Author Topic: FIRE Questions - biggest 'risks'?  (Read 2012 times)

jeromedawg

  • Magnum Stache
  • ******
  • Posts: 3605
  • Location: Orange County, CA
FIRE Questions - biggest 'risks'?
« on: January 21, 2021, 01:22:03 PM »
Hey guys,

I've just recently started exploring and investigating FIRE more closely so please bear with some dumb questions....

For those of you who are Post-FIRE: what, if any, are the concerns you have as far as things going majorly wrong (to the point that your expenses end up being higher than what was anticipated)?

One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?


Other questions:
Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?

I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

One last one:
Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?
« Last Edit: January 21, 2021, 01:31:42 PM by jeromedawg »

secondcor521

  • Magnum Stache
  • ******
  • Posts: 3472
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: FIRE Questions - biggest 'risks'?
« Reply #1 on: January 21, 2021, 01:45:03 PM »
Hey guys,

I've just recently started exploring and investigating FIRE more closely so please bear with some dumb questions....

[1] For those of you who are Post-FIRE: what, if any, are the concerns you have as far as things going majorly wrong (to the point that your expenses end up being higher than what was anticipated)?

[2] One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away to changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

[3] Or along a similar train of though - what if you get into an accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?

Other questions:
[4] Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? [5] Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?

I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

One last one:
[6] Any of you go back to actually working again (whether full time or part time) after being FIREd because you were bored or needed the extra money?

[Numbers added for reference.]

51M, FIREd 5 years.

1.  Zero concerns.  Before I FIREd, I documented a tripwire and 41 contingency plans.  So far my tripwire hasn't tripped, but if it had, I'd execute my contingency plans.  Contingency plans were generally categorized into "ways to earn more income", "ways to reduce expenses", and "super duper backups" - things I didn't want to rely on but could in a pinch.

2.  Yes, I'm on ACA - a bronze HSA currently.  I don't expect it to go away; I think the risk of it going away are overstated.  But I have specific contingency plans if it does.

3.  Multiple risks mentioned here.  Sued - I lead a boring life but also have an umbrella policy.  Injury - I'm careful but have health insurance.  LTC - I'm careful but could sell my house, use up my assets, and then go on Medicaid or die from lack of medical care.  That's not a complaint or criticism, that's my actual plan.

4.  I don't; my home is paid off.  Some do, they can answer for themselves.  I assume they treat the payments as part of their expenses and account for them in their FIRE calcs.

5.  I have no plans, but Google asset depletion loans.  There are also reverse mortgages, but I don't like those.

6.  You could.

7.  Not really.  Sometimes I think about a "third act" sort of career, but I don't need the money and can find other ways to be not-bored.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1671
  • Age: 48
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: FIRE Questions - biggest 'risks'?
« Reply #2 on: January 21, 2021, 03:12:54 PM »
Healthcare - I retired shortly before ACA and thought it would be no big deal to get insurance by just calling a broker.  My pre-existing condition of Tourette's Syndrome apparently scares the shit out of insurance companies and I found myself uninsurable.  The alternative my broker offered was an "indemnity plan".  These still exist.  It isn't insurance but works very similar.  You have in-network and out of network where the prices are prenegotiated at the insured patient rate and not the uninsured rate.  You pay for "units" I maxed out at five.  Basically, there was a schedule of reimbursements, 10 dollars every time I saw PCP (times my five units for 50 bucks).  It paid so many dollars per day of hospitalization, so much for surgery, etc.  It was very cheap and takes the edge off for major medical so that you don't go bankrupt if you get cancer.  I'll go this route again if ACA ever goes away.

You can also do the health care share programs now.  These became popular under ACA under a "religious exemption".  Originally, they had strict rules regarding your faith and practice, now they are just alternative health care providers. 

Malcat

  • Walrus Stache
  • *******
  • Posts: 5019
Re: FIRE Questions - biggest 'risks'?
« Reply #3 on: January 21, 2021, 03:56:25 PM »
Hey guys,

I've just recently started exploring and investigating FIRE more closely so please bear with some dumb questions....

For those of you who are Post-FIRE: what, if any, are the concerns you have as far as things going majorly wrong (to the point that your expenses end up being higher than what was anticipated)?

Divorce is our biggest risk, by far. Otherwise, I have a serious illness that could result in me being wheelchair bound, which would take away a lot of my favourite free/low cost activities. That said, this is baked into our plans, and we anticipate having far, far more money than we need.

One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?


Other questions:
Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?

-Some people keep their mortgage in retirement and some don't, it's not an oxymoron. It can be very difficult to get a mortgage in retirement though, so that is worth considering.

I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

Where I live, you don't need a job to rent. A credit check, yes, but a job isn't required. Tons of retirees here rent with no issue.

One last one:
Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?

Only boring people get bored.
However, that doesn't mean that only boring people go back to work. I've been out of work since last March, except for a brief month-long foray back into full time work in September, and I fully intend to go back to work again. It's not because I'm bored, it's because work is what I enjoy.

But if someone doesn't love work and ends up going back to it because they can't think of anything better to do with their time??? That's just fucking sad.

In the meantime while I'm not working, I'm voraciously consuming educational literature and online classes, which keeps me quite busy.

I enrolled in ab accelerated 1 year graduate degree early on, but ended up leaving it because the program wasn't as good as I expected. I'm now looking at a different 3 year graduate degree, which would open doors to a whole new world of work and volunteer opportunities all over the world.

There's just so fucking much to do in this world. I'm retired in my 30s and I still don't feel like I have nearly enough time to do everything I want. I still have to triage what's most worth doing with the time I have left.


We, as a couple aren't actually FIRE. I medically retired from my profession, and although DH theoretically could retire now, he will work another 12 years until his full pension, so that leaves me with even more time to myself because he's working all day.

I'm retired right now, but I have no intention of staying that way. As I said, I have too many things I want to do, and a lot of them involve some degree of paid work, so I'll likely make money until I die.

markbike528CBX

  • Handlebar Stache
  • *****
  • Posts: 1562
  • Location: the Everbrown part of the Evergreen State (WA)
Re: FIRE Questions - biggest 'risks'?
« Reply #4 on: January 21, 2021, 05:24:33 PM »
Hey guys,

I've just recently started exploring and investigating FIRE more closely so please bear with some dumb questions....

For those of you who are Post-FIRE: what, if any, are the concerns you have as far as things going majorly wrong (to the point that your expenses end up being higher than what was anticipated)?
One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?
Nope, self insured till Medicare.  I'm withdrawing 2/3 of my estimated ACA payments to cash, and building it up for future use.
https://forum.mrmoneymustache.com/welcome-to-the-forum/self-insuring-are-you-doing-this-(or-considered-it)/
.......
quote author=markbike528CBX link=topic=86892.msg1875024#msg1875024 date=1517173560]
I'm the OP of this thread https://forum.mrmoneymustache.com/welcome-to-the-forum/self-insured-specifically-health-insurance/msg1258336/#msg1258336

TL;DR,, the impression I got was the consensus was F$&& NO and how could you even think about it.
Lots of anecdotes of high cost horror stories.

MMM weighed in:   https://www.mrmoneymustache.com/2020/11/09/direct-primary-care/
Quote
Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?
https://www.mrmoneymustache.com/2011/06/02/insurance-a-tax-on-people-who-are-bad-at-math/

If you live in fear, no amount of insurance will be sufficient.

Quote
Other questions:
Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?
No mortgage (except for property taxes).  Mostly for piece of mind and not leave DW with shit to deal with in case of my demise.

Quote
I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).
Others have mentioned that this probably should not be an issue, assuming you "old enough" to look retired.  Younger people YMMV.

Quote
One last one:
Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?
Nope never working unless lots of unlikely (<2.5%  withdrawal rate, total societal collapse, I get labeled as an "undesirable") things happen.  Then I'll be dumpster diving with everyone else.  As far as boredom, I'm astounded that I ever had time for work.

cool7hand

  • Bristles
  • ***
  • Posts: 403
Re: FIRE Questions - biggest 'risks'?
« Reply #5 on: January 22, 2021, 05:05:43 AM »
For those of you who are Post-FIRE: what, if any, are the concerns you have as far as things going majorly wrong (to the point that your expenses end up being higher than what was anticipated)?

I think you might have a little error in your thinking. FIRE isn't theoretically different than having a job. When you FIRE, your income comes from investments, not a job. And those investments follow a proven methodology that no matter what happens in the market you'll be fine as long as you don't violate the 4% rule. So if anything goes majorly wrong if you have a job, you have insurance, you can tighten your belt until things normalize, you can go back to work part or full time, or any number of other things.

One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

See above.

Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?

See above. This is what insurance is for. If you have a lower risk tolerance, your FIRE number needs to include payments for more robust insurance.

Other questions:
Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?


I think this question addresses one's investment order risk preference. If you think your investments will out earn your mortgage interest rate, there's nothing theoretically wrong with going FIRE or Barista FIRE with a mortgage.

I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

There is nothing wrong with renting after FIRE. Your FIRE number just needs to pay for your rent.

One last one:
Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?


For me, the purpose of FIRE is to stop working at any job that you hate. You can structure your FIRE life however you want. So if you want to "work" because your post-FIRE work is actually play, what's wrong with that?

blue_green_sparks

  • Stubble
  • **
  • Posts: 165
Re: FIRE Questions - biggest 'risks'?
« Reply #6 on: January 22, 2021, 06:18:50 AM »
At the beginning of each hurricane season I look at my house and think "well this may be it for you". The Atlantic lines up her storms like so many pinballs. The stress of looking at spaghetti plot projections and very ugly RADAR images whilst boarding up and securing supplies prior to evacuation is wearing on us. Being instantly homeless would undoubtedly cost us a considerable unplanned IRA withdrawal despite home owners insurance. My longer term plans involve "snow-birding" by selling the Southern house for a Northern house and then escaping winter for three or four months by renting down South. 

Fishindude

  • Magnum Stache
  • ******
  • Posts: 2694
Re: FIRE Questions - biggest 'risks'?
« Reply #7 on: January 22, 2021, 07:33:17 AM »

1. One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

ACA Health insurance is probably just about as expensive as it could possibly get if you are above the income threshold to get subsidies.   We are paying $1400+ per month now, when you could buy private insurance in the marketplace it was half that, so health insurance is not likely to go up.


2. Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?

This is why we have health insurance, liability insurance, and umbrella policy, a nest egg of savings, etc.   Can't go through life worring about this stuff.

3. Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?

No mortgage, although it is not difficult to get one if you have assets that could serve as collateral and the ability to re-pay the mortgage.

4. I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

Landlords don't care if you are retired, so long as you can pay the deposit and can prove you have ability to pay the monthly rent.   And what in the hell is Barista FIRE?, never heard of it.

5. Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?

Nope, but sure could if we ever got in a pinch.

Greystache

  • Bristles
  • ***
  • Posts: 384
Re: FIRE Questions - biggest 'risks'?
« Reply #8 on: January 22, 2021, 08:38:08 AM »
Not worried. Our withdrawal rate is less than 4%. We are well insured. If everything goes to hell, we also have about $750K in home equity that we can tap.

Malcat

  • Walrus Stache
  • *******
  • Posts: 5019
Re: FIRE Questions - biggest 'risks'?
« Reply #9 on: January 22, 2021, 09:03:36 AM »
Not worried. Our withdrawal rate is less than 4%. We are well insured. If everything goes to hell, we also have about $750K in home equity that we can tap.

Exactly, there are countless threads addressing this very issue. Everyone has to come to their own personal balance of risk management when it comes to retirement...or, really, everything in life.

jim555

  • Magnum Stache
  • ******
  • Posts: 2532
Re: FIRE Questions - biggest 'risks'?
« Reply #10 on: January 22, 2021, 09:05:32 AM »
1. One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?
I have 9 years until Medicare so the next 4-5 years are safe with Biden.  I doubt they do much to it after that.  Worst case I pay full price for a few years or move to the UK for a few years (I have right of abode).

2. Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?
Have good insurance.  Don't take risks that are easy to avoid, like driving for no good reason. 

3. Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?
Own my place outright so this isn't an issue.

4. I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).
Not undercapped, so not an issue.

5. Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?
Between pension and Social Security these will cover base expenses.  So all I need is enough to bridge the gap, which I don't see as a problem.

« Last Edit: January 22, 2021, 10:02:23 AM by jim555 »

stoaX

  • Pencil Stache
  • ****
  • Posts: 667
  • Location: South Carolina
  • 'tis nothing good nor bad but thinking makes it so
Re: FIRE Questions - biggest 'risks'?
« Reply #11 on: January 22, 2021, 09:58:52 AM »
As usual, there are a bunch of good responses here.  Here's my $.02:
Managing my taxable income for ACA purposes was a little more difficult than I expected.

I own my own home but just out of curiosity I asked the managers at 2 large apartment buildings about renting when you don't have regular working income. One said they would be open to understanding your finances when qualifying you to rent, the other said they wanted the last tax return and current pay stubs...no exceptions. 

soccerluvof4

  • Walrus Stache
  • *******
  • Posts: 6494
  • Location: Artic Midwest
  • Retired at 50
    • My Journal
Re: FIRE Questions - biggest 'risks'?
« Reply #12 on: January 22, 2021, 01:18:14 PM »
As usual, there are a bunch of good responses here.  Here's my $.02:
Managing my taxable income for ACA purposes was a little more difficult than I expected.

I own my own home but just out of curiosity I asked the managers at 2 large apartment buildings about renting when you don't have regular working income. One said they would be open to understanding your finances when qualifying you to rent, the other said they wanted the last tax return and current pay stubs...no exceptions.

Then you need to just find a different Apartment to rent. If you are Fire'd and have done so sufficiently , renting should be easy peasy with a copy of your last year taxes and Financials/Investments.

spartana

  • Handlebar Stache
  • *****
  • Posts: 2065
Re: FIRE Questions - biggest 'risks'?
« Reply #13 on: January 22, 2021, 02:47:26 PM »
As usual, there are a bunch of good responses here.  Here's my $.02:
Managing my taxable income for ACA purposes was a little more difficult than I expected.

I own my own home but just out of curiosity I asked the managers at 2 large apartment buildings about renting when you don't have regular working income. One said they would be open to understanding your finances when qualifying you to rent, the other said they wanted the last tax return and current pay stubs...no exceptions.

Then you need to just find a different Apartment to rent. If you are Fire'd and have done so sufficiently , renting should be easy peasy with a copy of your last year taxes and Financials/Investments.
You'd think renting would be easy once Fired but that's not always the case. Most landlords still want an income of 3 - 4 times the rent amount,  and they often won't count non-earned investment income or assets that are in a retirement accounts that you may be far to young to tap. This probably won't matter to many here who have very high FIRE incomes or live in very low cost rentals, but for many (including me) it has been very challenging so I just bought a house instead. And paid cash because I couldn't get a mortgage either.
« Last Edit: January 22, 2021, 02:53:40 PM by spartana »

Dicey

  • Senior Mustachian
  • ********
  • Posts: 14851
  • Age: 63
  • Location: NorCal
Re: FIRE Questions - biggest 'risks'?
« Reply #14 on: January 23, 2021, 09:31:16 AM »
As usual, there are a bunch of good responses here.  Here's my $.02:
Managing my taxable income for ACA purposes was a little more difficult than I expected.

I own my own home but just out of curiosity I asked the managers at 2 large apartment buildings about renting when you don't have regular working income. One said they would be open to understanding your finances when qualifying you to rent, the other said they wanted the last tax return and current pay stubs...no exceptions.

Then you need to just find a different Apartment to rent. If you are Fire'd and have done so sufficiently , renting should be easy peasy with a copy of your last year taxes and Financials/Investments.
You'd think renting would be easy once Fired but that's not always the case. Most landlords still want an income of 3 - 4 times the rent amount,  and they often won't count non-earned investment income or assets that are in a retirement accounts that you may be far to young to tap. This probably won't matter to many here who have very high FIRE incomes or live in very low cost rentals, but for many (including me) it has been very challenging so I just bought a house instead. And paid cash because I couldn't get a mortgage either.
See bolded. We paid cash for our current home in 2013 because we sold two highly appreciated properties. Our rentals have mortgages. I've been FIRE for years, but DH loves his job and still works. Before he pulls the trigger, we will refi all of the rentals, sell our clown house, and buy something smaller. We will absolutely be getting a big, fat, fixed rate mortgage. We could easily pay cash, but we still kick ourselves for doing so eight years ago. If we had left 80% of the purchase price of our home in equities, our NW would be considerably higher. We don't need it, but having plenty of $$ to contribute to charitable causes is way more fun than we ever expected. Once your 'stache is large enough, having a mortgage is no big deal.

Metta

  • Pencil Stache
  • ****
  • Posts: 696
Re: FIRE Questions - biggest 'risks'?
« Reply #15 on: January 23, 2021, 06:32:21 PM »
1: Things going majorly wrong: Many of the things we considered were things we couldnít do much about: natural disasters, a serious destruction of value in the stock market, etc. Insurance for the natural disasters as well as a well-stocked pantry and emergency supplies helps ameliorate that. The stock market is going to go up and down. We have money in cash and bonds and we will just weather it. We are better placed to deal with this than other people.

2. Medical stuff: We are worried so we are trying to eat better, exercise, have designated $250,000 as an emergency fund for long-term care if needed. As to ACA going away, we are not dependent on it. I have insurance from my former employer. My husband continues to work, but if he stopped he would also have insurance from his former employer. ACA is a backstop.

3. Getting sued. It is a worry. Another worry not mentioned is a cyber attack on our accounts. But at some point you just have to accept that life is risk. We have insurance policies but obviously not everything can be insured against.

4. Mortgage payments: We currently do not have mortgage payments, but we intend to move to New Mexico and get a mortgage because pulling the money out to pay for the house in full would make our incomes high enough that taxes become a problem. Since my husband has kept his academic job, we will have income to show. Once he leaves, we wonít, so might as well take advantage of the low interest rates right now.

5. Work. Well, here is the truth. Wherever you go, you take yourself with you. People who keep busy and love to work, will be busy in FIRE. What Iíve found is that I take on just as many (if not more) projects for myself that I did when i worked for someone else. Iím not making a lot of money right now, but I donít need money. My investments make more money each month than I did working that same period. My husband is a college professor and loves it, so whether or when he leaves his job is very much up in the air. But would I go back to working for someone else? Probably not.

Linea_Norway

  • Walrus Stache
  • *******
  • Posts: 7293
  • Location: Norway
Re: FIRE Questions - biggest 'risks'?
« Reply #16 on: January 24, 2021, 06:18:41 AM »
One of our biggest risks already happened. A few years ago our small valuta dropped against the Euro the USD. Both became 25% more expensive. As most of the stuff we buy, except for some groceries, is foreign, that makes an impact.

Divorse would make a difference, as sharing a household is cheaper. In my case, having a handyman available is very convenient.

Lifestyle inflation could be a thing. If you in FIRE want to travel more because you finally have the time, it might cost you more and you'd better budget for it. Last summer we had a week with a pricy vacation, even though it was fun. Although we did not go on our yearly trips abroad.

You might make more money than you expect in FIRE. Last year I spent slightly less than I received from several sources. No dent made in my FIRE money yet. A big risk would be that you don't live long enough to enjoy your retirement. Better not keep waiting too many years just because you want to save up more for each possible disaster.
« Last Edit: January 24, 2021, 06:21:03 AM by Linea_Norway »

spartana

  • Handlebar Stache
  • *****
  • Posts: 2065
Re: FIRE Questions - biggest 'risks'?
« Reply #17 on: January 24, 2021, 09:27:35 AM »
As usual, there are a bunch of good responses here.  Here's my $.02:
Managing my taxable income for ACA purposes was a little more difficult than I expected.

I own my own home but just out of curiosity I asked the managers at 2 large apartment buildings about renting when you don't have regular working income. One said they would be open to understanding your finances when qualifying you to rent, the other said they wanted the last tax return and current pay stubs...no exceptions.

Then you need to just find a different Apartment to rent. If you are Fire'd and have done so sufficiently , renting should be easy peasy with a copy of your last year taxes and Financials/Investments.
You'd think renting would be easy once Fired but that's not always the case. Most landlords still want an income of 3 - 4 times the rent amount,  and they often won't count non-earned investment income or assets that are in a retirement accounts that you may be far to young to tap. This probably won't matter to many here who have very high FIRE incomes or live in very low cost rentals, but for many (including me) it has been very challenging so I just bought a house instead. And paid cash because I couldn't get a mortgage either.
See bolded. We paid cash for our current home in 2013 because we sold two highly appreciated properties. Our rentals have mortgages. I've been FIRE for years, but DH loves his job and still works. Before he pulls the trigger, we will refi all of the rentals, sell our clown house, and buy something smaller. We will absolutely be getting a big, fat, fixed rate mortgage. We could easily pay cash, but we still kick ourselves for doing so eight years ago. If we had left 80% of the purchase price of our home in equities, our NW would be considerably higher. We don't need it, but having plenty of $$ to contribute to charitable causes is way more fun than we ever expected. Once your 'stache is large enough, having a mortgage is no big deal.
For me getting a mortgage now, as well as after I first quit my job when I was 36, would likely be impossible since most of my money was in retirement accounts and I was living off a relatively small income.  Went back to work after taking 2 years off, got a mortgage and a house, then eventually quit again at 42 but got a HELOC BEFORE I quit. Never used it but nice to have if needed. Doubt I could have gotten a HELOC once FIREd even on my paid off house.  Weird but my personal experience.

Same with renting. But again I have a lower income than many here and was looking to rent in HCOL areas so would have been 50% or more of my monthly expenses. The OP might not be in that situation but if his FIRE income is $40k/year pre-tax and he is looking at a mortgage or rent of $2000/month he may be out of luck.

Otherwise my advice is to have cash in CDs or bonds to ride out market downturns so you don't have to touch the stash. For me keeping basic expenses lower and willing to cut my discretionary spending and/or make lifestyle choices helps. I do worry about so.e kind of law suit but an umbrella policy will likely cover that. Medical stuff is the only thing I'd be unsure about and would leave myself enough in expenses to cover a reasonably priced non-ACA policy if ever needed.

I've personally never had anything besides the rent issue come up (which would be a long term issue if I choose to rent rather than buy).
« Last Edit: January 24, 2021, 09:42:17 AM by spartana »

jeromedawg

  • Magnum Stache
  • ******
  • Posts: 3605
  • Location: Orange County, CA
Re: FIRE Questions - biggest 'risks'?
« Reply #18 on: January 25, 2021, 03:29:26 PM »

1. One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

ACA Health insurance is probably just about as expensive as it could possibly get if you are above the income threshold to get subsidies.   We are paying $1400+ per month now, when you could buy private insurance in the marketplace it was half that, so health insurance is not likely to go up.


2. Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?

This is why we have health insurance, liability insurance, and umbrella policy, a nest egg of savings, etc.   Can't go through life worring about this stuff.

3. Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?

No mortgage, although it is not difficult to get one if you have assets that could serve as collateral and the ability to re-pay the mortgage.

4. I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

Landlords don't care if you are retired, so long as you can pay the deposit and can prove you have ability to pay the monthly rent.   And what in the hell is Barista FIRE?, never heard of it.

5. Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?

Nope, but sure could if we ever got in a pinch.

What's the main diff between liability and umbrella insurance? Just additional coverage over certain things? Is this all stuff you want to kind of plan and line up before transitioning from work to FIRE? So if you have a FIRE date of say 6/31/2021, start calling around and setting up all the insurance you need etc and schedule for it to start on or soon after that date?

secondcor521

  • Magnum Stache
  • ******
  • Posts: 3472
  • Age: 51
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: FIRE Questions - biggest 'risks'?
« Reply #19 on: January 25, 2021, 03:48:11 PM »
Liability insurance is basically insurance against being sued for negligent acts which result in financially quantifiable harm to someone else.  For average people, the most common forms of liability insurance are contained in their homeowner's and auto policy.  Malpractice insurance for doctors and dentists is also a form of liability insurance, although it typically is referred to by it's more specific name.

An umbrella policy is also a liability policy, but it sits on top of a person's homeowner's and auto policies.  They typically come in multiples of $1M, so you can get a $1M, $2M, $3M or more umbrella policy.  If something happens where the liability is, for example, $800K, then the first $300K or $500K would be handled under the auto or home policy, and then the remaining liability would be covered by the umbrella policy.  Since most liability claims are for less than $300K or $500K, the additional umbrella insurance can be quite cheap - it seems to run about $100 per $1M per year for boring people.  It is perhaps more for pilots, stuntmen, and people with teenage drivers in the house.

This is why sometimes you see recommendations to get the umbrella policy through the same carrier as home and auto - it's good if the policies coordinate so there is no gap in coverage between the home/auto and the umbrella.  Also, presumably the customer service and claims handling is easier if it's all with one company.

...

Having an umbrella policy is separate from FIRE.  You should buy an umbrella policy if you want to transfer that liability risk of $XM to the insurer for the price of the policy.  Generally, though, umbrella policies are purchased by people with substantial assets and/or liability risk, so they might tend to happen around the same stage in life.  Personally I FIREd without an umbrella policy five years ago.  My assets have grown about 50% since then, and I finally decided that it was time to get one a few months ago.  Someone who is FIREing on a low amount of assets, or doesn't feel particularly at risk, or has their assets protected by other means (it's inside a 401(k) perhaps, or some other federally or state protected method applies) may choose to forgo the insurance.

spartana

  • Handlebar Stache
  • *****
  • Posts: 2065
Re: FIRE Questions - biggest 'risks'?
« Reply #20 on: January 26, 2021, 08:29:28 AM »
^That's a great explanation. I'll add that you often NEED to have 2 other types of insurance (usually car and house or renters) to even get an umbrella policy. I had this problem when I decided to go car less last year. I couldn't keep my million dollar umbrella liability policy if I just had homeowners insurance. So I bought an inexpensive ($250/year) non-car-owners auto liability policy so I could keep my umbrella policy - as well as cover myself if renting or borrowing a car. Since I sold my house and am still car less I will have to get renters insurance I suppose if I want to keep an umbrella policy in order to protect the stash at a higher level.

Loren Ver

  • Pencil Stache
  • ****
  • Posts: 723
  • Location: Midwest USA
  • I Retired. Yah!
Re: FIRE Questions - biggest 'risks'?
« Reply #21 on: January 26, 2021, 09:40:21 AM »
-  You are getting some great insight from some very knowledgeable folks and varied folks.  I thought I'd throw in my opinions too. 

Hey guys,

- Hello :).

For those of you who are Post-FIRE: what, if any, are the concerns you have as far as things going majorly wrong (to the point that your expenses end up being higher than what was anticipated)?

-As others have started or hinted at above, having things go wrong in FIRE doesn't make them harder to pay for than if one was working, it actually gives you more flexibility than if you only had a job that paid x for y number of hours.  Bad financial things will always happen, having a higher control and understanding over ones finances doesn't make this worse.  So our concerns are lessened, not increased, and we FIREd pretty lean.

One example I'm thinking of for some reason is ACA and, if in the future at any point, it all goes away or changes to be "not so affordable" - I presume a majority of you going Post-FIRE are leveraging ACA to subsidize on healthcare no?

-DH and I are using the ACA for healthcare and work to keep our income low for subsidies.  Last year the market granted us a great boon, and our income shot up and overshot all of the subsidy limits.  Oops.  Out of our control.  We will have to pay back a LOT of money, kind of like if we had bought insurance without subsidies.  Oh well.  Again, relating this back to working, when DH had a job his insurance was pretty terrible and expensive, and the only option was for him to buy it since it was through work.  Now that we are FIRE we can go with ACA or do something else if we want to.  Being FIRE has given us more choices not less.  They might be expensive choices, but they are there.  Not everyone can do this, but we can, and it works for us.  We can't going to live our lives working worrying about something that might happen that isn't likely too.  DH and I have also both had jobs that didn't provide insurance and I have bought private insurance Pre-ACA.  Life did happen pre-ACA, people FIREd back then too :).

Along a similar train of thought - what if you get into a bad accident and or are sued and are now dealing with legal fees and long term care/medical bills, etc?

- Same thing one would do if one was working, I would assume.  Though I will say, the chances of getting into a real bad car accident has gone down drastically now that neither of us commute anymore nor have work stress.  What if you were working and got injured and couldn't work?  Or were sued?  Working doesn't make either of those better.  Some jobs offer insurance for injuries and lost wages, but can you live happily forever on that percent (I think it is 60%, but I could be wrong), especially without a FIRE-style nest egg growing in the background?  That would be far far worse. 

I was told back in high school I have a good likelihood of going blind at some point and there isn't really anything I can do about it.  I'd much rather be FIREd and enjoy my sight doing ALL THE FUN THINGS than sitting in a lab doing someone else's work.  I also like to know my stache doesn't require me to be able to see to grow and support my family. 



Other questions:
Although this seems like an oxymoron, do any of you have mortgage payments during FIRE? Or able to get a mortgage while FIREd? Do you go to Barista FIRE or working again in that case?

-  I totally have a mortgage and a student loan I am still paying off!  My working career was about 13 years, so that wasn't enough time for those to things to age off.  Since they are both low interest we will complete in their own time, though DH likes to bring up the mortgage every time we have cash on hand.  The payments are merely baked into our monthly budget, just like our other bills.  Once they age out in a few years the money will either get reallocated, or simply not get pulled out each year.

I also saw the question come up in another thread about finding a place to rent when you have no job. I'm assuming this isn't as big of a deal if you Barista FIRE (which is probably what I'd want to do if I actually take the leap to FIRE).

-there have been a few threads on this.  Seems to vary quite a lot on how landlords deal with it.

One last one:
Any of you actually go back to working again (whether full time or part time) after being FIREd because you were bored, wanted/needed the extra money, or other reasons?

-That might depend on what you mean by working.  I don't think DH or I will ever have another boss or do a traditional job again.  DH currently welds trash into art and sometimes people walking by hand him money and take some of the art away.  That seems to make room for more art.  Most of the art he wont sell since he likes it in the yard though.  We don't need the money, but he likes to make crazy things (eleven foot tall man riding a t-rex, sure) so eh. 

In general, we are both far to busy to be bored.  If my day had more hours, I might be able to fit in more things I want to do, but for right now, I can't squeeze it all in.