Hi everyone,
I'm a big fan of the MMM blog, but this is the first time I've posted on the forums. Until now I've just enjoyed getting advice, but now I'm getting closer to my goals I'm hoping I can get some specific help with some questions.
I want to know if I've saved enough to go into semi-retirement.Over the last ten years I've been working as an artist. I've become moderately successful and for many years I've been bringing in between $20K and $30K a year performing around the country.
It wasn't a lot of money, but I loved the lifestyle of being a travelling performer.
The one concern I had was what I'd do if I ever had to stop working. Like anyone who works in the performing arts, I live with the risk that I could suddenly become unemployed and all my income dry up at very short notice. That hasn't happened in the last 10+ years I've been in this game, but who knows what tomorrow might bring?
For that reason I got into the habit of saving at least half my yearly income (usually around $10K or more a year) and living frugally off the rest (spending about $8K or less).
I didn't really plan this, I just wanted to be ready in case of a rainy day, but by the end of my twenties I'd saved quite a stache.
Then, about two years ago I stumbled onto ERE and the MMM blog.
Living off passively invested savings seemed like an amazing idea. I figured if I could do that, I'd be able to focus entirely on my art and never have to worry about money again. Even if the unthinkable happened and all my work dried up, I'd have savings I could fall back on.
So, with that goal in mind, I got a boring desk job. I kept performing on weekends, lived off the proceeds from that, and saved everything I could from the 9 to 5.
Right now I have $135000.
I calculate my yearly minimum yearly expenses are $5400 ($450 per month - see below).
Following the 4% safe withdrawal rate I should be able to retire, right?
I'm not really planning to retire though. Since $5400 is a little more frugal than I like, my plan is this:
- Quit the 9 to 5 and just live off the income from my performing career.
- I won't touch my 'stache. Instead I'll leave it to compound and try to add $10K each year from my art.
- Currently my 'stache is invested in the Vanguard Australian Index fund, and I've signed up for the dividend reinvestment plan.
- This should allow to keep doing my art knowing I've always got this passive income to fall back on.
- If, in say five or ten years, my performing career has dried up for some reason (or even if I want to take a break) my 'stache should have grown to more than $200K providing over $8K a year in passive income which is enough for me to live on quite comfortably.
Currently, my only debt is a $13K student loan (charging 2%p.a. - fees aren't too bad here in Australia). Once I've paid that off, I'm thinking of quitting the day job.
Before I do though, I thought I'd run my plan past the MMM community to get your feedback.
What do you think of my plan?
Am I almost ready to go into semi-retirement?
Can I quit the desk job for a more fulfilling semi retirement pursuing my artistic interests?
Have I made any mistakes or missed something?
BREAK DOWN OF FINANCES
Income: Desk Job: $47,500 p.a.
Art: $10,000 p.a. (before I took the desk job I usually made over $20K a year, but have had to scale it back).
Savings: $135000 invested in the Vanguard Australian Shares Index ETF. You can find information here:
http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=VASCurrent Monthly Expenses:Rent: $210
Internet: $15
Water: $21
Gas: $11.20
Electricity: $16.45
Misc: $15.50
Travel: $81 (I mostly bike, but also have a pass for public transport)
Food: $70
TOTAL: $440.15YEARLY TOTAL: $5281.80Assets: I don't really have any. I rent. I don't own a car. From living as a traveling performer for so many years I've just got used to not owning stuff. I've got clothes, etc. but pretty much everything I own could be packed into a suitcase (which is the way I like it).