but I had no idea it was like this.  You would recommend I first move to a state to “try out the healthcare system?”  I see a doctor once a year for my annual checkup and that’s it.  How exactly does one take a healthcare system for a spin?
 
Also, is there a big a difference between being on Medicaid and having a “silver” or “gold” plan through a state exchange?

I agree that it is a good idea to first spend time in an area before deciding to build a home and settle down there.

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #10 on: October 17, 2018, 08:32:00 AM »
The urgent message regarding health insurance in each of your responses had me seriously spooked, so I did some more research.  Out of pocket limits of the plans I have looked at don’t seem unmanageable.  For most of these plans, out of pocket maximums are $6k or so.  That would be a hit, for sure, but it wouldn’t wipe me out or force me to rejoin the workforce.  The few horror stories I’ve read, where people with good health insurance -- who followed all the rules -- got stuck with tens or hundreds of thousands of dollars in hospital bills seem to involve out-of-network doctors getting involved in their complicated procedures and subsequently not being covered, but even those cases seem to be preventable (no pun intended) to a certain degree with a little communication and oversight of the case and – at the very least – resolvable, although a pain in the backside to deal with, but still resolvable.

I still don’t see what the worry is unless I can’t afford the premiums -- which it looks like I can -- or the ACA gets repealed.  I definitely don’t see why I would base where I live solely on health insurance considerations… and I’m certain I wouldn’t choose a location just to “try out the healthcare.”  Unless I’m missing something, I just don’t see how this issue warrants the level of concern.  I don’t have special needs dependents or a wife with a chronic illness, and -- touch wood -- I’m in okay health myself...

lhamo

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Re: FSO is done, ready to FIRE, need reality check
« Reply #11 on: October 17, 2018, 08:42:26 AM »
I have had absolutely no problem with the quality of or access to Medicaid -- but I am in a major metropolitan area with really good health care in general.  One of the things that a lot of people freak out about  with Medicaid are RUMORS that it is impossible to get access to doctors -- they are too overbooked or nobody takes it.  This is often more of an issue in rural areas where there are comparatively few providers.  And it is more of an issue with specialists -- if you do happen to develop an autoimmune issue and the one rheumatologist within 250 miles of you doesn't take your plan, you are going to have issues.

My personal experience has been that Medicaid has been the equivalent of a platinum plan.  I had cataract  surgery on both of my eyes at a top eye center and paid nothing out of pocket.  DH had an MRI a couple of weeks ago with no out of pocket cost.  We didn't have to wait unreasonably long for our appointments, either.  But lots of people FREAK OUT about the idea of Medicaid, thinking it is automatically some kind of substandard program.  And maybe in some parts of the country where doctors are in short supply and the economy isn't as good as western WA it is.  I don't have experience with that, hence my words of caution.

Do whatever you want.  You asked for advice so I gave some.  I tend to want to risk manage, and for me buying undeveloped land in a place I have never lived and sinking a bunch of money into it before I was sure I actually liked living there would be more risk than I would want to take on at the beginning of FIRE.  YMMV.


DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #12 on: October 17, 2018, 09:24:54 AM »
I have had absolutely no problem with the quality of or access to Medicaid -- but I am in a major metropolitan area with really good health care in general.  One of the things that a lot of people freak out about  with Medicaid are RUMORS that it is impossible to get access to doctors -- they are too overbooked or nobody takes it.  This is often more of an issue in rural areas where there are comparatively few providers.  And it is more of an issue with specialists -- if you do happen to develop an autoimmune issue and the one rheumatologist within 250 miles of you doesn't take your plan, you are going to have issues.

My personal experience has been that Medicaid has been the equivalent of a platinum plan.  I had cataract  surgery on both of my eyes at a top eye center and paid nothing out of pocket.  DH had an MRI a couple of weeks ago with no out of pocket cost.  We didn't have to wait unreasonably long for our appointments, either.  But lots of people FREAK OUT about the idea of Medicaid, thinking it is automatically some kind of substandard program.  And maybe in some parts of the country where doctors are in short supply and the economy isn't as good as western WA it is.  I don't have experience with that, hence my words of caution.

Do whatever you want.  You asked for advice so I gave some.  I tend to want to risk manage, and for me buying undeveloped land in a place I have never lived and sinking a bunch of money into it before I was sure I actually liked living there would be more risk than I would want to take on at the beginning of FIRE.  YMMV.

I did ask for advice, appreciate your thoughtful response, and have read and re-read what you've written above with great interest and serious consideration.  I also understand that you are passing on good advice based on your experience.  I hadn't fully considered the fact that quality (and availability) of care varies.  Obviously rural Virginia would have fewer options and probably lower quality of care than developed Washington.  I will think more about this.

To clarify, I do not intend to buy land and build on it with the intention of retiring without living there first, so we're on the same page there.

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #13 on: October 17, 2018, 10:10:17 AM »
Nothing much to add but I agree with @lhamo that trying a place for a year before buying land and sinking both a lot of work and a lot of money into it is wise. This allows you enough time to evaluate everything about an area before making a decision. As an FSO you've probably lived in many places and are aware how climate, people, social aspects and culture of a place can really effect your quality of life even in a beautiful place. You'll have decades in retirement so no need to make a permanent and difficult to change plan asap. As a single kid less guy you can try out many many options for as long as you want before making a choice.

Also, as a 40 year old single guy, you may find a remote life in the woods less appealing than you thought after awhile. So have a back up/back out plan and money in case you change your mind after a few years and want to move. No guarantee your home built cabin in.the woods would sell for what you put into it. 

I once speculated that I could be perfectly content in a prison cell for the rest of my life if I had a good internet connection and books.  That might be exaggerating, but it gives you a sense of my personality.  Some of my happiest days were when I was posted to DC and lived in a very cheap apartment to save money.  I rented a room in a shared flat, and in my free time I gamed, read, listened to music, etc.  If I wanted social interaction, I could have it with my neighbors or my friends in the area.  I remember thinking to myself that it was a perfectly-suitable life for me and didn't cost much.  I honestly think I could live that life forever and be happy. 

And while I was living that lifestyle, I realized I was saving a huge percentage of my pay and didn't need as much as I made in order to enjoy life.  I was already a confirmed Boglehead and sort of a Mustachian, but I didn't actually know about MrMoneyMustache, so I never even considered retiring this early.  I was already going to retire "early" at 50 as an FSO.  As the old adage goes, "When the student is ready, the master will appear."  I'm not sure what I was seeking, but I found the MrMoneyMustache blog a few weeks ago, so that's why I'm here.  I crunched the numbers and realized, "My goodness, maybe I can do this."

I am now focusing on Southwest Virginia, as I have spent time there previously and like the area.  City life (restaurants, cafes, etc.) is relatively-close.  I have a cousin there, and my other cousins and aunt might be moving there soon.  It would be nice to have family close by.  It is also fairly close to the DC metro area and to Charlotte, and I have close friends in both places. 

Still, you are right; I can't confirm at the present that rural life 24/7 would please me.  I am usually pretty good when I have a strong feeling about something, but I agree I should try it first.  There may be a possibility to do just that... and even to "try" FIRE before fulling committing and quitting my job.  More to come.

Rosy

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Re: FSO is done, ready to FIRE, need reality check
« Reply #14 on: October 17, 2018, 10:38:48 AM »
Just in case you haven't noticed it:

https://forum.mrmoneymustache.com/welcome-to-the-forum/what-comes-after-the-aca/

A very long thread with a lot of good information - tends to wander into all sorts of subjects, but immensely helpful overall given the many links throughout that thread - and - it will give you considerable insight into the topic of the state of medical insurance in the US.

Do make it your business to find a good plan and review it every year - coverage, not just laws and requirements change literally every year.

Congrats  - may you enjoy your FIRE:).

ROF Expat

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Re: FSO is done, ready to FIRE, need reality check
« Reply #15 on: October 17, 2018, 02:23:13 PM »
Done FSO,

I'm a recently retired FSO myself. 

As far as a reality check goes, I think your numbers sound pretty reasonable, but if you aren't planning to work, the amount of capital you'll be able to draw on might be a little lean if your housing costs turn out to be higher than you anticipated.  It seems to me that healthcare is the other big wildcard.  Keep in mind that the 20k pension you're talking about will have substantially less value 17 years from now than it does today. 

If you're really anxious to bail out, you can ignore the following.  If not, you might want to consider an alternative departure scenario: 

It sounds like you have about 10-12 years of service.  Are you by any chance an O-1 or close to promotion to O-1?  If so, you might want to consider opening your window and hanging on for a few more years.  The 20 years/50 year old retirement rule doesn't apply to O-1s who open their windows but don't make it to the senior level.  Let's say, for example, that you've just been promoted to O-1 at the age of 40.  You open your window and don't get promoted within the five years.  At that point, you retire from the Department at 45, but you collect your pension immediately.  So instead of $20k per year 17 years after retirement, you'll get something along the lines of $28K per year immediately with inflation adjustments.  You'll also be able to keep your health insurance at the same payment level as an active FSO. 

In this scenario, the pension alone would more than cover your projected needs.  You'd have permanent healthcare at a reasonable cost, and your investments would grow and provide a cushion that would give you options if you ever want to change your lifestyle. 

The State Department wants to keep FSOs for a 20-30 year career and they want to encourage O-1s to compete for senior promotions.  They put real money and benefits on the table to make it attractive.  If it looks like this scenario might work for you, you should check with an HR expert to make sure the rules haven't changed, but I'm pretty sure this will still apply. 

Good luck to you whatever path you choose, and keep your head down in whatever war zone you happen to be in at the moment.  I did my share of those and can understand what you're doing. 


DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #16 on: October 17, 2018, 03:01:02 PM »
Done FSO,

I'm a recently retired FSO myself. 

As far as a reality check goes, I think your numbers sound pretty reasonable, but if you aren't planning to work, the amount of capital you'll be able to draw on might be a little lean if your housing costs turn out to be higher than you anticipated.  It seems to me that healthcare is the other big wildcard.  Keep in mind that the 20k pension you're talking about will have substantially less value 17 years from now than it does today. 

If you're really anxious to bail out, you can ignore the following.  If not, you might want to consider an alternative departure scenario: 

It sounds like you have about 10-12 years of service.  Are you by any chance an O-1 or close to promotion to O-1?  If so, you might want to consider opening your window and hanging on for a few more years.  The 20 years/50 year old retirement rule doesn't apply to O-1s who open their windows but don't make it to the senior level.  Let's say, for example, that you've just been promoted to O-1 at the age of 40.  You open your window and don't get promoted within the five years.  At that point, you retire from the Department at 45, but you collect your pension immediately.  So instead of $20k per year 17 years after retirement, you'll get something along the lines of $28K per year immediately with inflation adjustments.  You'll also be able to keep your health insurance at the same payment level as an active FSO. 

In this scenario, the pension alone would more than cover your projected needs.  You'd have permanent healthcare at a reasonable cost, and your investments would grow and provide a cushion that would give you options if you ever want to change your lifestyle. 

The State Department wants to keep FSOs for a 20-30 year career and they want to encourage O-1s to compete for senior promotions.  They put real money and benefits on the table to make it attractive.  If it looks like this scenario might work for you, you should check with an HR expert to make sure the rules haven't changed, but I'm pretty sure this will still apply. 

Good luck to you whatever path you choose, and keep your head down in whatever war zone you happen to be in at the moment.  I did my share of those and can understand what you're doing.

Thanks for the message.  I do want out, but not desperately.  I could tough it out a bit longer in the FS, but not 11 more years.  I am currently an 03 with 9 years in.  I imagine I'll likely be promoted coming out of here.  I've gotten solid EERs and had good leadership, and I've always been promoted on time and have had fantastic assignments and tours.  I don't hate the building -- although I do hate some of the people -- so it's not about the service.  It's about my life and my priorities.  As you know, we're in the middle of bid season right now, and I just have no motivation for it.  I am talking to AFSA and some mentors, and I've breached the subject with my leadership here (who have been supportive and -- as I knew they would -- unintentionally guilt-tripping the hell out of me by being so supportive).  I'm looking at a few options right now and will have more to post here soon, I think.

If I toughed it out until 50, I'm sure I'd probably have $3 million in the retirement accounts, I'd keep my Cadillac health insurance, and I'd get the pension and the supplementary annuity.  All very sweet, but as I wrote above, it's just not what I need to be happy.  Don't get me wrong, I've got nothing against having extra money.  But I don't think the "juice is worth the squeeze" as they say on the military side.

ROF Expat

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Re: FSO is done, ready to FIRE, need reality check
« Reply #17 on: October 17, 2018, 03:30:43 PM »
If you're an O-3 now, my scenario doesn't really work.  Two promotions and then a 5-year window could easily take you to the 20/50 you're trying to avoid. 

Despite some really bad days, the work and lifestyle of the Foreign Service worked for me.  If they don't work for you, don't feel guilty about looking for something that does.  Maybe this doesn't apply to you, but since you mentioned the "guilt trip,"  I'll add that sometimes when you're in a high-threat post, ending your tour (or your career) while the mission/crisis/war continues can feel like you're running out on the colleagues you're leaving behind.  Don't give in to this feeling.  You should feel proud of what you've contributed, not guilty for not staying longer.  Every year you do in a war zone is one more year than most people will ever do. 


DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #18 on: October 17, 2018, 03:43:01 PM »
If you're an O-3 now, my scenario doesn't really work.  Two promotions and then a 5-year window could easily take you to the 20/50 you're trying to avoid. 

Despite some really bad days, the work and lifestyle of the Foreign Service worked for me.  If they don't work for you, don't feel guilty about looking for something that does.  Maybe this doesn't apply to you, but since you mentioned the "guilt trip,"  I'll add that sometimes when you're in a high-threat post, ending your tour (or your career) while the mission/crisis/war continues can feel like you're running out on the colleagues you're leaving behind.  Don't give in to this feeling.  You should feel proud of what you've contributed, not guilty for not staying longer.  Every year you do in a war zone is one more year than most people will ever do.

I appreciate the words of support and agree completely with everything you wrote, but to clarify, I do not intend to end my tour early while the mission goes on.  I intend to finish this tour and not leave my colleagues and leadership hanging under these circumstances.  If I FIRE, it will be after my TED -- next summer at the earliest.  I can hack it here for the remainder of the tour.

ROF Expat

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Re: FSO is done, ready to FIRE, need reality check
« Reply #19 on: October 17, 2018, 03:49:45 PM »
I understood that you are not curtailing your tour and are definitely not leaving anybody hanging.  I meant that it can be difficult and one can have very mixed emotions about departure even when you reach your TED.  At least, I did. 

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #20 on: October 20, 2018, 06:29:47 PM »
I went through my financial documents to run some numbers.  The last two years I lived fully in the United States were 2015 and 2016.  In 2015, I had a gross income of $88K and a take home pay of $64K.  I spent around $31K and saved the rest.  At the time, I was renting a room in an apartment that cost me about $850/month in the metro-DC area.  For those who do not live in a major, coastal metropolitan city, that is very cheap rent; go any cheaper, and you’re basically in the ghetto or subsidized housing, for which I didn’t qualify.  So taking rent out of the equation, I spent about $20K.  This included work-related expenses such as daily driving for work, kiss-and-ride parking, dry cleaning of suits and ties, etc.  And frankly, I didn’t even know about MrMoneyMustache at the time and was not planning on FIRE’ing, so I was eating out a lot, spending money on hobbies, etc.  2016 was similar. 

So running these numbers has me even more convinced that I can live comfortably on $20K if I lived in a home I owned outright, without work-related expenses, in a much cheaper COL area than the greater metro-DC region.

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #21 on: October 21, 2018, 08:57:56 PM »
You definitely have enough to FIRE imho even if your expected expenses end up being higher than projected. Lots of us (ok some of us) around here have FIREd on less than what you have and have lower expenses than $20k so know its very doable. My only suggestion is to plan on potential changes to your income - whether by choice or circumstance - and be flexible enough so that you can comfortably absorb any changes in your expenses or market downturns over the long haul. 

ETA: I retired in similar circumstances to your OP. Retired at 42 with a paid off house, no debt, kids or spouse, and very low expenses and a smaller NW and annual spend than you have so I know its doable. Just be flexible and leave yourself some wiggle room for potential changes your $20k/year spend can't handle.

Thanks, Spartana.  Your case is encouraging. 

I am trying hard to avoid counting chickens before they hatch, as no one knows what the market will do, but if I could count on $850K or so by my FIRE date -- and if I really were able to secure property/shelter for $50K -- then my portfolio could provide $32K/annual, which is a buffer that would give me substantial peace of mind.  That's the best case scenario.  The worst case scenario, I think -- barring a major disaster -- is that I end up with $750K or so, which would still provide $28K, which is still a good buffer and which still gives me flexibility in procuring property/shelter.  Even in that scenario, I would have great flexibility in my property/shelter budget and could spend as much as $150K on my setup and still have $600K to provide $24K/annual to live on.  So there's a certain degree or market downturn risk-mitigation "wiggle room" there, but I should probably do some proactive preparation for major market downturns, as well.  I think an emergency fund for a year or two of expenses (so, $40K or so) might be a good idea, for example, in a money market account.

I'm working on other risk-mitigation strategies right now, too.  More to come!

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #22 on: November 23, 2018, 08:40:56 PM »
After discussing with my union and my career development officer, I have decided to take two years of absence from duty -- a "trial FIRE" period.  During that time, I’ll technically be in employment status and will keep my health insurance; I just won’t be drawing a paycheck.  This seems to be the best option, as I can go back to the service with no loss of time or benefits if I decide that FIRE isn’t for me, and it gives me a way to return to my job if there are drastic changes in health care laws in the coming years.  My plan is to return to the Foreign Service for at least one more tour after this two-year “trial FIRE” period.  Really, I’d like to just be done and FIRE’d… but it strikes me as wise to hedge a little since I have this option available to me.

DoNorth

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Re: FSO is done, ready to FIRE, need reality check
« Reply #23 on: November 24, 2018, 02:53:30 AM »
I like the plan and did something similar.  Medically retired from the Army in 2014 and went straight into the civil service in DC, didn't particularly enjoy it and left after a year (I was about 36 then).  Moved to my hometown up north and built a house in the woods on a lake; worked part time at a non-profit focused on providing affordable housing to low income people.  This was a sabbatical of sorts from white collar office work.  After 3 years, about the time I finished the house, I saw an overseas federal term position in west Europe, applied and am here now for the next 24-32 months.  Going back to work has relieved a lot of stress that originated from the house building process (I have an extraordinarily low stress job) and I'm able to save a lot of my income + my whole military pension.  I thinking taking 2 years off is a good start because your plans will most likely change in some way or another as you begin the sabbatical. 

The house building process taught me a lot; especially that I had underestimated costs in a lot of areas despite general contracting it myself and doing a considerable amount of labor myself.  Things like permits, well, septic etc. often have fixed costs despite the footprint.  Sounds like you might be happy in a trailer mounted tiny house or something like that.  If you're building with cash, its a good idea to make sure you have multiple credit lines set up; especially with 0% interest offers because it offers more flexibility during the building process.

Dirigo

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Re: FSO is done, ready to FIRE, need reality check
« Reply #24 on: November 24, 2018, 05:06:21 AM »
You definitely have enough to FIRE imho even if your expected expenses end up being higher than projected. Lots of us (ok some of us) around here have FIREd on less than what you have and have lower expenses than $20k so know its very doable. My only suggestion is to plan on potential changes to your income - whether by choice or circumstance - and be flexible enough so that you can comfortably absorb any changes in your expenses or market downturns over the long haul. 

ETA: I retired in similar circumstances to your OP. Retired at 42 with a paid off house, no debt, kids or spouse, and very low expenses and a smaller NW and annual spend than you have so I know its doable. Just be flexible and leave yourself some wiggle room for potential changes your $20k/year spend can't handle.

Thanks, Spartana.  Your case is encouraging. 

I am trying hard to avoid counting chickens before they hatch, as no one knows what the market will do, but if I could count on $850K or so by my FIRE date -- and if I really were able to secure property/shelter for $50K -- then my portfolio could provide $32K/annual, which is a buffer that would give me substantial peace of mind.  That's the best case scenario.  The worst case scenario, I think -- barring a major disaster -- is that I end up with $750K or so, which would still provide $28K, which is still a good buffer and which still gives me flexibility in procuring property/shelter.  Even in that scenario, I would have great flexibility in my property/shelter budget and could spend as much as $150K on my setup and still have $600K to provide $24K/annual to live on.  So there's a certain degree or market downturn risk-mitigation "wiggle room" there, but I should probably do some proactive preparation for major market downturns, as well.  I think an emergency fund for a year or two of expenses (so, $40K or so) might be a good idea, for example, in a money market account.

I'm working on other risk-mitigation strategies right now, too.  More to come!

Are you me?! I'm a current FSO, also currently serving in a PSP (but not the same one, from your description), and am also planning to FIRE soon after finishing my tour. I have a linked assignment so I'll see that through before throwing in the towel, but by then I'll have almost the same time in service as you as well as the same grade. I plan to FIRE somewhere in WHA where the living is good and cheap and medical care is top-notch (hopefully won't need for a while as I'm currently quite healthy).

The only twinge of guilt I have for leaving the service is that it took me several years to get in and I know how many people would kill to have my job (even if it's not all it's cracked up to be). But, as we all know, time is the most valuable asset we have and while I enjoy serving my country and the unique benefits we have, I'd rather live life on my own terms and am getting sick of the bureaucracy and having to cancel plans and vacations for the next CODEL.

Anyway, just glad to know there are other "FIRE walkers" in the service. LWOP is a pretty sweet deal, so I don't think you can go wrong with that plan. I took some between my last tours to go and hike the Appalachian Trail and it was an awesome decision. Best of luck! 




SimplyMarvie

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Re: FSO is done, ready to FIRE, need reality check
« Reply #25 on: December 08, 2018, 04:32:38 AM »
Another FSO here -- Jeeze, maybe we need a separate chat thread or something! We're in until 20/50 or my husband threatens to leave me, whichever comes first, but my dream retirement sounds a lot like yours. After talking to 120 people a day (or managing the people who do) for a full career and cleaning the enormous battlecarriers we keep being assigned as housing in AF, a small house where I don't have to talk to anyone sounds like bliss.

Also, major props to your CDO -- a couple of years of LWOP sounds like a really perfect solution to your dilemma, especially if you can get land and a start on a house during that time.

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #26 on: December 11, 2018, 05:42:12 AM »
A few years ago, I ran some numbers and realized I'd be filthy rich at 50, given my frugality and my rate of savings.  I actually told myself that I needed to cut back on the saving and start spending more, i.e. "treating myself" more, but I discovered there was nothing to spend on.  I already had the few little luxuries I enjoyed.  I already traveled on vacation when I wanted to and ate whatever I wanted to, so my spending rate increased by zero despite myself.

The Foreign Service is the best job in the world... if you're into jobs.  I just don't think I am anymore.  Who knows; there is no legal requirement to do another tour after LWOP ends, so I may FIRE anyway -- and not return for another tour -- if I find myself enjoying the “trial FIRE” period and if it looks like it will be financially feasible.

lhamo

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Re: FSO is done, ready to FIRE, need reality check
« Reply #27 on: December 11, 2018, 08:08:44 AM »
Do you already know what your next post would be? If not, when do you bid?  If you can snag a good posting, might be worth hanging around. 

DoneFSO

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Re: FSO is done, ready to FIRE, need reality check
« Reply #28 on: December 11, 2018, 01:22:51 PM »
Do you already know what your next post would be? If not, when do you bid?  If you can snag a good posting, might be worth hanging around.

My next post is Leave Without Pay (LWOP) status for two years, technically-speaking.  I bid again in the fall of 2020 to begin a tour immediately after LWOP ends in summer 2021.  If I were interested in snagging a good posting, I would not be going into LWOP.  The reason I decided not to FIRE outright is because things could change over the next 2 1/2 years; I might find that I don't actually like FIRE; I might find that FIRE isn't as financially-feasible as I thought it would be; I might get the itch to do another tour or remain in the Foreign Service; or the ACA might be repealed/replaced.  But for right now, I have no interest in doing another tour after this one.