Author Topic: Has anyone FIREd with less than 1,000,000 in net worth?  (Read 7857 times)

Gretamom

  • 5 O'Clock Shadow
  • *
  • Posts: 64
Has anyone FIREd with less than 1,000,000 in net worth?
« on: July 20, 2017, 05:47:03 PM »
Here's the situation: My hubby and I are both 41 and planned on retiring (for the most part) at the end of 2018 with $1,000,000 in net worth. Even with 1,000,000 we are a little worried just because at that time we would have a 16, 12, and 11 year old at home. However, recently we have been feeling extremely unhappy and uncomfortable at one of our main jobs. This job is further complicated by the fact that family are involved. We would like to instead drop our main job (the one that is making us unhappy) in December 2017 and continue to pursue other interests which include hospital work and our property management / rental business. We would have a net worth of $800,000 at that time and it would continue to increase our net worth every month, just not as fast.

I'm thinking it's not worth the mental stress and abuse I feel from other family members to stick it out for another 18 months even though we would make about an extra $100,000. What do you all think?

I can make the numbers work, I just don't know what I'm so worried about! I guess the unknown? Unexpected costs?


daverobev

  • Magnum Stache
  • ******
  • Posts: 2645
  • Location: Canada
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #1 on: July 20, 2017, 06:08:46 PM »
https://www.amazon.com/Early-Retirement-Extreme-Philosophical-Independence/dp/145360121X/

Yes, lots of people. The biggest issue you Americans have is healthcare.

$40k is a lot of money.
Tangerine Canada $50 free chequing sign up bonus, use Orange Key: 48322202S1

PayTM on Android/iOS - Pay property tax/bills with credit card for free (for the time being!). $10 signup bonus, use referral: PTM9691063. Alternative to Plastiq, great for reaching minimum spend.

Amex Canada referral - $350+ in sign up bonuses

thunderball

  • 5 O'Clock Shadow
  • *
  • Posts: 36
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #2 on: July 20, 2017, 06:42:03 PM »
I haven't but I would!

2Birds1Stone

  • Magnum Stache
  • ******
  • Posts: 2938
  • Age: 30
  • Location: New York
  • CFO
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #3 on: July 20, 2017, 07:11:18 PM »
You must be really new around here.....yes....thousands (if not many many more) of people have quit work before amassing $1M+

It doesn't sound like you are FIREing anyway, just scaling back income.
"A small house can hold as much happiness as a big one." - Fortune Cookie

33 Months till FIRE - Stop by, or stay a while.....
https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/

Gretamom

  • 5 O'Clock Shadow
  • *
  • Posts: 64
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #4 on: July 20, 2017, 07:13:18 PM »
https://www.amazon.com/Early-Retirement-Extreme-Philosophical-Independence/dp/145360121X/

Yes, lots of people. The biggest issue you Americans have is healthcare.

$40k is a lot of money.

I do worry about healthcare but the other job I have at the hospital takes care of that with minimal cost to me & I only have to work 16 hours a week to keep the insurance. In addition, my hubby is also at the hospital and works 20 hours a week and so one of us could quit entirely and we would still have healthcare (there is no extra healthcare benefit to both of us getting healthcare there, only monetary.

Financial.Velociraptor

  • Pencil Stache
  • ****
  • Posts: 899
  • Age: 45
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #5 on: July 20, 2017, 07:14:10 PM »
I'm coming up on 5 years FIRE.  Stache is still just under 0.5 million.  I'm single and living alone with a paid off home.  But you can totes do 800k with a family of 5 considering you are going to still have an income stream.
Achieve Financial Escape Velocity - Financial Velociraptor

Gretamom

  • 5 O'Clock Shadow
  • *
  • Posts: 64
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #6 on: July 20, 2017, 07:19:24 PM »
Not new, just maybe have a greater need for security, a bigger stash of money for my own comfort level. Besides I do have 3 kids counting on me who are still in the home - 15, 11, 10 - It's a little different when you don't have that added pressure / cost / responsibility.

The numbers work, yes, I'm just a little scared to "pull the trigger" so to speak.

I am planning on FIREing in stages. A little at a time........

You must be really new around here.....yes....thousands (if not many many more) of people have quit work before amassing $1M+

It doesn't sound like you are FIREing anyway, just scaling back income.

Gretamom

  • 5 O'Clock Shadow
  • *
  • Posts: 64
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #7 on: July 20, 2017, 07:21:33 PM »
I'm coming up on 5 years FIRE.  Stache is still just under 0.5 million.  I'm single and living alone with a paid off home.  But you can totes do 800k with a family of 5 considering you are going to still have an income stream.

I will still have income from my property management & Real Estate & also work very part time (as long as I still love it) as an RN at a hospital that provides my healthcare insurance.

GenXbiker

  • Stubble
  • **
  • Posts: 178
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #8 on: July 20, 2017, 07:42:43 PM »
I only have to work 16 hours a week to keep the insurance.
Sweet.  The minimum is 24 hours where I work, although I don't know if they would let me transition to a part time role when I'm about ready to FIRE.

Net worth includes your home, so you would normally want to count your stache that you can draw down on in retirement - investments, savings, retirement accounts.  And not knowing your expenses, it's difficult to say what any particular stache would support, but you specifically stated that your net worth would continue to grow.  Based on that statement, I don't see any problem here.  If you were drawing down on your stache, that would be a different story.

I crossed that $1,000,000 threshhold myself in the last year or so, and I'm a single guy with no kids and own my home outright with low expenses (stache at 73X) and still not ready to retire.  Health care coverage is one issue despite historically low health care utilization, but I also like my full time job quite a bit - it's actually gotten better in the last year, so I'm just adding to the stache.

clairebonk

  • 5 O'Clock Shadow
  • *
  • Posts: 34
  • Location: Walnut Creek, CA
  • Off-and-on FIREing
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #9 on: July 20, 2017, 10:53:15 PM »
Life is too short so quit the stressful situation!!!!!! You are resourceful people, you never know what opportunities might come along that are better!!!

Villanelle

  • Handlebar Stache
  • *****
  • Posts: 1846
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #10 on: July 20, 2017, 11:09:04 PM »
Is that $800,000 in net worth, or in your stache, because that makes a big difference.  Do you live in a high, medium, or low COL area?  And the biggest question--what are your monthly expenses?  (And the related question of what you expect your expenses to be after you scale back, since they often change with things like commutes, or having more time and doing less outsourcing?)

Whether someone else did this isn't especially relevant, as their lives might be very different than yours.  You need to look at your expenses and contrast that to the stache and the income you'd still be bringing in and see if it paints a picture with which you are comfortable.  You say you'd still be increasing your net worth, and I'm guessing that means you'd actually be making more than you spend (and isn't just a reference to projected growth).  Run the timeline to see how much you could invest and how long it will take you to get to your $1m (or whatever you need to be fully FIRE).  Is it worth it?  Is 18 months less at the family job worth 5 years of part time work?  8?  10? 

gerardc

  • Bristles
  • ***
  • Posts: 354
  • Age: 33
  • Location: SF bay area
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #11 on: July 20, 2017, 11:47:14 PM »
$1M seems to be around the median on this forum (see poll):
https://forum.mrmoneymustache.com/welcome-to-the-forum/what's-your-fi-number/

but there's also a ton of people who have a $700-1200k "baseline" but then shoot for more, $1.5-2.5M:
https://forum.mrmoneymustache.com/welcome-to-the-forum/what-is-your-target-amount/

jim555

  • Handlebar Stache
  • *****
  • Posts: 1209
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #12 on: July 21, 2017, 07:54:42 AM »
So folks have pensions that makes a sub 1MM very doable.  Without my frozen pension I would feel a lot more insecure about things.

mcneally

  • Stubble
  • **
  • Posts: 140
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #13 on: July 21, 2017, 11:13:28 AM »
We would have a net worth of $800,000 at that time and it would continue to increase our net worth every month, just not as fast.

You're asking whether it's practical to earn less than you make now but still more than you spend? I think you can probably make that work.

zinethstache

  • Pencil Stache
  • ****
  • Posts: 690
  • Location: Anywhere USA
  • FIREd 1/27/2017
    • My FIRE Hobby and travel blog
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #14 on: July 21, 2017, 11:20:51 AM »
You mention rentals. I have rentals, NW 1.3ish M, but right now 790k of that is equity in those rentals, it is not cash I can draw on to live. I just point that out as most of your 800k could be equity. In addition, do you have mortgages on those rentals? That can be a factor as well. And do you have enough capital savings for maintaining them or will a large repair have a big impact on your family? We made sure we had a good amount of cash to cover our rental maintenance/repairs before we FIREd. I understand why you are concerned with three dependents and real estate. That is a lot to juggle! I wish you the best of luck:)

skip207

  • Stubble
  • **
  • Posts: 119
  • Location: UK
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #15 on: July 25, 2017, 12:44:29 PM »
An interesting thread.  There is a lot of talk here about NW, I understand why but its sometimes not the best measure of how much income you can muster in FIRE. 

Cassie

  • Magnum Stache
  • ******
  • Posts: 3711
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #16 on: July 25, 2017, 01:06:31 PM »
You need to figure out your expenses and then how much income you have from your p.t. jobs, rentals and then the $ you make from your stache to see if things line up.  You do have 3 kids and your expenses will increase as they grow. 

Accidental Miser

  • Bristles
  • ***
  • Posts: 345
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #17 on: July 25, 2017, 05:59:37 PM »
An interesting thread.  There is a lot of talk here about NW, I understand why but its sometimes not the best measure of how much income you can muster in FIRE.
This is an excellent point.  We have almost 1M in NW but we'd have to do some rearranging to provide enough income to allow for retirement.  I intend to work 2.5 more years and do some of the aforementioned rearranging to allow us to have our income ducks in a row. 

Also, keep in mind that if you are 41 and semi-ER doesn't work out as you intend, you can always go back to work!

One of my biggest regrets in life is not semi-retiring while my kids were still at home for a while.  They're all out of the house now (I'm currently 49) and I'll never get another chance to watch them grow up.

gerardc

  • Bristles
  • ***
  • Posts: 354
  • Age: 33
  • Location: SF bay area
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #18 on: July 25, 2017, 07:36:42 PM »
An interesting thread.  There is a lot of talk here about NW, I understand why but its sometimes not the best measure of how much income you can muster in FIRE.

This is an excellent point.  We have almost 1M in NW but we'd have to do some rearranging to provide enough income to allow for retirement.  I intend to work 2.5 more years and do some of the aforementioned rearranging to allow us to have our income ducks in a row. 

Why? Even if 100% invested in stocks, can't you collect your 2% dividends and sell 2% of your stocks for your "income" ?

That's roughly what you get with RE considering expenses and risks, too.

Laura Ingalls

  • 5 O'Clock Shadow
  • *
  • Posts: 47
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #19 on: July 25, 2017, 08:16:53 PM »
We did in mid 2014.  We were also in our 40's.  Our kids were 9 and 13 at the time.  We have both engaged in some low stress, low pay part time work since.  Expanded Medicaid and the bull market have both helped a lot ;).  We presently have about 30% more than when we started.

Your plan is pretty durable from the health care front and even if you are not adding any "new" money if your investments have gains you should be fine.  Sequence of risk returns are a real potential problem but you are young and worse case scenario is returning to full time work.


Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 714
  • Age: 41
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #20 on: July 25, 2017, 09:52:33 PM »
We would have a net worth of $800,000 at that time and it would continue to increase our net worth every month, just not as fast.

You're asking whether it's practical to earn less than you make now but still more than you spend? I think you can probably make that work.

^^ This 


skip207

  • Stubble
  • **
  • Posts: 119
  • Location: UK
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #21 on: July 26, 2017, 02:11:46 AM »
An interesting thread.  There is a lot of talk here about NW, I understand why but its sometimes not the best measure of how much income you can muster in FIRE.

This is an excellent point.  We have almost 1M in NW but we'd have to do some rearranging to provide enough income to allow for retirement.  I intend to work 2.5 more years and do some of the aforementioned rearranging to allow us to have our income ducks in a row. 

Why? Even if 100% invested in stocks, can't you collect your 2% dividends and sell 2% of your stocks for your "income" ?

That's roughly what you get with RE considering expenses and risks, too.

You are assuming its in stocks though.  NW is the whole worth, I think its stache size which is more key.  Either that or NW should be assets only.

Villanelle

  • Handlebar Stache
  • *****
  • Posts: 1846
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #22 on: July 26, 2017, 02:41:28 AM »
An interesting thread.  There is a lot of talk here about NW, I understand why but its sometimes not the best measure of how much income you can muster in FIRE.

This is an excellent point.  We have almost 1M in NW but we'd have to do some rearranging to provide enough income to allow for retirement.  I intend to work 2.5 more years and do some of the aforementioned rearranging to allow us to have our income ducks in a row. 

Why? Even if 100% invested in stocks, can't you collect your 2% dividends and sell 2% of your stocks for your "income" ?

That's roughly what you get with RE considering expenses and risks, too.

If he lives in a $1mm house and plans to stay there, a $1mm net worth would give him an annual retirement budget of $0.  Heck if you live in a $1mm house and own a car worth $20,000, a $1mm net worth would mean you actually have a negative annual cash flow because there's some kind of $20k loan in the mix that presumably needs paying.

Obviously those are extreme examples, but the point remains that net worth and "stache" are very different things and when looking at net worth, unless someone plans on liquidating most of the real property, you really have no what that number translates to in the ability to spend in retirement.  That's why we generally talk stache around here, which seems to me more or less defined as "assets that can be sold off to generate income in retirement".  That might include a house (or car, or coin collection that will be sold, or...), but then the other side of the coin--the annual budget--needs to account for rent or some other form of lodging. 

gerardc

  • Bristles
  • ***
  • Posts: 354
  • Age: 33
  • Location: SF bay area
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #23 on: July 26, 2017, 02:49:20 AM »
Meh, you just need to account for it properly, by setting 4% of your house as expenses, which is the rent you could afford by selling your house, investing the money and withdrawing 4%. So living in your house has an opportunity cost of 4% of the value of the house. Now add the other living expenses and you'll see that your NW isn't big enough.

Villanelle

  • Handlebar Stache
  • *****
  • Posts: 1846
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #24 on: July 26, 2017, 04:54:35 AM »
Meh, you just need to account for it properly, by setting 4% of your house as expenses, which is the rent you could afford by selling your house, investing the money and withdrawing 4%. So living in your house has an opportunity cost of 4% of the value of the house. Now add the other living expenses and you'll see that your NW isn't big enough.

Sure.  But many people don't plan to sell their house and their car and their grandma's pearls and their wedding ring and their RV.  So all that network does nothing for them as far as retirement income.  If you know your budget in retirement is going to be $40k, you need $1mm (assuming 4% SWR) in assets that you are actually prepared to liquidate.  And also assets that will grow that the rate necessary to put off 4%.  Even if someone plans to sell that fancy $50k car in 5 years to help with FIRE expenses, that $50k is not equal to $50k invested because while the investments grow, the car will actually be depreciating.

For many people net worth and "stache" are probably within about 5% (car, basic possessions, etc., and for possessions they aren't willing to sell and that aren't depreciating, and/or for someone who rents).  For plenty of  others, there could be a difference of 50% or more.  Most people see and acknowledge the difference, but not all do, so saying that someone can retire with a $40k budget if they have a $1mm "net worth" can be very misleading. 

burnedoutattorney

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #25 on: July 26, 2017, 08:50:56 AM »
I can definitely relate to this post and have lately been having the same thoughts. 39 w/ 3 kids (6, 5 & 3 yrs old) and am just burned out from my job.  Have about $650,000 in investable assets and the plan is for my wife to go back to teaching in another year - thinking/hoping I can pull the plug on my career at that point and reevaluate what I want to do workwise (go down to part-time, career switch, etc.).  Hoping that between my wife's salary (probably $45-50K) and our passive income, that will be enough to cover our expenses (probably low $40s /yr) and leave a little left over for saving without having to worry about how much money I'm bringing in.  I would love to get our stache up to $800-900K before quitting my full-time job, but not sure I can hang in that long...
« Last Edit: July 26, 2017, 10:18:10 AM by burnedoutattorney »

gerardc

  • Bristles
  • ***
  • Posts: 354
  • Age: 33
  • Location: SF bay area
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #26 on: July 26, 2017, 10:25:29 AM »
Meh, you just need to account for it properly, by setting 4% of your house as expenses, which is the rent you could afford by selling your house, investing the money and withdrawing 4%. So living in your house has an opportunity cost of 4% of the value of the house. Now add the other living expenses and you'll see that your NW isn't big enough.

Sure.  But many people don't plan to sell their house and their car and their grandma's pearls and their wedding ring and their RV.  So all that network does nothing for them as far as retirement income.  If you know your budget in retirement is going to be $40k, you need $1mm (assuming 4% SWR) in assets that you are actually prepared to liquidate.  And also assets that will grow that the rate necessary to put off 4%.  Even if someone plans to sell that fancy $50k car in 5 years to help with FIRE expenses, that $50k is not equal to $50k invested because while the investments grow, the car will actually be depreciating.

For many people net worth and "stache" are probably within about 5% (car, basic possessions, etc., and for possessions they aren't willing to sell and that aren't depreciating, and/or for someone who rents).  For plenty of  others, there could be a difference of 50% or more.  Most people see and acknowledge the difference, but not all do, so saying that someone can retire with a $40k budget if they have a $1mm "net worth" can be very misleading.

What I'm saying is it's simpler and clearer to state your total net worth and expenses that include 4% of your house as rent you're paying yourself. Otherwise you have to specify "investable assets of X with expenses of Y with a house paid off".

infromsea

  • 5 O'Clock Shadow
  • *
  • Posts: 31
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #27 on: August 05, 2017, 08:54:25 AM »
I retired at 42 with a fairly low NW (stash plus paid off house) but knew I'd get a government pension of approx $1400/month plus 3% COLA each year once 50. Easy for me to live on low income because single with no kids or debt and free medical.  Low expenses too. $1400/month or less has been very doable for frugal me but will be transitioning from owning a paid off place to renting so will have higher expenses then.

Very similar situation here...

For me, I'm going to retire at 43 with a NW of less than 1/2 mil....

BUT

I get a yearly pension of 45K plus cheap medical (it sure aint free no more...)

PLUS, my wife enjoys her job, she'll add another 38K a year.

Exspenses are 60K a year but that includes 17K in savings and 12K in mortgage payments (Owe 84 on a 200K home, have liquid assets that could be used to pay the home off if we desired).

We could easily lower expenses to 22K or less (Pay off the home, drop all cable and internet, turn off all cell phones, only eat every other day [don't judge, it's actually very doable] etc) but life would not be as full at that point so we'll push forward.

At some point, I will work some part time stuff just to get out of the house and maybe educational benefits, I actually enjoy school now...


One of my biggest regrets in life is not semi-retiring while my kids were still at home for a while.  They're all out of the house now (I'm currently 49) and I'll never get another chance to watch them grow up.

Thank you for sharing this. I have found that being home for my 16 year old, making her breakfast and lunch on a daily basis, has really added a lot of value and support to my decision to spend more time at home.

rachael talcott

  • Bristles
  • ***
  • Posts: 282
  • Age: 43
  • Location: TN
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #28 on: August 07, 2017, 06:41:18 AM »

I can make the numbers work, I just don't know what I'm so worried about! I guess the unknown? Unexpected costs?

I've found that having more free time after retirement means that I have unexpected savings.  I shop around for cheaper insurance.  I go to the grocery store before all the bargains are gone.  I cook from scratch more often. I get that everyone has a different risk tolerance, but it sounds like you're already low risk. 

onewayfamily

  • 5 O'Clock Shadow
  • *
  • Posts: 55
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #29 on: August 11, 2017, 08:56:22 AM »
We called it quits with a lot less than $1M.

We discussed all of the options but at the end of the day we decided that even 1 more year of our lives was not worth giving up for extra money - for us it was also close to $100k of savings that we were looking at for staying another year or so in the workforce.

We've spent a lot of money traveling this first year, but there are ways to keep it manageable (financially) but we still haven't eaten into our stash at all yet.
We FIRE'd at age 28 (me) and 29 (Mrs. OneWayFamily) and are now trying to travel to every country on Earth - it takes longer with 2 toddlers!

If you'd like to keep track of where we're at - check out our photos @ Instagram or our lame attempt at a blog at onewayfamily.com

Sustainable Happiness

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #30 on: August 16, 2017, 10:49:03 AM »
Planning on starting a Semi-FIRE test run in roughly 1 month with 12X expenses saved at liquid and invested assets of ~400K with 2 adults and 1 (soon to be born) baby.

Open to the idea of returning to CashFlow Cannon Job if shit hits the fan in the next year, but am much more interested in pursuing part-time interests, working ~10 hours per week and aiming to work harder on a smaller footprint, cheaper lifestyle building useful skills vs Cubicle Riding.

Starting and failing at an internet business with 0 $$ start-up costs also sounds like it might be an interesting way to spend time...

IMHO -> Do it, jobs you don't like suck and if you are open minded you can make life work. At worst, you can just try to go back to work (assuming this option isn't completely closed if you leave).

Bicycle_B

  • Handlebar Stache
  • *****
  • Posts: 1006
  • Mustachian-ish in Live Music Capital of the World
Re: Has anyone FIREd with less than 1,000,000 in net worth?
« Reply #31 on: August 17, 2017, 01:47:05 PM »
We would have a net worth of $800,000 at that time and it would continue to increase our net worth every month, just not as fast.

You're asking whether it's practical to earn less than you make now but still more than you spend? I think you can probably make that work.

^^ This


+1.

@GretaMom - no kids, but skating along at the edge of FIRE, no real job, 50ish age; left my last full time job 4 years ago.  Better off financially now than then.  Have worked in bits as convenient part time gigs came up. 

Based on the fact your initial plan will let you save/invest even without the Bad Job, I support dropping the Bad Job.  Since you have less than the amount where all of your wants (including feeling of safety) are met, I highly encourage working at jobs you like.  From here on out the biggest muscle you will need is courage.  Start exercising it! 

:)