Author Topic: Can I FIRE?  (Read 8112 times)

axes_of_evil

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Can I FIRE?
« on: December 13, 2016, 03:20:59 PM »
Hi All,

I'm just trying to get an idea on feasibility of FIRI-ing in my current situation.  I know this questions is probably asked allot on this forum - but when it comes to such a major decision i figured better get as many opinions as possible, I am relatively young to FIRE (33) so I am being cautious about it - if all goes well would plan to FIRE in 2 years.  DW (31) is a few years younger and probably will keep on working for a few years.

My current situation:

My Salary 100k
Spouse Salary 50k
No Kids but will likely enter the picture in a couple of years.
Mortgage Free House / No Car Loan
Investable Assets (RRSP, TFSA, RPP, Taxable Account) ~ 1.3M with a emphasis on high quality dividend stocks/ETF (Split 85% Equities / 15% Fixed Income - Average MER 0.7%)
Yearly Dividend Income ~ 34k
Yearly Household Spending ~50k

I've done a few different scenarios on firecalc & cfiresim but feedback from you guys would be appreciated.

Thanks!

ysette9

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Re: Can I FIRE?
« Reply #1 on: December 13, 2016, 03:31:27 PM »
Doing a quick cFIREsim run with no social security or pension gives you a 82% success rate. If you transfer your investments to something low-cost and give up the ridiculous 0.7% fees, then your success rate jumps to 94% (I assumed fees of 0.15%). Looks good to me!

onlykelsey

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Re: Can I FIRE?
« Reply #2 on: December 13, 2016, 03:34:10 PM »
Doesn't seem crazy, except for the kid parts.  Make sure you adjust your expectations for your anticipated costs.  I'm not sure what they would run for you, but I'd think about health insurance and health costs (including labor and delivery, fertility treatments if applicable, adoption fees if applicable), extra travel costs, extra food, college savings if you're interested, etc.

axes_of_evil

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Re: Can I FIRE?
« Reply #3 on: December 13, 2016, 05:53:49 PM »
Thanks for the feedback ysette9 & onlykelsey - I should have some social security down the line but won't be a huge amount since my time in the work force will be limited (believe that's how they calculate it up here in Canada) - I know I know my fees are very un-moustachian i'll have to see how to try and minimize them.
I think some of the health insurance and birth costs should be relatively minimal up here, but I'll have to ask some of my friends with newborns what their experience was!

ender

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Re: Can I FIRE?
« Reply #4 on: December 13, 2016, 06:49:18 PM »
Why are your funds at 0.7% fees?

I don't know how easy you can pull that out in Canada in ER like you can with American based retirement accounts.

Gunny

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Re: Can I FIRE?
« Reply #5 on: December 14, 2016, 06:13:56 AM »
I agree that you are paying to much In fees, but you seem to be financially ready.  However, am I reading a little hesitancy in your post based on more than financial caution?  Make sure you have well defined, personally fulfilling reasons to retire; more time to spend with family, to continue learning a certain subject, to pursue a fulfilling hobby, start your own gig.  Don't retire just to quit work.  You will soon end up treading water and regretting the decision.  Of course you are young enough that you could find another well paying job. 

axes_of_evil

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Re: Can I FIRE?
« Reply #6 on: December 14, 2016, 08:00:48 AM »
haha you guys are going to have a field day with this one so here goes

my fees are broken down in the following way:
~100k In my Work DC Retirement Plan I am stuck with the mutual fund mix they have available which is a mixed bag between @ 0.5 - 1 %
~ 370k in self directed investments @ 0%
~ 420k in ETF's High Dividend Covered Call (ZWH) @ 0.7%
~ 270k in a managed portfolio which is mainly in fixed income @ 1.5% <-- this is the low hanging fruit i should probably switch
~ 140K in RRSP & TFSA in some index funds that are probably way too high 0.7 - 2.25 % :O

Gunny, although I am sold on the moustashian concept, you are right there is some hesitation, one of the main driving force for FIRE'ing would be to spend more time with family and kids down the road (but until we have any I probably won't retire unless i get really pissed off one day with work!!).  I have a well paying engineering job that I am good at but isn't my life passion and the more I read on these forums and blogs the more I realize that there is more to life than a 9 to 5.  I'm not one to sit on the couch all day so I would keep busy even in "retirement" my ideal scenario would be to have my own gig where I can have my own schedule (real estate could be a possibility) to accommodate hobbies (we're big outdoorsy types) and travel if the budget allows!


Playing with Fire UK

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Re: Can I FIRE?
« Reply #7 on: December 17, 2016, 03:35:12 AM »
How stable is your dividend income and how stable are your annual costs? Do you or your DW feel like you are missing out on anything with your current budget? Is DW happy to work for a few more years after you?

Have you included an allowance for bigger occasional costs (roof repair, new car, new boiler)? Or did you include this is your annual costs?

Will you SAH if kids arrive or would there be child care costs?

If you've considered all of these I think you are ready to FIRE when you are ready.

axes_of_evil

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Re: Can I FIRE?
« Reply #8 on: December 19, 2016, 01:18:33 PM »
Thanks for the feedback Playing with Fire UK

I've just gone through my 1st full year with my investments in dividend focussed income, so it's hard to judge by one year's data, but I was careful to pick my investment in stable companies with a history of dividends (Utilities, Banks & Telecoms).  I think DW is quite happy to keep on working for a few more years which we figured would be safer than both of us taking the jump in one go!!

I have a line in my budget for around 3k for house maintenance costs but no specific allowance for bigger repairs.

I would definitively SAH if kids arrive!

Playing with Fire UK

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Re: Can I FIRE?
« Reply #9 on: December 23, 2016, 01:45:05 AM »
Thanks for the feedback Playing with Fire UK

I've just gone through my 1st full year with my investments in dividend focussed income, so it's hard to judge by one year's data, but I was careful to pick my investment in stable companies with a history of dividends (Utilities, Banks & Telecoms).  I think DW is quite happy to keep on working for a few more years which we figured would be safer than both of us taking the jump in one go!!

I have a line in my budget for around 3k for house maintenance costs but no specific allowance for bigger repairs.

I would definitively SAH if kids arrive!

Sounds good. 3k per year on average should cover some bigger repairs when they come up.

2Birds1Stone

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Re: Can I FIRE?
« Reply #10 on: December 23, 2016, 06:36:29 AM »
Looks good to me!

You are young enough that if we were to have some shitty luck and you suffered poor sequence of returns in the first ~5-10 years of FIRE you could easily go back to work for a year, or work part time on something you enjoy and pretty much have a 90+ success rate in almost any scenario.

jim555

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Re: Can I FIRE?
« Reply #11 on: December 23, 2016, 11:32:10 AM »
You might want to consider the uncertainty about health insurance in your numbers. 
Who knows how much it will cost in the future??  Add a few years of work to cover that.

FIRE Artist

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Re: Can I FIRE?
« Reply #12 on: December 24, 2016, 09:24:25 AM »
You might want to consider the uncertainty about health insurance in your numbers. 
Who knows how much it will cost in the future??  Add a few years of work to cover that.

The OP is Canadian.  I pay about $2300 for basic dental, drug and supplemental insurance.  Even if that doubles, a few years extra work is not justified. Shakes head in sorrow for Americans....

anisotropy

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Re: Can I FIRE?
« Reply #13 on: December 24, 2016, 01:45:00 PM »
I agree with FIRE artist. You could even skip the insurance if you have been generally healthy here in Canada.

dividendsplease

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Re: Can I FIRE?
« Reply #14 on: December 27, 2016, 05:28:24 PM »
What dividend ETF's do you love for long term goals?

boarder42

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Re: Can I FIRE?
« Reply #15 on: December 30, 2016, 04:00:27 AM »
Stop chasing dividends.

soccerluvof4

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Re: Can I FIRE?
« Reply #16 on: December 30, 2016, 06:16:57 AM »
I would just say this: Not knowing how the whole Health Insurance if you even pay for it works it would be huge if so to have that protection along with your DW willingness to work for a few years while you go through the adjustment stage.

Secondly, I agree with those that said your young enough to at least try it and if things dont work out can go back into the working world. Again it helps with your wife working and you transitioning first. Probably be better though the other way if your going to have kids but thats just an opinion.

So yes you can easily do it and hopefully in a few years your DW unless she just loves her job can join you. Good luck! and keep us posted.

axes_of_evil

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Re: Can I FIRE?
« Reply #17 on: February 08, 2017, 08:08:11 AM »
Thanks All who responded, I love reading all the feedback and encouragement, as other have mentioned up here in Canada health costs are mostly covered by our government and for the time being since DW will stay at work I will be covered under her benefit plan for dental and drug.

@dividendsplease - as far as ETF go i'm mainly invested in ZWH (BMO US Div. Covered Call) but I also own some some individual equities in mainly large canadian banks, utility & telecom.  Going forward I think i'm going to be investing any new money in more of a couch potato approach, i.e. low cost total market index ETF's
In general I don't like switching my investments too much and so far i've had the discipline to only make a couple trades in the last year and i'm going to try and keep it that way.

MidWestLove

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Re: Can I FIRE?
« Reply #18 on: February 09, 2017, 08:28:23 AM »
In terms of encouragement - you are doing great! both overall , and especially for your age.

As others said, maintaining family happiness, making your DW happy , is (or at least should be) your highest priority. family troubles and divorce will f$ck yup your finances (in addition to EVERYTHING else) much more than any other life action you may take or that may happen to you.

for investments
- 0.7 expense ratio is very, very high for me. Mine are 1/7 of yours (I am in US) and that is including expensive 403b that my wife still has.
- step away from dividends, it is a dumb play for dumb money. your are trading very real taxes for perception of 'security' and to deal with inner emotional monkey that somehow fears 'selling the principal'. Besides being total BS, it is mathematically not going to work in your favor, focus on total return and  at regular intervals refill your spending account.  If companies happen to pay dividends (taking away your ability to decide if and when to take profit or loss), ok, whatever. but chasing them and paying more to hold them  is dumb. chasing anything more complex (covered calls ,etc) or any form of derivatives is even worse.
 
- be aware of home country bias, Canada is a fairly small part of the world economy and one that is heavily connected to natural resources. your financial portfolio should be diversified geographically and across asset classes.