Author Topic: Can I FIRE with my situation?  (Read 4571 times)

FB2020

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Can I FIRE with my situation?
« on: August 25, 2016, 03:30:57 PM »
We're both in mid-40s. This is our fin situation:

regular taxable acct: 1M
Roth IRAs: 60K
Trad IRAs: 250K
Home value: 370K, 160K mortgage remaining. so equity is ~210K.

Live in NJ, which is HCOL area.
Two kids - 18 and 12. Both have some disabilities. 18 year old is now an adult and gets SSI/Medicaid.

current yearly expenses ~50K - including monthly mortgage of 2100 (that includes 750 in prop taxes)

The wrench is, after I FIRE, I'd like to do this:

- Sell this house, move to a LCOL area and buy a house there (TX or FL) for ~250K
- Buy another house in India (I am originally from India) for ~200K. This is because I'd like to spend 3 months of summer there. Like to spend time with extended family. Would like kids also to spend time there.
- We'll be back for kids school here after summer.

My concerns are:
- Do I have enough to FIRE?
- Concerned about ACA / insurance . What if some law changes later on that affects ACA?
- Do I have to pay for ACA during summers too when I'm not in the country?
- Summer trips would cost additional ~12K per year.

Any pointers would be great.

Financial.Velociraptor

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Re: Can I FIRE with my situation?
« Reply #1 on: August 25, 2016, 03:37:23 PM »
Four percent of 1MM is 40k/year.  Less than you are spending now.

You might be able to make it work in TX (250k is too much for a house here.  You can get a lot for 150k.  My 4 bd/2 bt in Houston is worth about 115k).  Much depends on what the house in India costs you.  You could maybe AirBnB for those three months instead?

Retire-Canada

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Re: Can I FIRE with my situation?
« Reply #2 on: August 25, 2016, 03:42:40 PM »
Don't buy a $200K house in India to live in for 3 months of the year. You can rent something when you go that will be a lot cheaper.

Your annual COL with paid off mortgage is $50K - ($2100-$750)x12 = $33800 + $12000 for trips to India...say $15000 so you can rent a house for 3 months = $48800.

Your investments can spit off $1.3M x 4%/yr = $52000. So if you can get to mortgage free in your new LCOL area and don't buy a house in India you are pretty close. Depending on what taxes will be like for you. I'm not in the US so I can guess very accurately about that.
« Last Edit: August 25, 2016, 03:46:37 PM by Retire-Canada »

FB2020

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Re: Can I FIRE with my situation?
« Reply #3 on: August 25, 2016, 03:45:41 PM »
Don't buy a $200K house in India to live in for 3 months of the year. You can rent something when you go that will be a lot cheaper.

Your annual COL with paid off mortgage is $50K - ($2100-$750)x12 = $33800 + $12000 for trips to India...say $15000 so you can rent a house for 3 months = $48800.

Your investments can spit off $1.3M x 4%/yr = $52000. So if you can get to mortgage free in your new LCOL area and don't buy a house in India you are golden.

Thank you. Yes this makes sense, however my 50K current expense was not including ACA, which is a big wild-card IMO. Currently I get insurance with the job.
Not really sure how much would that add to the mix.

Retire-Canada

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Re: Can I FIRE with my situation?
« Reply #4 on: August 25, 2016, 03:47:42 PM »
I also edited my reply to say you need to factor in taxes. Either way you are close. Estimate in what both those items will cost...just do your best and see how big the gap is between what your investments will support and what you need.

Cycling Stache

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Re: Can I FIRE with my situation?
« Reply #5 on: August 25, 2016, 06:39:26 PM »
Have you been paying into social security?  If so, given your savings, I'm guessing you've paid in a fair amount.  At mid-40s, that's only 22 years until social security kicks in and can really help subsidize spending.  That gives you a greater safety margin for the 4% rule because you don't fully need a 30-year portfolio that survives by itself.

To give you an idea of the potential significance, in our early 40s, my wife and I have already earned enough in social security to generate $38,000 per year at age 67 even if we earn no more income going forward.  While there might be some changes to social security, it is unlikely to be significantly reduced by the time we claim.  Accordingly, I factor that into the analysis because it will cover most of our expected expenses starting at 67, so our investments don't have to do as much work.  (I also am eligible for a moderate federal pension, so that helps as well.)

Do the math, and see if it helps your situation.  It's a complicated formula, but you only have to do it once to get a good idea of the expected benefits.  Good luck!

Eucalyptus

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Re: Can I FIRE with my situation?
« Reply #6 on: August 25, 2016, 08:13:14 PM »
Sounds pretty close if not there.

I say FIRE now. Move to where you want in Texas or Florida. Do your annual 3 months in India with Family (that sounds like a FABULOUS FIRE idea!).

I agree with others; rent in India. If you are FIREd you'll have plenty of time up your sleeves to arrange a rental before you go each year.

You could look into ways of getting cheaper or free trips to India annually, by carefully using frequent flyer schemes.

You also have the opportunity to take on part time work when back in the US for the nine months, if you feel you need to. You probably don't. There's a very low chance you'll need to. Though you could for a couple of years for your peace of mind. As you are basically FIREd anyway, you don't have to stress if it takes you a while to find work that you would like to do, the job market is your oyster!

If I were in your position I would start moving on this now, start enacting it. You'll get to spend more time with your kids, and your family. That is fantastic :-) Best of luck :-)

theadvicist

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Re: Can I FIRE with my situation?
« Reply #7 on: August 26, 2016, 04:54:26 AM »
I also agree about not buying a house in India.

Even aside from the fact that you could use that money to rent very nicely and have the excitement of trying out a new place every year, a house sitting vacant for 9 months while you are in a different country is stress you don't need.

You don't want to arrive for your summer and spend the whole time getting the house back in shape, then doing maintenance, then packing it back up to go again. Managing an empty property from afar is a pain. And I'm sure you'll say, "my family will help!", but it's not a fair burden to place on them. They will feel obliged to check on the place constantly, and if something happens will have to 'break' the news to you. Just rent.

FB2020

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Re: Can I FIRE with my situation?
« Reply #8 on: August 26, 2016, 08:28:46 AM »
Thanks all - great feedback.

Agreed, buying the house in india may not make much sense for my case.

Also, it'll probably make sense to do some consulting etc. during the 9 months I'm here, because we don't plan to travel much during this time anyway - due to kids school.

Still need to run the numbers on ACA/insurance - my biggest headache - and I'm sure for many others too.. grrrr.


FB2020

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Re: Can I FIRE with my situation?
« Reply #9 on: August 26, 2016, 11:36:14 AM »
You can only get the exemption from paying for health insurance if you are a full-time overseas resident with either bona fide tax residency in another country, or stay outside the US for the required # of days in a calendar year (330 if I recall correctly).

I have not found ACA that difficult to navigate.  It took awhile for them to review my eligibility documents last year, and then I made a stupid mistake with requesting back coverage that ended up costing me, but otherwise it has been pretty easy to manage.  I currently pay just over $500/month for coverage for me and my son on a Silver HDHP plan, not including any subsidy -- need to wait until tax time to see if our income qualifies us (not much earned income this year but may have a taxable property sale go through).  I am about to add DH/DD to the plan and based on the estimates I did last year expect the rate to go up to about $800/month.  Again, without any subsidy.  If you are able to keep your income under the threshholds, you can get much of that back in subsidies.

I would definitely do some extensive research on the ease of use/access of the exchanges in any state you plan to move to.

Like you, we have family overseas.  I had originally built purchase of a $200k apartment into our retirement plan, but have since taken it out for the reasons others have mentioned.  If you are not going to be there long-term, it is generally more hassle than it is worth, especially if Air BnB or other sharing services have any kind of traction in the city you will be staying in.  Makes much more sense to spend the money on something nicer short-term than have to worried about taking care of a place when you are gone.

Oh, and definitely look into travel hacking.  I have made 2.5 trips to China this year, plus booked the equivalent of 2 RTs for my two kids, and only paid for one very cheap RT -- under $600 in the spring.  The rest of the trips were booked with miles.

Thanks, this is helpful.
if you don't mind - what state are you in?

somehow I'm not sure how much travel hacking is worth it, because you generally get cash back rewards with credit cards anyway (1 - 1.5%) instead of travel rewards

MustacheAndaHalf

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Re: Can I FIRE with my situation?
« Reply #10 on: August 26, 2016, 11:53:25 AM »
Did your kids grow up in U.S.?  Keep in mind you might be more patient and used to India, while your kids might expect the same things they have in NJ.  Your kids might not like all the differences between India and NJ, and might not want to spend 3 months of every year there.

Using a 6% withdrawal rate will not generally work until other money comes into play.  Consider your initial $1M and the money you wanted to spend on housing: $200k + $40k (sell NJ, buy TX/FL).  That would leave $760k for retirement, where your expenses are $50k/year.  Yes you'd avoid the mortgage of $1350 (w/o prop tax) but you'd spend $12k/year more in travel, so almost a wash at $47k/year.  $47k/year divided by $760k is about 6.2%.

I'd suggest you also reveal how your portfolio is invested - percent stocks, percent bonds, percent cash.  You could even plug those amounts into Vanguard's nest egg calculator to see how it looks.  For example, invested entirely in cash, Vanguard gives a 2% chance of your money surviving 20 years.  Invested equally in stocks, bonds and cash the chances become 72%.  So there's very different outcomes depending on that.
vanguard.com/nesteggcalculator

FB2020

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Re: Can I FIRE with my situation?
« Reply #11 on: August 26, 2016, 12:19:01 PM »
Did your kids grow up in U.S.?  Keep in mind you might be more patient and used to India, while your kids might expect the same things they have in NJ.  Your kids might not like all the differences between India and NJ, and might not want to spend 3 months of every year there.

Using a 6% withdrawal rate will not generally work until other money comes into play.  Consider your initial $1M and the money you wanted to spend on housing: $200k + $40k (sell NJ, buy TX/FL).  That would leave $760k for retirement, where your expenses are $50k/year.  Yes you'd avoid the mortgage of $1350 (w/o prop tax) but you'd spend $12k/year more in travel, so almost a wash at $47k/year.  $47k/year divided by $760k is about 6.2%.

I'd suggest you also reveal how your portfolio is invested - percent stocks, percent bonds, percent cash.  You could even plug those amounts into Vanguard's nest egg calculator to see how it looks.  For example, invested entirely in cash, Vanguard gives a 2% chance of your money surviving 20 years.  Invested equally in stocks, bonds and cash the chances become 72%.  So there's very different outcomes depending on that.
vanguard.com/nesteggcalculator

Correct.
So I am still planning to continue to work/save and invest at this time. And re-visit my numbers early next year and see where do I stand.

Also, regarding kids, since they have a disability, they don't really have friends here anyway. I know the environment would be different, but closeness to family would be quite a plus (I hope). Also, india does have most facilities these days, so I don't expect too much difference in day-to-day lives.

Plus, this is for me and wife too, we also need to spend some time with our families over there.
We're taking care of special kids 9 months, they can bear some inconveniences for 3 months :)




FB2020

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Re: Can I FIRE with my situation?
« Reply #12 on: August 26, 2016, 12:21:34 PM »
Did your kids grow up in U.S.?  Keep in mind you might be more patient and used to India, while your kids might expect the same things they have in NJ.  Your kids might not like all the differences between India and NJ, and might not want to spend 3 months of every year there.

Using a 6% withdrawal rate will not generally work until other money comes into play.  Consider your initial $1M and the money you wanted to spend on housing: $200k + $40k (sell NJ, buy TX/FL).  That would leave $760k for retirement, where your expenses are $50k/year.  Yes you'd avoid the mortgage of $1350 (w/o prop tax) but you'd spend $12k/year more in travel, so almost a wash at $47k/year.  $47k/year divided by $760k is about 6.2%.

I'd suggest you also reveal how your portfolio is invested - percent stocks, percent bonds, percent cash.  You could even plug those amounts into Vanguard's nest egg calculator to see how it looks.  For example, invested entirely in cash, Vanguard gives a 2% chance of your money surviving 20 years.  Invested equally in stocks, bonds and cash the chances become 72%.  So there's very different outcomes depending on that.
vanguard.com/nesteggcalculator

I am invested in 70% stocks and rest cash

Scandium

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Re: Can I FIRE with my situation?
« Reply #13 on: August 29, 2016, 11:58:21 AM »
Also, india does have most facilities these days, so I don't expect too much difference in day-to-day lives.

Now, I've been to NJ and only talked to people who have visited India, but this does not sound quite true to me..

FB2020

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Re: Can I FIRE with my situation?
« Reply #14 on: August 29, 2016, 12:18:42 PM »
Also, india does have most facilities these days, so I don't expect too much difference in day-to-day lives.

Now, I've been to NJ and only talked to people who have visited India, but this does not sound quite true to me..

It depends on who you talk to. Outside environment - traffic, congestion etc. yes its bad.
But indoors, its cool and comfy. You can hire comfy cars to go around.
Obviously, it all costs fair amount of $$$

Scandium

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Re: Can I FIRE with my situation?
« Reply #15 on: August 29, 2016, 12:24:24 PM »
Also, india does have most facilities these days, so I don't expect too much difference in day-to-day lives.

Now, I've been to NJ and only talked to people who have visited India, but this does not sound quite true to me..

It depends on who you talk to. Outside environment - traffic, congestion etc. yes its bad.
But indoors, its cool and comfy. You can hire comfy cars to go around.
Obviously, it all costs fair amount of $$$
Sure. But even if all the same facilities and goods of modern society are available, US and India are very different cultures. Neither is necessarily better/worse, they're just different. Your kids might be perfectly ok with the change or they might not.

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NESailor

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Re: Can I FIRE with my situation?
« Reply #16 on: August 29, 2016, 01:37:01 PM »


somehow I'm not sure how much travel hacking is worth it, because you generally get cash back rewards with credit cards anyway (1 - 1.5%) instead of travel rewards

Sure they do.  But travel hacking gets you upwards of 20% cashback.  Example - Plain old Citi AAdvantage American card will offer 50K miles if you spend $3,000 in 3 months.  So you put your normal spend on the card and get 50,000 miles.  Depending on how you value miles this could be anywhere from $500 to $1000 if you get an awesome redemption.  So basically 16.7% to 33% of your normal spend.

Good luck!