Author Topic: For those that have FIRE'd - is this realistic?  (Read 6577 times)

Unique User

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For those that have FIRE'd - is this realistic?
« on: July 07, 2017, 08:30:41 AM »
I think my calculations are correct, but the thought of stopping full time work makes me a wee bit nervous.  I'm worried that I'm missing something.  Is the below realistic?

Future Situation - Quit FTE work around the April-June 2021, I'll be 52 that fall and teen will have just finished sophomore year at college.  Assuming cash to purchase a house, a boat or rv (please no face punches) and pay for the last two years of college is separate from our stash for withdrawal.  Stash will allow for a $55k a year at a 4% withdrawal. 

Current Situation - Our basic budget is $30k to $35k in non-mortgage spending.  We will want to travel that first couple years and due to our ages, I'd probably be okay with a higher WR if needed.  I also intend to do something on a part time/contract basis, I'm just not 100% sure what that will be yet.     
« Last Edit: July 07, 2017, 09:19:58 AM by Unique User »

Financial.Velociraptor

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Re: For those that have FIRE'd - is this realistic?
« Reply #1 on: July 07, 2017, 09:08:37 AM »
I think my calculations are correct, but the thought of stopping full time work makes me a wee bit nervous.  I'm worried that I'm missing something.  Is the below realistic?

Future Situation - Quit FTE work around the April-June 2021, I'll be 52 that fall and teen will have just finished sophomore year at college.  Assuming cash to purchase a house, a boat or rv (please no face punches) and pay for the last two years of college is separate from our stash for withdrawal.  Stash will allow for a $55k withdrawal at a 4% withdrawal. 

Current Situation - Our basic budget is $30k to $35k in non-mortgage spending.  We will want to travel that first couple years and due to our ages, I'd probably be okay with a higher WR if needed.  I also intend to do something on a part time/contract basis, I'm just not 100% sure what that will be yet.     

It looks like you are probably good but you may want to check in at the case studies board.  Have you done an estimate of how your tax bill will change?  A 55k withdrawal for MFJ and 15% long term cap gains will give you a really low tax rate (and no OADSI or medicare withdrawals either).
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WolfpackFan

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Re: For those that have FIRE'd - is this realistic?
« Reply #2 on: July 07, 2017, 11:32:47 AM »
How are you paying for health insurance?

Unique User

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Re: For those that have FIRE'd - is this realistic?
« Reply #3 on: July 07, 2017, 11:58:45 AM »
For taxes, I estimated around $3k and deducted that to come up with the $55k.   For health insurance I estimated $500 per month.  That is probably way too low, but that is what we paid pre-ACA for a bare bones policy that covered three people before we got employer health insurance.  I can't even think of a logical way to estimate health insurance costs right now.  If I go with the worst case scenario, I'll never FIRE.  That said, I'm flexible and if I need to stay in one more year, then I'll do it. 

Monkey Uncle

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Re: For those that have FIRE'd - is this realistic?
« Reply #4 on: July 09, 2017, 05:00:52 AM »
Don't worry.  You're still four years out; you'll re-run your calculations a million times before the big day arrives.  Things will change, possibly a lot, during that time, but you'll be following closely and will adjust as needed.

Are you in the U.S.?  If so, the numbers you gave don't appear to include social security, which means you are being extremely conservative, especially considering that you're planning on a $20k spending buffer at a 4% WR.  If you're working until you're 52, you should have a substantial SS benefit coming when you hit 62 - 67.  If you and your spouse are both currently employed full time, it is likely that your SS payments will more than cover your $35k basic spend.  I would encourage you to re-run your numbers including expected SS benefits.  You can reduce them by 25% if you're nervous about the future of that program.  The results might have you moving your FIRE date closer.

Disclosure: I haven't FIREd yet, but if things work out in the health care arena I should be going within 6 months.
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Lepetitange3

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Re: For those that have FIRE'd - is this realistic?
« Reply #5 on: July 09, 2017, 06:30:23 AM »
Sooo are you absolutely dead set on paying for college?  If so- what type?  There's a big difference eb between private and state schools and it looks like you're assuming 20k a year potentially on that front?  That's a lot.  I'm one of the people don't do their children any favors by giving them a universally free ride people.  And you have time to set expectations now. 

For example, I'm FIREd and I have 4 kids- 17, 8, 4, newborn.  The older children already know that their father and I will pay for 2 years at the local community college if the my live at home and receive good grades while attending and work towards achieving their AA there.  If they receive any scholarship to University when they transfer to complete the BA, we will *consider* matching.  That's it.  I will not pay housing or food costs for an adult capable of working for themselves.  And I won't support a slacker at school.  Both hubby and I left home at 17 and paid for our own educations through scholarships and work so that's where I'm coming from.  And my parents are very wealthy but that was still the expectation in the house I grew up in.  You're an adult, you pay for your own life.

My 17yo is unwilling to apply himself to his studies and so intends to move out and work and potentially consider the military if he finds he can't afford himself.  My 8 year old is a mini genius and may very well end up doing all 4 years of college for free (special programs with scholarships) living at home before she turns 18.  Don't know how the other 2 will play out yet ;)

Unique User

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Re: For those that have FIRE'd - is this realistic?
« Reply #6 on: July 16, 2017, 07:50:42 AM »
Don't worry.  You're still four years out; you'll re-run your calculations a million times before the big day arrives.  Things will change, possibly a lot, during that time, but you'll be following closely and will adjust as needed.

Are you in the U.S.?  If so, the numbers you gave don't appear to include social security, which means you are being extremely conservative, especially considering that you're planning on a $20k spending buffer at a 4% WR.  If you're working until you're 52, you should have a substantial SS benefit coming when you hit 62 - 67.  If you and your spouse are both currently employed full time, it is likely that your SS payments will more than cover your $35k basic spend.  I would encourage you to re-run your numbers including expected SS benefits.  You can reduce them by 25% if you're nervous about the future of that program.  The results might have you moving your FIRE date closer.

Disclosure: I haven't FIREd yet, but if things work out in the health care arena I should be going within 6 months.

My Social Security!  I totally forgot to add that in as I'd be retiring 15 years before full retirement age.  I used the below link with current stash, Social Security estimates and the estimate that we'd earn something the first five years along with a 4.5% WR to begin with and ended up with a 100% chance of not running out of money by the time I am 95.  Yay!!

http://www.cfiresim.com/input.php

For college - I do plan on paying for college.  We've told the teen that we have enough for 4 years at in state tuition rates and that is it.   She is an honor student and knows she will need scholarships/financial aid if she goes private. 

soccerluvof4

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Re: For those that have FIRE'd - is this realistic?
« Reply #7 on: July 16, 2017, 04:57:49 PM »
With your numbers, side gig and future SS I would say you have more than enough especially with what your living on now. The only wild card is Health Insurance. My wife took a side gig a year and a half after we fired to get coverage to take that worry out of the equation until the government figures out this whole health care mess.
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ShortInSeattle

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Re: For those that have FIRE'd - is this realistic?
« Reply #8 on: September 03, 2017, 11:16:10 AM »
Don't forget out of pocket medical expenses. We're one year in and things like teeth cleaning, a visit to a specialist (for something mild like investigating an allergy) and an unexpected tooth filling can really add up. Sure, there will be low cost years, but they aren't guaranteed, or even typical.

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BTDretire

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Re: For those that have FIRE'd - is this realistic?
« Reply #9 on: September 21, 2017, 04:24:01 PM »
Don't worry.  You're still four years out; you'll re-run your calculations a million times before the big day arrives.  Things will change, possibly a lot, during that time, but you'll be following closely and will adjust as needed.

Are you in the U.S.?  If so, the numbers you gave don't appear to include social security, which means you are being extremely conservative, especially considering that you're planning on a $20k spending buffer at a 4% WR.  If you're working until you're 52, you should have a substantial SS benefit coming when you hit 62 - 67.  If you and your spouse are both currently employed full time, it is likely that your SS payments will more than cover your $35k basic spend.  I would encourage you to re-run your numbers including expected SS benefits.  You can reduce them by 25% if you're nervous about the future of that program.  The results might have you moving your FIRE date closer.

Disclosure: I haven't FIREd yet, but if things work out in the health care arena I should be going within 6 months.

My Social Security!  I totally forgot to add that in as I'd be retiring 15 years before full retirement age.  I used the below link with current stash, Social Security estimates and the estimate that we'd earn something the first five years along with a 4.5% WR to begin with and ended up with a 100% chance of not running out of money by the time I am 95.  Yay!!

 Be careful, the FRA Number on your SS report is calculated assuming you will be working that 15 years at the same wage you are earning now.
 I earned $39,269 in 2015 and dropped to $34,710 in 2016, this dropped my FRA SS from $1,912 to $1895. I can't image what 15 years of your highest earning years would do to your SS if you put all $0 in the rows.
 I'm sure the SS website has a way to figure that out.

markbike528CBX

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Re: For those that have FIRE'd - is this realistic?
« Reply #10 on: September 21, 2017, 04:51:13 PM »
....big snip.......
 I can't image what 15 years of your highest earning years would do to your SS if you put all $0 in the rows.
 I'm sure the SS website has a way to figure that out.
Or you could just spreadsheet  per Social Security Calculation method EN-05-10070 Jan 2017
https://www.ssa.gov/pubs/EN-05-10070.pdf 
 
note that you'd have to do this yearly, as the inflation adjustment changes every year.  Make sure you are using the most current EN-05-10070 form.

Monkey Uncle

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Re: For those that have FIRE'd - is this realistic?
« Reply #11 on: September 22, 2017, 04:05:20 AM »
....big snip.......
 I can't image what 15 years of your highest earning years would do to your SS if you put all $0 in the rows.
 I'm sure the SS website has a way to figure that out.
Or you could just spreadsheet  per Social Security Calculation method EN-05-10070 Jan 2017
https://www.ssa.gov/pubs/EN-05-10070.pdf 
 
note that you'd have to do this yearly, as the inflation adjustment changes every year.  Make sure you are using the most current EN-05-10070 form.

Or you could just use SSA's retirement estimator, which lets you enter any "stop working" age you want.

https://www.ssa.gov/retire/estimator.html
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markbike528CBX

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Re: For those that have FIRE'd - is this realistic?
« Reply #12 on: September 22, 2017, 07:31:01 AM »
Golly, we'll I'll be a monkeys uncle!   

Oh, sorry, see that's taken...

I had forgotten it had a stop work age.   But it stll won't let you delay SS if you retire early.

Monkey Uncle

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Re: For those that have FIRE'd - is this realistic?
« Reply #13 on: September 25, 2017, 05:01:23 AM »
Golly, we'll I'll be a monkeys uncle!   

Oh, sorry, see that's taken...

I had forgotten it had a stop work age.   But it stll won't let you delay SS if you retire early.

That brings up another good point.  Anyone who is retiring early should run their SWR simulations with both "delay SS" and "take it at 62" scenarios.  I end up with a higher SWR under the "take it now" scenario because I'm pulling less out of the stash earlier in retirement, which mitigates sequence of return risk.  Everyone's situation is different depending on the age they retire, size of stash, other income sources, etc., so it pays to actually run the numbers rather than just assume it is best to delay or take it early based on something you read.
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ZiziPB

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Re: For those that have FIRE'd - is this realistic?
« Reply #14 on: September 26, 2017, 11:31:46 AM »
Golly, we'll I'll be a monkeys uncle!   

Oh, sorry, see that's taken...

I had forgotten it had a stop work age.   But it stll won't let you delay SS if you retire early.

That brings up another good point.  Anyone who is retiring early should run their SWR simulations with both "delay SS" and "take it at 62" scenarios.  I end up with a higher SWR under the "take it now" scenario because I'm pulling less out of the stash earlier in retirement, which mitigates sequence of return risk.  Everyone's situation is different depending on the age they retire, size of stash, other income sources, etc., so it pays to actually run the numbers rather than just assume it is best to delay or take it early based on something you read.

Thank you for this reminder!  I always assumed that I would delay SS until 70 in order to maximize the amount but when I ran the numbers taking it at 62 and taking it at 67, I get the best results when taking it at 67.