Author Topic: Less than lean or coast FIRE?  (Read 791 times)

mistymoney

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Less than lean or coast FIRE?
« on: November 22, 2020, 02:02:22 PM »
Hey everyone,

Been learning a lot since I started hanging out here, and I appreciate everyone's input thus far.

I've been saving and shoring up my situation, and looking at what is possible as my job situation has become increasingly less desirable.

I have a stache of ~900k, ~60k expenses, and have had some side job income of 13k this year. Just got notice they want this work to continue into 2021, and may end up being about 20k for the year.

so at 4%, I could take 36k from stache, have about 20k side hustle, and then look for some other side jobs to bridge the gap, I think I can more effectively look at decreasing yearly spend once off the merrygoround of 60 hour work weeks, and/or go a little above the 4% here and there if needed.

So - I'm not really lean, and I'm not really coasting. Is this not advisable to even try to do? I'd really like to try, and see where I can get on my own terms with the side hustle. My mental and physical health are showing some wear and tear, and I've really been fighting with the "can't afford to" "can't afford NOT to" aspect of it all.

In 11 months, I'll be 55, and can access current dayjobs 401k without penalty, so I am going to try to make it to that point. I have about 15k saved outside of retirement accounts, and am currently putting 1k/pay check into 401k to max+catchup going forward.

Possible, or no way? If I do do it, and I can push myself until November 1st - what should I consider on a todo list moneywise between now and then?

And I think if the stock market tanks between now and then, it would just be too risky and I'd have to give up the idea, but if the stock market bounces up after the transition to prez biden, and the widespread administration of the vaccine, and side job going well.....I think i could do it....

Assumptions:
side job goes away/fully retire and ss income kicks in to replace it ~62-65
downsizing is always an option (200+k equity in desirable neighborhood)

Uncertainties
Not sure what taxes may be on this scenario
healthcare before medicare - ACA, but at what cost?


Thoughts?

madness? or sanity?

rockeTree

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Re: Less than lean or coast FIRE?
« Reply #1 on: November 22, 2020, 03:39:18 PM »
It's definitely time to run your numbers and think about where you have risks and flex in your spending if your physical and mental health are suffering.

How likely is it that the side gig will be doable until your SS kicks in? How much SS do you/maybe your partner expect?  That seems likely to be the biggest driver of how risky this is - you're 54 thinking to quit at 55, even if you wait til 67 to claim that's only a twelve year bridge if you're partnered and have two 30k SS incomes coming in, for instance. You could keep your money in cash and take out 60k a year, quit your side job, and still have money left. (Not advice, just making a point). Go through the detailed calculator and get a handle on that number with your planned side gig income for the next few years.

If you have a partner, what's their financial situation and risk tolerance and what do they think?

At your age, a lot of folks would never be hired in in their field again if they were out a couple years. Is that true in yours?

How's your health generally? Look up those ACA costs in your state and any you might move to to save money.

How far could you downgrade your housing if you took that route without being unhappy, and how much would that change your expenses?

Speaking of the house, what kind of shape is it in? What happens when the roof/boiler/foundation crack/whatever goes? Ditto cars if you are car dependent. Ditto kids and parents if you feel you have financial obligations to them in a pinch.

If you post a budget and delineate what you are willing to change if your money situation changes folks will be happy to help you ID savings, I'm sure.

Either way you're definitely close to being able to wash your hands of all this. Congrats!

jeroly

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Re: Less than lean or coast FIRE?
« Reply #2 on: November 22, 2020, 03:50:37 PM »
Hey everyone,

Been learning a lot since I started hanging out here, and I appreciate everyone's input thus far.

I've been saving and shoring up my situation, and looking at what is possible as my job situation has become increasingly less desirable.

I have a stache of ~900k, ~60k expenses, and have had some side job income of 13k this year. Just got notice they want this work to continue into 2021, and may end up being about 20k for the year.

so at 4%, I could take 36k from stache, have about 20k side hustle, and then look for some other side jobs to bridge the gap, I think I can more effectively look at decreasing yearly spend once off the merrygoround of 60 hour work weeks, and/or go a little above the 4% here and there if needed.

So - I'm not really lean, and I'm not really coasting. Is this not advisable to even try to do? I'd really like to try, and see where I can get on my own terms with the side hustle. My mental and physical health are showing some wear and tear, and I've really been fighting with the "can't afford to" "can't afford NOT to" aspect of it all.

In 11 months, I'll be 55, and can access current dayjobs 401k without penalty, so I am going to try to make it to that point. I have about 15k saved outside of retirement accounts, and am currently putting 1k/pay check into 401k to max+catchup going forward.

Possible, or no way? If I do do it, and I can push myself until November 1st - what should I consider on a todo list moneywise between now and then?

And I think if the stock market tanks between now and then, it would just be too risky and I'd have to give up the idea, but if the stock market bounces up after the transition to prez biden, and the widespread administration of the vaccine, and side job going well.....I think i could do it....

Assumptions:
side job goes away/fully retire and ss income kicks in to replace it ~62-65
downsizing is always an option (200+k equity in desirable neighborhood)

Uncertainties
Not sure what taxes may be on this scenario
healthcare before medicare - ACA, but at what cost?


Thoughts?

madness? or sanity?

A bit of clarification will help you to get more informative answers.

You say you have a stash of 900k, and later on you mention downsizing to the extent of 200k in equity.  Did the 900k not include home equity? 

You say you have 60k expenses / year.  Does that include housing expenses?  How long does your mortgage have left on it?  How much will your expenses drop after paying off the mortgage and possibly getting reduced property tax rates as a senior?

You say you're uncertain about taxes.  So will everyone else on this board unless you give more specifics.  How much of that 900k is in after-tax accounts?  Roth IRAs?

Regarding your ACA costs, you could possibly qualify for subsidies if you keep your gross income under certain threshholds and doing so might depend on where you are taking withdrawals from, what portion of your after-tax accounts are in the form of capital gains, etc.  The costs also depend on what state you live in, whether you are paying just for yourself or also for dependents, etc.

The 'madness or sanity' question also depends to a large degree on how easy it would be to re-enter your profession after a hiatus.  If you think you could easily get a different job at a similar salary/level of enjoyment/level of stress after taking off a year or three, then I think you are in a very good position to do so.  You seem to be able to more or less cover your expenses with 4% withdrawals and your side gig (again, this is based on incomplete information so I have made some assumptions here), and therefore taking a year off should be a low risk thing to do provided you aren't sabotaging your career by doing so.  It would give you a good idea as to whether you enjoy early retirement, possibly allowing you to grow your side gig into something bigger if you like.  If on the other hand you would be left with no return options into the working world other than as a Walmart greeter at $7.25/hr, maybe it wouldn't be the greatest of moves...

mistymoney

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Re: Less than lean or coast FIRE?
« Reply #3 on: November 22, 2020, 04:08:22 PM »
It's definitely time to run your numbers and think about where you have risks and flex in your spending if your physical and mental health are suffering.

How likely is it that the side gig will be doable until your SS kicks in? How much SS do you/maybe your partner expect?  That seems likely to be the biggest driver of how risky this is - you're 54 thinking to quit at 55, even if you wait til 67 to claim that's only a twelve year bridge if you're partnered and have two 30k SS incomes coming in, for instance. You could keep your money in cash and take out 60k a year, quit your side job, and still have money left. (Not advice, just making a point). Go through the detailed calculator and get a handle on that number with your planned side gig income for the next few years.

If you have a partner, what's their financial situation and risk tolerance and what do they think?

At your age, a lot of folks would never be hired in in their field again if they were out a couple years. Is that true in yours?

How's your health generally? Look up those ACA costs in your state and any you might move to to save money.

How far could you downgrade your housing if you took that route without being unhappy, and how much would that change your expenses?

Speaking of the house, what kind of shape is it in? What happens when the roof/boiler/foundation crack/whatever goes? Ditto cars if you are car dependent. Ditto kids and parents if you feel you have financial obligations to them in a pinch.

If you post a budget and delineate what you are willing to change if your money situation changes folks will be happy to help you ID savings, I'm sure.

Either way you're definitely close to being able to wash your hands of all this. Congrats!

Thanks!

To answer questions:

no partner involved....SS would be about 22k/year at 65. I do plan to take at 62 if no longer working FT. Maybe about 20K? 18/19?

I think I stand a good chance of getting back into my field within 1-2 years. after that, if may be an issue.

Not sure how happy I may be with a downsize, would be an extra cushion if things don't go well. Maybe I could get a roommate with their own SS check? ;)

I think my health would greatly improve once I get off the merrygoround.....currently having a lot of insomnia, digestive issues, I think all stress related. Would love to pull the plug on the stress and see ...also chronic inflammation, not sure if that can be stress related? But my I have not followed up with more medical workup.

House and car are in reasonable to good shape, but yes - those could put a monkey wrench into the business, for sure. Current PI part of mortgage is about 1500 month, so that is something that will go away in 15 years.


rockeTree

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Re: Less than lean or coast FIRE?
« Reply #4 on: November 22, 2020, 04:24:25 PM »
If you would like a roomie more than you would like moving it's a great idea. You must have over 20k in house payments a year, plus any maintenance that comes up, and it sounds like a fairly expensive house which means either it's big or it's in a HCOL area, which pushes up maintenance costs and hassles. Do you plan to live on inflation-adjusted 40k once it's paid off?

Your SS single isn't super high esp if you take it early. Too risky for my blood without a combo of a bigger emergency fund or dropping/offsetting expenses. But maybe you like to live on the wild side, you wouldn't have to get all that lucky.

Can you get a leave of a couple months to take off some stress and get some headspace/ time to look after your health?

mistymoney

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Re: Less than lean or coast FIRE?
« Reply #5 on: November 22, 2020, 04:40:07 PM »


A bit of clarification will help you to get more informative answers.

You say you have a stash of 900k, and later on you mention downsizing to the extent of 200k in equity.  Did the 900k not include home equity? 

You say you have 60k expenses / year.  Does that include housing expenses?  How long does your mortgage have left on it?  How much will your expenses drop after paying off the mortgage and possibly getting reduced property tax rates as a senior?

You say you're uncertain about taxes.  So will everyone else on this board unless you give more specifics.  How much of that 900k is in after-tax accounts?  Roth IRAs?

Regarding your ACA costs, you could possibly qualify for subsidies if you keep your gross income under certain threshholds and doing so might depend on where you are taking withdrawals from, what portion of your after-tax accounts are in the form of capital gains, etc.  The costs also depend on what state you live in, whether you are paying just for yourself or also for dependents, etc.

The 'madness or sanity' question also depends to a large degree on how easy it would be to re-enter your profession after a hiatus.  If you think you could easily get a different job at a similar salary/level of enjoyment/level of stress after taking off a year or three, then I think you are in a very good position to do so.  You seem to be able to more or less cover your expenses with 4% withdrawals and your side gig (again, this is based on incomplete information so I have made some assumptions here), and therefore taking a year off should be a low risk thing to do provided you aren't sabotaging your career by doing so.  It would give you a good idea as to whether you enjoy early retirement, possibly allowing you to grow your side gig into something bigger if you like.  If on the other hand you would be left with no return options into the working world other than as a Walmart greeter at $7.25/hr, maybe it wouldn't be the greatest of moves...

no equity included in the stache - 900k cash, bonds, stocks

yes - 60k includes mortgage - 15 years left on mortgage 1500/month PI

Quote
I have about 15k saved outside of retirement accounts

I was thinking along the lines of madness (money) ..... sanity (health and well being).

Yes - I need to think about long term implications if I can never get the higher paying day job back. But - Would love to take just a one-year sabbatical and see how it goes.....maybe I will frame it that way. I think I could easily get a definitely "coast fire" salary somewhere - and - maybe for a lot less stress.

mistymoney

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Re: Less than lean or coast FIRE?
« Reply #6 on: November 22, 2020, 04:55:16 PM »
If you would like a roomie more than you would like moving it's a great idea. You must have over 20k in house payments a year, plus any maintenance that comes up, and it sounds like a fairly expensive house which means either it's big or it's in a HCOL area, which pushes up maintenance costs and hassles. Do you plan to live on inflation-adjusted 40k once it's paid off?

Your SS single isn't super high esp if you take it early. Too risky for my blood without a combo of a bigger emergency fund or dropping/offsetting expenses. But maybe you like to live on the wild side, you wouldn't have to get all that lucky.

Can you get a leave of a couple months to take off some stress and get some headspace/ time to look after your health?

Yes - it is a nice house in a M-HCOL area, a bit larger than average. I'd like to try to keep it, one way or another (roommate, more side jobs), but then if that doesn't pan out, selling is fine. I may end up preferring to sell, who knows?

I'd like to try to live on 50k/year rather than 40k once mortgage is gone. Would keep the side job and try to add more and leave the 900k alone as much as I can to grow. retire fully at 62 if the numbers made sense.

But I'm thinking I should be using a planned burn of 70k/year instead of 60k due to some taxes, health insurance costs, maintenance, etc. then it doesn't seem quite so doable.

MrThatsDifferent

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Re: Less than lean or coast FIRE?
« Reply #7 on: November 22, 2020, 06:44:23 PM »
Not insane, go for it! I’d focus on tightening up those expenses as much as possible. Otherwise, if your side hustle becomes your main job or you downshift to something else, it shouldn’t be too hard for you to find $25k of work a year. Life is so short and if you just have yourself to worry about, it’s much easier to do and just as critical that you keep yourself as healthy as possible. Maybe do a proper case study so people can help you with those expenses?

ixtap

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Re: Less than lean or coast FIRE?
« Reply #8 on: November 22, 2020, 06:54:10 PM »
Have you verified that your current 401k will allow you to make partial withdrawals? Although the IRS removes the penalties, it is individual plans that determine whether or not partial withdrawals can be made prior to 59.5. It wouldn't make sense to stick it out for that benefit only to find out at the last minute that you can't use it as planned.

mistymoney

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Re: Less than lean or coast FIRE?
« Reply #9 on: November 23, 2020, 09:43:18 AM »
Not insane, go for it! I’d focus on tightening up those expenses as much as possible. Otherwise, if your side hustle becomes your main job or you downshift to something else, it shouldn’t be too hard for you to find $25k of work a year. Life is so short and if you just have yourself to worry about, it’s much easier to do and just as critical that you keep yourself as healthy as possible. Maybe do a proper case study so people can help you with those expenses?

Thanks! I think you are right, I am close and there are so many ways to make it work. I may never have the "big" salary again, but I won't be homeless either - and if things are looking sketchy after a year or so, I can make adjustments.

mistymoney

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Re: Less than lean or coast FIRE?
« Reply #10 on: November 23, 2020, 09:46:53 AM »
Have you verified that your current 401k will allow you to make partial withdrawals? Although the IRS removes the penalties, it is individual plans that determine whether or not partial withdrawals can be made prior to 59.5. It wouldn't make sense to stick it out for that benefit only to find out at the last minute that you can't use it as planned.

This is a good point. I was counting on much lower taxes on those withdrawals, I think I could do the 5 years thing, but then I am locked in - even if the side gigs keep coming or I decide I need to return to FT.

Certainly something to consider as I crunch more numbers.

mistymoney

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Re: Less than lean or coast FIRE?
« Reply #11 on: November 23, 2020, 09:51:14 AM »
I think I will tentatively put myself down to semi-FIRE Nov 1st, 2021. I have nearly a year to plan and crunch numbers (if I ever get any time, lol!).

If work eases up, market tanks, or something else comes up, I can re-evaluate. Pandemic should be winding down (fingers crossed!), and the financial and political landscape a bit easier to gage.

seattlecyclone

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Re: Less than lean or coast FIRE?
« Reply #12 on: November 23, 2020, 02:53:50 PM »
In 11 months, I'll be 55, and can access current dayjobs 401k without penalty, so I am going to try to make it to that point. I have about 15k saved outside of retirement accounts, and am currently putting 1k/pay check into 401k to max+catchup going forward.

You don't need to wait for your birthday to get this tax treatment on your 401(k) withdrawals. It's based on whether you left the job during or after the calendar year in which you turn 55. Make it to January in your day job and you're all set from that perspective. All of the other considerations brought up in this thread still apply.