Author Topic: Three countries, two children, deciding when and where to catch FIRE  (Read 604 times)

EnjoyTheJourney

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We have ties to Canada and Japan (self and spouse are citizens, one of each), as well as two US-born sons who are quite young. I am 54 and my wife is a few years younger than me.

In the US we currently have about 600K in tax deferred investments and about 180K in home equity. We add about 24K to tax deferred funds each year and we're accumulating about 19K per year in home equity, on a salary of about 120K. I'm anticipating that between pension money from Canada and social security we will clear 30K per year in pension income (after WEP reduction) if we start collecting when I reach 62 years of age. We can keep our non-housing expenses down to 24-30K without undue effort, as even with some unnecessary "luxury" spending now (two cars, yoga lessons, salon treatments, buying almost everything new) we usually spend 30K per year on things other than housing. Living costs after retirement seem likely to be about 36-45K for home / non-housing (not including travel).

Our retirement portfolio is currently mostly with TIAA-CREF (employer, no good alternatives), with about 33% held by Vanguard.

With a 15 year mortgage, dues to the condo association, and maintenance, our expenses for housing are currently a little over $3,000 per month. Our mortgage is our only debt and the interest rate is 3.25%, so early repayment hasn't been a priority to date. We've been doing updates to our home that will make selling easier, will help us enjoy being in our home more, and add to the value of the home. I'm anticipating we'll have about 220K equity by next summer, with updates done, as long as the housing market doesn't tank. I'm reluctant to make any predictions about the value of our portfolio by that time (currently a 3-fund portfolio, about 33% each for total bond market ETF, S&P 500 index fund, and MSCI ex-US & Canada index fund). If we stay beyond next year, then updates will be done and I'm confident we can find 6-10K in extra money to put toward retirement, in one way or another.

We're eager to travel back and forth between Canada and Japan while on FIRE, as our children continue on the path toward growing up. I'm not certain of the tax implications of not having a fixed residence in any country, which it looks like we can manage, versus fixing on Canada as our official country of residence (or another choice, perhaps, if we use geoarbitrage). We'd like our children to grow up bilingual (Japanese and English). The most likely scenario is that we will remain renters over the longer term, although clearly that would require some adjustments in where we live, from time to time, if we're ping-ponging back and forth between two countries once or twice a year.

Following the advice of the ERN blogger, I'm aiming for a 3.25% withdrawal rate from our portfolio, although RMDs may to push us beyond that total at some point.

I enjoy my job and I like my colleagues. But, I'm eager to retire to spend more time helping out at home and with my family.

As one other fact that might help, foreigners living in Japan for their first five years, as long as they're careful, only pay taxes on their Japanese income (meaning investments held in tax-deferred accounts in the US are not taxable in Japan, at least for the first five years).

What tips / strategies would help us to get to FIRE ASAP and stay that way? When are we likely to be able to catch FIRE?

Any tips / suggestions / opinions would be welcome and appreciated.
« Last Edit: November 13, 2018, 08:11:09 PM by EnjoyTheJourney »

reeshau

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Re: Three countries, two children, deciding when and where to catch FIRE
« Reply #1 on: November 14, 2018, 02:11:32 AM »
Two questions:

It sounds like you intend to rotate your residency among the countries.  But what length of time do you really intend to spend in each?  For example, a Canadian or US citizen can visit Japan for 90 days with no visa.  This is more like slow travel, but would be a significant amount of time spent, with no worries on taxation or tax residency.

Which leads to question two:  how are you looking to educate your children?  Will you homeschool?  It seems like you will be tied *somewhere* for 9 months out of the year, but then you could easily spend summers remotely.  Also, really my first thought, what are your thoughts on college education?  With a long timeframe, you could be considering a location where college is free for citizens / long-term residents / other qualified.  You didn't mention specific savings, but this would be a large part of your nest egg, if you go a traditional US route.

EnjoyTheJourney

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Re: Three countries, two children, deciding when and where to catch FIRE
« Reply #2 on: November 14, 2018, 02:40:26 AM »
Thank you for your response!

If we anchor 9 months per year in one nation, then Canada would probably work better for us (for pension, for a number of things). Then having them attend regular school becomes more appealing. Homeschooling by registering in a province in Canada should work well, I believe, if we decide to be a bit more nomadic and spend about half a year in each country.

College education costs a lot less in Canada than in the US, which should help quite a bit. Our sons are able to become Canadian citizens, which helps to further reduce the cost of higher education. We have well over a decade to prepare for that, though, and I wouldn't be shy about having our sons live with us and/or help to fund their higher education in some way.

I should probably have mentioned that we have no Roth IRAs, but do have a substantial rollover IRA (not Roth). So, backdoor conversion to Roth IRAs may be unattractive (if I've read correctly, which is not guaranteed).
« Last Edit: November 14, 2018, 02:48:59 AM by EnjoyTheJourney »