Getting Divorced - How close am I to FIRE'ing

[Bojack]

I'm going through a divorce right now and I'm 47. It's a long story but I lost my job due to the divorce and I had to get a job that I absolutely hate so my spouse's attorney can't claim I'm rigging my child support numbers. We are getting close to being done (I hope) and I'm trying to decide if I can quit the job and maybe focus on something I enjoy or maybe look into buying a mature company. I expect to have the following assets:

In total: $3.6M
I plan on buying a house with cash that will leave me about $3M-3.1M. I live in a HCOL area and it's important that I stay in a particular school district so that I can make sure the kids can get to school. It's difficult to get anything less than $500k in the area. I plan to move to a lower COL area after my kids graduate, but that is 10 years out.
 
$675k savings
$1,150,000 taxable brokerage
$1,050,000 401k pretax
$72,000 Roth
$52,000 HSA

Unfortunately, it's been a contentious divorce so the cash may drop another $50k or so. To be clear - this is my expectation of MY assets post-divorce.
I estimate my expenses will be approximately $80k annually. 

Can I FIRE now, or am I in a situation where I can take a job with lesser pay for the time being? I'm also hoping to work less so that I can spend more time with the kids and take them on a few more vacations each year.

Also, does anyone have experience buying mature companies that have already been through growing pains? I've considered this as well where I might be able to work 30 hours/week or so. I actually enjoy working.

Thanks for any advice!

[BECABECA]

With a $3m stash and a paid off house, an annual spend of $80k has you at less than 2.7% withdrawal rate. You’re sitting pretty to FIRE now, assuming that you’ve already included potential child support in your 80k annual spend. You’ve already won the game, why would you want to complicate things by buying a company? Seems like a lot of hassle and would just add risk to your FI.

[former player]

I'm sorry to hear about the job loss and divorce.

Yes, you have enough investments for FIRE.

About buying a company?  It seems to me that your life is in a lot of flux at the moment, and apart from staying near your children (which good for you: too many divorced parents don't) I suspect that you don't have much idea about the shape your life is going to take for the next 10 years or after that.  So while I can see the need to keep busy and put new structures back in your life, in your situation I would be wary of putting money into something that is going to tie you down in ways that might not suit the direction your life takes in future years.  In your situation I would be looking for ways to add value to my life that can change with me as necessary in the future.

Good luck.

[Bojack]

With a $3m stash and a paid off house, an annual spend of $80k has you at less than 2.7% withdrawal rate. You’re sitting pretty to FIRE now, assuming that you’ve already included potential child support in your 80k annual spend. You’ve already won the game, why would you want to complicate things by buying a company? Seems like a lot of hassle and would just add risk to your FI.

My spouse makes considerably more than me and the discussion has been 50/50 custody, which would have me not owing child support. She is holding out on this to negotiate other things. However, my worst case scenario appears to be a 40/60 split, which would leave me owing $1k/month. This would put me right at $100k total child support in current dollars, so my plan at that point would be to put that in its own account and sort of forget about those funds as far as retirement goes.

Thank you for the input on the business. I hadn't considered it from a "winning the game" perspective. I'm not good at being idle so I will need to get creative to find something that keeps me busy at 25-30 hours/week.

Also, I have a question, and I'm trying to learn in asking, not to be argumentative. The math works out today because we are in the top of the market. Suppose the market dropped by 30% over the next 6 months and I'm asking the same question. I think that changes your answer on winning the game, right?

[Bojack]

I'm sorry to hear about the job loss and divorce.

Yes, you have enough investments for FIRE.

About buying a company?  It seems to me that your life is in a lot of flux at the moment, and apart from staying near your children (which good for you: too many divorced parents don't) I suspect that you don't have much idea about the shape your life is going to take for the next 10 years or after that.  So while I can see the need to keep busy and put new structures back in your life, in your situation I would be wary of putting money into something that is going to tie you down in ways that might not suit the direction your life takes in future years.  In your situation I would be looking for ways to add value to my life that can change with me as necessary in the future.

Good luck.

I appreciate your advice. Regarding adding value, did you mean that internally or financially, or both?

[former player]

I'm sorry to hear about the job loss and divorce.

Yes, you have enough investments for FIRE.

About buying a company?  It seems to me that your life is in a lot of flux at the moment, and apart from staying near your children (which good for you: too many divorced parents don't) I suspect that you don't have much idea about the shape your life is going to take for the next 10 years or after that.  So while I can see the need to keep busy and put new structures back in your life, in your situation I would be wary of putting money into something that is going to tie you down in ways that might not suit the direction your life takes in future years.  In your situation I would be looking for ways to add value to my life that can change with me as necessary in the future.

Good luck.

I appreciate your advice. Regarding adding value, did you mean that internally or financially, or both?

I was thinking internally: in my view (I'm poorer than you so take it for what it's worth) you've already won the game financially and what's left is to look after your children and find meaning and occupation for yourself.  Nothing against that meaning and occupation producing money, of course.

[TimCFJ40]

Suppose the market dropped by 30% over the next 6 months and I'm asking the same question. I think that changes your answer on winning the game, right?

At a 2.7% Withdrawal rate from your funds, a 30% drop would still be survivable, but you might want to reduce consumption if possible while things improve.  Theoretically, a 30% drop in portfolio moves your withdrawal rate from 2.7% to right around 4%, which is viewed as the safe baseline for long term withdrawals by many around here. 


I'd recommend some more research and reading up on the 4% rule, the trinity study, and SORR (sequence of return risk) to help you better understand and feel confident you'll be OK.  The numbers work out, but being confident in your plan will help you sleep at night rather than biting your nails waiting for the market to rebound. 

[mistymoney]

Suppose the market dropped by 30% over the next 6 months and I'm asking the same question. I think that changes your answer on winning the game, right?

At a 2.7% Withdrawal rate from your funds, a 30% drop would still be survivable, but you might want to reduce consumption if possible while things improve.  Theoretically, a 30% drop in portfolio moves your withdrawal rate from 2.7% to right around 4%, which is viewed as the safe baseline for long term withdrawals by many around here. 

but is that assuming 100% stocks?

OP after buying the house, have 5 years in cash and you will be in great shape.

But I'm not getting your assets adding up to 3.6m. just 3. is the .6 coming from somewhere else for the house? or will the 675k in savings be for the house? then only about 2.3m is left over.

[Dicey]

I'm curious - if you live in a HCOLA, what are you planning on buying for only $500k? Also, why pay cash? It might give you more protection to get a mortgage while you're still working. You can always pay it off later. That would give you more protection against a market drop and inflation.

[Bojack]

Suppose the market dropped by 30% over the next 6 months and I'm asking the same question. I think that changes your answer on winning the game, right?

At a 2.7% Withdrawal rate from your funds, a 30% drop would still be survivable, but you might want to reduce consumption if possible while things improve.  Theoretically, a 30% drop in portfolio moves your withdrawal rate from 2.7% to right around 4%, which is viewed as the safe baseline for long term withdrawals by many around here. 

but is that assuming 100% stocks?

OP after buying the house, have 5 years in cash and you will be in great shape.

But I'm not getting your assets adding up to 3.6m. just 3. is the .6 coming from somewhere else for the house? or will the 675k in savings be for the house? then only about 2.3m is left over.

The additional $600k is assuming I'll be in that level buying a home. It won't be more than that.

[Bojack]

I'm curious - if you live in a HCOLA, what are you planning on buying for only $500k? Also, why pay cash? It might give you more protection to get a mortgage while you're still working. You can always pay it off later. That would give you more protection against a market drop and inflation.

Maybe I described it incorrectly. I'm in the suburb of a HCOL city. $500k gets me 4Bed/2 BR for the kids, approx. 2200 sqft.

Can you provide detail on how not paying off a house would give me protection against the market? If I pay the house off and the market drops, I don't have to worry about the loss of liquidible assets to pay off the house if I got into that spot. Also, not sure how important it is for this conversation, but I wouldn't be able to take to big of a mortgage on my current compensation anyway. I'm guessing $300k.

I'm open on this point though.

[lhamo]

Sorry about the divorce -- especially the contentious part.  It sucks when you have to throw a ton of money at the lawyers.

That being said, I think you are in an excellent position, especially if you can keep your housing costs modest.  Having 1mill+ in retirement accounts that you can let ride for 20+ years means you have lots of flexibility with your other assets.  Given that taxes and health insurance probably make up a decent chunk of your estimated 80k/year spend, you might want to look at how to best balance living off investments (using as much as you can of that sweet, sweet 0% LTCG rate) + savings as a way to keep your taxable income low and open up space for Roth conversions.  I am going to disagree with @Dicey and advocate for paying cash for housing -- that will also greatly reduce your monthly outgo and give you more space to play with your Roths. 

If you are worried about a market 30% drop, you might consider capturing some LTCG now and parking those funds in savings.  I have a very annoying Inner Bag Lady and doing that has helped keep her quiet. 

[Dicey]

I'm curious - if you live in a HCOLA, what are you planning on buying for only $500k? Also, why pay cash? It might give you more protection to get a mortgage while you're still working. You can always pay it off later. That would give you more protection against a market drop and inflation.

Maybe I described it incorrectly. I'm in the suburb of a HCOL city. $500k gets me 4Bed/2 BR for the kids, approx. 2200 sqft.

Can you provide detail on how not paying off a house would give me protection against the market? If I pay the house off and the market drops, I don't have to worry about the loss of liquidible assets to pay off the house if I got into that spot. Also, not sure how important it is for this conversation, but I wouldn't be able to take to big of a mortgage on my current compensation anyway. I'm guessing $300k.

I'm open on this point though.

Lol, I live in a suburb of a "HCOL city" and $500k buys an old, 2+1 condo, with one parking space and communal laundry, if you're lucky. What you describe goes for $2M. Sounds like you are in a MCOLA.

Short answer: the market goes down, the market goes back up, and then some. Having a mortgage means you have more green soldiers working for you instead of sitting on their asses.

Rather than disagreeing with anyone who I respect here, I strongly suggest you ask this question over on the DPOYM thread. It exists for discussing the pros and cons of having a mortgage (or not). Lots of helpful discussion there.

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/

[Bojack]

I'm curious - if you live in a HCOLA, what are you planning on buying for only $500k? Also, why pay cash? It might give you more protection to get a mortgage while you're still working. You can always pay it off later. That would give you more protection against a market drop and inflation.

Maybe I described it incorrectly. I'm in the suburb of a HCOL city. $500k gets me 4Bed/2 BR for the kids, approx. 2200 sqft.

Can you provide detail on how not paying off a house would give me protection against the market? If I pay the house off and the market drops, I don't have to worry about the loss of liquidible assets to pay off the house if I got into that spot. Also, not sure how important it is for this conversation, but I wouldn't be able to take to big of a mortgage on my current compensation anyway. I'm guessing $300k.

I'm open on this point though.

Lol, I live in a suburb of a "HCOL city" and $500k buys an old, 2+1 condo, with one parking space and communal laundry, if you're lucky. What you describe goes for $2M. Sounds like you are in a MCOLA.

Short answer: the market goes down, the market goes back up, and then some. Having a mortgage means you have more green soldiers working for you instead of sitting on their asses.

Rather than disagreeing with anyone who I respect here, I strongly suggest you ask this question over on the DPOYM thread. It exists for discussing the pros and cons of having a mortgage (or not). Lots of helpful discussion there.

https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/

Thanks for the advice on the house. And I'll stop saying I live in a HCOL :-)

[jeroly]

With a $3m stash and a paid off house, an annual spend of $80k has you at less than 2.7% withdrawal rate. You’re sitting pretty to FIRE now, assuming that you’ve already included potential child support in your 80k annual spend. You’ve already won the game, why would you want to complicate things by buying a company? Seems like a lot of hassle and would just add risk to your FI.

My spouse makes considerably more than me and the discussion has been 50/50 custody, which would have me not owing child support. She is holding out on this to negotiate other things. However, my worst case scenario appears to be a 40/60 split, which would leave me owing $1k/month. This would put me right at $100k total child support in current dollars, so my plan at that point would be to put that in its own account and sort of forget about those funds as far as retirement goes.

Thank you for the input on the business. I hadn't considered it from a "winning the game" perspective. I'm not good at being idle so I will need to get creative to find something that keeps me busy at 25-30 hours/week.

Also, I have a question, and I'm trying to learn in asking, not to be argumentative. The math works out today because we are in the top of the market. Suppose the market dropped by 30% over the next 6 months and I'm asking the same question. I think that changes your answer on winning the game, right?

We are talking about a starting withdrawal rate that is less than 2.7%. Anything is possible, but... it's highly unlikely that a WR low enough to have survived the worst timing ever (so far) would fail you.

[TheFrenchCat]

Base on the little I know and the responses of those who know way more than me, I think you're fine from a money perspective. 

But you might want to take some time to think about what you want to retire to.  You said you want something to keep you busy 25-30 hours a week, so maybe also think about what could fill that need.  I'm currently at a point where I'm kind of stuck without enough to do that's interesting/meaningful, and it really sucks. 

[Bojack]

Have you already FIRE'd? If so, for how long?