I'm 46 and looking to FIRE in under 6 months (5-31-20), with wife following at end of 2020. I didn't think I could really do this quite yet, but after reading this forum I said 'what the heck'! However, I'm SUPER ANXIOUS about the possibility of checking out near the peak of the stock market which has been so generous to us (me) in the past few years. I started my investing in earnest in 1999. So even though through DCA I made a few $$$, I remember the period between 2000 and 2016 where the S&P 500/DJIA basically returned ZERO!
I'm committed to this, because I can't see myself slugging it out at work any longer, even though there are some great things about my job. I want the freedom to spend time with as I please and focus on my family.
Is there someone that would take me under their wing, a mentor if you will, and help me transfer from accumulation mode to the next level? Here's some details to start with as of 6-1-2020:
I'll have just turned 47 in May 2020, wife about to turn 39. 3 kids (19, 17, 8). Married 2.5 years ago. First child in college and paid for. Second not college bound. 3rd we will contribute $60k to 529 plan.
$87k mortgage; 12.5 years left of 15 year mortgage @ 3%. Small 3 bedroom, 1 bath house (1008sf). P+I = $700. No other debt.
$530k in retirement accounts
$114k Roth IRAs
$416k in 401k
$906k in non-retirement accounts
$452k in various DRIPs (probably 100 companies-too many; I know, I know...)
$243k in 4 brokerage accounts (too many; I know, I know...)
$157k in 2 cash accounts (1.6-1.82% interest; just sold one home)
$39k in 2 CDs (2 Yr and 4 Yr Ally 'Raise Your Rate'; @ 2.35%)
$15k in Worthy Bonds (5% I; guaranteed and reinvesting interest-as long as
company is solvent LOL)
$12k HSA
Budget is about $42,000 per year + $5000 per year for next 10 years for last child's 529 plan. Got some good pointers on budget from this forum already, and current budget has A LOT of fluff, but we want to live extravagantly compared to others here LOL!
Housing: $1200/mo
$700 P+I
$200 T+I
$300 yearly repairs
Utilities: $300 (including internet/streaming services)
Car: $525
$150 insurance (for 2 cars; 19 yr old ruined my rates LOL!)
$75 gas
$50 repairs
$250 new car (every 7 years IF NEEDED)
Groceries, Clothes, Personal items: $500
Health Care: $275
Health Insurance on Xchange: $100??
Gym: $50
Life Insurance: $75
Vision/Dental: $50??
Cell Phones: $100 (x2; wife locked in for 2-3 years, I'm Googlefi for under $35/mo)
Misc/Entertainment: $600 (BIG CUSHION)
Welcome to hear suggestions about cutting budget, like getting rid of life insurance. We just got policies a few months ago (each $500k) because it was a goal we had before I decided to read this website and FIRE. Car number will come way down in a few years after we don't need 2 cars (as no one will be commuting to work) and teen's tickets will evaporate from our policy. Cutting expenses and saving for me has never been a big issue.
For the first 7 years after we FIRE starting in 2021, we'll have an additional $19k coming in beyond our investment stash, and then $11k in year 8, and $5.5k in year 9.
I've also lined up a PT gig that will make $20-$30k with about 2-3 hours of work per day from home IF it works. It's a sales job, so need to make sure that if I leave my industry FT my contacts still work. I'd say it's a 50-50 shot it works for at least a few years. I just started this in November, so I'll know if it works by beginning of 2021 or sooner.
I'd like to keep $150-$200k in cash to start a house flipping business. Not looking to make much more than interest on the cash, but hoping the son that is not college bound learns some hands on skills and takes an interest. Will be working with his biological father. Planning on making 8% per annum on any capital invested, and if they need a pair of hands to help $20 per hour. Think my wife would like to help with this too, both of us just a few hours per week if needed. At 8% per annum, I'm assuming 4% return yearly before tax on this money, as I don't think they'll be very aggressive as son is in HS and biological dad has a FT job.
Here's what keeps me up at night:
1. Should I pay off my mortgage? Lots of moving parts to make this decision.
2. Investing questions. Who is the right (low cost) online broker to use? Should I jsut invest the majority in index funds or other low cost funds? How to protect against downside risk? My two options seem to be some type of glide path where I have less in stocks and more in cash early in retirement and move more into stocks over next 20 years, or something like options.
My DRIPs were a blessing as many years ago I started with only a few dollars a month and could invest with zero fees. If a stock I held dipped I typically just added $50 or $100 and just let the dividends reinvest. There may be some fees as I get out of these positions, but I do a very similar thing with Folio First and it has worked out nicely. With many brokers now having $0 trading fees, I could pretty much do this with any company I please. I'd reduce the number of companies I invest in, but every time I had a few extra $$ I'd look for an opportunity and throw a few more bucks into a position. Is this better than just doing the same with an index fund?
Is there a way to not worry so much about this piece, so I don't exchange my FT job for managing my money many hours per week?
My goal is to live off the returns off my investments and at worse never touch the principal.
3. Should I invest in some type of annuity to defer taxes with a guaranteed income on a portion of my non-retirement assets? 10 year annuity from Gainbridge is at 4% no fees. Could access money with 10% penalty on gain from IRS if life got ugly after a few years. Thinking about $100-$250k going into this.
4. How to not screw up and make too little money/too much money to qualify for best ACA low cost insurance. I refuse to go on Medicaid, but I can't afford decent health insurance without a big subsidy since rates have gotten stupid in the past few years and won't have a company to help absorb some of those costs.
5. Do I include my son in community college as part of household? Do I have to include his income from PT job? He has insurance from biological father. All tax/ACA subsidy related.
6. On most of the FIRE calculators, it says I'll be fine no worries. I read somewhere these calculators including inflation. Things like health insurance, taxes, home insurance, car insurance, are zooming up crazy over the reported rate of inflation (under 2%) by several fold. Does this concern anyone?
7. Should I even worry about the PT job/side hustle?
I know that all the information is probably at my fingertips and with others help here on this forum I could find. My issue is I still have to try to focus on a very stressful (to me at this point in my life) job that requires lots of hours for the next 5 months. I will not probably sleep until I feel more comfortable that I have a very solid plan to answer the above questions. Someone that could deep dive with me or just go into my specifics more in depth would feel like a life line right now. I know it's a big ask, but I'd be so willing to pay it forward and do the same for others in a few years once I made it through the other side in one piece.
All suggestions welcome, but if there is a Jedi master out there willing to take on a student, I'm here. Willing to answer anything on this post or private message.
Thanks all so much!!