Author Topic: How much would you need to be FI if you kept working (for fun) and only lived off of that income?  (Read 27272 times)

SpareChange

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This is what I'm planning to do. My workplace and career are very flexible on the number of shifts worked. There's an app we can use to add/trade shifts. Employer doesn't care who works as long as there's coverage, and it's not overtime. I think I'll continue FT until my net worth hits at least 300k, and then drop down to a scheduled 16hrs/wk...the minimum needed for health insurance and other bennies. I should be earning 6 wks paid time off a year by then, with 50-60 days sitting in my pto bank. I can easily live on that with room to spare without touching the stash. I can then add shifts occaissionally if/when needed for fun stuff. I'll still contribute enough to the 403b to get the match.

No particular desire (yet) to leave career or employer, so I don't perceive working another 10-15 years as a problem. Both are very stable. Don't think I'll be able to do the slow travel thing so much with aging parents.

It would take a minimum 5 more years FT to get FIREd, and I don't think that would be the optimal way to go. Tired of working FT, and I'm not getting any younger. :).

LostGirl

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We are at the point now where we could keep letting our savings compound and not save any more. we would be at our full fi number in 12 years with this approach. The issue is that our spending is so high, we would not be able to work low-wage jobs in the interim. We love in A HCOL. We would still need to earn a salary of at least $100,000, to account for our spending plus taxes on that income. At that point I may as well just keep my job at a higher salary and work 2 full fi through savings.

It's something that I look at but it doesn't really work in our situation.

Chairman

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The level of optimism in this thread is amazing.

2Birds1Stone

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The level of optimism in this thread is amazing.

Realism my friend =)

retireatbirth

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I've been dwelling on this for a while. I'm mid-30s and at about $320k. I'm strongly considering semi-retiring in a few months. I would still seek a fun, highly paid job, but I think I'd be fine with the worst case of just settling for part time work. Anything is better than my current job.

retireatbirth

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The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

rubybeth

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The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

A lot of people do jobs in "retirement" even without a huge amount of savings. They make ends meet with part-time jobs and social security, and live very simple lives. Having $500-$800k in savings that you don't need to touch for several years is a dream for many people. Having $1mil+ like many people plan on this site is out of reach for lower-income folks.

nereo

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The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

In most developed countries its pretty hard NOT to make $30k a year if you're working at least 32 hours/week (4 days). Whether its "fun" to you depends on what the job is and what you like doing.
Long term (2+ decades) 4% is among the worst the broader US market has ever returned.  Will the next several decades be worse than the worst we've experienced? ...maybe.  Seems pretty pessimistic though...

trollwithamustache

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The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

How is it optimism/unrealistic if you actually know what your spend was last year, the year before and how its tracking this year? Sure the rate of return may be off, but then I have to work this gig that I enjoy for another couple years. There are worse tortures out there.  Control the things you can control.

tj

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I've been dwelling on this for a while. I'm mid-30s and at about $320k. I'm strongly considering semi-retiring in a few months. I would still seek a fun, highly paid job, but I think I'd be fine with the worst case of just settling for part time work. Anything is better than my current job.

A fun highly paid job? What unicorn might that be?

2Birds1Stone

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The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

In most developed countries its pretty hard NOT to make $30k a year if you're working at least 32 hours/week (4 days). Whether its "fun" to you depends on what the job is and what you like doing.
Long term (2+ decades) 4% is among the worst the broader US market has ever returned.  Will the next several decades be worse than the worst we've experienced? ...maybe.  Seems pretty pessimistic though...

Eh, assuming that PT work paid $15/hr you are grossing a hair under $25k

retireatbirth

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I've been dwelling on this for a while. I'm mid-30s and at about $320k. I'm strongly considering semi-retiring in a few months. I would still seek a fun, highly paid job, but I think I'd be fine with the worst case of just settling for part time work. Anything is better than my current job.

A fun highly paid job? What unicorn might that be?

Fun as in intellectually stimulating. I'd target a data analytics job.

nereo

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The level of optimism in this thread is amazing.

Which part? The 4-7% expected returns or the ability to make about $30k in fun jobs?

In most developed countries its pretty hard NOT to make $30k a year if you're working at least 32 hours/week (4 days). Whether its "fun" to you depends on what the job is and what you like doing.
Long term (2+ decades) 4% is among the worst the broader US market has ever returned.  Will the next several decades be worse than the worst we've experienced? ...maybe.  Seems pretty pessimistic though...

Eh, assuming that PT work paid $15/hr you are grossing a hair under $25k

Yup.  If you’re working 32hr/week you need to earn $18.75/hr to grow $30k (assuming working 50/52 weeks).  At 40 hours it’s $15/hr.  If you are a couple you can cut either the # of hours or the $/hr in half.

Depending on your background and skills earning $18/hr might be a dream or it might be a big pay-cut.  So whether its “easy” and “fun” depends mostly on the individual.

rockstache

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This is an awesome thread. I don't know exactly what my number would be, but it sounds more and more like this could be a viable option for us, especially if my job allows me to work remotely. I don't need the health insurance, so it would really be just working for what we wanted to spend. It seems like it would be hard to transition to a mindset of not saving though.

gutts

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400K + a reliable and somewhat offroad capable vehicle to travel across South and North America/sleep in it/live on the public land.

2Birds1Stone

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400K + a reliable and somewhat offroad capable vehicle to travel across South and North America/sleep in it/live on the public land.

Very close to my my own numbers/plan!

I will be closing in on that sometime late this year or early next year =)

formerlydivorcedmom

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Current plan is to look into part-time work when I've reached about 2/3 of my stash goal.  I would likely do part-time or contract work in my current occupation, just because the money is so good.  I've also thought about transitioning to teaching, which would pay all the bills but would be a full-time job.

I'm struggling with this choice.  I make terrific money now, I'm just bored.  I don't know if part-time in this occupation would be enough to get around the boredom, or if I'd just end up ticked that I have to work an increased number of years part-time.  Plus the worry about how long part-time work might be sustainable.  Yet if I change careers completely, I might end up hating it at half my current salary....

We probably have 4-5 years until we get there, so I at least have time to think about it.

kork

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I think I have a good handle on this as I've been thinking about it for a while. Currently, my wife and I have about $700k in investments and $150k remaining on our mortgage.

Because of turmoil at my work, we've been looking at our numbers quite a bit.  Should we pay off the mortgage? How much is our barebones FI? Can we crush some of the groceries? Do we really need to do the hardwood floors?

And as such, it turns out to be some simple math. End result is...

We're there!!!

Currently, our monthly spending is about $5k. Not very mustachian, but that's in Canada with a family of 4. $2k/month of that is mortgage and kids RESP/College savings. This could stop at any time by paying off the mortgage and reducing our monthly expenses down to $3k/month. $2k a month is for Insurance, food, gas, heat, hydro, property taxes, etc. The remaining $1k of that is extra stuff.  For example, this month it was a new iPad and tickets to two music concerts. Next month it might be activities for the kids or a little vacation. 

So currently, our expenses living exactly as we are is $5k/month or $60000k / year between us. But that's today with a mortgage and kids. It drops by a lot without those expenses.

Now, what we really need to do is assume we're shutting off the kids RESP's and the mortgage is paid off. So then we use $3k/month as a our retirement number since we're living well and happily and not feeling deprived at all.  So assuming we have $700k now and we both have decades before traditional retirement age, it goes like this.

We need $900k to generate $36k a year with a 4% SWR. Assuming a 4% return on our investments we'll get there in about 7 years. Between now and then, we need to earn $5k a month to keep paying down the mortgage and keep up with the kids RESPS. My wife's take home is currently $2500/month.  That means that I would need to cover the other $2500. Well, if we drop our income in Canada, we'll get about $1k a month tax free in Child Benefits for the next 7 years (Until oldest turns 18). So then there's just $1500/month that we need to come up with. And because I work in technology, I don't think that earning $1500/month would be terribly difficult and on my own terms working on fun projects, that satisfies the OP's question of "fun jobs."

Currently though, we're adding about $60k a year to our stache through savings.  Keeping on doing what we're doing, we'll get there even faster. But it depends on circumstances, etc.

So our plan in that in 10 years when our youngest is, theoretically, in post secondary, the mortgage is paid off, we're no longer contributing to RESPs, we'll have $900k in investments. We'll draw down $3k/month at that point and technically be fully FIRE. Between now and 10 years from now we need to earn enough to live. As shown above, we could do it pretty easily. And that's not taking into account CPP, OAS, any inheritance or things that would only increase our net worth and income.

So to the OP's question of "how much would we need to be FI if we kept working for fun?" I'm going to say $700k which is where we are right now.  VERY GOOD FEELING!





heybro

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This is exactly what my plan has always been.

Once your house is paid off and you have no debt, most people take on more debt to acquire more stuff (bigger house, nicer cars, more vacations, etc.) but I would like to BUY more free time or BUY less stress or BUY more self-respect or BUY the ability to say 'No.'

Issues that always come up:
1. How do you buy health care if you were to work part-time?
2. How do you establish your 'enough' number.  Even if you figure out how much you need saved today that will grow to a reasonable number by the time you actually retire, there are so many 'what-if this happens' or 'what if that happens.'  I'd always like to believe that not all the what-ifs can happen at once so that perhaps you are as close as you can be (say 80%) and don't sweat about a (20% uncertainty).  What I mean is that you cannot plan for every catastrophe to happen so you basically become OK with a few catastrophes happening.

It just always seems that spending more money than you earn is looked at as OK.  But pulling the plug on traditional life is considered 'risky.'  I wish there was more devoted to working part time your entire life or finding living situations that allow for a non-traditional life (not having to buy massive property that you don't even care about anyway, etc.).

trollwithamustache

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This is exactly what my plan has always been.

Once your house is paid off and you have no debt, most people take on more debt to acquire more stuff (bigger house, nicer cars, more vacations, etc.) but I would like to BUY more free time or BUY less stress or BUY more self-respect or BUY the ability to say 'No.'

Issues that always come up:
1. How do you buy health care if you were to work part-time?
2. How do you establish your 'enough' number.  Even if you figure out how much you need saved today that will grow to a reasonable number by the time you actually retire, there are so many 'what-if this happens' or 'what if that happens.'  I'd always like to believe that not all the what-ifs can happen at once so that perhaps you are as close as you can be (say 80%) and don't sweat about a (20% uncertainty).  What I mean is that you cannot plan for every catastrophe to happen so you basically become OK with a few catastrophes happening.

It just always seems that spending more money than you earn is looked at as OK.  But pulling the plug on traditional life is considered 'risky.'  I wish there was more devoted to working part time your entire life or finding living situations that allow for a non-traditional life (not having to buy massive property that you don't even care about anyway, etc.).

Once one can pull the rip cord, one is negotiating from a position of strength.  The Dear Lady Troll gets health insurance for her and the wee (well, not soo wee) ones even though she is part time. They really didn't want to loose her.

So yeah, is our number perfect? no. are there cost risks going forward, yes. Does it take some negotiating/haggeling/ time when you walked away to make it all happen, yes it does. But if you are currently spending less than 70% of you combined income, its pretty easy to downshift and still cover all of your lifestyle costs... and have no current withdrawal rate.

kork

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2. How do you establish your 'enough' number.  Even if you figure out how much you need saved today that will grow to a reasonable number by the time you actually retire, there are so many 'what-if this happens' or 'what if that happens.'  I'd always like to believe that not all the what-ifs can happen at once so that perhaps you are as close as you can be (say 80%) and don't sweat about a (20% uncertainty).  What I mean is that you cannot plan for every catastrophe to happen so you basically become OK with a few catastrophes happening.

I actually have a philosophy on this. Bear with me.

The first book I ever read was The Wealthy Barber.  I was about 22 years old and had 40+ years to retire.  I figured, based on his 12% gains that I'd have $10+ million dollars at 65 when I "retired."

I used to imaging all the things I'd do when I turned 65.  All those things I "thought" I would want. A big boat, a big house, a big this, that and the other thing. And on top of it, I was still early in my career and a keener.

Fast forward 15 years. Those things don't appeal to me any longer in the same way. Now I'm much more interested in the enlightenment of the Fulfillment Curve.

And here's what I've come up with to validate when is enough, enough.

I had a great upbringing.  It wasn't without drama, but I always knew I was protected.  I was secure. Always had shelter, always had food. But I needed to "save up" for things I wanted.  New video games, bicycle, toys, remote controlled cars... And through the actions of saving and sacrifice, my fulfillment was higher on those items that I actually had to work for.

So I figure, if I have enough money to satisfy the necessities of life and feel secure while still having the ability to work or sacrifice or save to obtain those extras, then that increases the fulfillment. Appreciation of the things we own isn't acquired with money... Appreciation can't be bought.

So the $1k/month we have that we spend on extra stuff right now, we'd need to save a couple months to refinish the floors or to buy a new macbook.  Do we need either of those, nope... But we appreciate them more when we don't have an endless faucet of money overflowing into our coffers.

So enough is enough to keep us safe and the larger the nest egg becomes, the safer it becomes during market downturns....   But I'm not sure we're interested in significantly more money flowing in.  It affects fulfillment in a negative way.

 
« Last Edit: March 29, 2018, 11:53:10 AM by kork »

Goldielocks

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I think I have a good handle on this as I've been thinking about it for a while. Currently, my wife and I have about $700k in investments and $150k remaining on our mortgage.

Because of turmoil at my work, we've been looking at our numbers quite a bit.  Should we pay off the mortgage? How much is our barebones FI? Can we crush some of the groceries? Do we really need to do the hardwood floors?

And as such, it turns out to be some simple math. End result is...

We're there!!!

Currently, our monthly spending is about $5k. Not very mustachian, but that's in Canada with a family of 4. $2k/month of that is mortgage and kids RESP/College savings. This could stop at any time by paying off the mortgage and reducing our monthly expenses down to $3k/month. $2k a month is for Insurance, food, gas, heat, hydro, property taxes, etc. The remaining $1k of that is extra stuff.  For example, this month it was a new iPad and tickets to two music concerts. Next month it might be activities for the kids or a little vacation. 

So currently, our expenses living exactly as we are is $5k/month or $60000k / year between us. But that's today with a mortgage and kids. It drops by a lot without those expenses.

Now, what we really need to do is assume we're shutting off the kids RESP's and the mortgage is paid off. So then we use $3k/month as a our retirement number since we're living well and happily and not feeling deprived at all.  So assuming we have $700k now and we both have decades before traditional retirement age, it goes like this.

We need $900k to generate $36k a year with a 4% SWR. Assuming a 4% return on our investments we'll get there in about 7 years. Between now and then, we need to earn $5k a month to keep paying down the mortgage and keep up with the kids RESPS. My wife's take home is currently $2500/month.  That means that I would need to cover the other $2500. Well, if we drop our income in Canada, we'll get about $1k a month tax free in Child Benefits for the next 7 years (Until oldest turns 18). So then there's just $1500/month that we need to come up with. And because I work in technology, I don't think that earning $1500/month would be terribly difficult and on my own terms working on fun projects, that satisfies the OP's question of "fun jobs."

Currently though, we're adding about $60k a year to our stache through savings.  Keeping on doing what we're doing, we'll get there even faster. But it depends on circumstances, etc.

So our plan in that in 10 years when our youngest is, theoretically, in post secondary, the mortgage is paid off, we're no longer contributing to RESPs, we'll have $900k in investments. We'll draw down $3k/month at that point and technically be fully FIRE. Between now and 10 years from now we need to earn enough to live. As shown above, we could do it pretty easily. And that's not taking into account CPP, OAS, any inheritance or things that would only increase our net worth and income.

So to the OP's question of "how much would we need to be FI if we kept working for fun?" I'm going to say $700k which is where we are right now.  VERY GOOD FEELING!

That is a great desciption.  Pretty much where I am at, except I quit my job, down to part time $1500/mo and DH is working for $4k/mo. Since FIRE, a few items come up -- vacations, home maintenance, and a plan to replace the car.

The car is a big one for us.   it is 12 years old now and will eventually need replacement.  One way to cut some of our costs to give more wiggle room has been cutting insurance , I am dropping one car (going to ebike), and have dropped most of the life insurance, too.   Savings keep coming after FIRE.  (oh, and the kids are starting jobs this year and costing less and less)   

snapperdude

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The first book I ever read was The Wealthy Barber.  I was about 22 years old ...


What kind of shitty ass schools did you go to?

2Birds1Stone

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Lmoot

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Already earning much lower than it seems the average is here, has its benefits. I would feel
comfortable leaving full time work if I had as low as $250k in the bank. I’d continue working my part time job (which happens to be my “fun” job, and has an employer funded 503b...though it’s not a lot). And I’d use most of the $250k to purchase rental properties so I can continue to generate income, while having assets that are expected to continue growing in value. I’d keep maybe $50k cash, and build on that from after-expenses rental income profits. My expenses are lean enough that the fun job would cover that and my fun money.

I have dual citizenship to a country that has free healthcare, and while I don’t plan on living there, I wouldn’t hesitate to pay only for the most catastrophic plan I qualify for here, and getting expensive procedures done in my birth country. That is what my siblings have done. 3 years ago my sister had a life-saving procedure done with a 4 day private room hospital stay....cost less than $1,000 (all we paid for was the supplies, a bag of blood, and the first day of the hospital stay. In the US, it would be around $50k (and that would just include 1 day in recovery).
« Last Edit: March 30, 2018, 05:53:56 AM by Lmoot »

FreshPrincess

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This is kind of what my plan is.  DH would be content working his full-time job because it's easy, pays moderately well and has good benefits.  I love my job - I truly do - but I think I've always felt like I wasn't supposed to be working for a living.  In every new job I've taken something didn't feel "right".  And then I found this forum and it all kind of clicked for me; this is what I was missing.  I didn't HAVE to work if I just made better financial choices.  THIS was my future.

Long story short.  I plan to get us to 750k with a paid off mortgage by 40.  And then DH can work if he wants - his salary more than covers our bills.  And I will quit my job and let the pot grow while I do something I love.  My current obsession is dance.  No reason I can't teach a dance fitness class in my area for a few years.

kork

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The first book I ever read was The Wealthy Barber.  I was about 22 years old ...


What kind of shitty ass schools did you go to?

Ha! Meant the first "Finance" book I ever read.  ;-)

Nudelkopf

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I've always had $300k in my mind as my "Baby FI". That's the number I wanted to be at by around age 30 - or the age that I'd probably start having kids. Then I can have some decent time off with the kids. And since I'm a teacher, it's really flexibile and very easy to go part-time (not to mention the 12 weeks of paid leave per year to spend with the kids!). Working 2 or 3 days per week or 5 half-days would bring in plenty of income to keep pay the expenses, plus a little bit of savings each year.

I'm on track to reach that $300k by 30, if I stay in my LCOL area. And I half-imagine that I'll have a partner to help raise the child with, which will also help.

kork

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The other thing I noticed with the recent market correction is that by choosing to earn enough $ to pay the current bills is that I'm not as concerned with market fluctuations. I enjoy working, just not all the time. By having enough of a stache and working it easily allows to ride out the bumps.

rockstache

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I'm necroposting because this was such a great thread. We are now at a number which will be very comfortable in 5-6 years and taking the opportunity to move our family to a new LCOL state to be close to family. It's uncertain whether DH will be able to keep his job when we leave the state (and he's not really sure he wants to) so we're half planning for him to become a SAHP while I keep my low stress remote job and we live off of that. It's possible we might even be able to save a bit too. I think once we eventually RE it will be really difficult to transition from a saving to spending.

A lot of people above commented about doing this in the next few years. How are you all? Has anyone else has taken the plunge to Coast FI since this thread?

Freedomin5

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$150k. By the time we retire in 12 years, given a conservative 5% return, it would be worth appprox. $300k. A 4% SWR would give us $12k per year. Our rental property would also give us $12k per year.

I guess that means, at age 36, having aggressively saved for 3 years, we are basically FI. At this point we're just padding the stash because we can't just up and leave our jobs, and DH likes working.

Three years later, I have downshifted to an easier job. Funny thing is that we are saving more than ever. Working hard in my previous job gave me the skills needed to be successful at this job. Next year, DH is planning to quit his job. Our expenses are so low though that we will probably still save quite a bit.

shicky

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We are doing this. We are FI, but was planning on DH working a couple more years to further cushion our retirement. Lately, every day at his former job has become such a dredge for him. Negative nasty people, felt like he was not making a difference, etc really bothered him. Here's the reality: DH is just not wired to not work. Lots of double negatives in there, so to say another way, DH will probably always work outside the home and I needed to accept that. I, on the other hand, would be happy to never work again.

DH just wrapped up his high stress, long hours $200k/yr job. He walked away from extra bonuses, stock options, etc. He is now doing something he LOVES but it just barely pays our bills. He loves it. He can't wait to wake up in the morning because he wants to get back at working at this new gig. He has a lighter schedule, more predictable, just a few days a week, lots of time off. He loves it. People he works with love their job too and it is such a positive environment. I can see DH doing this for years and years. He has more energy and his former job just drained him. Mo' money mo' problems, as they say.

So, for all intents and purposes, I would say we wrapped up our retirement savings goals and will just spend whatever he makes going forward. Begin our Roth conversion pipeline in 2018 and pay those extra taxes now while we still have our 2 little tax exemptions, otherwise known as kids. In a few years, we will be wealthier than we could spend. Maybe he worked too long and could have pursued the path you are thinking of sooner.

I hope this story has helped. Life is very short. It's not worth the stress to be miserable. If DH had known he would have had this much fun doing this job, I guarantee he would have cut even more stuff sooner to make this job a reality. It took him a long time to realize that spending money does not make you happy, but for him, it is doing work you truly love that makes him happy.

What was the job DH switched to?

Tester

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I don't really know my number as it seems we can spend a lot ...
But I plan to take 3-6 months off when I get to 1 million net worth and think about my options.
If I can get myself motivated at work again I should get there in around 5 years...
Right now we are at 350k net worth, started saving 5 years ago.
The stress part is a mortgage of 490k...
« Last Edit: October 07, 2020, 04:06:54 PM by Tester »

StarBright

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This was a fun necropost!

I got to look back and see something I posted from years ago and see just how wrong I was about my own comfort level when it came to leaving my job.

I said I would downshift when our retirement investments hit 300k and we were probably around $250k or so when I typed that. Current retirement savings are sitting at about 450k and I'm not thinking of downshifting for another three years.

So what happened? Kids got a bit older, life keeps happening and getting more expensive, the world feels decidedly more unstable, my husband's job is no longer as secure or as flexible as we thought it might be. My job continues to be very secure, relatively flexible and well paying. 


2Birds1Stone

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400K + a reliable and somewhat offroad capable vehicle to travel across South and North America/sleep in it/live on the public land.

Very close to my my own numbers/plan!

I will be closing in on that sometime late this year or early next year =)

I executed the plan, and enjoyed rereading this thread.

Pulled the plug a year ago with ~$500k net worth. Fun job in the future will be necessary to keep the portfolio growing, but it could be so many different things, and there is no rush to look actively.......serendipity will find me.

sparkytheop

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Went back to read my reply, and nothing has changed, lol.

The part time option looks better and better though, too bad we can't implement it (yet).

SpareChange

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This is what I'm planning to do. My workplace and career are very flexible on the number of shifts worked. There's an app we can use to add/trade shifts. Employer doesn't care who works as long as there's coverage, and it's not overtime. I think I'll continue FT until my net worth hits at least 300k, and then drop down to a scheduled 16hrs/wk...the minimum needed for health insurance and other bennies. I should be earning 6 wks paid time off a year by then, with 50-60 days sitting in my pto bank. I can easily live on that with room to spare without touching the stash. I can then add shifts occaissionally if/when needed for fun stuff. I'll still contribute enough to the 403b to get the match.

No particular desire (yet) to leave career or employer, so I don't perceive working another 10-15 years as a problem. Both are very stable. Don't think I'll be able to do the slow travel thing so much with aging parents.

It would take a minimum 5 more years FT to get FIREd, and I don't think that would be the optimal way to go. Tired of working FT, and I'm not getting any younger. :).

My how time passes. Things largely happened as planned. I went PT a year ago. Originally was going to do 2 days on/5 off, but decided I'd rather work 5 on/9 off. Father passed away 18 months after the above post unfortunately, so going PT has let me help my mother out in various ways. It's been an adjustment, but I wouldn't go back to FT. Stache is doing well. I still work extra when it's worth my while.

chasesfish

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I just wanted to drop in on this thread again...

Quit my job in April of 2019, didn't earn a dollar for six months.   Since then, between my wife and I we've averaged a total of $2,900/mo between some consulting work that found me, bank bonuses, and running instacart orders.  The grocery shopping has been great for days the weather stinks because we live next to a Costco and it pays well.

In 5-10 years I'll probably look back and say I didn't need to save $1.8mil to pull the plug

Finances_With_Purpose

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I just wanted to drop in on this thread again...

Quit my job in April of 2019, didn't earn a dollar for six months.   Since then, between my wife and I we've averaged a total of $2,900/mo between some consulting work that found me, bank bonuses, and running instacart orders.  The grocery shopping has been great for days the weather stinks because we live next to a Costco and it pays well.

In 5-10 years I'll probably look back and say I didn't need to save $1.8mil to pull the plug

That's reassuring to hear.  We're on a similar path but farther from pulling the trigger.  However, I am sure we'll end up earning far more post-retirement than I expect since both of us love being industrious anyway, have several solo ideas/options/businesses that are possible, and I'll continue doing a fair bit of consulting and the like as well.  I am fairly confident that we could average $3-4k/month or more just on those, which would mean we wouldn't need nearly as much to pull the trigger. 

Rubyvroom

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I like hearing others' thoughts on this. As we get closer to FIRE I've been thinking a lot about this too.

At first I set a hard number of $1M for our FIRE goal and tried to project dates based on when we hit that number. The more I've read about withdrawal rates and the sequence of returns risk, the more flexibility I've introduced to that way of thinking and I think we'll be retiring closer to $800K (5% WR).

The tentative plan now is to have DH retire first, in October 2019, at a date triggered by our "free" 3-year auto lease expiring (paid for by his work) before we enter into another lease or need to purchase a second vehicle. We may have between $700K-$750K at that time (liquid, not including home equity). Depending on what the markets look like at that time, he will either be fully retired and start to get our house ready to sell, or he may pick up a small job near our home.

I will probably stay at work until that following spring 2020 when I receive a potential bonus and a raise (the raise impacts my vacation payout upon quitting). We may have between $825K-$875K by then. Now, if for some reason the markets had pushed our stash up into the $800K range by October 2019 and I am not going to get a bonus in the spring, I will absolutely retire at the same time as DH. We'll have to see how things shake out.

So I'm feeling far more comfortable with something around $800K (5% WR) rather than $1M (4% WR), knowing that in our situation, we have quite a bit of flexibility. In my line of work it's quite easy to pick up consulting gigs at a $40-$50/hr. rate, which I may pick up periodically to either push us over the $1M hump, to provide some "fun money," or to mitigate a poor sequence of returns either due to market instability or underestimating the cost of the health insurance debacle. To me, the extra 1.5 years or so of freedom are worth the 1% WR, and part-time consulting will be the perfect way to bridge the gap.

Ha. The crystal ball wasn't horribly inaccurate, but things have changed a bit. By October 2019 we had dropped a significant amount of cash on a large tract of land, so we had closer to $550K liquid after that. DH actually pulled the plug on his stressful job in summer of 2019 and put in some serious sweat equity on our house. We sold last fall, cashing in on the equity and living in an apartment ever since. Shortly after selling the house, his job pleaded that he come back after 2 other people walked out, so he upped his rate and worked for ~3 months right before Covid hit, which nearly maxed out his 401k for 2020. He ended up leaving again after they fired 50% of their workforce in March (definitely nice to be able to walk away when management decisions don't align with your values) and has been putting in time on the land ever since.

I throttled down in the fall of 2019 after deciding my stressful job wasn't worth it anymore, and have been consulting under my own LLC ever since. I have only had ~1 month of bench time in the past year and my current client is 100% remote and doesn't seem to want me to go anywhere anytime soon, so I have a job fairly locked in at least through audit season, at a rate far higher than I anticipated in my previous post.

We are building a small home on the land we bought, funded with cash, so by the end of all that (hopefully spring 2021 when our apartment lease is up) I'd say we'll be closer to $600K liquid, but with a fully paid off house on ~90 acres of land. It's not the $1M I was shooting for, but we throttled down earlier than expected (no regrets there) and we've strategically spent a portion of the portfolio on the "retirement home" where our expenses will be much lower without mortgage payments. So perhaps by spring 2021 we will be lean FIRE, with a bit of remote work on the side to make up the WR difference (and/or to buy a few farm toys).

I'd have loved it if we would have really buckled down and soared past that $1M marker, but the path we took was pretty awesome too. The land has been a nice escape during Covid and it felt damn good to set the terms of our careers after plenty of years of compromising. Throttle down or coast FI or whatever we want to call it (just being flexible and rolling with it?) has been worth it for us.

ChpBstrd

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There are some specific risks to the "coast FIRE" strategy that are assumed away with full retirement strategies:

1) If for some reason you are unable to work the "fun" job (e.g. health, mental health, economic depression, criminal record, caretaker role) then the stash will not be enough to support you. These issues are primary causes of bankruptcy and poverty in the U.S. today.

2) If your stash can cover your remaining expenses only because your employer covers health insurance, and then that gets taken away...

3) If wages fail to keep pace with inflation then the low-wage "fun" job might not cover as much of one's budget as originally projected. OTOH, someone retired on the 4% rule would, in theory, get a nominal stock market boost after a few years as corporations raised prices.

4) The 4% rule retiree has, as a final fallback plan, the ability to take the low-stress "fun" job for a few years if their stash reaches critical levels during a long bear market. The coast FIRE person would have to increase (double?) their wages during the same economic bad times, for example by returning to their professional career that they abandoned years ago. Which fallback is easier or more likely to work?

5) Not all lower-wage jobs are "fun" or "easy" or "low-stress". Managers still push to get every last bit of productivity out of these employees. Harassment, toxic coworkers, negative cultures, unsafe environments, etc. are very much a thing in lower-tier work. Arguably things are worse because most people in such jobs don't have the option to leave. As the person with more latitude to leave such environments, you'll be changing jobs often to avoid toxic people and conditions as they come and go. Thus, wages might be less than originally projected due to employment gaps.
 
6) If the plan is to break even living from wages, and to let a small stash grow big over the course of several years, that could be derailed if we have flat or negative returns for a decade (this would be a perfectly normal outcome for the stock market), and then you wait another decade for the stash to grow to retirement levels in a new, higher-cost environment. You end up working for 20+ years instead of doing a five-to-ten year drive to FIRE.

---

To me, it seems like a risky gambit for the sake of escaping an unpleasant high-wage job. You could bail on the unpleasant job by making a lateral move or getting a promotion, and voila! there you are with completely different coworkers, a different boss, new culture, etc. And if that doesn't work out, just keep looking until it does. You could also put some effort into changing things, such as getting the toxic people shitcanned, advancing into management, automating or delegating unpleasant tasks, or replacing interpersonal arguments with decision procedures. Go to lunch or have an extended chat at least once a month with your foes in the organization and see if things don't change. If the hours are too long, think about the Pareto principle to identify the 20% of your work that leads to 80% of your results and ask what of the rest can be eliminated. Propose a new job description for yourself. Any of this seems easier to me than standing behind a cash register and dealing with jerks all day.

Retire-Canada

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There are some specific risks to the "coast FIRE" strategy that are assumed away with full retirement strategies:

There are risks to any retirement strategy. The primary risk I see a lot of people ignoring is that time is your most precious resource and you can't make more of it...particularly time at the prime of your life. Coast FIRE ensures you get to enjoy more free time early. Beyond that there are all sorts of health risks associate with the high stress sedentary jobs that a lot MMM-esque high earners have. Having a big stash and never having to work again is lovely if you get to enjoy it for a long time in good health. So I don't see Coast FIRE as particularly risky. It's just trading one set of risks for another. 

rockstache

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^^^

I think there are two different options people consider when discussing Coast FI and they have vastly different sets of challenges. One is the 'quit your day job and get an easy fun job,' a la Starbucks or Trader Joe's. But I have most often heard this referred to as Barista FI. It sounds like most of your concerns revolve around this method, and generally I agree with you that it's the risker one.

The other method seems to be the 'scale down your day job into something low(er) stress.' This one generally keeps individual's on their employee benefits, and seems to have fewer risks. We have several people on the forums who do this now, and work 2-4 days per week. They get to enjoy life now, and not at some distant future point. It's true that if layoffs come, part time people could be more at risk, however that is something that each individual will need to evaluate in their personal role. 

Overall I think it gets really hard to continue in the rat race when your actual yearly savings have little to no effect on your time to FI. The temptation to just cover expenses and let the investments ride is huge.

ChpBstrd

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There are some specific risks to the "coast FIRE" strategy that are assumed away with full retirement strategies:

There are risks to any retirement strategy. The primary risk I see a lot of people ignoring is that time is your most precious resource and you can't make more of it...particularly time at the prime of your life. Coast FIRE ensures you get to enjoy more free time early. Beyond that there are all sorts of health risks associate with the high stress sedentary jobs that a lot MMM-esque high earners have. Having a big stash and never having to work again is lovely if you get to enjoy it for a long time in good health. So I don't see Coast FIRE as particularly risky. It's just trading one set of risks for another.

2 notes:

1) One does not "get more time" by trading one full time job for another. Working 8 hours in an office or at meetings is exactly the same as 8 hours at Starbucks in terms of time. Actually, the "low stress" service industry job might fire you if, for example, you are 10 minutes late 3 times in two quarters, and that's how you end up leaving for work an extra 15 minutes earlier than necessary every day because you wanted more time and less stress.

If someone wants to coast FIRE by working only part-time, they'll need to be aware that PT job opportunities are much more scarce than FT, generally pay less, and one will need to have sufficient investments to cover the cost of a standalone health insurance plan if they live in the United States of Extortion.

2) I think we can agree either traditional FIRE or coast FIRE plans can fail. A traditional FIRE plan fails if investment returns are too low. A coast FIRE plan fails if either of two things happen: low investment returns or low job earnings. If returns are too low, full retirement never happens. If job earnings are too low, one faces the difficult odds of a high withdraw rate in today's low-interest, high-valuation environment.

If the plan is to withdraw, say, 4% from the portfolio and earn the other half of one's spending at a job, then yes, there is a chance one might fully retire in 10 years depending on how markets do. A few 4% WR cohorts always end up with 2x the money they started with after 10 years of retirement. But there's also a chance it doesn't happen in 25 years, or by the time one can no longer work for whatever reason.

StarBright

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2 notes:

1) One does not "get more time" by trading one full time job for another. Working 8 hours in an office or at meetings is exactly the same as 8 hours at Starbucks in terms of time. Actually, the "low stress" service industry job might fire you if, for example, you are 10 minutes late 3 times in two quarters, and that's how you end up leaving for work an extra 15 minutes earlier than necessary every day because you wanted more time and less stress.
 . . . snip

But so many decently paying salaried white collared jobs aren't 40 hours a week.  My company hires new engineers and coders with an expectation of 50 hours a week minimum and constant availability (and COVID has made this worse).

I think one of the real draws of barista-style FIRE is that when you are done, you are done. 30-40 hours and no expectations of more.

arebelspy

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2) I think we can agree either traditional FIRE or coast FIRE plans can fail. A traditional FIRE plan fails if investment returns are too low. A coast FIRE plan fails if either of two things happen: low investment returns or low job earnings. If returns are too low, full retirement never happens. If job earnings are too low, one faces the difficult odds of a high withdraw rate in today's low-interest, high-valuation environment.

Correct, but you're guaranteeing extra work to hit full FIRE and have that extra security.

It's always a trade-off of security vs time, and someone coast FIRE might be okay with the extra risk you outline for the extra time.
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ReadySetMillionaire

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Interesting thread. I've basically come full circle to the CoastFIRE model, albeit a hybrid one because I intend on at least somewhat keeping my professional job (attorney).

This transition from traditional FIRE to CoastFIRE is likely a result of my recent reading, which has shifted from financial to philosophical. We have limited time and limited certainties in life -- I want take care of the certainties and pursue my time as quickly as possible.

The plan is this:

1) Always keep $25k liquid cash.

2) Pay off all debt, including mortgage. I really could care less what the long term math is -- lower debt means lower overhead which is a priority for my mental health and wellbeing.

3) Expenses will be roughly $3,000/month (including taxes/health insurance) when we CoastFIRE.

4) My wife still wants to work 25 hours/week ($2,800/month net income). I am an attorney and, while there are stresses to the job, I won't be able to find much that pays $200/hour.  I will keep 4-5 cases going -- only good ones with sophisticated clients -- and look to make maybe $2,000-3,000 per month.

5) For me to make that much income, I will have to work maybe 5-10 hours per week. That leaves a lot of extra time.  I am looking to get into real estate investing, writing books and blogs, speaking to law students and lawyers, etc. I have a lot of ideas. Hopefully these other pursuits eventually replace the attorney income.
« Last Edit: October 21, 2020, 03:33:46 PM by ReadySetMillionaire »

Retire-Canada

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2) I think we can agree either traditional FIRE or coast FIRE plans can fail. A traditional FIRE plan fails if investment returns are too low. A coast FIRE plan fails if either of two things happen: low investment returns or low job earnings. If returns are too low, full retirement never happens. If job earnings are too low, one faces the difficult odds of a high withdraw rate in today's low-interest, high-valuation environment.

The problem with your perspective is that it focuses on running out of money as "failure". You can plenty of money and "fail" at retirement. Money is only part of the puzzle for a happy and healthy life. Coast FIRE addresses some of the non-financial failure modes by creating free time earlier to prevent/heal some of the physical/mental and relationship damage that can occur as people pursue a huge pile of money through the typical sedentary/high stress careers popular on MMM.  There is a deep intrinsic value to having big chunks of free time at the prime of your life vs. putting that off in pursuit of a securing a bigger investment account through FT work.

Like traditional FIRE plans a Coast FIRE aspirant will have to adjust their plans in response to what the market does as well as a myriad of other factors. Presumably these people will have thought through some of the obvious scenarios and come up with responses they are satisfied with.



« Last Edit: October 21, 2020, 03:29:22 PM by Retire-Canada »

ChpBstrd

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2 notes:

1) One does not "get more time" by trading one full time job for another. Working 8 hours in an office or at meetings is exactly the same as 8 hours at Starbucks in terms of time. Actually, the "low stress" service industry job might fire you if, for example, you are 10 minutes late 3 times in two quarters, and that's how you end up leaving for work an extra 15 minutes earlier than necessary every day because you wanted more time and less stress.
 . . . snip

But so many decently paying salaried white collared jobs aren't 40 hours a week.  My company hires new engineers and coders with an expectation of 50 hours a week minimum and constant availability (and COVID has made this worse).

I think one of the real draws of barista-style FIRE is that when you are done, you are done. 30-40 hours and no expectations of more.

Going from a $100k/year 55 hour week engineering job to earning $25k/year as a 40 hour barista would certainly free up 15 hours a week and lead to a more enjoyable (although much more frugal) lifestyle, but the difference is that the 55 hour job could be retired from in 5-10 years starting from scratch, while the barista job will require, what?, 20-30 for people starting from scratch? For people starting with, say, $500k and going to $1M the engineer job delivers within 5 years but the barista job with zero savings takes more than twice as long.

The math says you spend more of your lifetime at work on the coast FIRE plan. The counterpoint is that time today is worth more than time in five years. For me, there would be regrets after spending five years in a menial paying job with no end on the horizon.

Rather than accepting an extra 5-15 years of menial work, why not strike a compromise such as earning the highest wage you can obtain in 40h/week? This would not be a barista job, it would be a low level professional job that allows for a 50% savings rate. Just don’t accept promotions. This would be budgeting time like we budget money. There’s always an offer to sell your whole life for money, but there’s a sweet spot between the downsides of workaholism and the downsides of earning wages so low your savings rate is only 5-10% and you never truly retire early.

Another alternative is to adopt the mentality of Jacob Lund Fisher over at earlyretirementextreme.com and find ways to live on almost nothing. Lean Fire strikes me as a lot easier than spending a decade of my days standing at a retail counter or bartending. The extra time commitment here consists of fixing your own stuff, cooking all your own food, learning, cleaning a very small living space and set of clothes more frequently, and very careful shopping. So maybe an extra 5-10 hours a week instead of letting Amazon solve all problems.

Yet another option is to just give it a go with a 5-8% withdrawal rate. There is a historical probability that one gets lucky and never runs out of money, particularly if for some reason life turns out to be short or if one is already older. In taking this path instead of coast FIRE, one trades the risks of job-dependence for a bigger slice of the risk of low market returns. However, depending on age, one also retains the option to switch to coast FIRE in 10 years if things aren’t working out according to plan. Thus, with this plan one front-loads free time to one’s “prime” years and gets to take a gamble on never working again. If we say the odds of being at a 4% WR in 10 years are 50/50, and that one agrees to work 5 years if that threshold is not reached at the 10 year mark, then the expected value is 2.5 years of work, to be done after one’s “prime” years.

rockstache

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Going from a $100k/year 55 hour week engineering job to earning $25k/year as a 40 hour barista would certainly free up 15 hours a week and lead to a more enjoyable (although much more frugal) lifestyle, but the difference is that the 55 hour job could be retired from in 5-10 years starting from scratch, while the barista job will require, what?, 20-30 for people starting from scratch? For people starting with, say, $500k and going to $1M the engineer job delivers within 5 years but the barista job with zero savings takes more than twice as long.

I've never heard anyone describe CoastFI as leaving a full time job for another full time job. Most people are talking about leaving a full time job for a part time one to just cover expenses. And if you're starting from scratch with no savings, that's not CoastFI, that's just another working stiff.

In my personal situation, it will take us ~6 years to hit our full FI number if we both work. If we start coasting, it will take ~8. The difference is that we get to spend a ton more time with our little kids who won't be little forever. Those two years are a no brainer for us, but we're also not starting from zero, or taking a 40 hour per week job bagging groceries.