Race to 100% FI! (With a Poll added to track your progress!)

[SwordGuy]

We are between 10-12%, depending on where we net out for our planned annual spend at 4% withdrawal rate. Crazy considering we were between 2-3% a year ago.

Can't wait for compounding to really amp things up!

Awesome!   

I believe that the 10% level is about where people start to reach financial stability.    An expensive dammit becomes an annoyance instead of a disaster because the resources exist to deal with it.  And the positive cash flow that funded creating that 10% level makes recovery a whole lot easier, too.

[SwordGuy]

Update your status for the start of 2020!

[RWD]

Hey everyone!   Don't forget to update your status for the new year!

Update your status for the start of 2020!

It's only been ~3 months since this thread was created. Nothing to update yet for me.

[SwordGuy]

Hey everyone!   Don't forget to update your status for the new year!

Update your status for the start of 2020!

It's only been ~3 months since this thread was created. Nothing to update yet for me.

Just advertising for the thread.   Lots of folks probably haven't seen it yet. :)

[Monkey Uncle]

I missed this thread when it first came out.  I've been FIREd since January, 2018.  I'm currently at 126% of my income target.

[BigEasyStache]

Apologies if this has already been answered somewhere but....

Define FI?

Is it that 4% of your stash covers your expenses?  What about healthcare?   I have accurate expenses for the last 3 years and they're nearly identical.  But I'm currently covered by employer insurance.  If I use the ACA and keep my income low I can get about the same price for healthcare.  So yeah, I'm 100% FI if you base it off of ACA healthcare.

And I assume that you can't include your home in your stash if you're going to live in it.

[DadJokes]

Apologies if this has already been answered somewhere but....

Define FI?

Is it that 4% of your stash covers your expenses?  What about healthcare?   I have accurate expenses for the last 3 years and they're nearly identical.  But I'm currently covered by employer insurance.  If I use the ACA and keep my income low I can get about the same price for healthcare.  So yeah, I'm 100% FI if you base it off of ACA healthcare.

And I assume that you can't include your home in your stash if you're going to live in it.

Use whatever definition works for you. If you wanted to quit working tomorrow, how much of a stash would you need? You might need to include extra to account for medical (or less due to geo-arbitrage), and your plan might involve a paid off house, living with a mortgage, or selling and renting.

[E.T.]

My FI number is still a bit of a SWAG since I plan move and have kids soon but I put myself in the 5-10% spot. Not too bad for being at negative 5-10% recently and just crossing zero in 2018.

[SwordGuy]

Apologies if this has already been answered somewhere but....

Define FI?

Is it that 4% of your stash covers your expenses?  What about healthcare?   I have accurate expenses for the last 3 years and they're nearly identical.  But I'm currently covered by employer insurance.  If I use the ACA and keep my income low I can get about the same price for healthcare.  So yeah, I'm 100% FI if you base it off of ACA healthcare.

And I assume that you can't include your home in your stash if you're going to live in it.

Use whatever definition works for you. If you wanted to quit working tomorrow, how much of a stash would you need? You might need to include extra to account for medical (or less due to geo-arbitrage), and your plan might involve a paid off house, living with a mortgage, or selling and renting.

Lots of good examples in the very first post in the thread.

Your FI number needs to include spending on things you will be spending money on, whatever those things are and whatever they cost.

[monarda]

I'm going to have to figure this out before I answer the poll. I like this way of thinking better than those races you mention (I participate in two of them right now, depending on what's included).

I might say 80% and I might say 60%.  Or some other number. It depends on how I look at things. I'm still feeding my retirement accounts, but I guess I can consider the current balances and what I'd take out at 4% SWR and then include rental income and pension.

Posting to remind myself to get back to this.

 <snip>

He has a rental property worth $50,000 that produces a profit of $5,000 a year.   He won't be selling it.   His running total of FI income is $8000 + $5000, or $13,000.   

<snip>

He has a house that's worth $500,000 and which he owes $100,000 on, giving him $400,000 in equity.   When he retires he plans to sell this house and buy another one for $100,000 cash.   That means his FI stash will grow by $300,000 or another $12,000 a year.    I would count this in Joe's FI total even though the house hasn't been sold and the real estate market might go down for a few years.   Before Joe pulls the FI trigger and quits, he'll have checked the market and made sure those numbers are still solid, or he might even sell first, then go FI.  So, $25,000 + $12,000 puts Joe at $37,000, or 75% of FI.

<snip>

I'm not sure what to do with the rental equity. We don't plan to sell for a while, but eventually (many years into FI) we probably will. So do I  add the amount of equity to the cash assets? If I include the net rental profit and then I add back the principal that we pay each month I get a very different number than if I don't. Loans will be paid off in ~10 years. I could consider that amount? Different ways to look at this.

When you're calculating these numbers, it's very important to know exactly what you want to know, because that governs what numbers you include in your calculation.

In this case, we have a target income we are aiming for and we want to know how close we are to being able to provide that income after FI.

So, let's say I have two assets that I won't or can't sell and can't tap for equity, that each provide me with an income of $5,000 a year ($10,000 combined).   It literally doesn't matter whether those assets are worth $1 or $5 bazillion dollars because -- drum roll -- they won't be put up for sale.   Let's say one is worth $50,000 and the other would be worth $500,000, we own them free and clear, and there are no costs to sell them (i.e., taxes or realtor fees).   For purposes of this specific example of this %FI income calculation, they are exactly equal.

Now, let's remove those restrictions on those two assets.   They are no longer exactly equal for this purpose.   

Asset one could be worth $5000 a year in direct income or it could be sold and translated into a stock/bond portfolio that would shed $2000 a year using the 4% rule.   In this case, selling is crazy talk.

Asset two could be worth $5000 a year in direct income or sold for $500,000, which could be turned into a stock/bond portfolio with an income of $20,000 a year using the 4% rule.  In this case, sell, sell, sell!

But this next point is important -- for purposes of this calculation, the asset is EITHER producing direct income for owning it OR is turned into some other asset that produces direct income.  It can't be counted BOTH WAYS at the same time.   

You can pick either one you want, but you can't pick both.

The next point I'll bring up is you mentioned selling them well into FIRE.  In that case, since the calculation we're putting together is SOLELY for the purpose of knowing how close to being FI we are, it's a moot point.  For purposes of this calculation, you've chosen to value them for their direct income.

Does that help?

Yes, thanks. :-)

Our rental expenses vary, so I'm basing the number just on this year's rental expenses to date. We did a lot of work on the properties so it's going to be a bit of a high year.  And we really aren't totally decided on our FIRE number, but for this poll say, let it be $50,000. Then we're at 64% or better (in a more typical year for rental expenses). Cool.

Changing my number and my poll vote because I asked the retirement office for an official estimate of my pension, which is much higher than the guesstimate I used to reach the number above. So now we're at 75%

Changing my number and my poll vote again because I see an error in my rental income spreadsheet -  I've double deducted my rental insurance premium- whoopsie. And I put in this year's rental expenses, which are lower than last years' and are more typical of a normal year's expenses. Fixed that and now at 102%. Whaddaya know. Hasn't sunk in quite yet.

[SwordGuy]

I'm going to have to figure this out before I answer the poll. I like this way of thinking better than those races you mention (I participate in two of them right now, depending on what's included).

I might say 80% and I might say 60%.  Or some other number. It depends on how I look at things. I'm still feeding my retirement accounts, but I guess I can consider the current balances and what I'd take out at 4% SWR and then include rental income and pension.

Posting to remind myself to get back to this.

 <snip>

He has a rental property worth $50,000 that produces a profit of $5,000 a year.   He won't be selling it.   His running total of FI income is $8000 + $5000, or $13,000.   

<snip>

He has a house that's worth $500,000 and which he owes $100,000 on, giving him $400,000 in equity.   When he retires he plans to sell this house and buy another one for $100,000 cash.   That means his FI stash will grow by $300,000 or another $12,000 a year.    I would count this in Joe's FI total even though the house hasn't been sold and the real estate market might go down for a few years.   Before Joe pulls the FI trigger and quits, he'll have checked the market and made sure those numbers are still solid, or he might even sell first, then go FI.  So, $25,000 + $12,000 puts Joe at $37,000, or 75% of FI.

<snip>

I'm not sure what to do with the rental equity. We don't plan to sell for a while, but eventually (many years into FI) we probably will. So do I  add the amount of equity to the cash assets? If I include the net rental profit and then I add back the principal that we pay each month I get a very different number than if I don't. Loans will be paid off in ~10 years. I could consider that amount? Different ways to look at this.

When you're calculating these numbers, it's very important to know exactly what you want to know, because that governs what numbers you include in your calculation.

In this case, we have a target income we are aiming for and we want to know how close we are to being able to provide that income after FI.

So, let's say I have two assets that I won't or can't sell and can't tap for equity, that each provide me with an income of $5,000 a year ($10,000 combined).   It literally doesn't matter whether those assets are worth $1 or $5 bazillion dollars because -- drum roll -- they won't be put up for sale.   Let's say one is worth $50,000 and the other would be worth $500,000, we own them free and clear, and there are no costs to sell them (i.e., taxes or realtor fees).   For purposes of this specific example of this %FI income calculation, they are exactly equal.

Now, let's remove those restrictions on those two assets.   They are no longer exactly equal for this purpose.   

Asset one could be worth $5000 a year in direct income or it could be sold and translated into a stock/bond portfolio that would shed $2000 a year using the 4% rule.   In this case, selling is crazy talk.

Asset two could be worth $5000 a year in direct income or sold for $500,000, which could be turned into a stock/bond portfolio with an income of $20,000 a year using the 4% rule.  In this case, sell, sell, sell!

But this next point is important -- for purposes of this calculation, the asset is EITHER producing direct income for owning it OR is turned into some other asset that produces direct income.  It can't be counted BOTH WAYS at the same time.   

You can pick either one you want, but you can't pick both.

The next point I'll bring up is you mentioned selling them well into FIRE.  In that case, since the calculation we're putting together is SOLELY for the purpose of knowing how close to being FI we are, it's a moot point.  For purposes of this calculation, you've chosen to value them for their direct income.

Does that help?

Yes, thanks. :-)

Our rental expenses vary, so I'm basing the number just on this year's rental expenses to date. We did a lot of work on the properties so it's going to be a bit of a high year.  And we really aren't totally decided on our FIRE number, but for this poll say, let it be $50,000. Then we're at 64% or better (in a more typical year for rental expenses). Cool.

Changing my number and my poll vote because I asked the retirement office for an official estimate of my pension, which is much higher than the guesstimate I used to reach the number above. So now we're at 75%

Changing my number and my poll vote again because I see an error in my rental income spreadsheet -  I've double deducted my rental insurance premium- whoopsie. And I put in this year's rental expenses, which are lower than last years' and are more typical of a normal year's expenses. Fixed that and now at 102%. Whaddaya know. Hasn't sunk in quite yet.

102%!!!   That's great!   

[SwordGuy]

77%
By my calculations we should be FI in the next 5 years or so.
I'm already retired but my partner is still working and likes it.  If he decides he wants to quit there are many ways we could reduce our spending (we spend a lot on charity and vacations) and still be quite happy.  Or we could get part time jobs.

Thanks for the post, it was good to revisit the spreadsheets and see where we are at.  I think our spending has increased significantly over the past year but since he wants to continue to work it's probably ok.

77% and 5 years?!   That's a solid position to build from!   4 years will go by quickly.  That fifth year might drag a bit... :)

[Mmm_Donuts]

Answered 80-90% and not FIREd. If we downsize the house by my estimated amount, we'd be at 85%. Currently with invested assets only we're at 75%.

Now I'm at 83% WITHOUT the house downsize. This past year has been very kind to investors. I won't change my poll answer, but it's nice to see this kind of progress!

[ScreamingHeadGuy]

I've had to change my vote to 110.1%+ and not FIREd. (Hooray/not really!)

Usually I don't check my balance in the middle of the month, but I'd seen the market returns so far and I was checking if Vanguard had my tax forms ready (nope) anyways, so I just went and redid my net worth calculation in lieu of doing my taxes. 

When I was still in the mid-80% range I thought "Why are those folks at 110%+ still working?" and now I know why.  For me it's because I told myself this OMY was my time to get all my ducks in a row (financially) and mentally prepare for the change.  Plus I'm just holding on to see what happens in the November elections - maybe I'll be scared into changing my plan.  But, yes, at this point the numbers are all taken care of and it's all about being ready to switch from accumulation to draw-down. 

[SwordGuy]

I've had to change my vote to 110.1%+ and not FIREd. (Hooray/not really!)

Usually I don't check my balance in the middle of the month, but I'd seen the market returns so far and I was checking if Vanguard had my tax forms ready (nope) anyways, so I just went and redid my net worth calculation in lieu of doing my taxes. 

When I was still in the mid-80% range I thought "Why are those folks at 110%+ still working?" and now I know why.  For me it's because I told myself this OMY was my time to get all my ducks in a row (financially) and mentally prepare for the change.  Plus I'm just holding on to see what happens in the November elections - maybe I'll be scared into changing my plan.  But, yes, at this point the numbers are all taken care of and it's all about being ready to switch from accumulation to draw-down.

It took us an extra year on top of the planned extra year to pull the plug.  It's a big deal, so I fully understand why!

[itchyfeet]

96.5%. The work is almost done.

[Queen Frugal]

Interesting thread. I am at 13% using 4% w/d rate and last year's spending. 

I am curious to know how others handle the future input of social security to the FIRE equation since it will decrease the need for passive investment income at a future date.

If I were young, I would probably just ignore it, but it is not that far down the road for me (I am 46).

[SwordGuy]

Interesting thread. I am at 13% using 4% w/d rate and last year's spending. 

I am curious to know how others handle the future input of social security to the FIRE equation since it will decrease the need for passive investment income at a future date.

If I were young, I would probably just ignore it, but it is not that far down the road for me (I am 46).

I started off using a spreadsheet, then switched to www.cfiresim.com.  Either way, you don't need as much up front because SS will cover some of the costs later.   (I would budget for 75% of expected SS benefits at most.)

[BicycleB]

Just posting to add to the poll. Best wishes, racers!

Fwiw, I put "80 to 90%, but FIRE". Floating through accidental thin FIRE, lazily.

[SwordGuy]

How is everyone doing on their FI journey?

Moving forwards despite the 2020 craziness?   

Update your poll entry and let us know!   

We're still comfortably FIRED.    :)

[MudPuppy]

4.8% here

[Monkey Uncle]

Still comfortably FIREd as well.

[SwordGuy]

4.8% here

That's a good, solid buffer against lots of life's dammits!

[MudPuppy]

It is!

[DadJokes]

Well that's depressing.

1.4% to 3.9% over the last 12 months.

Well, adding today's contributions makes it 4.0%. Woo...

4.63% today - 2 more months, and I can (hopefully) change my answer on the poll

5.35% today - I changed my selection on the poll. I'm aiming for 9% by the end of 2020, though I can't really control what the market does.

In 6 months, I've gone up to 7.16%. 9% by year-end still looks likely.

[Monkey Uncle]

Still comfortably FIREd as well.

Ditto. Even saving more (or rather spending less)  now then before Covid.

Yeah, if we don't do any traveling during the remainder of the year, which is looking increasingly likely, we are on track to come in about $10k below our already super-safe annual spending limit.

[Faramir]

I've amended my vote as I've moved up to the 70-80% band from the 60-70% band since my original vote in September.

[SwordGuy]

I've amended my vote as I've moved up to the 70-80% band from the 60-70% band since my original vote in September.

Sweet!   Way to go!

[ScreamingHeadGuy]

I am back to the >110.01 and NOT FIRED section.  In <7 months I will change my response again one way or another (hopefully to the >110.01 and FIRED column, but we'll see what the market says to my plan).   

[SwordGuy]

I am back to the >110.01 and NOT FIRED section.  In <7 months I will change my response again one way or another (hopefully to the >110.01 and FIRED column, but we'll see what the market says to my plan).

I can understand a bit of extra caution in times like these!

[clarkfan1979]

I think we are around 40% to FI and about 5-10 years away. We currently save 30% of our income that goes directly into stock investments. We also have 3 rentals (4 doors).

We are not really in a rush because my current full-time job is somewhat similar to a barista FI part-time job. However, I still like the idea of FI, just in case my job ever became toxic.

I teach community college and work 30 hours/week M-Th on campus and another 5 hours/week from home. Each semester is 15 weeks + 1 week of prep. 32 weeks total is 1,120 hours/year. If you divide this by 52 weeks, I average 21.5 hours/week. My wife works 13.5 hours/week at Target. Our combined working hours are 35 hours/week. We still have plenty of time for hobbies, travel, etc...

[SwordGuy]

How is everyone doing?     Backsliding due to covid 19 damage to your plan?   Moving forward? 

[fuzzy math]

At some point I answered 30-40% but didn't comment so I can't tell when I voted.
Updating that because I just crossed 50% !

[Mmm_Donuts]

We went from 75% when I first answered this poll, to 62% in the covid dip, to now ~90%. It's a roller coaster.

[MudPuppy]

6.2% presently

[diapasoun]

I am at a whopping 6.5%... but that's up from 2.9% earlier this year. Chug chug chugging along! One day I too will benefit from crazy compounding. ;)

Now at 9.91%. I'm starting to get to the point where I have enough assets that crazy compounding can really be a thing.

[2Birds1Stone]

Bam

In chrono order for your polls

40-50%
50-60%
70-80%

and now 100-110% and FIREd as of next week, age 32.

Wam bam, 197%

[RWD]

Up to about 63% now. Moved up one bracket on the poll!

[bbates728]

I am at about 4% FI which is up from -4% last year. Seems....slow.... On the other hand, that represents $80k difference and little to no compound interest.

Just crossed over to 10%. Also just had my roommates move out so my SR has decreased to about 55%. A good trade off but still sad to see the number go up slower.

[Much Fishing to Do]

Crazy year so far, huh?  March 2018 was at about 78%, April 2019 at 97%, Started 2020 at 100%, Feb high of 103%, dropped to about 78% in March, now back to 101%.  I better hurry up and RE before it turns again ;-)

[SwordGuy]

Crazy year so far, huh?  March 2018 was at about 78%, April 2019 at 97%, Started 2020 at 100%, Feb high of 103%, dropped to about 78% in March, now back to 101%.  I better hurry up and RE before it turns again ;-)

We chose a different bucket of income streams (including SS because we're older) so March 2018 was 110% for us (FIRED in April) and because we don't depend on the market for our normal living expenses, we've been at over 100% the whole time.  The market is for long term growth to support our mentally handicapped daughter.

[lcmac32]

Just voted and believe I was conservatively in the 40-50% range.

[SwordGuy]

Just voted and believe I was conservatively in the 40-50% range.

That's great!   Well done!   

[MudPuppy]

7.3%!

[SwordGuy]

7.3%!

That's enough to take the sting out of quite a few dammits life can toss your way!

[pdxmonkey]

I made it to 99.96% before the market stopped it's crazy upward climb. I'm somewhere below that now. I'm also thinking of increasing my target # again. Looking around I'm probably still not allocating enough for self paid health insurance. I used to have $0 allocated as I figured it would keep changing wildly and I'd figure it out when I got closer. I added a bit to my number for it, but I don't think it's enough to generate monthly premium using 4% rule.

[Queen Frugal]

Interesting thread. I am at 13% using 4% w/d rate and last year's spending. 

I am curious to know how others handle the future input of social security to the FIRE equation since it will decrease the need for passive investment income at a future date.

If I were young, I would probably just ignore it, but it is not that far down the road for me (I am 46).

I started off using a spreadsheet, then switched to www.cfiresim.com.  Either way, you don't need as much up front because SS will cover some of the costs later.   (I would budget for 75% of expected SS benefits at most.)

Thanks for the link, that was super helpful! I would like to FIRE in 2030 when my daughter is out of the house and do a lot of RV traveling.

Based on this goal, I'm at 21%. Woot woot!

[SwordGuy]

Interesting thread. I am at 13% using 4% w/d rate and last year's spending. 

I am curious to know how others handle the future input of social security to the FIRE equation since it will decrease the need for passive investment income at a future date.

If I were young, I would probably just ignore it, but it is not that far down the road for me (I am 46).

I started off using a spreadsheet, then switched to www.cfiresim.com.  Either way, you don't need as much up front because SS will cover some of the costs later.   (I would budget for 75% of expected SS benefits at most.)

Thanks for the link, that was super helpful! I would like to FIRE in 2030 when my daughter is out of the house and do a lot of RV traveling.

Based on this goal, I'm at 21%. Woot woot!

21% is an awesome place to reach!     You've got a great money-making tailwind pushing you forward and enough reserves to take on most setbacks and recover from them.

[diapasoun]

I am at a whopping 6.5%... but that's up from 2.9% earlier this year. Chug chug chugging along! One day I too will benefit from crazy compounding. ;)

11% now, a year later -- I get to change in the poll!

Slowly making my way forward. \o/

[SwordGuy]

I am at a whopping 6.5%... but that's up from 2.9% earlier this year. Chug chug chugging along! One day I too will benefit from crazy compounding. ;)

11% now, a year later -- I get to change in the poll!

Slowly making my way forward. \o/

You're starting to get to the point where compound growth starts to noticeably kick in to help you out!