Reader Case Study - Would you feel comfortable with this FIRE plan?

[Fite4Rite2Party]

Life Situation: 42 year old lawyer. Live in Asia. Married filing jointly, no dependants. Overall plan once we hit the number is to move to my wife’s LCOL rural hometown. We might have kids.
 
Gross Salary: $250K p/year
 
Dividends: ~30K p/year dividend income. Currently just set to re-invest.
 
Taxes: I do not expect to pay any US taxes in retirement. I live abroad. Please take my word for it.
 
Expected ER expenses:
 
This is my retirement budget.
Housing: $700
Health: $450
Social Security: $350
Income Tax: $0
Water: $50
Gas: $70
Electric: $70
Internet: $50
Phone: $50
Auto: $230
Groceries: $400
Dining out: $400
Pet: $150
Entertainment: $200
Her allowance: $300
His allowance: $300
Misc: $200
Travel / Kids: $1,000

Total p/mo: $4,970

Total annual: $59,640
 
Notes:
 
1)  These numbers are based on current spending patterns, but with changes to account for reduced costs in the LCOL country town where we plan to FIRE. In particular, housing costs are much lower in the country. We also have an open invitation to live with the in-laws, for a modest rent payment.
 
2)  We live in a country with a national healthcare system. Monthly premiums are income-based and would be quite low after we FIRE (I estimate $450 for the two of us). Out of pocket costs are also regulated by the government and subject to an annual cap.
 
3)  We live in a country with a national pension system. Monthly premiums are income-based, and would be low (I estimate $350 p/mo for the two of us) after we FIRE. I’m not including pension or social security income in my planning.
 
4)  I included the $1,000 p/month “Travel / Kids” categories as a catch-all depending on whether we have kids. If we have kids (likely only one child), the $1,000 goes to child rearing costs. If we don’t have kids, the $1,000 is an annual optional travel budget of $12,000, which would be cut in lean times.
 
Assets: I have roughly $1.5M invested in Vanguard ETFs. About $400K out of the $1.5M is in Roth/Trad IRA accounts. No other major assets.
 
Liabilities: None.
 
Specific Question:
 
Based on an annual withdrawal of $60K at a 4% SWR, I need a $1.5M base portfolio. In addition, over the next 1-2 years I plan to stockpile around $200K in cash and short-term bonds, as a 2-3 year safety fund to ride out an extended recession.
 
Therefore, total FIRE number is $1.7M.
 
My question is, would you feel comfortable pulling the FIRE trigger with this plan? Why or why not?

I think I’m comfortable based on the following factors:
 

• There is a lot of buffer in the budget. In an extended market downturn, we could eliminate various discretionary categories such as entertainment, allowances, eating out, etc. I also expect we could cut back on some other categories.
• In addition to having a portfolio that covers expenses at 4%, I will have at least 2 years of expenses set aside in cash/bonds. When you consider this part of the overall portfolio, it’s really more of a 3.5% withdrawal rate.
• I plan to try and pick up some remote freelance work. If that doesn’t work, I will probably look for some other part time job just to have the opportunity to stay busy and socialize. I don’t count any of this income.
• I don’t include social security, which my wife and I qualify for.

That said, I welcome skepticism or face-punching of any kind.

[shuffler]

I welcome skepticism or face-punching of any kind.

No opinion.  Just had to say:

        M.C.A. Was with it and he's my ace
        So I grabbed the piano player and I punched him in the face

[Playing with Fire UK]

Yep, I'd FIRE on that. $60k at 4% with $12k being optional until/unless a child arrives sounds great.

[2Birds1Stone]

Easy peasy lemon squeezy.

We just fired abroad on $700k though a decade younger than you. How old is the wife? "May have kids" at 42, sounds like you need to strongly consider this and how it would impact your life. Is this a developing or developed country? Do you trust public schools? Etc.

[ROF Expat]

Your numbers look sensible to me, and I don't see any real reasons not to pull the trigger.  Just one or two things to think about: 

--Will NHS provide care that meets your expectations for something really expensive like cancer? 

--Are you comfortable with local primary/secondary/tertiary education options for kids?

--If you plan to keep your money in US-based accounts, will you generate significant expenses in transferring to local accounts and currency?  If you plan to transfer a significant portion of your assets to local accounts, will you be exposed to significant exchange rate risks?  I assume you are already aware of, and have a plan for dealing with the growing difficulties of having US investment accounts if you are resident abroad. 

--Do you need to plan for any host country tax or residency expenses?  I agree with you that US income tax and capital gains taxes can be zero if you keep your realized income at an appropriate level. 

--On the positive side, is your retirement country the same one you are living in now?  If not, have you checked to see if your spouse might qualify for any duty free import benefits as a "returning resident?"  Some countries give substantial breaks for household goods and cars of citizens who are returning home after spending years abroad.  This can translate into significant savings in some countries.