Author Topic: Nervous - should I do it?  (Read 3573 times)

moneymatters242

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Nervous - should I do it?
« on: August 04, 2023, 09:15:07 AM »
I'm considering pulling the plug on my day job and starting early retirement end of 2023. But the closer that gets, the more nervous I'm getting to take the leap.

The goals I've worked extremely hard and sacrificed much to reach are seemingly accomplished, if I trust the 4% rule... but that's a big if in my mind.

Factors driving my concern that the 4% rule is not enough:
  • My younger age
  • Unknown expense growth as kids get older (and college, which we'd like to pay for - though would hope for Florida scholarships and go frugal routes like community college first 2 yrs)
  • Unknown older age-related medical issues 
  • Uncertainty in future stock market returns.  (arguably, the market is the most overvalued in history right now) 
  • What I feel like is a highly lean/optimized budget with little low hanging fruit to cut (without sacrifices we wouldn't want to make) if hard times occurred
Originally I was going to quit last year, but forced myself to work another year to add extra safety margin.  One reason: Part of me "hoped" the stock market would take a dive and return to reasonable valuations so that I could get a better sense for how well my investments would hold up from there and what I could expect going forward for a reasonable rate of return, but that didn't happen.

I'd really appreciate some second opinions to help me decide: Should I do it?

Life Situation:
I'm 37 years old, married, with 3 young kids all between 1-6 years old living in FL.  My wife does not work and stays home with kids, so we avoid childcare expenses. 

For the purposes of this case study, I want to assume that neither of us ever works/earns salary income again, though I realize that's an extra "safety valve" in the background here. 

My goal of early retirement: maximize time with kids and family, and with time remaining, pursue a whole bunch of interests/hobbies that have been on the backburner my working career.

Gross Salary:
Very fortunate to have reached ~$170K/yr salary in my day job, and my happiness level with the work I do is highest it's been and honestly as high as I could see it reaching in any job (not that it's a super fulfilling job, I just don't derive much satisfaction from working in general).  This favorable situation has just made it harder to walk away. 

What drives me to want to quit is how much I long for more free time/freedom to do what I want/when I want.  I get very little satisfaction/enjoyment from working, and struggle greatly with my limited free time.  I wish so much that I wasn't wired that way... have even tried anti-depressants to try to help that, but it's just me.

Current expenses:
Annual total expenses: $42K (based on monthly expenses below)

I feel I probably underestimate/miss some things, and anticipate some unknown expense growth to get to a "norm" from my ideal state today, so I like to add a buffer of $5K to this which is:

Total Annual Spending: $47K

Monthly expense details:
Restaurants   300 (seems like a lot, but I eat a lot of super cheap fast food. not the smartest for health reasons, but this is probably not adding significantly more to my total food expenses)
TV   30
Internet   65
Home (insurance, taxes)   416
Electric   230
Water/Sewer/Trash   95
Hair cuts   66
Gas   162
Car Maintenance   55
Car Insurance   65
Future car payments   400 (we own our cars, but we will replace at least one in the next few years I suspect)
Medical/dental costs   45 (low now... but? what about in future?)
Groceries   650 (this is going to grow a lot with 3 kids that are all big for their ages)
Misc. expenses   80
Clothes   30 (have benefited from hand-me-downs, friends, etc... this will go up for kids)
Gym   20
Home maintenance   200
Trips to visit family (airfare,car)   316
Yearly vacation   208
Gifts   33
Misc entertainment   50
Monthly total:   3.5K

Invested Assets:
Taxable investment account: $580K
Retirement investment accounts: $720K
Total invested assets: $1.3M  (I plan to keep almost all of this invested in the stock market, though I am well diversified and invest in less volatile companies than most)

Other, Non-Invested assets:
House: $447K (paid off)
Cars: $25K (paid off)

Liabilities:
None currently.

Other Factors:
It's occurred to me that with little income coming in and so many kids, we'd likely be eligible for some non-insignificant tax refunds, benefits, and subsidies for healthcare marketplace plans, if we opted in to them. 

I've just assumed we will take the subsidies from healthcare marketplace plans in the expenses above, and the subsidy would be significant enough so that the only medical expenses we have will just be driven by meeting deductibles/OOP, but have not assumed any additional low-income tax related benefits at this time.

What would you do in my shoes?
« Last Edit: August 04, 2023, 09:55:08 AM by moneymatters242 »

LifeHappens

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Re: Nervous - should I do it?
« Reply #1 on: August 04, 2023, 10:11:39 AM »
As a fellow Floridian, I am considering the possibility of *significantly* higher home insurance premiums or even needing to self-insure for most scenarios. It is a real possibility in the near future.

You also seem quite anxious about the idea of pulling the plug (and want to consider the highly unlikely possibility of never earning another $ again). This is usually a sign that someone is not quite ready.

In your case, another year of full-time work or figuring out a part time arrangement is not the worst idea.

Louise

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Re: Nervous - should I do it?
« Reply #2 on: August 04, 2023, 11:12:36 AM »
I think you can do it if you are sure about your monthly expenses. One thing that surprised me was the cost of activities (and braces!). I'm not the kind of parent that believes kids have to be signed up for everything, but even instrument lessons cost almost $100/mo. I suppose you could cut down on the eating out though if you wanted to pay for these types of things. Gas expenses will probably go down also if you are commuting. Kids will get a little more expensive when they get older, but not astronomically so in my experience.

Have you ever looked at the Root of Good blog? He and his wife were early retirees with three kids and have a 40K (or less) budget. They seem to have a full life and it's fun to read. There are a lot of things you can take advantage of with your low income and family size. You may find you need less money that projected.

Don't forget you can always go back to work if some of your worst fears come true in the next few years. I am a little more optimistic though. You all have a sizeable amount of money saved up and think you will do fine. Reading between the lines, you may not be ready though. I don't think there's anything wrong with waiting another year or two.

wageslave23

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Re: Nervous - should I do it?
« Reply #3 on: August 04, 2023, 12:05:59 PM »
I would keep working.  You've said yourself you are in basically the best work position you could hope for. Your leeriness of the 4% is justified.  Take a look at earlyretirementnow.com and read about current market valuations. He recommends more like 3.5% especially for a longer time frame. We also don't know that the next 50 years will look like the last 100 years.  At 3.5% withdrawal rate, you are right at your current expenses. With older kids, unforeseen expenses as you age like dental, hearing, assisted living, I would suggest that you add a 10k buffer. So I'd shoot for $52k divided by .035 = 1.5mil. Then add another 100k to help with college costs or buying a home for your kids.  This gives you plenty of flexibility for braces, clothing, sports, going places with your kids.  Each extra year of work gives you about $300 extra dollars a month spending money for the rest of your life. That could be the difference between making tough choices and feeling comfortable and financially free.

Tax laws and Healthcare insurance subsidies WILL change over the next 50 yrs, it's just a matter of how. This alone could justify a 10k buffer per year.
« Last Edit: August 04, 2023, 12:09:46 PM by wageslave23 »

Sandi_k

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Re: Nervous - should I do it?
« Reply #4 on: August 04, 2023, 12:35:22 PM »
You're not there yet.

1) You're vastly over-simplifying the 4% Rule (of thumb).

- It is only for a 30 year term; you're expecting more like 50!
- It's for a 60/40 portfolio.
- Given the expanded timeframe, I would not count on more than a 3% Rule for a SWR.

2) You have not listed what medical care premiums would actually cost you with a family of five. FL is notoriously harsh with the ACA (they are one of only 12 states that has NOT joined the exchange via Medicaid expansion), so I would not expect much from the state.

https://wusfnews.wusf.usf.edu/health-news-florida/2022-02-03/floridas-aca-enrollment-is-tops-nationally-but-medicaid-expansion-questions-remain

3) As noted by a previous poster, what about dental, eyeglasses, hearing aids, and other health care?

4) You are seriously truncating your Social Security earnings. BOTH you and your wife should have employment that takes you past the second "bend point."

I see nothing in your budget for a car downpayment ($400/month assumes a heft cash DP, I would assume). What about home repair and maintenance? Appliance replacement? HVAC/Roof/energy efficient upgrades?

5) Kids' college will be expensive, even if they do the JC route for the first 2 years. Assume $50k per year for 6 years in CURRENT dollars. (Six years due to 3 kids x 2 years each).

If you can build a nest egg of $3M, I think you'd be in the ballpark. At 8% portfolio annual growth, you'd be there in another 7-8 years, using the Rule of 72. So I would target FIRE at age 45 for you.

I note that you say you're invested in "less volatile companies than most." That doesn't sound like Index funds to me, which means by definition, your investments WILL be more volatile.

I think you guys are doing a fantastic job. But once you leave the workforce, getting back to a $170k annual salary will be difficult - so make hay as the sun shines.


zolotiyeruki

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Re: Nervous - should I do it?
« Reply #5 on: August 04, 2023, 01:34:06 PM »
I think you're close, but not quite there yet.  Especially as kids grow, the associated expenses grow as well:
--activities
--clothes
--appetites
--driver's ed
--car insurance
--braces

Little kids can be amazingly inexpensive, as clothes and toys can be found for pennies on the dollar, and they don't eat very much.  All of that changes as they get bigger.  Boys from age 6 to about 12 (or more) will tear through pants about once per week.  Teenage boys will eat a LOT.

Others have pointed out that you'll need to consider health insurance.  In our family, we don't plan to pay for our kids' college.  Between working in high school, choosing a value-for-dollar college, applying for scholarships, getting good grades, and working through college, I think they'll do pretty well.

Villanelle

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Re: Nervous - should I do it?
« Reply #6 on: August 04, 2023, 02:39:43 PM »
Should you do it?

I wouldn't, in your position.  You seem very unsure about your expenses and it sounds like what you posted is based on guesses rather than actual tracking.  It seems to miss some major categories and doesn't address the potential college costs you want to cover as needed.  You are doing well, but I don't think you are FI yet.

I'd plan to work another 5+ years, unless you reduce expenses now and/or increase income.  Use those 5 years to track actual expenses and see what you spend, and consider categories that might appear or increase over time (healthcare, home maintenance if your 3-5 year look doesn't include any major projects, car replacement...). 

In 5 years, you will probably be there, or very close.  Or at least close enough to quit your fT job and coast FIRE or have some side job that at least decreases the amount you need to withdraw for the first few years, minimum.

You may also want to look at how you are invested.  It sounds like you own individual stocks.  If that's the case, your situation is much more volatile than those who own the boring, broad index funds.  Consider using this 5 year period to also gradually move to more conservative (stable) investments.

Maybe it doesn't take 5 years.  But I think today is not the day, and you need time to figure out your actual current expenses so you can project your FIRE expenses, as well as get quotes for health insurance. 

Silrossi46

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Re: Nervous - should I do it?
« Reply #7 on: August 04, 2023, 07:04:06 PM »
I didnít see anything listed for property taxes.

Silrossi46

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Re: Nervous - should I do it?
« Reply #8 on: August 04, 2023, 07:10:18 PM »
I stand corrected I missed it in the original post

PMJL34

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Re: Nervous - should I do it?
« Reply #9 on: August 04, 2023, 10:03:30 PM »
What has happened to this forum? When did this forum become bogleheads??

OP needs 3 million??????? He needs to work 5 more years and then reassess?????

OP, I'm 36 with two kids and will be pulling the plug early next year.

I agree with the following replies:
1) your expenses will go up in the near future and that needs to be accounted for. Do you actually track spending like mint or are these educated guesses? Either way, it does seem very bare bones and there's really nowhere to cut back.
2) what exactly are you investing in? Just invest in total stock index funds and call it a day.
3) Do you have any source of passive income? How much dividends does your taxable account spit out? Pension? SS projections?

Can you retire today? It would depends on the answers above.

Most likely you could, but I wouldn't. It would be far too LeanFIRE for my taste. I fear you would be too stressed over money and not be able to enjoy your freedom as much.

How much do you think you can save in 1 year's time?

Best of luck! 

EDIT: forgot to say the obvious....Huge congrats on getting to where you are today! You are doing fantastic and you should be proud!

« Last Edit: August 04, 2023, 10:08:46 PM by PMJL34 »

FIRE 20/20

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Re: Nervous - should I do it?
« Reply #10 on: August 05, 2023, 12:57:00 PM »
I would keep working.  You've said yourself you are in basically the best work position you could hope for. Your leeriness of the 4% is justified.  Take a look at earlyretirementnow.com and read about current market valuations. He recommends more like 3.5% especially for a longer time frame. We also don't know that the next 50 years will look like the last 100 years.  At 3.5% withdrawal rate, you are right at your current expenses. With older kids, unforeseen expenses as you age like dental, hearing, assisted living, I would suggest that you add a 10k buffer. So I'd shoot for $52k divided by .035 = 1.5mil. Then add another 100k to help with college costs or buying a home for your kids.  This gives you plenty of flexibility for braces, clothing, sports, going places with your kids.  Each extra year of work gives you about $300 extra dollars a month spending money for the rest of your life. That could be the difference between making tough choices and feeling comfortable and financially free.

Tax laws and Healthcare insurance subsidies WILL change over the next 50 yrs, it's just a matter of how. This alone could justify a 10k buffer per year.

Even ERN (who is one of the most pessimistic FIRE bloggers) is on board with 4% again after FINALLY looking at the changes to accounting rules, taxes, stock buybacks, etc. Here's the post:
https://earlyretirementnow.com/2022/10/12/dynamic-withdrawal-rates-based-on-the-shiller-cape-swr-series-part-54/

And contrary to the concerns of many, 4% isn't just for 30 year retirements or based on a particular asset allocation.  Lots of research has been done to update the original Trinity study, including this link - particularly table 3 on page 20 for a look at the impact of various asset allocations:
https://web.archive.org/web/20110806210437/http://www.aaii.com/journal/article/retirement-savings-choosing-a-withdrawal-rate-that-is-sustainable?utm_source=sitesearch&utm_medium=click

And here for longer timeframes - as this article points out 4% is so conservative that if you withdraw 4.5% (!) in 96% of cases after 30 years you have *more* than you started with even after accounting for inflation!
https://www.kitces.com/blog/what-happens-if-you-outlive-your-safe-withdrawal-rate-time-horizon/

I am with @PMJL34 in bemoaning the changes to the forum, and I think you could definitely FIRE if your numbers are accurate.  However, I would be exceptionally conservative if I had 3 young kids and I suspect your spending in a few categories will go up as the kids get older.  If I were in your shoes, I would transition to part-time for a few reasons.  First, while I think based on your numbers you are EXCEPTIONALLY safe right now, I think your spending will rise as your kids age.  Second, your main complaint about work seems to be it doesn't give you enough free time and that was my issue as well.  Most employers, even if they're initially averse to part-timers will work with you if they want to keep you as an employee.  If they really won't let you drop to part time, maybe you can do what I did and use PTO for a DIY part-time by using PTO to take off most Fridays.  Or see if you can negotiate extra vacation time for a drop in salary.  A smart manager / HR person should be able to work with you to get you more free time to keep you on as an employee.  For me, taking Fridays off during my last year was the one of the best things I did - it felt more like 50% more off days (from 2-3) than a 20% reduction in working days (from 5-4).  I used hundreds of hours of accrued PTO, and my partner switched to 32 hours a week officially.  Or start looking at other companies to work for.  You either have enough to FIRE now or are very, very close.  There's no reason to keep working more than you want.  With a 'stache that's either past or close to a safe FIRE number, you have lots of options and should be able to negotiate with you company to get yourself into a work situation that you can be happier with. 

Oh, and it's not the case that "the market is the most overvalued in history right now" as you wrote in your OP.  It is a little high, but nowhere near its peak, and this doesn't account for the changes in GAAP (Generally Accepted Accounting Principles), stock buybacks, tax rates, and other factors that make post-1990/2000 CAPE artificially high relative to earlier years.  See big ERN's post on building a better CAPE below for more detail on this:

https://www.multpl.com/shiller-pe
https://earlyretirementnow.com/2022/10/05/building-a-better-cape-ratio/


wageslave23

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Re: Nervous - should I do it?
« Reply #11 on: August 05, 2023, 06:26:03 PM »
I would keep working.  You've said yourself you are in basically the best work position you could hope for. Your leeriness of the 4% is justified.  Take a look at earlyretirementnow.com and read about current market valuations. He recommends more like 3.5% especially for a longer time frame. We also don't know that the next 50 years will look like the last 100 years.  At 3.5% withdrawal rate, you are right at your current expenses. With older kids, unforeseen expenses as you age like dental, hearing, assisted living, I would suggest that you add a 10k buffer. So I'd shoot for $52k divided by .035 = 1.5mil. Then add another 100k to help with college costs or buying a home for your kids.  This gives you plenty of flexibility for braces, clothing, sports, going places with your kids.  Each extra year of work gives you about $300 extra dollars a month spending money for the rest of your life. That could be the difference between making tough choices and feeling comfortable and financially free.

Tax laws and Healthcare insurance subsidies WILL change over the next 50 yrs, it's just a matter of how. This alone could justify a 10k buffer per year.

Even ERN (who is one of the most pessimistic FIRE bloggers) is on board with 4% again after FINALLY looking at the changes to accounting rules, taxes, stock buybacks, etc. Here's the post:
https://earlyretirementnow.com/2022/10/12/dynamic-withdrawal-rates-based-on-the-shiller-cape-swr-series-part-54/

And contrary to the concerns of many, 4% isn't just for 30 year retirements or based on a particular asset allocation.  Lots of research has been done to update the original Trinity study, including this link - particularly table 3 on page 20 for a look at the impact of various asset allocations:
https://web.archive.org/web/20110806210437/http://www.aaii.com/journal/article/retirement-savings-choosing-a-withdrawal-rate-that-is-sustainable?utm_source=sitesearch&utm_medium=click

And here for longer timeframes - as this article points out 4% is so conservative that if you withdraw 4.5% (!) in 96% of cases after 30 years you have *more* than you started with even after accounting for inflation!
https://www.kitces.com/blog/what-happens-if-you-outlive-your-safe-withdrawal-rate-time-horizon/

I am with @PMJL34 in bemoaning the changes to the forum, and I think you could definitely FIRE if your numbers are accurate.  However, I would be exceptionally conservative if I had 3 young kids and I suspect your spending in a few categories will go up as the kids get older.  If I were in your shoes, I would transition to part-time for a few reasons.  First, while I think based on your numbers you are EXCEPTIONALLY safe right now, I think your spending will rise as your kids age.  Second, your main complaint about work seems to be it doesn't give you enough free time and that was my issue as well.  Most employers, even if they're initially averse to part-timers will work with you if they want to keep you as an employee.  If they really won't let you drop to part time, maybe you can do what I did and use PTO for a DIY part-time by using PTO to take off most Fridays.  Or see if you can negotiate extra vacation time for a drop in salary.  A smart manager / HR person should be able to work with you to get you more free time to keep you on as an employee.  For me, taking Fridays off during my last year was the one of the best things I did - it felt more like 50% more off days (from 2-3) than a 20% reduction in working days (from 5-4).  I used hundreds of hours of accrued PTO, and my partner switched to 32 hours a week officially.  Or start looking at other companies to work for.  You either have enough to FIRE now or are very, very close.  There's no reason to keep working more than you want.  With a 'stache that's either past or close to a safe FIRE number, you have lots of options and should be able to negotiate with you company to get yourself into a work situation that you can be happier with. 

Oh, and it's not the case that "the market is the most overvalued in history right now" as you wrote in your OP.  It is a little high, but nowhere near its peak, and this doesn't account for the changes in GAAP (Generally Accepted Accounting Principles), stock buybacks, tax rates, and other factors that make post-1990/2000 CAPE artificially high relative to earlier years.  See big ERN's post on building a better CAPE below for more detail on this:

https://www.multpl.com/shiller-pe
https://earlyretirementnow.com/2022/10/05/building-a-better-cape-ratio/

Plugging 4% withdrawal and 40 year timeframe into firecalc.com gives 85% success rate. Good luck with that.

moneymatters242

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Re: Nervous - should I do it?
« Reply #12 on: August 06, 2023, 02:43:24 PM »
Thanks for the replies everyone.  I appreciate the diverse viewpoints and rationale shared.  I must admit, the suggestions to wait until $3M or another 5+ years are quite a shock, but getting second opinions is why I posted.

Here's some answers/clarification in reply to the questions various posters raised:
  • Regarding spending estimate accuracy, it should be good.  For years, I've tracked every penny withdrawal from our checking account, the source of all funds.  Last year's actuals were $47K even though my estimates (in OP) were $42K - partly why I added the +$5K buffer.
  • I'm not sure I'd trust my anxiety level as indicative of me not being ready.  I'm just an extremely risk averse person who tends to gravitate toward everything that "could" go wrong, perhaps to my detriment at times.
  • On stock investments, I do not invest in total index funds, but I do invest in a large swath of companies (so you could call it self-indexing), so I consider the risk vs. total index funds to be comparable, if not better for various reasons.  I avoid dividend stocks in my taxable account, so any withdrawals will be from selling shares and capital gains.
  • My wife has little work history, so I've written off her social security potential (assuming she will just take advantage of the rule that gives her half of mine).
  • For kids college, I know it'll be painful.  But I'd be hopeful that with added free time to work with the kids more, they could be eligible for Flordia's bright future scholarships which would take a significant bite out of expenses. But that's not guaranteed.

Two variables I deliberately left out (since I wanted opinions on early retirement risk absent of these):
  • My wife is planning to return to work as a waitress for at least for a few years, simply because she likes it.  This is probably a sure thing, and should help cushion us a bit from sequence of returns risk.  But she most likely won't make much in that gig - probably $20K-$25K.
  • I'm planning to devote some time to a very part-time business if I proceed with early retirement - a hobby right now.  This could be a source of modest income eventually, if successful.  But this is far from a certainty.

I do, however, expect these two factors to bring in enough earned income to allow us to meet the minimum threshold in FL for ACA premium subsidies.
« Last Edit: August 06, 2023, 02:44:58 PM by moneymatters242 »

TyGuy

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Re: Nervous - should I do it?
« Reply #13 on: August 06, 2023, 02:57:00 PM »
What has happened to this forum? When did this forum become bogleheads??

OP needs 3 million??????? He needs to work 5 more years and then reassess?????

OP, I'm 36 with two kids and will be pulling the plug early next year.

I agree with the following replies:
1) your expenses will go up in the near future and that needs to be accounted for. Do you actually track spending like mint or are these educated guesses? Either way, it does seem very bare bones and there's really nowhere to cut back.
2) what exactly are you investing in? Just invest in total stock index funds and call it a day.
3) Do you have any source of passive income? How much dividends does your taxable account spit out? Pension? SS projections?

Can you retire today? It would depends on the answers above.

Most likely you could, but I wouldn't. It would be far too LeanFIRE for my taste. I fear you would be too stressed over money and not be able to enjoy your freedom as much.

How much do you think you can save in 1 year's time?

Best of luck! 

EDIT: forgot to say the obvious....Huge congrats on getting to where you are today! You are doing fantastic and you should be proud!

Thank you, my thoughts exactly!


You are very close OP, I think for your mental stability in regards to money, it would benefit you greatly to work 1 more year full time. The additional year would give you a sizable buffer for your projected increase in expenses. Or as others have stated, see if you can reduce your work week to 3-4 days per week. This would give you time to "ease" into your retirement without any financial stress while also giving you significantly more free time!

Villanelle

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Re: Nervous - should I do it?
« Reply #14 on: August 06, 2023, 03:15:35 PM »
Thanks for the replies everyone.  I appreciate the diverse viewpoints and rationale shared.  I must admit, the suggestions to wait until $3M or another 5+ years are quite a shock, but getting second opinions is why I posted.

Here's some answers/clarification in reply to the questions various posters raised:
  • Regarding spending estimate accuracy, it should be good.  For years, I've tracked every penny withdrawal from our checking account, the source of all funds.  Last year's actuals were $47K even though my estimates (in OP) were $42K - partly why I added the +$5K buffer.
  • I'm not sure I'd trust my anxiety level as indicative of me not being ready.  I'm just an extremely risk averse person who tends to gravitate toward everything that "could" go wrong, perhaps to my detriment at times.
  • On stock investments, I do not invest in total index funds, but I do invest in a large swath of companies (so you could call it self-indexing), so I consider the risk vs. total index funds to be comparable, if not better for various reasons.  I avoid dividend stocks in my taxable account, so any withdrawals will be from selling shares and capital gains.
  • My wife has little work history, so I've written off her social security potential (assuming she will just take advantage of the rule that gives her half of mine).
  • For kids college, I know it'll be painful.  But I'd be hopeful that with added free time to work with the kids more, they could be eligible for Flordia's bright future scholarships which would take a significant bite out of expenses. But that's not guaranteed.

Two variables I deliberately left out (since I wanted opinions on early retirement risk absent of these):
  • My wife is planning to return to work as a waitress for at least for a few years, simply because she likes it.  This is probably a sure thing, and should help cushion us a bit from sequence of returns risk.  But she most likely won't make much in that gig - probably $20K-$25K.
  • I'm planning to devote some time to a very part-time business if I proceed with early retirement - a hobby right now.  This could be a source of modest income eventually, if successful.  But this is far from a certainty.

I do, however, expect these two factors to bring in enough earned income to allow us to meet the minimum threshold in FL for ACA premium subsidies.

If those are truly accurate budget numbers then yeah, you can retire now.  But I doubt they are.  Healthcare costs alone--$45/mo once retired?  Do you really think that's accurate?  Maybe I missed that you have some kind of health insurance for life or something?  And the kid activities seem super low, too.

With the additional income you've added to the picture, it might still work, but I don't see how the budget is realistic.  But you know better than we do, so if you feel confident in those numbers, then yup, have at it and enjoy your retirement. 

badger1988

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Re: Nervous - should I do it?
« Reply #15 on: August 06, 2023, 06:03:11 PM »
I say go for it. 1.3M invested assets and zero debt vs. long-term tracked annual expenses <$47k? Quit now while your kids are young and enjoy it, if thats what you think will bring you and your family the most fullfilment. You'll most likely never need to work again. On the off chance that things start trending in the wrong direction, you'll see this developing well in advance and easily formulate a strategy to get back on track.

Also...do you really need to live in a 447k house? Seems like low hanging fruit to me.

PMJL34

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Re: Nervous - should I do it?
« Reply #16 on: August 06, 2023, 08:00:28 PM »
Thanks for some clarifications OP.

I'm still most worried about this:

"On stock investments, I do not invest in total index funds, but I do invest in a large swath of companies (so you could call it self-indexing), so I consider the risk vs. total index funds to be comparable, if not better for various reasons.  I avoid dividend stocks in my taxable account, so any withdrawals will be from selling shares and capital gains."

How?? I doubt you bought 3500+ different company stocks. This just raises red flags for me, but yeah.

Also, your actual yearly spend was 47K. That is your baseline. That's with tiny little mouths to feed and $0 in child related costs in your budget list. Also, healthcare is way too low. You can't say you want a buffer of 5k, but you already spent that last year lol.

I'd say guesstimate 50-60k is more realistic for your growing family going forward and then obviously it will drop off significantly once they leave the nest.

Now back to the ultimate question...can you retire today? Putting aside your "better than index funds holdings," I'd vote one more full year unless you are committing your wife and self to some form of future work.

Either way, you're in an awesome position and best of luck to your family!

Shuchong

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Re: Nervous - should I do it?
« Reply #17 on: August 07, 2023, 10:10:48 AM »

Very fortunate to have reached ~$170K/yr salary in my day job, and my happiness level with the work I do is highest it's been and honestly as high as I could see it reaching in any job (not that it's a super fulfilling job, I just don't derive much satisfaction from working in general).  This favorable situation has just made it harder to walk away. 

What drives me to want to quit is how much I long for more free time/freedom to do what I want/when I want.  I get very little satisfaction/enjoyment from working, and struggle greatly with my limited free time.  I wish so much that I wasn't wired that way... have even tried anti-depressants to try to help that, but it's just me.


You might be interested in the "calling all downshifters" thread.  https://forum.mrmoneymustache.com/post-fire/calling-all-downshifters!/300/

If I were you, with this combo of high salary, nervousness about pulling the plug, this being the best job you've ever had, and wanting more free time, I'd be trying to engineer a part-time role at your current job.  You'd get more time with the kids while they're young, but because they're young you're probably going to be tied to school schedules, etc. for the next decade or so rather than galavanting around the globe and doing long trips you'd need complete work freedom for.  And you get the security of money coming in and a few more years for the stash to grow.  Half your salary is more than enough for you to live on comfortably, plus save more (and with taxes and all, halving your gross pay won't halve your take-home pay).   

Laura33

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Re: Nervous - should I do it?
« Reply #18 on: August 08, 2023, 09:33:42 AM »
You have put yourself in a position to FIRE if you want to.  The real question is whether you want to.

First, you have built-in slack in your budget.  You've added an extra $5K/yr on top of your regular spending.  And in addition to that, you have a portfolio that will theoretically throw off another $5K extra on top of that, which gives you at least some cushion against market drops.  Not to mention your wife's and your own income potential.  (Side note:  you say your wife wouldn't earn much, $20-25K/yr.  That's not much compared to your current income, but it's a huge amount compared to your needs).  So unless the shit seriously hits the fan in the next couple of years and the market stays down for an extended time, you should be able to maintain your current lifestyle indefinitely.  Congrats!

Of course, the real question is whether your current lifestyle will match what your want your future to be.  If you want to pay for braces and college and allow your kids to participate in every activity that interests them, that's not something that you can cover on your current budget.  So how important is all that extra stuff, compared to time with your kids now?  And how comfortable are you with investment risk and your current safety net?  Only you can answer those questions.  Why not sketch out what future "extras" you may want?  Do the math, based on your best estimates of what you will want to pay for and how much you need to be putting away now to get there, and then see if you can fit those things into your "leftover" budgeted amount?  If so, you're good to go; if not, you can evaluate all the many ways available to get from here to there (DW going back to work immediately, you working for X longer, you working part-time for Y longer, you hitting that side hustle hard, etc.).  No, you will never be able to predict what is going to happen with certainty, but no one can.  You just put in the work to do the best analysis you can and then go with it -- then adjust along the way when the future never works out exactly as you expect it to.

moneymatters242

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Re: Nervous - should I do it?
« Reply #19 on: February 11, 2024, 08:29:37 AM »
An update -

I decided to take the plunge in Feb, so I'm officially FIRE'd now.  My stress levels have plummeted, and having freedom to dictate my schedule & spend more time with the kids & family has been an amazing feeling.  My work colleagues were quite surprised when I shared the news.  They were very encouraging, though I suspect many secretly think I'm crazy for doing this.

Between extra money coming in from working through Jan, some paid time off I'd never used that I was able to cash in, and a bonus coming from last year's employment, I calculated that it's as if I'd effectively FIRE'd in Apr '24.  This seemed like a good compromise for us between pulling the plug at end of last year and working another full year.

The stock market has been favorable since the last post in Aug '23, so that has helped my peace of mind, though I'm not banking on those added gains continuing (or even remaining).  Total invested assets + cash now sit at: $1.47M

To provide extra margin of safety, I'm planning to start working on a part-time self employment concept, a website similar to a blog, in a topic area that interests me & that I have a lot of experience with, once my large backlog of personal life to-do items related to kids, house projects, etc. is burned down thanks to having vastly more time being FIRE'd. 

I'm expecting a significant, uphill battle to reach a steady stream of visitors so the website can start bringing in a modest income.  (If anyone has experience with increasing visitors via SEO, etc., please let me know!)  My goal is to have this site be a source of >$20K/yr in income in 2-3 years time.  I'm hoping this is an achievable goal working very part time (7-10 hrs a week, steady state), after that upfront legwork is put in.

The plan is to burn through cash for living expenses until the middle of this year, at which point my wife who was primary caregiver for kids while I worked may return part time to work to bring in a little extra income, and I'll take on more of a role with the kids.  This gives her an additional break from mom duty which her sanity needs, and adds some additional cushion to our finances.  This also gives me the next few months hands-free to focus on getting the website stood up and into a rhythm.

Any thoughts/feedback on the above, I welcome.
« Last Edit: February 11, 2024, 10:46:31 AM by moneymatters242 »

Dicey

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Re: Nervous - should I do it?
« Reply #20 on: February 11, 2024, 10:04:59 PM »
Congratulations!

zolotiyeruki

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Re: Nervous - should I do it?
« Reply #21 on: February 12, 2024, 04:17:55 AM »
Congratulations on taking such a big step.  Best of luck!

Laura33

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Re: Nervous - should I do it?
« Reply #22 on: February 12, 2024, 10:12:58 AM »
Congratulations!  Happy you had the guts to go for what you wanted.

aloevera1

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Re: Nervous - should I do it?
« Reply #23 on: February 12, 2024, 10:14:03 AM »
Congratulations! Enjoy your time!!