I've only recently discovered this whole subculture of FIRE having stumbled upon MMM via his Tim Ferriss podcast interview. I've been kind of obsessively running my numbers for a few weeks now to see if I'm potentially able to FIRE in the not-too-distant future and... I think I just might be!
I recently took the time to change my investment mix, moving out of some actively managed funds and into index funds. I invested some idle cash. I ramped up funding of a Roth IRA.
Now 2022 is looking like it could be my year. My struggle is going to be reducing my spending. I've done a pretty good job (by normal standards, not by Mustachian standards) in the savings category and so I now have a 'stache of around 800K + ~140K home equity (remaining mortgage of 120K). I have a savings rate of around 36% (low by Mustachian standards, I know). My spending is about 50% discretionary (restaurants, mostly) but it will be a hard habit to break.
I'm single w/no kids so I only have to support one person (so long as my mom's $ lasts for her retirement, which it probably will, fingers crossed).
My spending goal for post-FIRE is around 47K/yr so I'm hoping to have my 'stache at the 1.2M level by 2022. That seems to be where things are headed assuming average returns over the next 5 years (7%). There's also a lot of fluff built into that 47K figure, so plenty of room to adjust if needed.
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So this is my one year post-iversary!* How has the plan been going over the past year? Well, let's see...
A couple of things from my initial post can now be revised. First, my savings rate has improved. At the time of my first post, I had approx a 36% savings rate. I ended 2017 with a 49% (post tax) savings rate and so far in 2018 I'm actually at 59% (I include mortgage principle in that calc). So that's a win and works the needle in the FI sooner direction. My spending has reduced just a little bit (maybe 8% so far). I do plan to take a couple of short trips later this year, so that might get me closer to last years spending.
My net worth has increased by $143K since this first post and I became a millionaire, which is also good. That also works the FI needle closer to now.
I no longer intend to pay off my mortgage in any hurry. I've read lots of the posts in these forums about the issue and the math seems to be solidly in the 'keep your mortgage' category. Since I've got 12 more years on my 3.75%, I think I'll stay the course and just pay it off on the normal schedule. I may move before then, anyway.
Now that I am tracking my spending more closely, I have revised my target RE spend upward. Now, I realize that there are many on the forums who rightly point out that MMM is all about finding sufficiency (nay, bounty) in low cost living. I get it. We bigger spenders are dragging up the average on the boards, but we're doing better than we would have without the MMM influence. So while my 2017 self used 47K as my expected RE spend, I'm now looking for something more around 60K. Frankly, healthcare costs have me a little freaked out. Where I live, right now the ACA plan at the Silver level with no subsidies would cost me around 8K/year. It's only going up. I'm expecting to need 10-12K/year when I start my RE life. Trying to predict this is almost pointless, but clearly all signs point to 'more expensive'.
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All in all, I see myself still on target for a 2022 RE. I still extrapolate my stash will be somewhere in the $1.2-1.3M range at that point. I have a small pension that kicks in at 60, which should reduce my WR by almost 1.5 percentage points. FIRECalc has me at 100% historical success with my current numbers.
Will I have the guts to really pull the trigger in 2022? I don't know. It's too far away to be real just yet. Of course, 20% of my 5 year horizon from first post has now slipped into the past, and it didn't seem to take very long.
I think my finances are pretty much in snowball mode at this point so the most important thing I need to be doing now to prepare myself for RE is finding new hobbies, interests, and friends that I can spend my time with post-FIRE. I think this is the most likely stumbling block for me come 2022. I couldn't retire today if I had the money, because I'm not mentally and socially prepared. I've got to focus on getting that part in order.
Hope everyone else has made good progress on your goals for the past year and I look forward to the final stretch!
*close enough
And here we are at my 2 year post-iversary! Not sure what the correct gift is for that...
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I'm still using the $60K/yr number for spending post FIRE, which gives me a 96% fireCalc success rate for the 2022 time frame. The poor markets last year brought that down from a projected 100% a year ago. Noise, I guess.
My spend number obviously includes a great deal of discretionary spending. My 'skinny' FIRE spending - which wouldn't require downsizing or ditching cable or eating only beans and rice or anything like that, is about $40K and my 'slim' FIRE number which would include more frills is about 50K. These levels are pretty much within reach right now, but I am aiming for a more 'husky' FIRE. I think I keep up with these other lower FIRE levels just as a way to stay confident that if I lose my job for some reason before I decide to pull the cord, I don't have to freak out. I can gauge the level of bullshit up with which I am willing to put at the corporate gig. I can stay confident that my corporate overlords don't really have any power over me.
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2 years into my journey I now recognize that 3 more years until 2022 is not very long at all.
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And here we are now at my 3 year post-iversary. How the time has flown. Never have I related more to the old saying that sometimes "the days drag on while the years fly by."
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Financially, everything is actually ahead of schedule. Two years ago I predicted that my stash would reach $1.2M by 2022, but in fact I reached that level last week. I firmly believe that the current market is a bit of a mirage, so I think we are in for either several years of low/zero market growth or we are in for another big drop to get things somewhat in sync with economic reality. I wouldn't have the cajones to RE using today's stash level as my 4% rule jumping off point. No way.
My savings rate was a bit lower in 2019 than 2018, at 45%. Income was pretty much identical to 2018 but I had some home and auto maintenance costs that took out a bite.
My current FIRE estimated spending levels are $57k/67k/87k for basic/comfortable/fat FIRE. The 'comfortable' level is pretty much current spending + health insurance at non-subsidized rates. When my stash has reached the point it can cover that level, I'll consider myself truly FI.
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So, what about FIRE 2022? My gut tells me that I will probably not yet be where I want to be financially in just 2 short years, but who knows? Every year, I adjust my targets upward and I'm sure that will continue.
I'm also beginning to consider my housing situation. I'm not sure I want to stay in my current home for the long term. I'm not ready to move yet, but I know that obtaining a mortgage after FIRE can be problematic, so I may have to come to a decision on that front in the next year or so. My car is.. well, it isn't going to last forever. It cost me about 3K last year in repairs / maintenance and my threshold for seriously considering a replacement is when I no longer would consider driving my car on a multi-hour road trip. That time has arrived. I don't have any road trips planned in my immediate future, though, so I have some breathing room.
How is everyone else doing on the 2022 FIRE goals?
4 years now. Wow. 80% of the time since my original post now gone. My goals have shifted over those years, as I mentioned in last year's anniversary update. Since that update, my stash has grown by over 300K and my total net worth is pretty close to $2 million if I include the value of my smallish pension.
My spending in 2020 was just a tad lower than 2019 due to COVID. So far this year, I think my spending is about the same, but that is in part due to a mortgage refinance that is saving me a few hundred dollars a month to offset my higher spending in other areas. I guess I'm also saving some money on gas, since I'm not commuting to the office, but that really wasn't a very big expense, probably saving me about $50/ month.
I'm still convinced that we are riding a huge bubble in the markets, including home prices, equities, and bonds. Of course, I've thought that for years, and we're still riding it, so who knows what 'normal' even is anymore?
On the purely financial side, the numbers appear to show me at FI now. My average annual spending over the past three years is pretty much exactly 4% of my stash. Since I will need to purchase health insurance when I retire, I adjust upward my anticipated spending by the price of a silver level ACA plan without subsidies. I also have to account for some taxes which I will incur doing Roth conversions for feeding the pipeline. On the other hand, I have a small pension that will kick in which should reduce my withdrawal rate by about a full percentage point when the pension starts paying.
At the market lows last year when the S&P 500 was at 2300, my stash would still have supported a 40K WR, which is still plenty to actually pay my bills, so that's a comfort.
As to the emotional and psychological aspect of RE readiness, I'm still behind on that front. I have to build up a life outside of work. COVID isn't helping, obviously. I'd like to do a little travelling later this year but we will see what the state of the pandemic is when we get to the fall. I'm cautiously optimistic that the wave we're seeing now will abate in most of the country within the next 4-6 weeks which should allow for a quick trip down to New Orleans to enjoy the cooler weather.
I think I've lost some ground on the health front this past year. Nothing major, just a few (5) extra pounds and maybe a bit more alcohol consumption. It's quite hot in my part of the country this time of year, so biking and running is a bit less enjoyable, but I still make myself do it a few times a week. In fact, I plan to go for a ride as soon as I post this update.
How do I feel about 2022 as the year I RE? I'm still very much on the fence. I want to be in a position of confidence that I
could RE. I think I will hire a financial planner to work with me on a withdrawal plan and review all of my numbers just to have a sanity check on things like taxes and RMDs. It's all fun and games when I'm just daydreaming about RE and the 4% rule, but it's time to get serious about the nuts and bolts of a drawdown strategy and uncovering any gaps in my understanding of how all this stuff is going to work.
My job certainly isn't horrible by any stretch, especially in the work-from-home era in which we find ourselves. I appreciate my job. I work for a good company with good benefits. But I'm just tired of it. I'm done with conference calls (which are independent of the COVID era, since so many of our team members are in India). I'm done with the stress of supporting vital systems that impact tens of thousands of people across the world in any outage. I'm tired of being on call. I'm tired of working around the same aspect of my industry for so long now. Same shit, different day. It wears one down.
If I hit my financial goals next year and I have a solid plan that tells me I can afford to leave my job and never work again, I think I'll at the very least try to take a sabbatical for a few months. I may also look into changing my role significantly at my company, and work in an entirely different area just to shake things up. I might ask about going to part time. None of those things may be an option, but if I've got my plan ready to go I think I'll have the confidence to push for something. I may also leave my corporate job and look into focusing exclusively on freelance work for a few hours a week. I may truly RE and see how it goes. Being FI is about freedom. I want to take that freedom out for a spin and see what she's got.
