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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: HappyRuhestand on September 03, 2013, 12:46:13 PM

Title: Are we ready to be FI / FIRE - Your feedback appreciated!!
Post by: HappyRuhestand on September 03, 2013, 12:46:13 PM

Firstly, Id like to say how thankful I am for finding this site.  Its only been about a month and timing could not have been more perfect!  So many articles have hit home and we feel like weve finally found the kindred spirits weve been looking for.
The last year has been pretty close to a nightmare for me and Im really over the corporate rat race.   So, we decided we should take the leap and retire!  While, I am pretty sure we are ready, I sometimes let my unfounded worries get the better of me.  It would help ease our minds, if we could get some fellow MMM feedback, especially because we plan on living well into our nineties. 

For example, if I calculate the 4% SWR based on the taxable investment account, then it would cover $15K and we get a small passive income from a rental house.  I wasnt sure if I should factor in the retirement account as well?  I do expect to work, but at jobs I am interested in and that bring me new and interesting experiences.  However, even if we withdrew the full amount for expenses until social security/access to 401K funds kick in - wed still be okay, right?

Expenses:  We are expecting $22K or less and have no mortgage (we live well, but simply and can easily get this down to 15-17k)

Please let us know if we are missing something major, we weren't sure if we include 401K when calculating SWR.

Thank you!
Title: Re: Are we ready to be FI / FIRE - Your feedback appreciated!!
Post by: matchewed on September 03, 2013, 01:39:37 PM
It depends on your plan. You'll have to map out better how you plan to execute this. Also figure out how much income does your rental property provide a month, that should reduce the amount needed to be withdrawn from accounts.

Choosing to use retirement accounts is your call. There are methods to accessing them prior to retirement age (several posts on this topic exist). Some choose to do this some do not.

If you do not choose to utilize your retirement accounts I think it's pretty clear you're short, unless your rental property is generating $7k worth of income over the year.

If you choose to use your retirement funds and access them you should be fine given your outlined expenses.

Both of those are assuming no extra sources of income such as side hustles. You'll really need to put some solid numbers behind this, use to run various scenarios and incomes from side hustles.
Title: Re: Are we ready to be FI / FIRE - Your feedback appreciated!!
Post by: footenote on September 03, 2013, 02:27:57 PM
I also strongly recommend cFIREsim. You are talking about funding 50 years, which amps up the amount you need going in (even with periodic work and income, and low expenses).
Title: Re: Are we ready to be FI / FIRE - Your feedback appreciated!!
Post by: tomsang on September 03, 2013, 03:04:35 PM
Expenses:  We are expecting $22K or less

I would recommend that you continue working until you prove out your expenses, get your assets deployed in the appropriate manner, sketch out how you see retirement, and figure out a few things. 

On the expense side have you figured out medical, dental, other expenses that are covered by the company? 
If you "retire" and then realize that you missed a few things how difficult is it to jump back into the workforce?  If it is easy, then there is limited risk in retiring and then figuring stuff out.  If you are getting paid a large amount then, which would be permanently discounted then I would make sure you have everything figured out before hanging it up.

Congrats you are very close!
Title: Re: Are we ready to be FI / FIRE - Your feedback appreciated!!
Post by: travelbug on September 03, 2013, 09:29:33 PM
Two questions that pop out for me are:

what does your rental pay pa?

What are the prices for houses when you move? Or are you going to be renting?

If your Vanguard pays 4% pa the total  would give you your $22600 pa income, but I have no understanding about taxes in the USA...

Good luck!