Fire on $750k invested?

[thriftyc]

.

[NearlyThere]

This is to be pretty much my story, so I'm all ears on this post.

[Faramir]

I think there's this guy called MMM who did this once with similar numbers ;-)

He also supplements with fun PT work.

Sorry, I couldn't help myself.

[gomike]

How old are you?

[NearlyThere]

I think there's this guy called MMM who did this once with similar numbers ;-)

He also supplements with fun PT work.

Sorry, I couldn't help myself.

Hahaha, I thought it sounded familiar. I'll be 34-35 and have approximately $12,000 PT income.

[Dances With Fire]

Following....Our "number" is approximately $800K-$900K..

Can a frugal couple live on $32K-$36K per year until SS kicks in? For us, I believe so. (Health issues & health care will always be a an concern.) We could live very well on one million...

[MrGreen]

I think MMM fired with a little less than 700k invested. Of course he also had the rental house that would eventually be sold and become investment income. You didn't say anything about your yearly spending in FIRE. If you were dropping 60k a year that might be a problem. But if it's a typical amount I see tossed around (20-40k) on this forum then 700k invested, 250k asset, and a $12,000 PT income? Sound like FIRE time to me!

[forummm]

Yeah, the size of the NW doesn't matter. It's the ratio of invested NW to intended annual expenditure that matters. I recommend people actually live on their intended annual expenditures for at least a year (ideally several minimum) before deciding to FIRE. If you can do it for years, you can probably do it for more years.

[Financial.Velociraptor]

I went FIRE on 5OCT2012 with 273k in taxable account 105k in 401(k) and paid off house.  It's totally possible.

[NearlyThere]

I'm 52% of the way there, so a little bit more time to go. I also have the non-considered asset of a sizeable business that generates a great profit, but would require me to head for the most part unless I sold up (can't see that happening).

On the basic number though, $750k would give us a 4% withdrawal we are very comfortable with. In fact our actual spending - luxuries is already catered for at 52% of our overall goal. Fire today? Not a chance

Also just realised I hijacked thriftycanadian's post. Sorry

[Faraday]

Has anyone here completely fired on approx 1 million household net worth? For example, a $250K paid for home and around $750k in assets?

I am looking to hear from people who have jumped into full fire on roughly this amount with no additional pension money coming later. (Government SS is expected of course)  Perhaps you supplement with fun min PT income, would like to hear about that too.

Would love to hear your story...

I wish...badly, I could answer your question because I'm interested a real world answer myself. However ,there are mathematical forecasts available that people are probably going to tell already telling you about:

SWR:
Most people in these forums plan for a 4% Safe Withdrawal Rate.  That's $30,000/year at your stache size. With my mortgage paid off (as you have done), I could live like a MUSTACHIAN KING on $30k/year.

I'm surprised no one has mentioned FIREsim and cFIREsim (google 'em). Those simulators are relatively complex, but with a little noodling around (you are smart enough to accumulate $750k, you are probably smart enough to figure the simulators out) you can use these simulators to tell you the odds of your portfolio "survival" at a given withdrawal rate.

What I can tell you, after working the simulators, is that you are in very excellent shape. You could FIRE now and if you can live on $30k/year or less, you'll keep accumulating cash quite nicely.

All that said, the responses you have gotten so far are solid gold. I like forummm's comment "if you can do it for a year, you can do it for many years", and Financial Velociraptor made my year by telling his situation - I'm not too far from where he FIREd and I'm facing the possibility of layoff in the next two years or so myself.

Does this help? I saw your original thread about being laid off, so I have great empathy for you. (It's happened to many of us before...) Please don't freak out - opportunity takes many different forms, but you need to be calm and composed in order to fully recognize it!

[James]

Yeah, the size of the NW doesn't matter. It's the ratio of invested NW to intended annual expenditure that matters. I recommend people actually live on their intended annual expenditures for at least a year (ideally several minimum) before deciding to FIRE. If you can do it for years, you can probably do it for more years.

+1

[Lian]

All that said, the responses you have gotten so far are solid gold. I like forummm's comment "if you can do it for a year, you can do it for many years", and Financial Velociraptor made my year by telling his situation - I'm not too far from where he FIREd and I'm facing the possibility of layoff in the next two years or so myself.

Does this help? I saw your original thread about being laid off, so I have great empathy for you. (It's happened to many of us before...) Please don't freak out - opportunity takes many different forms, but you need to be calm and composed in order to fully recognize it!

++1
I'm always interested in reading real world examples too. Been laid off - facing it again, as my job is tied to oil and gas industry. So it's a great relief to hear from folks that successfully FIRE on considerably less than $750k.  My goal is $700k or so, but based on my current living expenses (for the last couple of years), I could theoretically get by on what I already have if necessary. I have too much anxiety about it though.

[forummm]

Financial Velociraptor made my year by telling his situation - I'm not too far from where he FIREd and I'm facing the possibility of layoff in the next two years or so myself.

Just a note of caution. It's great that Financial Velociraptor has been able to make it work with his very high WR so far. But he is taking on much more risk than the average FIREee. That can work out great, but it could also work out very poorly. He's benefited from a huge bull market the past few years and he does more aggressive (and more risky) investing to increase his returns (so far at least--we'll see what happens when the market drops, as it certainly will). So you would be taking a huge risk in intentionally trying to FIRE with a very high WR.

On the flip side, it is good for you to know that you can be very frugal and get by with maybe part time work or a lower paying job in the event that you do get laid off. The security of a stash and frugality are great.

[Faraday]

Financial Velociraptor made my year by telling his situation - I'm not too far from where he FIREd and I'm facing the possibility of layoff in the next two years or so myself.

Just a note of caution. It's great that Financial Velociraptor has been able to make it work with his very high WR so far. But he is taking on much more risk than the average FIREee. That can work out great, but it could also work out very poorly. He's benefited from a huge bull market the past few years and he does more aggressive (and more risky) investing to increase his returns (so far at least--we'll see what happens when the market drops, as it certainly will). So you would be taking a huge risk in intentionally trying to FIRE with a very high WR.

On the flip side, it is good for you to know that you can be very frugal and get by with maybe part time work or a lower paying job in the event that you do get laid off. The security of a stash and frugality are great.

+1 forummm

I just need enough for that next version of LEAF, or a 200-mile eNV200, or a Tesla Model 3... :-)

[steveo]

At this point I intend to retire with probably a higher WR than 4% and that may be less than $750k.

Can it be done ? I think so but I also think you may want to work part time to ensure that there is some safety margin.

[Workinghard]

That's pretty close to where we'll be. Maybe 800-850k invested BUT we'll be selling our home. Low end is clearing 250k AND we only have 5 years to bridge to max SS. Two of those years we'll get around 20k and a 10k pension. SS and pension will be more than our current 40k expenses which includes ~12k/yr charitable giving. Even if the market drops 50%, I'm okay knowing the sale of our home will tide us over until SS.

[41918]

My entire career has been in commercial real estate investment and I dabble on the side in my free time. I think if you have a strong exposure to real estate you can FIRE on 750k. You can easily achieve low to mid teen cash returns at 60-75% LTV. That factors in everything and the kitchen sink (management, leasing, vacancy and credit loss, capital reserves, maintenance, property taxes, insurance, etc.) If you invested half of 750k in real estate and achieved 12.5% levered cash on cash, you're looking at 46,875 annually. I live in Texas so folks in CA, NY, et al. will have a harder time finding deals that cash flow at this level. Especially at this point in the cycle, but it can be done.

[FIKris]

yes.   My husband and I fire'd this year with a small paid off home and 720k in invested assets (divided roughly equally between stocks/bonds and rental properties).  We plan to do a lot of budget traveling and occasional fun part time work with our new free time.

[steveo]

I went FIRE on 5OCT2012 with 273k in taxable account 105k in 401(k) and paid off house.  It's totally possible.

How much do you spend or what was your WR ?

I think that we often wait too long until retirement. My wife and myself were discussing this last night and I can see us retiring with a sub 4% WR but I think that is way over the top.

[Bearded Man]

I plan on retiring with less than that invested in the market, largely due to the fact that my primary source of income will be rental properties. I just want enough in index funds (if I can ever stomach entering the stock market again - burned several times individual stock picking...) to cover my expenses and then some if the properties are vacant. Heck, even my rental income will be way more than I need.

I just like a lot of buffer and some diversification. If I can stomach even index funds after losing a lot of money stock picking long ago...

[KMMK]

I consider myself about half-FI with just under $200,000 NW, so yeah, with $400,000 I'd be fine. No house for me though. I rent and keep expenses low. I'm figuring about $1300 a month to live, depending on how much travel I do, plus taxes, which will be minimal at that level. I do plan to do some kind of job indefinitely though. If I never wanted to work another day I'd aim for $500,000.

[Hank Sinatra]

I retired with a market value of just about $750,000.00

I did have a pension but I imputed a market value to it but dividing it by.035. Also, I had an employer provided  medical policy (TriCare. I am retired military)  to which  I imputed a market value. That was actually very difficult and the value varied depending on  how the value was imputed.  That, plus my personal stash value at the time came out to about $750,000.00

[NoNonsenseLandlord]

It's risky...  But there is always public assistance.

I have a bit more more than 1M, plus a paid off house, plus a pension, plus free health care, plus rentals that produce 3x+ what I need...

What happens if inflation is big?  or deflation?  Or things go bad?  Extended stock market decline?  Higher taxes?  Or want to move to a different area?

You can do it, but what is your risk mitigation plan?  Working at Arbys? What if you spend more than you anticipate?  A grand-kid, or a wedding might make for a bad time. 

[Faraday]

I retired on a net worth much less than $1 mm - much much much less than $750K if you don't count the value of my paid off house in a HCOL area and my small government pension ($1400/month starting at age 50 - although I retired at 42 on savings/stash). Been retired over a decade now and doing fine financially - my expenses have actually gone down over the years as I become more mustachian. I live solely on my pension now and no longer touch the stash for the most part. With no debt, no kids, low cost/free medical, and a fairly frugal (but awesome) lifestyle it's more than enough for me. Like other's have mentioned, it's less about net worth or the size of the stash, and more about spending rate and expenses.

OMG spartana I swooned when I read what you posted. If I could pay off the house tomorrow, I'd FIRE the next day on my measly $250k. I've got enough projects and things to do at the house that I'd stay busy, solid, within these brick walls for at least a year.

(Hell, I could spend 3 months getting all my bicycles in the shape I want them to be in, make a truing stand and true up all the wheels, clean the bikes, and have one powder coated with highly reflective paint...then...go on my several-months-long bikeabout around the continental USA!!!)

Come to think of it, the week after I FIRE, there's about a 360 mile loop I'd want to bike from here to the coast and back. I dream of biking to the beach, enjoying the ride and biking back, visiting craft breweries and eating awesome hamburgers every meal.

[Bob W]

Hell yes!   House paid off no brainer.  Of course if you choose to live in high tax area maybe not.   The real answer is dump the house and move on with your life.   I hear Hawaii is very doable on 35k per year!

[Cookie78]

I think

My current plan is $700k including profits from selling the houses. Then live semi-nomadically near family part time and with boyfriend part time for a few years, slow travel inexpensively and try housesitting for a few years after that, all at a 3%WR. Maybe do some part time/fun/seasonal jobs to supplement income if I feel like it. By the time I feel like settling down in one place again, currently estimate 10 years but who knows, hopefully I'll have a little extra investment growth I can use to buy/rent a place.

Alas, I am not Post-FIRE and can not tell you how the plan is going.... yet.

[fishnfool]

Hell yes!   House paid off no brainer.  Of course if you choose to live in high tax area maybe not.   The real answer is dump the house and move on with your life.   I hear Hawaii is very doable on 35k per year!

Hawaii does have some great property tax exemptions for owner occupied resident. They get even better as you age. But you don't want to be close to a resort area or right on the beach. Anorher plus is Hawaii doesn't tax a Goverment pension. Some food costs are much higher but there are ways around that. Costco is on all the islands and they don't mark up most items anymore than what you'll pay at a mainland Costco.

Pass the sunscreen I'm ready for some aloha!

[Cookie78]

I think

My current plan is $700k including profits from selling the houses. Then live semi-nomadically near family part time and with boyfriend part time for a few years, slow travel inexpensively and try housesitting for a few years after that, all at a 3%WR. Maybe do some part time/fun/seasonal jobs to supplement income if I feel like it. By the time I feel like settling down in one place again, currently estimate 10 years but who knows, hopefully I'll have a little extra investment growth I can use to buy/rent a place.

Alas, I am not Post-FIRE and can not tell you how the plan is going.... yet.

And plans do change too! As you know I was planning to sell my house and travel full time too, but after trying it with the dog off and on for several weeks and months at a time I changed my mind. Just decided to hang on to the house awhile longer and travel part time (spring and fall) and stay in SoCal in winter and summer. Just seemed easier and much less of a hassle (especially since my sister is moving in soon and can pet and house sit for me) even if it wasn't the wisest financial decision.

Exactly. :) My plans have changed a LOT over the last 8 months since I started reading this forum. New information, new ideas, new life events, new plans. :) I have considered keeping my house and working an extra 2 years also, because I am loving it more and more with all the work I am putting into the yard this summer. And if the housing market crashes before I sell I will change my plans again. I'm also considering selling sooner than I am technically FI and being more dependent on part-time work than I had originally planned, just so I can be closer to my family in 1 year instead of 2 years.... decisions, decisions...

I enjoy following your life and changes to your plan too. :)

[fishnfool]

Hell yes!   House paid off no brainer.  Of course if you choose to live in high tax area maybe not.   The real answer is dump the house and move on with your life.   I hear Hawaii is very doable on 35k per year!

Hawaii does have some great property tax exemptions for owner occupied resident. They get even better as you age. But you don't want to be close to a resort area or right on the beach. Anorher plus is Hawaii doesn't tax a Goverment pension. Some food costs are much higher but there are ways around that. Costco is on all the islands and they don't mark up most items anymore than what you'll pay at a mainland Costco.

Pass the sunscreen I'm ready for some aloha!

But aren't the housing prices super high? If a person (OP?) sold their $250K house and moved to Hawaii would they be able to buy an equivalent (or even smaller) place for that same price or less? I lived in Hono for a bit when I was in the military and even back then it was really expensive for housing.

But I do like the idea of selling a house in a HCOL area and downsizing to a LCOL area. This is something I plan to do at some point - sell the paid off house in coastal SoCal and move somewhere much cheaper - adding a bunch of money to the stash and still having a paid off place.  I think that's a great way to get to FI/RE faster if someone is willing to move elsewhere.

Oahu is pricey but Big Island has real estate for every budget.

[NearlyThere]

While many in this area of the forum aren't in a "hair on fire" situation, it's great to see the principles of MMMs original posts still remaining strong:Wind down expenses, they are the real factors behind being able to retire early or not. Things change, so what. Just roll with the punches.

[dude]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

[Faraday]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

That's ironic, considering your .signature line...Tyler Durden would burn your condo and wreck your car.

[Rollin]

It's risky...  But there is always public assistance.

I have a bit more more than 1M, plus a paid off house, plus a pension, plus free health care, plus rentals that produce 3x+ what I need...

What happens if inflation is big?  or deflation?  Or things go bad?  Extended stock market decline?  Higher taxes?  Or want to move to a different area?

You can do it, but what is your risk mitigation plan?  Working at Arbys? What if you spend more than you anticipate?  A grand-kid, or a wedding might make for a bad time.

Gosh it sure feels likes its raining in here.

[dude]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

That's ironic, considering your .signature line...Tyler Durden would burn your condo and wreck your car.

Really, so you know what I spend my money on, eh?  You must be psychic.

[h2ogal]

My goal is $750K and a paid off house, and Im almost there...house is paid off and my investments are less than 200K short of goal.   I agree with the comment to live off your expected income ($30K) for a year or 2 first.  Im TRYING to do this, but falling short (I'm still overspending).

[Cookie78]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

That's ironic, considering your .signature line...Tyler Durden would burn your condo and wreck your car.

Really, so you know what I spend my money on, eh?  You must be psychic.

Not necessarily. Could just be stalking you.

[Faraday]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

That's ironic, considering your .signature line...Tyler Durden would burn your condo and wreck your car.

Really, so you know what I spend my money on, eh?  You must be psychic.

Not necessarily. Could just be stalking you.

Hey wait.......I don't care THAT much....

[pdxbator]

I'd be really curious to see someones annual budget on FIRE of $750k. 4% SWR would lead to $30k annual spending limit. For 2 people in my household we just can't come up with meeting that budget. I'd love to see how it would be possible for a couple.

[steveo]

I'd be really curious to see someones annual budget on FIRE of $750k. 4% SWR would lead to $30k annual spending limit. For 2 people in my household we just can't come up with meeting that budget. I'd love to see how it would be possible for a couple.

I could do that easily assuming we have a paid off house. We have 3 kids and we spent something like $38k last year.

[dude]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

That's ironic, considering your .signature line...Tyler Durden would burn your condo and wreck your car.

Really, so you know what I spend my money on, eh?  You must be psychic.

Lets see...climbing gear? Everest expedition? Beer afterwards? :-)!

haha!  Guilty as charged on the first and last! -- but Everest?  No, that place is a travesty.  I wouldn't waste my time or money going to that shit-hole.  It's a shame what's happened to that once great mountain.  It's not even "climbing" in the true sense anymore -- ferchrissakes, they BOLTED the entire Hilary Step!  No, there are far better, less cluttered/polluted/overrun mountains in the Himalaya to climb.  Maybe one day I'll get there, I don't know.  But if I do, I ain't paying anybody to drag me up the thing.

[Faraday]

I'd be really curious to see someones annual budget on FIRE of $750k. 4% SWR would lead to $30k annual spending limit. For 2 people in my household we just can't come up with meeting that budget. I'd love to see how it would be possible for a couple.

I think it's all dependent on your lifestyle. Lots of people with lower incomes have paid off homes in LCOL areas, have low prop and personal income taxes, no debt at all,  have low cost or even free medical, and go without things like cable TV and lots of costly entertainment, dining out a lot, and travel. If your only expenses are for basic homemade food, occasional clothes and toiletries and stuff like that, and some inexpensive entertainment and travel it's pretty easy to live on very little. Probably best for you to show us your current budget and see if it can be slashed in retirement. Ex-hubs and I lived on a very low budget for all of our marriage (17 years) even though we both worked full time. We had a great life doing all the things we wanted to and it was easy to transition that budget into FIRE (for me...he decided to do the "just 30 more years" plan :-)!

+1 to what Spartana said, and yes, DW and I have done all those things and we live in a somewhat-LCOL area. For essentials besides mortgage, we are well under $30k annual spending. Last I checked, we were under $500/week and falling ($26k/year). That counts food, power, internet, phones, taxes, insurance, gasoline and car maintenance. We eat out maybe twice a month and when we do, it's two low-carb thickburgers at Hardees ($11.95 total).

I'm planning to refi come January 2016. At that point, we'll be under $30k/year even with the (now shorter) mortgage. Most people here don't "count" the mortgage as an expense, since it's really a kind of savings and investment. But since it's "real money" for me, I am working to minimize it ASAP.

I think it was Spartana saying there was no specific savings target, just work as long as you can stand it, then make-do on what you have? I'm thinking that's the way it will be for me. I am expecting to last maybe 2 more years (if I'm very lucky) at my current position. I'd like to be able to FIRE on whatever I've got at that time....

[Fortuna]

Has anyone here completely fired on approx 1 million household net worth? For example, a $250K paid for home and around $750k in assets?

I am looking to hear from people who have jumped into full fire on roughly this amount with no additional pension money coming later. (Government SS is expected of course)  Perhaps you supplement with fun min PT income, would like to hear about that too.

Would love to hear your story...

Thrifty the DW and I are in Mississauga and right now we have a paid for house (value = $500k) and about $800k in investments.  I have three retirement budget numbers.  These are after tax assuming that we have a 15% tax rate in retirement.  Minimal budget of $38k/yr allows us about $2400/yr of that for travel.  Then we have an optimal budget number of $53k/yr that allows for us to put 10% towards charity and a little more travel and golf for me that is my one luxury.  If we ramp it up and spent about $62k/yr then we can have much more luxurious travel options.  So with our $800k we are not there yet.  My retirement strategy will include drawing down the RRSPs and growing the TFSAs to keep a nest egg.

Others have commented that MMM did it on $750k.  Costs in Canada are going to be higher for some items that despite the health care here make the retirement costs higher.  If we could sell the house and relocate cheaper then maybe we could go now but we cannot leave the GTA till the wife is eligible for her pension.

[happy]

From his blog posts MMM says he had approx 800k at year 10 of his accumulation phase…which was 2007.  Taking 2.5%inflation into account, he would have had around 975K in todays dollars. Over that time he seems to have been able to keep his expenses fairly stable at 25k, i.e. not inflate with COL rises. Firing on $750 k is quite doable,  but doing the equivalent of MMM in today's dollars would need a little more.

[Cassie]

I totally agree to live on it for a few years to see how you like it. The first year we retired we had $40,000 in pensions but $10,000 went to health insurance. No ACA 3 years ago. We did it but did not like it. We have found for us that a comfortable level is $60,000.  That will probably go down when we are in our 70's due to probably not traveling as much as we do now.  Everyone is going to find a different comfort level.

[NearlyThere]

From his blog posts MMM says he had approx 800k at year 10 of his accumulation phase…which was 2007.  Taking 2.5%inflation into account, he would have had around 975K in todays dollars. Over that time he seems to have been able to keep his expenses fairly stable at 25k, i.e. not inflate with COL rises. Firing on $750 k is quite doable,  but doing the equivalent of MMM in today's dollars would need a little more.

I don't think he is a good example for this anymore. I'm sure the blog and other incomes generated from the blog have surpassed his needs

[pbkmaine]

Living in the U.S., I think the tricky part is health insurance to age 65. I am fortunate - DH has retiree medical that covers me, but if I needed it, I would probably find the state with the most reasonable medical insurance costs and move there. Other than that - small house in a town with walking distance to a good library, thrift shop, grocery store. No cable, use the library Internet, bike for exercise, have a garden, antenna TV. I would buy a DVD player and get movies from the library, a redbox kiosk, garage sales or Netflix by mail. I don't need to travel. I did that all the time when I was working and I am all traveled out.

[happy]

Yes I think PPOR, but the IP I think came later.  My point is merely that if one is benchmarking against MMM, then one needs to convert to today's dollars.

[dude]

I'm sure I could cut some expenses, but really can't see myself getting down to $35K or less.  I'm inspired by those who do, but think it would be too limiting for me personally.

That's ironic, considering your .signature line...Tyler Durden would burn your condo and wreck your car.

Really, so you know what I spend my money on, eh?  You must be psychic.

Lets see...climbing gear? Everest expedition? Beer afterwards? :-)!

haha!  Guilty as charged on the first and last! -- but Everest?  No, that place is a travesty.  I wouldn't waste my time or money going to that shit-hole.  It's a shame what's happened to that once great mountain.  It's not even "climbing" in the true sense anymore -- ferchrissakes, they BOLTED the entire Hilary Step!  No, there are far better, less cluttered/polluted/overrun mountains in the Himalaya to climb.  Maybe one day I'll get there, I don't know.  But if I do, I ain't paying anybody to drag me up the thing.

Well spending on beer IS more important then spending on some fancypants portered climb of bolted Everest. UGH - porters, anchored routes, massive supplies, endless time spent doing nothing, the cost, the cost, the cost. Being a minimalist climber I'd rather just be bouldering or climbing in Joshua Tree for free - more money left over for beer afterwards :-)! Or maybe your trip to the Sierras - a couple of friends backpacking and climbing with little out of pocket expenses and probably more challenging and fun then a guided climb. Although someday I'd like to at least hike to Everest base camp (alone and unsupported) and maybe join the crews that clean it up and bring the trash down.

Yeah, sparty, you get the idea!

[Kalergie]

When people calculate their WR, do they include the MER of their portfolio? At .3% MER and a portfolio size of 750K$, that's 2,250$ per year. That's more than I spend on living cost a month!