Author Topic: Close to FI - The choice between 100% success and 95% success in simulations  (Read 1709 times)

lauren_knows

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Topic Title: Reader Case Study - Would you pull the trigger in 2023, or at the very least begin part-time work?

Life Situation: 40F married to 40F. 2 children (9 and 6). We live in a HCOL area in the Northern Virginia suburbs of DC.

Gross Salary/Wages: ~$200,000 + $5-15k bonuses yearly.

Investment Contributions: We are maxing out both 401k's, along with $4k/yr to 529 plans, and some going toward a post-tax brokerage. Total yearly "investments", including matches: $75k

Current expenses:
Here are some of the primary categories, but "Other Discretionary" contains a lot of not-well-tracked things.

Mortgage: $2500/mo (15 years left on the loan @ 2.875%)
Utilities: $450/mo
Groceries: $900/mo
Restaurants: $350/mo
Car: $250/mo
Other Discretionary: $4000/mo

Total Expenses: $8400/mo ($100k/yr) - For the purposes of planning in RE, I knock down our non-mortgage expenses to $5000/mo due to reduction in spending on conveniences we needed to work, but add on $1000/mo for a health plan bumps that back up to $6000/mo.

Expected ER expenses:
Primary non-living expenses will be covering 2 children in college (or helping to a large extent).
For this, we budget $15k/yr in today's dollars for each year of school, whether or not that totally covers it.

Assets: Allocation: ~95% equities, 5% bonds
House: $800k value
Pre-tax: $880k
Roth: $210k
Post-tax: $170k
529: $80k
RSAs: $333k
Crypto: $60k (don't harass me too much, this was all from mining, which was a little experiment of mine for a few years)
Cash/Savings: $50k
Pension @ 62: $16k/yr

Total Investable Assets: $1,783,000
Liabilities: Mortgage: $365k @ 2.875% for 20yrs. We're paying extra to kill this in 15.
Total Net Worth: $2.21M

Withdrawal Plan: Whenever I decide to drop to part-time or quit entirely, we're planning on living off of the RSA proceeds (it is reasonably liquid) and our brokerage account while we start a Roth Conversion ladder.

Specific Question(s): Primarily, it's a classic case of "should I OMY or not?". Given our assets, contributions per year, and expenses... 2023 is going to be a milestone for us (some RSAs vest). I'm considering the idea of asking my employer to go part-time, or just RE'ing altogether, but if you've seen my signature line, you'd understand how obsessed with the planning I am.  I like my job a lot, but I feel strangled for free-time. I'm also considering quitting altogether and trying to monetize some of my software dev ideas. cFIREsim has been a passion project of mine for years, but I haven't had the free time to make it what I wanted, OR to start other projects that could develop some income (maybe).

If I go part-time in 2023, just for a couple of years, the numbers tell me that it's 100% success rate. https://www.cfiresim.com/09543616-a5c1-4cf9-ae19-1f01a4f5fa30

If we both just RE in 2023, there is a slim chance (historically) of our plan failing. https://www.cfiresim.com/0c0223aa-a79b-48c0-a069-118e735f2898


« Last Edit: July 19, 2021, 02:10:36 PM by lauren_knows »

dandarc

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You're pretty much already there at 4% if you can really reduce spending from $100K to $72K per year, which certainly seems possible, so I'm wondering "why wait until 2023?" I'd personally be looking at cutting back right now - actually did recently start a CoastFIRE of sorts myself and we're not in quite as good a position as you are.

Assuming you're planning on staying in your house for the long term, I'd do the complete opposite of paying that down five years early - refinance now while you're in standard employment and easily can. 30 years at 3% with another $400-500K invested is a really good deal. I'd bet that's another way to up your odds of success a few percentage points according to CFireSim.


lauren_knows

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You're pretty much already there at 4% if you can really reduce spending from $100K to $72K per year, which certainly seems possible, so I'm wondering "why wait until 2023?" I'd personally be looking at cutting back right now - actually did recently start a CoastFIRE of sorts myself and we're not in quite as good a position as you are.

Well, at the end of 2022, I have some vesting RSAs that are not insignificant, which is why 2023 is a target (I'll add this to OP). And because of my background, I don't usually liked to reduce the entire withdrawal phase to a SWR (with varied extra expenses and income flows)... but you're right, it's certainly possible to RE now, if we reduce spending. But, we'd have to consider cutting like 30% of non-mortgage expenses to make it happen. 1.5-2 years of work to maintain the status quo seems like a decent compromise.

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Assuming you're planning on staying in your house for the long term, I'd do the complete opposite of paying that down five years early - refinance now while you're in standard employment and easily can. 30 years at 3% with another $400-500K invested is a really good deal. I'd bet that's another way to up your odds of success a few percentage points according to CFireSim.

Yeah, I waffle between these two options myself. We actually just refi'ed to a 20yr. So, we could pay the minimum on that and reduce the numbers from what I mentioned.

utaca

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You don't say whether or not you like your job. If you hate it, cut and run. If you don't mind it, why not go part-time (either now, CoastFIREing or in 2023)? You're pinned down by your kids for now anyway so, if your job is not completely miserable, why not work a bit less for a bit longer?

lauren_knows

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You don't say whether or not you like your job. If you hate it, cut and run. If you don't mind it, why not go part-time (either now, CoastFIREing or in 2023)? You're pinned down by your kids for now anyway so, if your job is not completely miserable, why not work a bit less for a bit longer?

Ha, this is a good catch. I added it to the OP.  I actually DO like my job quite a bit.  I'm mostly just strangled for free time with the 40+hr work week, along with kids.  A smaller consideration is that the governance of my current position at the company means that I can't develop anything remotely financial related (blogs, tools, whatever) that make money. So, if I stay, I can either attempt to go part-time in my current position... or look elsewhere in the company.


Villanelle

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It sounds like you aren't interested in any significant cuts, and you aren't quite comfortable pulling the trigger.

So I'd at least inquire about going to part time.  If they said yes, that would be my answer so that I could buy a bit of a scale-down period during which I wasn't withdrawing but wasn't contributing, either (give or take).  You can make it sound like you want to do this while the kids are still young (as though you might eventually go back to FT) if you worry about the optics and impressions you might give. 

I'd also absolutely pay only the minimum on the mortgage.

Also, I won't harass you about mining the Crypto, but you know that after you mine it, you can sell it, right?  I'd sell that, or if you can't bear to do so, perhaps do a DCA style monthly sale until it is gone in a year or two. 

lauren_knows

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Also, I won't harass you about mining the Crypto, but you know that after you mine it, you can sell it, right?  I'd sell that, or if you can't bear to do so, perhaps do a DCA style monthly sale until it is gone in a year or two.

Heh, it's ok.  Yeah, I've already sold about $20k worth, which 10x'ed my investment in hardware from years ago. So, honestly, I'm just letting it ride. It is the single speculative investment I own (everything else is 100% index funds), so I don't feel so bad.

chasingthegoodlife

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In your shoes I wouldn’t get too hung up on that last 5% - with both of you only 40 and an interest in monetising side projects, it seems likely you will make some extra income at some point along the way.

Choose what makes you most excited now - you can always work a bit more later if you need to.

matchewed

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My take on the situation is that past a reasonable risk number (you have to determine what is reasonable). The risks encountered day to day are higher than a portfolio failure.

As in it is a waste of time and resources to shore up that last 5% when we have health issues that can be managed, resolved, or dealt with. Lifestyle issues that can be similarly addressed.

Watchmaker

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Specific Question(s): Primarily, it's a classic case of "should I OMY or not?". Given our assets, contributions per year, and expenses... 2023 is going to be a milestone for us (some RSAs vest). I'm considering the idea of asking my employer to go part-time, or just RE'ing altogether, but if you've seen my signature line, you'd understand how obsessed with the planning I am.  I like my job a lot, but I feel strangled for free-time. I'm also considering quitting altogether and trying to monetize some of my software dev ideas. cFIREsim has been a passion project of mine for years, but I haven't had the free time to make it what I wanted, OR to start other projects that could develop some income (maybe).

If I go part-time in 2023, just for a couple of years, the numbers tell me that it's 100% success rate. https://www.cfiresim.com/09543616-a5c1-4cf9-ae19-1f01a4f5fa30

I'd say you're fine to fully retire in 2023, but since you like your work, it certainly seems worth asking about going part time. Presumably that would mean you still couldn't do any financial side projects for money though. Would you rather have the security of part time work or the freedom to pursue those?

If we both just RE in 2023, there is a slim chance (historically) of our plan failing. https://www.cfiresim.com/0c0223aa-a79b-48c0-a069-118e735f2898

For your plan to fail things would have to go bad AND you'd have to not react. Realistically, if you hit a bad SOR, you (more than most people) would see the problem and could cut some spending or pick up a bit of work. Not the end of the world.

secondcor521

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Why are you modeling a 58 year retirement in your second sim ("slim chance")?

In the four failure years in that sim, what is the failure mode?  I suspect it's just hitting the Great Depression after enduring 1916, 1917, and 1920.   Do you think it's reasonable to try to protect against it?

(I personally intellectually decided that I could spend up to a 95% safety level, because my failure years were the late 1960's start years and in my opinion the failure mode there was the stagflation of the early 70's, which I felt we would not experience again to that degree.  I never actually spent that much, but I thought I could if I needed to.)

lauren_knows

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Why are you modeling a 58 year retirement in your second sim ("slim chance")?

I'm generally conservative in this facet of simulations, in that I simulate a lifespan of 100. Not uncommon for either my wife or my family to reach the 90s (for those who weren't alcoholics, lol/sigh).  I realize that by being conservative here, there is a good safety margin that I might be overlooking.

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In the four failure years in that sim, what is the failure mode?  I suspect it's just hitting the Great Depression after enduring 1916, 1917, and 1920.   Do you think it's reasonable to try to protect against it?

It's actually failing in 1906, 1907, 1909, 1911 start years. This seems to indicate that one of the weaknesses of the plan is the increased withdrawals when my kids go to college.  Maintaining SOME cashflow during those times might protect against it.  Also, I didn't consider this as part of the plan, but when the kids fly the nest, downsizing and going on cheaper adventures would protect against failures here.

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(I personally intellectually decided that I could spend up to a 95% safety level, because my failure years were the late 1960's start years and in my opinion the failure mode there was the stagflation of the early 70's, which I felt we would not experience again to that degree.  I never actually spent that much, but I thought I could if I needed to.)

Yeah, I am generally a huge evangelist of "if you're flexible enough, you can get past any economic issues during retirement", but I do also seek outside validation from others haha. I appreciate the comments.

Playing with Fire UK

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How much do you value the free time sooner vs the possibility of needing to earn some income or cut some costs later?

If you are excited about your projects and spending time with your kids when they are still at home, you might be willing to accept the possibility of going back to work or downsizing or cutting back when they are in college.

I love that there is nothing we can tell you about the percentage of success and yet there is still a question of OMY.

I'd be confident you can make this work if you quit in 2023 as planned. I can't believe that you won't be able to find a way to make money somehow if you want to.

lauren_knows

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How much do you value the free time sooner vs the possibility of needing to earn some income or cut some costs later?

Good question, that I haven't put a ton of deep thought into.  I feel like the pressures of being a parent of small children during the pandemic, and the things that we did to juggle childcare and work, have taken a toll on my wife and I.  This is possibly clouding my judgement on this question, but I'm beginning to find more and more value in free time sooner.


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I love that there is nothing we can tell you about the percentage of success and yet there is still a question of OMY.

I'm glad that the irony is not lost on everyone haha. Part of this is definitely convincing my wife that we're "good".  She's frugal, but along the way hasn't had much interest in the math of quitting.  :)

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I'd be confident you can make this work if you quit in 2023 as planned. I can't believe that you won't be able to find a way to make money somehow if you want to.

I agree with this in principle, but neither my wife or I has ever HAD to "make money somehow", outside of our 9-5, so there is doubt. Welcome to imposter syndrome.

secondcor521

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In the four failure years in that sim, what is the failure mode?  I suspect it's just hitting the Great Depression after enduring 1916, 1917, and 1920.   Do you think it's reasonable to try to protect against it?

It's actually failing in 1906, 1907, 1909, 1911 start years. This seems to indicate that one of the weaknesses of the plan is the increased withdrawals when my kids go to college.  Maintaining SOME cashflow during those times might protect against it.  Also, I didn't consider this as part of the plan, but when the kids fly the nest, downsizing and going on cheaper adventures would protect against failures here.

Right, I didn't articulate myself very clearly.

My point is for you to look at the 1906/1907/1909/1911 cycles and see why the plan failed in those start years.  My hypothesis now is that in those start years, your kids' college spending is hitting your portfolio when it's down (1916/1917/1920 are all bad return years) followed by a Great Depression, followed by another couple of decades of spending.  So raising your cFIREsim success percentage from 95% to 100% means you're protecting against bad return years during your kids' college, followed by a Great Recession about a decade after that.  Is that a scenario you need to protect against?

My 95% success comment earlier was taking the old 4% rule phrase "as long as the future is no worse than the worst of past history" and modifying it slightly to "as long as the future is at least a tiny bit better than the worst of past history".  It's up to you to decide how optimistic you want to be about the future - personally I was but again I never got tested.

One other comment - there is a potential off by one error in your inputs.  I noticed that you plan for your kids college seems to include five years of spending.  Is that what you want, or is that how the inputs have to work for cFIREsim to do the right thing?  In other words, for kid #1 college, is there a $15K expense in 2030, 2031, 2032, 2033, and 2034?  If so, that might be five years, not four.  Ditto kid #2 college - 2033, 2034, 2035, 2036, and 2037 may be five years, not four.

If you do have an off by one error, it'd be good to recheck all of your inputs (including income adjustments).

lauren_knows

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One other comment - there is a potential off by one error in your inputs.  I noticed that you plan for your kids college seems to include five years of spending.  Is that what you want, or is that how the inputs have to work for cFIREsim to do the right thing?  In other words, for kid #1 college, is there a $15K expense in 2030, 2031, 2032, 2033, and 2034?  If so, that might be five years, not four.  Ditto kid #2 college - 2033, 2034, 2035, 2036, and 2037 may be five years, not four.

If you do have an off by one error, it'd be good to recheck all of your inputs (including income adjustments).

Holy shit, I just got schooled in my own damn tool. You're totally right. It's an off-by-one, because visually 2030-2034 looks like 4 years, but in cFIREsim it is not.  Thank you for pointing that out.

friedmmj

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Holy shit, I just got schooled in my own damn tool. You're totally right. It's an off-by-one, because visually 2030-2034 looks like 4 years, but in cFIREsim it is not.  Thank you for pointing that out.

I got a good laugh on this comment haha.

secondcor521

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One other comment - there is a potential off by one error in your inputs.  I noticed that you plan for your kids college seems to include five years of spending.  Is that what you want, or is that how the inputs have to work for cFIREsim to do the right thing?  In other words, for kid #1 college, is there a $15K expense in 2030, 2031, 2032, 2033, and 2034?  If so, that might be five years, not four.  Ditto kid #2 college - 2033, 2034, 2035, 2036, and 2037 may be five years, not four.

If you do have an off by one error, it'd be good to recheck all of your inputs (including income adjustments).

Holy shit, I just got schooled in my own damn tool. You're totally right. It's an off-by-one, because visually 2030-2034 looks like 4 years, but in cFIREsim it is not.  Thank you for pointing that out.

Is your success rate higher now?

(Also, repeating myself, but I suggest you check your other inputs for off-by-one errors also.)

jeroly

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As a reference point, my daughter graduated eleven years ago from a state university (paying in-state tuition) and it cost $20,000/yr in 2010 dollars.

lauren_knows

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As a reference point, my daughter graduated eleven years ago from a state university (paying in-state tuition) and it cost $20,000/yr in 2010 dollars.

Fair point, but I'm pegging my numbers to Virginia state schools which have been between 15-20k. Perhaps I should be more conservative, but I didn't get any support from my parents, so I must subconsciously think that 15k is better than 0 😂

Playing with Fire UK

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...
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I love that there is nothing we can tell you about the percentage of success and yet there is still a question of OMY.

I'm glad that the irony is not lost on everyone haha. Part of this is definitely convincing my wife that we're "good".  She's frugal, but along the way hasn't had much interest in the math of quitting.  :)

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I'd be confident you can make this work if you quit in 2023 as planned. I can't believe that you won't be able to find a way to make money somehow if you want to.

I agree with this in principle, but neither my wife or I has ever HAD to "make money somehow", outside of our 9-5, so there is doubt. Welcome to imposter syndrome.

I'm glad it's amusing for you too! It really isn't about the numbers at this point - so many people around here work extra years and then pull the plug and wish they'd done it earlier.

This may not help, as I've never met you, but you've created an amazing tool in limited spare time FOR FUN. The money will come if you go looking for it: skills like that don't evaporate. But if that isn't easy to believe, maybe think about how spending could be cut or how a HELOC might smooth out spending when the markets do their thing.

Dicey

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Yeah, I waffle between these two options myself. We actually just refi'ed to a 20yr. So, we could pay the minimum on that and reduce the numbers from what I mentioned.
Your OP says it's a 15 year loan. Why the discrepancy? Did you refi then throw a big chunk of money at it or do you just mean you're using a 15 year amortization table? If it's the latter, I would highly, highly recommend you STOP that now. In ten years, you're going to feel like a genius for having such a low mortgage rate. At that point if you have ten more years of that instead of five, your future self is going to be really, really happy.

Your 529 allocation seems very low. How did you come up with $15k per year, not adjusted for inflation?

Malcat

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100% success rate vs 95% success rate is utterly meaningless for your particular chances of "success", whatever that means.

FI calculators can't predict anything, so don't get hung up on that. There are huge factors in your inputs that they can't account for either.

So person A and person B have the same stache.
Person A could input a 50K spend and get a 95% success rate.
Person B could input a 45K spend and get a 100% success rate.
Person B is more likely to "succeed", right?
Not so fast.

Person A projected a 50K spend, but that's a very padded budget with tons of wiggle room and a lot of luxury spending that could be cut during major down periods. Person B has a super tight budget and is perhaps underestimating some of their future costs, like home maintenance. Their budget is so tight, that it would be very hard to ever cut costs if needed.

Person A, with the 95% success rate is actually hundreds of times more financially secure than Person B, who is actually at significant risk.

The calculator can't tell the difference.

Do NOT depend on a calculator that can't actually tell you much to project your future financial success. The calculators are amazing for what they actually can do, and that's for understanding the impacts of various financial decisions. They are fantastic for determining what would be more beneficial: working an extra year or finding a way to cut costs by 5%, paying off the mortgage vs keeping it, delaying taking social benefits vs taking early, etc. That kind of thing.

For the rest of it, you actually have to look at your own situation. How flexible is your spending, how easy would it be for you to go back to work if it came to that, what kind of resources would you want available if someone in your family developed a serious, chronic illness, etc, etc.

Looking for reassurance from the outputs of an online calculator is as useful as looking at tea leaves.

ETA: oops, didn't realize who I was responding to, feel free to disregard my response, you obviously know all of the above
« Last Edit: July 21, 2021, 11:10:55 AM by Malcat »

FireLane

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Hi, @lauren_knows! Is it OK to say I'm tickled pink to be offering advice to the creator of cFIREsim?

If I were you, my biggest concern would be that if I quit tomorrow, I wouldn't have enough of a bridge to the age where I could start drawing on pre-tax accounts. You have $710K in Roth and taxable, plus another $100K in cash and crypto. That would be enough for many people, but you're planning on a fairly high spend rate: $72,000 per year, or a 10% "withdrawal rate" from your taxable accounts. That means sequence of return risk looms a bit larger for you. A few bad years early on could result in depleting your taxable portfolio before 59. (And does that $72K take taxes into account?)

Also, $72,000 is almost exactly a 4% WR for your total NW. Although cFIREsim predicts success based on historical data, given the current high market valuations, I'd be uneasy about drawing the full 4% every year. My age and NW are similar to yours, and I'm planning on 3% or less. But that's a personal decision about risk and comfort levels.

Your categorized expenses seem reasonable, but $4000/mo is a lot of money to sweep into the "other discretionary" category. It might be the case that everything in there is absolutely necessary, but I'd try to get more of a handle on where that money is going before quitting. If it were possible to reduce your discretionary spending by, say, $1000 a month, it would have a cascading effect - it would reduce your taxes and increase your ACA subsidies, so you could retire on a significantly lower and safer withdrawal rate.

If you like your job but feel constantly short on time, going part-time is an obvious step. I did this in 2018, and it made the last few years of work so much better. An extra day off every week is enormously helpful for running errands, dealing with unforeseen kid issues, etc. If none of those things come up, you get that time back for yourself, almost like an advance test run for FIRE. And because you're only giving up your highest-taxed dollars, it makes less of a difference to your pay than you'd expect. It's a much more civilized way to work. I recommend it to everyone.

Of course, it depends on your company culture and your management. If your coworkers are constantly pinging you with questions on your day off, or your boss just expects you to get 40 hours of work done in 32 hours, it may not reduce your stress. But when it works out well, it's fantastic.

In your shoes, I would definitely go part-time now and see how you like it. If those RSAs vesting in 2022 are significant compared to your overall portfolio, and if you like your job, I might try to hold out for them - that's not very far off. But you're in a strong position whatever you do.

Imustacheyouaquestion

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I would drop to part-time and see whether it motivates you to pull the RE trigger. A year with a more free time could help you clarify whether you want the extra space to pursue passion projects, and could also identify how your budget will change with working less.

The extra 5% safety margin is not super valuable, in my opinion. In the opposite framing, these results tell you that in 95% of scenarios you worked as long or longer than necessary to avoid running out of money.

Flexibility and understanding how to adapt your spending (and income) in early retirement are more important than simulated rates of success. cFIREsim is a powerful tool to help people understand whether they are making adequately safe plans or blindly jumping off a cliff once they hit 25x expenses, but it can't compete with human adaptability. It seems safe to assume that if you built a historical simulation tool, you are not the type of person who will run out of money before realizing you need to adjust your plan. 


snowball

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I will ask you the same question I asked myself early this year, when I was on the fence about OMY and trying to define my personal meaning of "enough"...

What are the chances that you'll never earn another dime and you'll actually have to live off your current investments for the rest of your life?  Realistically?

My answer to that was...slim to zero, hah.

We are the same age, and you are pretty darn smart and enterprising based on your cFIREsim work (excuse me while I have a small fangirl moment, lol, nothing to see here, move along).  I'm having a really hard time visualizing you never earning anything further either.  Don't sell yourself short.  If you want to earn money doing your own thing, you will.  Absolutely.

My follow-on question for myself was...what possibilities, what projects of mine are getting stifled before they even have a chance to spark into the glimmer of an idea, because my life energy and mental bandwidth are being drained away into a job that I no longer find engaging?  How long am I willing to accumulate these ghosts of passion projects that will never be, now, because their time came and went?  Some things you can circle back to later...some things you never will.

In the end, I decided my leanFIRE number was enough to let me walk away from my job and explore what else is out there.  At the very least, it's enough to give myself the grace of a year or two in which I can take a long breath and de-stress without worrying about money;  if I decide I want to go back to my career afterward, I can always do that then.  To everything there is a season...I've decided this needs to be the season of prioritizing my own well-being.  I've poured so much of myself into my work and career over the last decade, and I wasn't wrong to do that - I got a lot out of it - but now I need to find a new balance.  And so my last day at work is officially Nov 4 of this year.  I am so excited about the next stage of my life, and it's so much fun to put together ideas for things I might do next year without the constraints of a job.

Disclaimer: I don't have any dependents to worry about, so I imagine it's easier for me to say "I have enough for myself now," and walk away.  But maybe some of my reasoning will be helpful as you work through this.  I think that once you reach the point of debating OMY, it's no longer really a mathematical question, but an emotional/psychological one.

trollwithamustache

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Quitting and quitting to try to monetize your software are two very very different things.

Seriously, you've got a great little piece of software that a lot of people love.... chances are you really can monetize it.

This money can be very tax advantageous as costs like your computer, home internet and cell phone can become business costs.

The biggest downside is someone will write an expose article that the cFIREsim author isn't really retired... this could really blow up reddit so be ready.

dougules

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Quitting and quitting to try to monetize your software are two very very different things.

Seriously, you've got a great little piece of software that a lot of people love.... chances are you really can monetize it.

This money can be very tax advantageous as costs like your computer, home internet and cell phone can become business costs.

The biggest downside is someone will write an expose article that the cFIREsim author isn't really retired... this could really blow up reddit so be ready.

That's called free advertising.  And a good response is

Villanelle

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I agree with this in principle, but neither my wife or I has ever HAD to "make money somehow", outside of our 9-5, so there is doubt. Welcome to imposter syndrome.

But remember, you don't need to make $100k, or even $50k or $25k.  Really, if you need anything, it will likely be ~~$3k-10k/yr to supplement or ride out a down market.  So your usual metric for "make money" doesn't even remotely apply.  With essentially ALL your time as yours, how hard would that be?  Get a job at a coffee shop.  Substitute teach.  Walk dogs.  Mow lawns for your neighbors.  Consult on software development.  Meal prep for people via word of mouth.  Rent a room to someone in the area for a few months.  Run errands for old ladies. Petsit.  Do basic handyman tasks for elderly people in your area.  Shovel sidewalks.  The list goes on and on.  You likely only need a few thousand, not to replace your current salaries. 

lauren_knows

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Quitting and quitting to try to monetize your software are two very very different things.

Seriously, you've got a great little piece of software that a lot of people love.... chances are you really can monetize it.

This money can be very tax advantageous as costs like your computer, home internet and cell phone can become business costs.

The biggest downside is someone will write an expose article that the cFIREsim author isn't really retired... this could really blow up reddit so be ready.

That's called free advertising.  And a good response is

I have to reply to some other comments, but first... this is hilarious 😂

lauren_knows

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Big reply thread, because I was out of town...

Hi, @lauren_knows! Is it OK to say I'm tickled pink to be offering advice to the creator of cFIREsim?

That's very sweet! Even I need external validation! Who knew that I would make a tool for validation... but still need people to talk me off the ledge, so to speak? haha

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If I were you, my biggest concern would be that if I quit tomorrow, I wouldn't have enough of a bridge to the age where I could start drawing on pre-tax accounts. You have $710K in Roth and taxable, plus another $100K in cash and crypto.

This is a big concern of mine, too. I've thought about turning all of my investments toward post-tax brokerage for the next 1.5-2 years, but missing out on tax advantages is brutal. If I went part-time, though, it would be perfect for starting a Roth Conversion Ladder.  If I quit tomorrow, and my RSAs were as liquid as I thought they were, I could withdraw that money for expenses as the Roth Conversion ladder started...

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Your categorized expenses seem reasonable, but $4000/mo is a lot of money to sweep into the "other discretionary" category.

This is a totally fair point, and I should have expected this on this forum. We've never been much of a "budgeting" family.  We got our savings to 30-40% and just got comfortable.  This is worth looking into, and I'll see what we can do.


We are the same age, and you are pretty darn smart and enterprising based on your cFIREsim work (excuse me while I have a small fangirl moment, lol, nothing to see here, move along).  I'm having a really hard time visualizing you never earning anything further either.  Don't sell yourself short.  If you want to earn money doing your own thing, you will.  Absolutely.

First off, have your fangirl moment. We love to see it. I appreciate it.  Secondly, you're totally right about earning. It's just such a hard concept to see when all you've done is 9-5.  I imagine freelancers would have an easier time with this :)

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How long am I willing to accumulate these ghosts of passion projects that will never be, now, because their time came and went?  Some things you can circle back to later...some things you never will.

This quote hit the hardest in this whole thread. I have tons of ghosts of passion projects past, and it's depressing.

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Disclaimer: I don't have any dependents to worry about, so I imagine it's easier for me to say "I have enough for myself now," and walk away. 

This does factor into some of the uncertainty.

Quitting and quitting to try to monetize your software are two very very different things.

Seriously, you've got a great little piece of software that a lot of people love.... chances are you really can monetize it.

This money can be very tax advantageous as costs like your computer, home internet and cell phone can become business costs.

The biggest downside is someone will write an expose article that the cFIREsim author isn't really retired... this could really blow up reddit so be ready.

Yeah, I've thought about this. It doesn't take a TON of money over say a 10 year span, to make a monetized side project knock my simulation success over 100%.  I don't know if cFIREsim alone would be able to swing it without making it super annoying to users (which I have no interest in), but it's a great thought.


But remember, you don't need to make $100k, or even $50k or $25k.  Really, if you need anything, it will likely be ~~$3k-10k/yr to supplement or ride out a down market.  So your usual metric for "make money" doesn't even remotely apply. 

I actually used to talk about this very thing in the forums here and on Reddit when this came up, and I'm glad to hear it again, because it had left my headspace. You're totally right. Even 5k/yr for a few years bumps our success rate up, so it's worth considering.  I feel like I need to lay out a huge list of "things that could go wrong", "things that could go right" and "possible income streams, and their effects" or something.

pasadenafr

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Hi Lauren, another fan of yours here :)


But remember, you don't need to make $100k, or even $50k or $25k.  Really, if you need anything, it will likely be ~~$3k-10k/yr to supplement or ride out a down market.  So your usual metric for "make money" doesn't even remotely apply. 

I actually used to talk about this very thing in the forums here and on Reddit when this came up, and I'm glad to hear it again, because it had left my headspace. You're totally right. Even 5k/yr for a few years bumps our success rate up, so it's worth considering.  I feel like I need to lay out a huge list of "things that could go wrong", "things that could go right" and "possible income streams, and their effects" or something.

Honestly, when it's this close, both in terms of assets and in terms of time, I'd go with "let's see where we're at at the end of 2022 and decide then". It'll only take the market being above or below a few % off your estimate to answer all these questions for you. Or maybe you'll find that just working FT for half a year would propel you back to 100% and it won't sound so bad.

Maybe add a "donations welcome" button to cFIREsim :)

jeroly

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As a reference point, my daughter graduated eleven years ago from a state university (paying in-state tuition) and it cost $20,000/yr in 2010 dollars.

Fair point, but I'm pegging my numbers to Virginia state schools which have been between 15-20k. Perhaps I should be more conservative, but I didn't get any support from my parents, so I must subconsciously think that 15k is better than 0 😂

Huh? The tuition alone at UVA is over $20,000 not counting room and board and books and...

secondcor521

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As a reference point, my daughter graduated eleven years ago from a state university (paying in-state tuition) and it cost $20,000/yr in 2010 dollars.

Fair point, but I'm pegging my numbers to Virginia state schools which have been between 15-20k. Perhaps I should be more conservative, but I didn't get any support from my parents, so I must subconsciously think that 15k is better than 0 😂

Huh? The tuition alone at UVA is over $20,000 not counting room and board and books and...

Maybe OP is paying just tuition and/or sending their kids somewhere else than UVA.  VT and JMU tuition are both under $15K per year.

Playing with Fire UK

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In the opposite framing, these results tell you that in 95% of scenarios you worked as long or longer than necessary to avoid running out of money.

I like this way of looking at it.

lauren_knows

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Maybe OP is paying just tuition and/or sending their kids somewhere else than UVA.  VT and JMU tuition are both under $15K per year.

I updated my sim to reflect $20k/yr/kid. I had that 15k number in there since I started working on cFIREsim (8 years ago?). ~20k seems to about cover tuition and room&board for most of the in-state schools. If they go out of state, they'll need to cover the difference (unless the market is crushing it) :)