Race from $2M to $4M...and Beyond!

[Dicey]

Oh, shit. When I read in bed on my tablet (which is often, 'cuz FIRE + L-a-z-y = Dicey), I have to expand the text to where I can't see who is the author. I now see I attributed the troll comment to the wrong person. Very sorry about that @fireforfun. Now, where is that @wannabe-stash person?

Okay, seriously, anyone is free to lurk here. What I was objecting to was someone, ANYone, implying that our dear @Herbert Derp is a troll, especially on this thread. Sorry I got the details wrong.

And @couponvan, thanks! I was not even attempting to be funny. Apparently this is a clear case of Ready, Fire, Aim. Or should that be Ready, FIRE, Aim?

[Taran Wanderer]

And this exchange is why I like this thread so much!  Everyone is so thoughtful.  Maybe it's because we've all made it and don't feel like we have something to provide to anyone else?

[Herbert Derp]

Thanks guys for the support! I didn't realize how notorious I've become around here lol

@wannabe-stache, I'll take it as a compliment that you think I must be trolling!

[Exflyboy]

Thanks guys for the support! I didn't realize how notorious I've become around here lol

@wannabe-stache, I'll take it as a compliment that you think I must be trolling!

Well the fact you have made it here at such a young age, plus the fact your NW is still increasing at an incredible rate (while most of us "index funders" are still down a little from the Feb peak).. Yeah you're pretty notorious..:)

Its also freaking awesome!

[JoJoP]

Hopefully @fireforfun will realize it's a case of mistaken identity.  Herbert Derp is an inspiration. 

As for me, I'm waiting with bated breath to see if I'll get a cash out refi to buy a fun vacation home/beach house.   We were debt free for about 3 months when I paid off the last mortgage earlier this year.   With our weird, non paycheck income and the fact that I bought more (cash flowing!) houses since I began the loan process, I'm a wee bit worried that they will view our application askance.   

[wannabe-stache]

Thanks guys for the support! I didn't realize how notorious I've become around here lol

@wannabe-stache, I'll take it as a compliment that you think I must be trolling!

Well the fact you have made it here at such a young age, plus the fact your NW is still increasing at an incredible rate (while most of us "index funders" are still down a little from the Feb peak).. Yeah you're pretty notorious..:)

Its also freaking awesome!

I was basing the troll comment on the post history.  Something about "sold all equities at the top" (literally i think he claims to have sold exactly on 2/19).  then reading his "trading strategy" and something about it being "multiplicative".  even if there is truth to his story, most of those "it's so easy, i can't lose money" stories don't end well.  i would recommend caution in investing strategies.

in other news, the rise of the markets and a large non recurring bonus took us over $5mm yesterday for the first time.  the only thing that sounds crazier is that i'm 100% convinced it isn't enough (just had a new baby join the family 3 weeks ago).

[couponvan]

Thanks guys for the support! I didn't realize how notorious I've become around here lol

@wannabe-stache, I'll take it as a compliment that you think I must be trolling!

Well the fact you have made it here at such a young age, plus the fact your NW is still increasing at an incredible rate (while most of us "index funders" are still down a little from the Feb peak).. Yeah you're pretty notorious..:)

Its also freaking awesome!

I was basing the troll comment on the post history.  Something about "sold all equities at the top" (literally i think he claims to have sold exactly on 2/19).  then reading his "trading strategy" and something about it being "multiplicative".  even if there is truth to his story, most of those "it's so easy, i can't lose money" stories don't end well.  i would recommend caution in investing strategies.

in other news, the rise of the markets and a large non recurring bonus took us over $5mm yesterday for the first time.  the only thing that sounds crazier is that i'm 100% convinced it isn't enough (just had a new baby join the family 3 weeks ago).

It's possible $5MM isn't enough. It all depends on how much you spend. LOL LOL LOL. It's where I'd feel comfortable having either spouse stay home with the kiddos for a bit for sure if that's what I wanted to do.  And if I didn't want to do that, it's enough where you can hire a nighttime nanny for some sleep for a few months.  (I didn't know that was even a thing until I met some attorney moms.)

[Exflyboy]

I think if I had $5M I'd be looking at ways to extend my life to about 120 years...:)

[flyingaway]

If I had $5M, I would do a lot of crazy things, that do not include working.

[EscapeVelocity2020]

Thanks guys for the support! I didn't realize how notorious I've become around here lol

I didn't know you were notorious either, I just reply to some of your comments on this thread, since you're one of us.  But one thing I'd love to hear more about are your plans!  A young Mustachian with extra money can be a wonderful thing...  I had awesome plans in my 20's and ended up doing totally different things in my 30's, all backstopped by having some healthy FU/FI money.  Life is still good, no regrets, even though I did spend a fair bit and paid a whole lotta' taxes along the way.  Turns out I coulda' spent a whole lot more!  But I didn't know and it turned out that I'm just not that guy anyway, I've even lived a $3M house (rented) traveling on business class flights (all paid by my company) as an expat, but it felt fake and hollow in retrospect.  My current, 'normal' lifestyle will allow me to do more travel and philanthropy later in life which is also a more fulfilling feeling of purpose and connection vs. empty, lavish consumption that is fleeting and superficial.  The hedonistic treadmill is definitely a thing.

[Car Jack]

in other news, the rise of the markets and a large non recurring bonus took us over $5mm yesterday for the first time.  the only thing that sounds crazier is that i'm 100% convinced it isn't enough (just had a new baby join the family 3 weeks ago).

I can completely understand the apprehension with unknown, scary costs ahead.  Younguns are going to cry about how much they're paying for child care (I mean young parents) and I lean back in my chair and chuckle, knowing that college costs make those look like mouse nuts.

While my older son was in high school, I put together my investments spread sheet and my first number I ever even looked at was $1.56M.  I showed it to my wife and asked what she thought we'd need to retire.  With 2 kids and college upcoming, she simply responded "We have college to pay for".  I wanted to gauge, so asked her "If we had $10M, do you think we could retire?".  Her response: "We have college to pay for".  "How about $100M?".  "We have college to pay for".  "What if we had $100 Billion?".  "We have college to pay for".  So I can fully understand being cautious with a new baby.  They can be very expensive.

[couponvan]

in other news, the rise of the markets and a large non recurring bonus took us over $5mm yesterday for the first time.  the only thing that sounds crazier is that i'm 100% convinced it isn't enough (just had a new baby join the family 3 weeks ago).

I can completely understand the apprehension with unknown, scary costs ahead.  Younguns are going to cry about how much they're paying for child care (I mean young parents) and I lean back in my chair and chuckle, knowing that college costs make those look like mouse nuts.

While my older son was in high school, I put together my investments spread sheet and my first number I ever even looked at was $1.56M.  I showed it to my wife and asked what she thought we'd need to retire.  With 2 kids and college upcoming, she simply responded "We have college to pay for".  I wanted to gauge, so asked her "If we had $10M, do you think we could retire?".  Her response: "We have college to pay for".  "How about $100M?".  "We have college to pay for".  "What if we had $100 Billion?".  "We have college to pay for".  So I can fully understand being cautious with a new baby.  They can be very expensive.

Maybe buy the 529 plan or if your state has a prepaid plan, fully fund that and then ask if you can retire?  Although I swear there are still additional kid costs after college. Weddings, what if they hit a road bump and you want to be able to help them, etc. and that is where OMY TMY comes in. At some point it usually is enough, or you're like Warren Buffett and just enjoy the working.

[Dancin'Dog]

in other news, the rise of the markets and a large non recurring bonus took us over $5mm yesterday for the first time.  the only thing that sounds crazier is that i'm 100% convinced it isn't enough (just had a new baby join the family 3 weeks ago).

I can completely understand the apprehension with unknown, scary costs ahead.  Younguns are going to cry about how much they're paying for child care (I mean young parents) and I lean back in my chair and chuckle, knowing that college costs make those look like mouse nuts.

While my older son was in high school, I put together my investments spread sheet and my first number I ever even looked at was $1.56M.  I showed it to my wife and asked what she thought we'd need to retire.  With 2 kids and college upcoming, she simply responded "We have college to pay for".  I wanted to gauge, so asked her "If we had $10M, do you think we could retire?".  Her response: "We have college to pay for".  "How about $100M?".  "We have college to pay for".  "What if we had $100 Billion?".  "We have college to pay for".  So I can fully understand being cautious with a new baby.  They can be very expensive.

I think it might be time to fire the pool boy.  ;)

[Buffaloski Boris]

in other news, the rise of the markets and a large non recurring bonus took us over $5mm yesterday for the first time.  the only thing that sounds crazier is that i'm 100% convinced it isn't enough (just had a new baby join the family 3 weeks ago).

I can completely understand the apprehension with unknown, scary costs ahead.  Younguns are going to cry about how much they're paying for child care (I mean young parents) and I lean back in my chair and chuckle, knowing that college costs make those look like mouse nuts.

While my older son was in high school, I put together my investments spread sheet and my first number I ever even looked at was $1.56M.  I showed it to my wife and asked what she thought we'd need to retire.  With 2 kids and college upcoming, she simply responded "We have college to pay for".  I wanted to gauge, so asked her "If we had $10M, do you think we could retire?".  Her response: "We have college to pay for".  "How about $100M?".  "We have college to pay for".  "What if we had $100 Billion?".  "We have college to pay for".  So I can fully understand being cautious with a new baby.  They can be very expensive.

Maybe buy the 529 plan or if your state has a prepaid plan, fully fund that and then ask if you can retire?  Although I swear there are still additional kid costs after college. Weddings, what if they hit a road bump and you want to be able to help them, etc. and that is where OMY TMY comes in. At some point it usually is enough, or you're like Warren Buffett and just enjoy the working.

Dittoes on the 529 plan, but not the prepaid plans which often suck.  This is an area where state tax deductions/ credits really matter. You can often carry those forward if you want to just throw a wad of cash at and be done.

Contributing to 529 plans are about the best instant return you can get on an investment in my state.

[MaybeBabyMustache]

As our net worth drops due to a planned home remodel/update, I have to remind myself that all is well, we planned for this, and we will see an increase in our home's property value well beyond what we're investing. It's still hard to spend a bunch of money, even when I look at our net worth & reassure myself that 1) we can afford it 2) it would take a whole heck of a lot for us to be in terrible shape, and we have multiple "outs", should that ever happen.

I know I need to get more comfortable with spending, as well as the concept of "enough". It's hard. My inner bag lady gets pretty nervous.

[flyingaway]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

[SwordGuy]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

The only way to "graduate" from this group, the "Race from $2M to $4M ... and Beyond!" is to go to the Great Beyond.    And there you won't have any money 'cause you can't take it with you! :)

[Dancin'Dog]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

You probably won't, but you're good for the economy. 


So, what are you shopping for at the moment?  We'll help you shop.  :)

[rmorris50]

I've got five more weeks left of work!!
This past week I started to feel very at peace with my decision to leave. I think I'm actually ready. It feels great.

Checked on the net worth today. $3M total. $2.9M without the house. That includes $62k in kids 529s though. And $30k that we are still planning to spend on a new car for DH. I'm not sure what he's waiting for on that. Guess he's just trying to get every last mile out of old the old Accord.

As I was checking on NW, I realized that when we hit $4.3M a 3% draw down will bring us $130k a year which is exactly what we bring home (net of taxes and retirement etc, $240k gross) right now with both of us working and it is more than enough for all the things. Including crazy tuition. That's nuts. So unless we have another crazy drop or a few years of really stagnant returns, we should hit $4.3M relatively easy. Not that we really need, or even want to do that, I just predict it will happen.
At that realization made me really glad I put in my notice. I do not want to look back and have too much money but feeling like I didn't have enough time to do the things I want, with the people I want.
Life is good, and kind of unbelievable.

Congrats, what a huge achievement. I'm curious if you've done a cash flow projection for rest of your life? Have others on this board? I've never trusted withdrawal rules and NW measurements, and the cash flow projections have been the most useful in making retirement decisions.

I'm not sure what you mean exactly when you say cash flow projection. We don't have a business or rental property so investments is it. When we calculated our NW for FIRE we do not include the value of our house, HSA or kids college funds.
I assume that we can draw down 3% each year. We'll take that from cash but each year. All of our dividends are going to cash now and we'll sell to rebalance and replenish cash as we need to.
Why do you not trust withdrawl rules and NW measurements?

@BeanCounter NW isn't a good indicator of cash flow, like you alluded to. My net worth could be millions but if it's all tied up in my fine art collection, well, I am cash flow poor and have to eat cat food. Also, I could have cash flow like social security or alimony, but that doesn't get included in my net worth because I don't own it. My house I include in my NW (and no, I don't have any fine art!)

Tracking NW is a short cut way of seeing if you're ready for retirement, but I think it's better to project out all sources of income over the years, and house hold expenses and taxes. You can see what years you are "short" cash flow and what years you have excess as well. I think a shortcut way people do this projection is to look at liquid NW.
 

[JoJoP]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

The only way to "graduate" from this group, the "Race from $2M to $4M ... and Beyond!" is to go to the Great Beyond.    And there you won't have any money 'cause you can't take it with you! :)

This has been a reoccurring theme amongst us.  It's amazing that you (we, me) can have so much money and still wonder if it's enough.   I think we get comfortable with the buffer, and realize how uncomfortable it would be to have a smaller buffer.   If my net worth drops by half I'm still in great shape, but man, I would not be pleased.  I don't have an "Inner Bag Lady" like " @MaybeBabyMustache,  I have an "Inner Struggling Student."

[Bateaux]

Lack of cash flow in retirement is why I'm kidding myself thinking we can retire at the end of the year.  The majority of our assets are in pretaxed retirement accounts.  2021 is looking like a work year.

[pecunia]

- SNIP -

This has been a reoccurring theme amongst us.  It's amazing that you (we, me) can have so much money and still wonder if it's enough.   I think we get comfortable with the buffer, and realize how uncomfortable it would be to have a smaller buffer.   If my net worth drops by half I'm still in great shape, but man, I would not be pleased.  I don't have an "Inner Bag Lady" like " @MaybeBabyMustache,  I have an "Inner Struggling Student."

Or no buffer at all. These are certainly not the best of economic times, but I don't think there are any times when you turn on some financial news show and they aren't saying the bottom will drop out around the next economic bend.  They make commission money when you sell.  They feed on your fear.

Old Ben said it best many years ago when he was talking about death and taxes.

[itchyfeet]

I include my pension in my net worth and consider that I own it. I think of it as a long term receivable.

If I die my DW will be entitled to collect on the receivable.

[secondcor521]

Lack of cash flow in retirement is why I'm kidding myself thinking we can retire at the end of the year.  The majority of our assets are in pretaxed retirement accounts.  2021 is looking like a work year.

Uh, you're familiar with the tools here to access retirement accounts earlier, right?

https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

I am 51, have been FIREd for 4 years now, am using strategy #2 in the above article (which is more commonly called a Roth conversion ladder), and everything is working peachy.

In addition to the above strategies, there's also the "just pay the penalty" strategy, and the 401(k) separation at 55 exception.

(If you're being ironic or were using sarcasm font, my apologies.  I miss that sometimes.  I'm new here; please let me stay! ;-) )

[Bateaux]

Lack of cash flow in retirement is why I'm kidding myself thinking we can retire at the end of the year.  The majority of our assets are in pretaxed retirement accounts.  2021 is looking like a work year.

Uh, you're familiar with the tools here to access retirement accounts earlier, right?

https://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

I am 51, have been FIREd for 4 years now, am using strategy #2 in the above article (which is more commonly called a Roth conversion ladder), and everything is working peachy.

In addition to the above strategies, there's also the "just pay the penalty" strategy, and the 401(k) separation at 55 exception.

(If you're being ironic or were using sarcasm font, my apologies.  I miss that sometimes.  I'm new here; please let me stay! ;-) )

Probably going to 55.  That's June 2023.  Should be another 500K to 750K of insulation by then.  Main reason is health care.   We're falling apart earlier than expected. 

[secondcor521]

Probably going to 55.  That's June 2023.  Should be another 500K to 750K of insulation by then.  Main reason is health care.   We're falling apart earlier than expected.

I had more time to take care of my health after I FIREd.  Just sayin' ;)

[rmorris50]

I include my pension in my net worth and consider that I own it. I think of it as a long term receivable.

If I die my DW will be entitled to collect on the receivable.

I include my pension too because I can take the lump sum or annuitize it. I should retire once I get through ball this change in my life and my expenses settle. My cash flow projections show I should be willing to spend down my pre-tax retirement accounts between now, age 46 and 70, because social security, pension and Roth should be enough after 70. I have $1.5m in pre-tax now, but it’s trickier to access this early and it goes against all the retirement advice we have been fed. But if I keep working then I just end up on this pile of money I won’t spend and I just enrich all the nephews and nieces. I don’t mind leaving a little but I save it to escape MegaCorp USA! So I have a cash flow timing problem and I will need to grow the balls to tell our financial advisor I’m spending it now, haha!


Sent from my iPhone using Tapatalk

[Bateaux]

Probably going to 55.  That's June 2023.  Should be another 500K to 750K of insulation by then.  Main reason is health care.   We're falling apart earlier than expected.

I had more time to take care of my health after I FIREd.  Just sayin' ;)

We're going to require domestic assistance in our older years.  It's a catch 22.   Squandering away the good years working so that you can afford to pay for help in the later years.  It's nothing we did wrong.  It's just shit luck.  Some of my wife's issues are because she was an athlete.  Our son didn't ask to have cancer at 14.  I didn't try to become a diabetic.   We're smart enough to predict our personal disability to come.  That's a blessing and a curse.  Ignorance is bliss and knowledge can be a prison at times.  Our main weapon are our paychecks and portfolio.   Those three years can be the most powerful of our earning lives.  At 55 my wife and I are eligible for my company's retirement heath care.  If I quit, even if I rehire, I lose eligiblity.  Our new employees do not have the benift at retirement, nor my pension which is now investing at 12 percent of my salary.   I'm not seeking sympathy, we've got it pretty good.  I haven't been hospitalized since a child.  However I've spent more nights on a tiny hospital couch as a caregiver than I can count.   That kind of treatment doesn't come cheap.  Through furgality and persistence we still have managed to rise above most people financially.  It's not time to give up what's shielded us from the dragons yet.

[2sk22]

This has been a reoccurring theme amongst us.  It's amazing that you (we, me) can have so much money and still wonder if it's enough.   I think we get comfortable with the buffer, and realize how uncomfortable it would be to have a smaller buffer.   If my net worth drops by half I'm still in great shape, but man, I would not be pleased.  I don't have an "Inner Bag Lady" like " @MaybeBabyMustache,  I have an "Inner Struggling Student."

Love your term! Thanks to this forum, I have managed to thoroughly squash my "inner struggling student" but my wife still thinks we are one step removed from the poverty line with several million in invested assets ;-)

[Buffaloski Boris]

We're going to require domestic assistance in our older years.  It's a catch 22.   Squandering away the good years working so that you can afford to pay for help in the later years.  It's nothing we did wrong.  It's just shit luck.  Some of my wife's issues are because she was an athlete.  Our son didn't ask to have cancer at 14.  I didn't try to become a diabetic.   We're smart enough to predict our personal disability to come.  That's a blessing and a curse.  Ignorance is bliss and knowledge can be a prison at times.  Our main weapon are our paychecks and portfolio.   Those three years can be the most powerful of our earning lives.  At 55 my wife and I are eligible for my company's retirement heath care.  If I quit, even if I rehire, I lose eligiblity.  Our new employees do not have the benift at retirement, nor my pension which is now investing at 12 percent of my salary.   I'm not seeking sympathy, we've got it pretty good.  I haven't been hospitalized since a child.  However I've spent more nights on a tiny hospital couch as a caregiver than I can count.   That kind of treatment doesn't come cheap.  Through furgality and persistence we still have managed to rise above most people financially.  It's not time to give up what's shielded us from the dragons yet.

Yup. They don’t call them golden handcuffs for nothing. Though in many people’s cases it’s the medical not the pension that keeps them in place. The handcuffs fall off late this year.But then a funny thing happens. You start enjoying your job a lot more than you have in recent history. The office space effect is for real!

[bluebelle]

just popped in to say we hit $2.1 million in investable assets, and I have no one I can tell in real life.   We're in the coast part of our investment cycle, so 'only' ~$2K being invested monthly these days....Gosh, I remember a time when $2K was alot, geez, I'm old!  :-) We are in the process of having our dream home built, so our money is going there.   My 'number' for retirement has been $2 million, really $1.8 with a buffer, then Covid 19 hit and I watched our portfolio loose $300K, I can't believe is has come roaring back so quickly.   I had resigned myself to working longer.   I'm now leaning toward having a bigger buffer.   
Just wanted to say, life is good, happy to be here!   Happy that my biggest dilema is deciding how big a cash cushion I want heading into retirement.  That and what colour kayak to buy.

[flyingaway]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

The only way to "graduate" from this group, the "Race from $2M to $4M ... and Beyond!" is to go to the Great Beyond.    And there you won't have any money 'cause you can't take it with you! :)

I was thinking to graduate from this group with a $4M portfolio.

[ixtap]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

The only way to "graduate" from this group, the "Race from $2M to $4M ... and Beyond!" is to go to the Great Beyond.    And there you won't have any money 'cause you can't take it with you! :)

I was thinking to graduate from this group with a $4M portfolio.

It is hard to graduate from "and beyond."

[BeanCounter]

I've got five more weeks left of work!!
This past week I started to feel very at peace with my decision to leave. I think I'm actually ready. It feels great.

Checked on the net worth today. $3M total. $2.9M without the house. That includes $62k in kids 529s though. And $30k that we are still planning to spend on a new car for DH. I'm not sure what he's waiting for on that. Guess he's just trying to get every last mile out of old the old Accord.

As I was checking on NW, I realized that when we hit $4.3M a 3% draw down will bring us $130k a year which is exactly what we bring home (net of taxes and retirement etc, $240k gross) right now with both of us working and it is more than enough for all the things. Including crazy tuition. That's nuts. So unless we have another crazy drop or a few years of really stagnant returns, we should hit $4.3M relatively easy. Not that we really need, or even want to do that, I just predict it will happen.
At that realization made me really glad I put in my notice. I do not want to look back and have too much money but feeling like I didn't have enough time to do the things I want, with the people I want.
Life is good, and kind of unbelievable.

Congrats, what a huge achievement. I'm curious if you've done a cash flow projection for rest of your life? Have others on this board? I've never trusted withdrawal rules and NW measurements, and the cash flow projections have been the most useful in making retirement decisions.

I'm not sure what you mean exactly when you say cash flow projection. We don't have a business or rental property so investments is it. When we calculated our NW for FIRE we do not include the value of our house, HSA or kids college funds.
I assume that we can draw down 3% each year. We'll take that from cash but each year. All of our dividends are going to cash now and we'll sell to rebalance and replenish cash as we need to.
Why do you not trust withdrawl rules and NW measurements?

@BeanCounter NW isn't a good indicator of cash flow, like you alluded to. My net worth could be millions but if it's all tied up in my fine art collection, well, I am cash flow poor and have to eat cat food. Also, I could have cash flow like social security or alimony, but that doesn't get included in my net worth because I don't own it. My house I include in my NW (and no, I don't have any fine art!)

Tracking NW is a short cut way of seeing if you're ready for retirement, but I think it's better to project out all sources of income over the years, and house hold expenses and taxes. You can see what years you are "short" cash flow and what years you have excess as well. I think a shortcut way people do this projection is to look at liquid NW.

I disagree. Your net worth is your net worth. Your drawdown strategy of the assets in your NW determines if you are ready to retire. Your drawdown strategy has to include things like liquidity, market returns and tax implications. Those things change from year to year so I think that’s why people use the 3% or 4% average. It’s not a “shortcut”.
I also don’t agree with the terminology of cash flow because other than dividends invested assets aren’t actually producing cash. If I had a business or rental property it would. But to convert invested assets to cash I have to sell them just like one would have to sell an art collection they are including in their net worth. One is just more liquid than the other. If a person is including their house, art collection, antique cars, or any other asset in their net worth its perfectly acceptable so long as they have a plan to convert that asset to cash as needed to fund their retirement.
Hopefully that makes sense.
Also, I don’t include SS in my plan because I don’t know what future changes could come to the system 27 years from now when we would become eligible. It’s just too far into the future.
Honestly at this point in the game we just worry about healthcare and unknown kid expenses because we’ve still got two other people we are responsible for.

[BeanCounter]

I can always find ways to spend more money. Even in this group, I just feel that I do not have enough money. Maybe I will feel better when I graduate from this group.

The only way to "graduate" from this group, the "Race from $2M to $4M ... and Beyond!" is to go to the Great Beyond.    And there you won't have any money 'cause you can't take it with you! :)

I’m not sure I want to graduate from this group. This is the only place I’ve been able to come and say I have $3M and I’m not sure if that’s enough. Because nobody talks about their NW IRL, and if you did most people would laugh at you. Here, you all understand the anxiety of feeling it might not be enough, but also encourage each other to realize it probably is and you can’t plan for everything. I know pages ago I was strewing this and you all really pushed me to have more flexible thinking. And I needed that!

I was thinking to graduate from this group with a $4M portfolio.

It is hard to graduate from "and beyond."

[rmorris50]

I've got five more weeks left of work!!
This past week I started to feel very at peace with my decision to leave. I think I'm actually ready. It feels great.

Checked on the net worth today. $3M total. $2.9M without the house. That includes $62k in kids 529s though. And $30k that we are still planning to spend on a new car for DH. I'm not sure what he's waiting for on that. Guess he's just trying to get every last mile out of old the old Accord.

As I was checking on NW, I realized that when we hit $4.3M a 3% draw down will bring us $130k a year which is exactly what we bring home (net of taxes and retirement etc, $240k gross) right now with both of us working and it is more than enough for all the things. Including crazy tuition. That's nuts. So unless we have another crazy drop or a few years of really stagnant returns, we should hit $4.3M relatively easy. Not that we really need, or even want to do that, I just predict it will happen.
At that realization made me really glad I put in my notice. I do not want to look back and have too much money but feeling like I didn't have enough time to do the things I want, with the people I want.
Life is good, and kind of unbelievable.

Congrats, what a huge achievement. I'm curious if you've done a cash flow projection for rest of your life? Have others on this board? I've never trusted withdrawal rules and NW measurements, and the cash flow projections have been the most useful in making retirement decisions.

I'm not sure what you mean exactly when you say cash flow projection. We don't have a business or rental property so investments is it. When we calculated our NW for FIRE we do not include the value of our house, HSA or kids college funds.
I assume that we can draw down 3% each year. We'll take that from cash but each year. All of our dividends are going to cash now and we'll sell to rebalance and replenish cash as we need to.
Why do you not trust withdrawl rules and NW measurements?

@BeanCounter NW isn't a good indicator of cash flow, like you alluded to. My net worth could be millions but if it's all tied up in my fine art collection, well, I am cash flow poor and have to eat cat food. Also, I could have cash flow like social security or alimony, but that doesn't get included in my net worth because I don't own it. My house I include in my NW (and no, I don't have any fine art!)

Tracking NW is a short cut way of seeing if you're ready for retirement, but I think it's better to project out all sources of income over the years, and house hold expenses and taxes. You can see what years you are "short" cash flow and what years you have excess as well. I think a shortcut way people do this projection is to look at liquid NW.

I disagree. Your net worth is your net worth. Your drawdown strategy of the assets in your NW determines if you are ready to retire. Your drawdown strategy has to include things like liquidity, market returns and tax implications. Those things change from year to year so I think that’s why people use the 3% or 4% average. It’s not a “shortcut”.
I also don’t agree with the terminology of cash flow because other than dividends invested assets aren’t actually producing cash. If I had a business or rental property it would. But to convert invested assets to cash I have to sell them just like one would have to sell an art collection they are including in their net worth. One is just more liquid than the other. If a person is including their house, art collection, antique cars, or any other asset in their net worth its perfectly acceptable so long as they have a plan to convert that asset to cash as needed to fund their retirement.
Hopefully that makes sense.
Also, I don’t include SS in my plan because I don’t know what future changes could come to the system 27 years from now when we would become eligible. It’s just too far into the future.
Honestly at this point in the game we just worry about healthcare and unknown kid expenses because we’ve still got two other people we are responsible for.

NW is NW, right. And cash flow is cash flow. By cash flow I mean money coming into the house every year netted against money going out of the house every year. My NW may or may not be able to support the (timing of) cash needed coming into the house to support expenses going out of the house. So I meant household cash flow analysis. Your right my art collection can’t support my household cash flow unless I sell it. Could be fun to look at as I eat cat food tho.

I still think many people shortcut the household cash flow analysis by looking at NW or a modified version of NW like LNW.

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.


Sent from my iPhone using Tapatalk

[BeanCounter]

I've got five more weeks left of work!!
This past week I started to feel very at peace with my decision to leave. I think I'm actually ready. It feels great.

Checked on the net worth today. $3M total. $2.9M without the house. That includes $62k in kids 529s though. And $30k that we are still planning to spend on a new car for DH. I'm not sure what he's waiting for on that. Guess he's just trying to get every last mile out of old the old Accord.

As I was checking on NW, I realized that when we hit $4.3M a 3% draw down will bring us $130k a year which is exactly what we bring home (net of taxes and retirement etc, $240k gross) right now with both of us working and it is more than enough for all the things. Including crazy tuition. That's nuts. So unless we have another crazy drop or a few years of really stagnant returns, we should hit $4.3M relatively easy. Not that we really need, or even want to do that, I just predict it will happen.
At that realization made me really glad I put in my notice. I do not want to look back and have too much money but feeling like I didn't have enough time to do the things I want, with the people I want.
Life is good, and kind of unbelievable.

Congrats, what a huge achievement. I'm curious if you've done a cash flow projection for rest of your life? Have others on this board? I've never trusted withdrawal rules and NW measurements, and the cash flow projections have been the most useful in making retirement decisions.

I'm not sure what you mean exactly when you say cash flow projection. We don't have a business or rental property so investments is it. When we calculated our NW for FIRE we do not include the value of our house, HSA or kids college funds.
I assume that we can draw down 3% each year. We'll take that from cash but each year. All of our dividends are going to cash now and we'll sell to rebalance and replenish cash as we need to.
Why do you not trust withdrawl rules and NW measurements?

@BeanCounter NW isn't a good indicator of cash flow, like you alluded to. My net worth could be millions but if it's all tied up in my fine art collection, well, I am cash flow poor and have to eat cat food. Also, I could have cash flow like social security or alimony, but that doesn't get included in my net worth because I don't own it. My house I include in my NW (and no, I don't have any fine art!)

Tracking NW is a short cut way of seeing if you're ready for retirement, but I think it's better to project out all sources of income over the years, and house hold expenses and taxes. You can see what years you are "short" cash flow and what years you have excess as well. I think a shortcut way people do this projection is to look at liquid NW.

I disagree. Your net worth is your net worth. Your drawdown strategy of the assets in your NW determines if you are ready to retire. Your drawdown strategy has to include things like liquidity, market returns and tax implications. Those things change from year to year so I think that’s why people use the 3% or 4% average. It’s not a “shortcut”.
I also don’t agree with the terminology of cash flow because other than dividends invested assets aren’t actually producing cash. If I had a business or rental property it would. But to convert invested assets to cash I have to sell them just like one would have to sell an art collection they are including in their net worth. One is just more liquid than the other. If a person is including their house, art collection, antique cars, or any other asset in their net worth its perfectly acceptable so long as they have a plan to convert that asset to cash as needed to fund their retirement.
Hopefully that makes sense.
Also, I don’t include SS in my plan because I don’t know what future changes could come to the system 27 years from now when we would become eligible. It’s just too far into the future.
Honestly at this point in the game we just worry about healthcare and unknown kid expenses because we’ve still got two other people we are responsible for.

NW is NW, right. And cash flow is cash flow. By cash flow I mean money coming into the house every year netted against money going out of the house every year. My NW may or may not be able to support the (timing of) cash needed coming into the house to support expenses going out of the house. So I meant household cash flow analysis. Your right my art collection can’t support my household cash flow unless I sell it. Could be fun to look at as I eat cat food tho.

I still think many people shortcut the household cash flow analysis by looking at NW or a modified version of NW like LNW.

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.


Sent from my iPhone using Tapatalk

Maybe this is just semantics, but if you don’t have a pension, or a business, or rental property, you don’t actually have cash coming in once you stop working. This would be the case for us. I HAVE to sell assets to create cash flow. My NW are those assets. If I’m not looking at the value of all of those and how I’ll sell them to fund retirement then I’m shortchanging myself.

[rmorris50]

I've got five more weeks left of work!!
This past week I started to feel very at peace with my decision to leave. I think I'm actually ready. It feels great.

Checked on the net worth today. $3M total. $2.9M without the house. That includes $62k in kids 529s though. And $30k that we are still planning to spend on a new car for DH. I'm not sure what he's waiting for on that. Guess he's just trying to get every last mile out of old the old Accord.

As I was checking on NW, I realized that when we hit $4.3M a 3% draw down will bring us $130k a year which is exactly what we bring home (net of taxes and retirement etc, $240k gross) right now with both of us working and it is more than enough for all the things. Including crazy tuition. That's nuts. So unless we have another crazy drop or a few years of really stagnant returns, we should hit $4.3M relatively easy. Not that we really need, or even want to do that, I just predict it will happen.
At that realization made me really glad I put in my notice. I do not want to look back and have too much money but feeling like I didn't have enough time to do the things I want, with the people I want.
Life is good, and kind of unbelievable.

Congrats, what a huge achievement. I'm curious if you've done a cash flow projection for rest of your life? Have others on this board? I've never trusted withdrawal rules and NW measurements, and the cash flow projections have been the most useful in making retirement decisions.

I'm not sure what you mean exactly when you say cash flow projection. We don't have a business or rental property so investments is it. When we calculated our NW for FIRE we do not include the value of our house, HSA or kids college funds.
I assume that we can draw down 3% each year. We'll take that from cash but each year. All of our dividends are going to cash now and we'll sell to rebalance and replenish cash as we need to.
Why do you not trust withdrawl rules and NW measurements?

@BeanCounter NW isn't a good indicator of cash flow, like you alluded to. My net worth could be millions but if it's all tied up in my fine art collection, well, I am cash flow poor and have to eat cat food. Also, I could have cash flow like social security or alimony, but that doesn't get included in my net worth because I don't own it. My house I include in my NW (and no, I don't have any fine art!)

Tracking NW is a short cut way of seeing if you're ready for retirement, but I think it's better to project out all sources of income over the years, and house hold expenses and taxes. You can see what years you are "short" cash flow and what years you have excess as well. I think a shortcut way people do this projection is to look at liquid NW.

I disagree. Your net worth is your net worth. Your drawdown strategy of the assets in your NW determines if you are ready to retire. Your drawdown strategy has to include things like liquidity, market returns and tax implications. Those things change from year to year so I think that’s why people use the 3% or 4% average. It’s not a “shortcut”.
I also don’t agree with the terminology of cash flow because other than dividends invested assets aren’t actually producing cash. If I had a business or rental property it would. But to convert invested assets to cash I have to sell them just like one would have to sell an art collection they are including in their net worth. One is just more liquid than the other. If a person is including their house, art collection, antique cars, or any other asset in their net worth its perfectly acceptable so long as they have a plan to convert that asset to cash as needed to fund their retirement.
Hopefully that makes sense.
Also, I don’t include SS in my plan because I don’t know what future changes could come to the system 27 years from now when we would become eligible. It’s just too far into the future.
Honestly at this point in the game we just worry about healthcare and unknown kid expenses because we’ve still got two other people we are responsible for.

NW is NW, right. And cash flow is cash flow. By cash flow I mean money coming into the house every year netted against money going out of the house every year. My NW may or may not be able to support the (timing of) cash needed coming into the house to support expenses going out of the house. So I meant household cash flow analysis. Your right my art collection can’t support my household cash flow unless I sell it. Could be fun to look at as I eat cat food tho.

I still think many people shortcut the household cash flow analysis by looking at NW or a modified version of NW like LNW.

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.


Sent from my iPhone using Tapatalk

Maybe this is just semantics, but if you don’t have a pension, or a business, or rental property, you don’t actually have cash coming in once you stop working. This would be the case for us. I HAVE to sell assets to create cash flow. My NW are those assets. If I’m not looking at the value of all of those and how I’ll sell them to fund retirement then I’m shortchanging myself.

Haha i think we are saying the same thing? I should say people need to look at both cash flow and NW. never meant to say one shouldn’t look at NW. but should look at CF too. Many people just look at NW only I think and don’t realize how insightful a year over year household cash flow analysis is. Like you allude to, positive cash flow comes from many sources. jOb, savings, selling assets, Social security., pension, etc. All those things fund the incoming cash flows in my Excel sheet. I have a sheet that projects CFs from now to age 100, but I make sure my CFs are supported to 90 only :-) I also have to project the worth of my assets to do this as well. And assume how much longer I work. And estimate my future expenses. And calc future taxes. I’m an actuary though so I like and feel comfortable with projections!


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[rmorris50]

The biggest insights I got from this is when am I truly comfortable retiring, when can I comfortably touch certain assets, and most of all what level of household expenses I can truly support. But I know whatever I project out will never happen, because life happens. So myspreadsheet also gives me a tool to see how to adapt


Sent from my iPhone using Tapatalk

[JoJoP]

Honestly at this point in the game we just worry about healthcare and unknown kid expenses because we’ve still got two other people we are responsible for.

NW is NW, right. And cash flow is cash flow. By cash flow I mean money coming into the house every year netted against money going out of the house every year. My NW may or may not be able to support the (timing of) cash needed coming into the house to support expenses going out of the house. So I meant household cash flow analysis. Your right my art collection can’t support my household cash flow unless I sell it. Could be fun to look at as I eat cat food tho.

I still think many people shortcut the household cash flow analysis by looking at NW or a modified version of NW like LNW.

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.


Sent from my iPhone using Tapatalk
[/quote]
Maybe this is just semantics, but if you don’t have a pension, or a business, or rental property, you don’t actually have cash coming in once you stop working. This would be the case for us. I HAVE to sell assets to create cash flow. My NW are those assets. If I’m not looking at the value of all of those and how I’ll sell them to fund retirement then I’m shortchanging myself.
[/quote]
Haha i think we are saying the same thing? I should say people need to look at both cash flow and NW. never meant to say one shouldn’t look at NW. but should look at CF too. Many people just look at NW only I think and don’t realize how insightful a year over year household cash flow analysis is. Like you allude to, positive cash flow comes from many sources. jOb, savings, selling assets, Social security., pension, etc. All those things fund the incoming cash flows in my Excel sheet. I have a sheet that projects CFs from now to age 100, but I make sure my CFs are supported to 90 only :-) I also have to project the worth of my assets to do this as well. And assume how much longer I work. And estimate my future expenses. And calc future taxes. I’m an actuary though so I like and feel comfortable with projections!


Sent from my iPhone using Tapatalk
[/quote]

Good cash flow is one of the beauties of rental properties.   It always surprises me to read a list such as you've compiled and rental income isn't even on it.   Most retirement calculators don't even have a spot to include rental income, which in my opinion is missing a key source of income for many millions of people.   Lots of people downsize or upsize or relocate or inherit a property and turn it into a rental with huge success.    It's  a beautiful thing and happens all the time.   You retain the asset AND it cash flows.  (Let's set aside the Great Debate on managing rentals for the purpose of this post)

 Our net worth is most RE, our cash flow is mostly rental income.  As near as I can tell, it both cash flows better and appreciates more than most investment portfolios.  A recent $200K investment is cash flowing a profit of $15,000 a year net and the asset is intact and likely to appreciate.     Rents have a steady and sure tie in to cost of living, which generally goes up.  Our stocks and bonds are a nest egg that can sit there peacefully and be left alone.   

[BeanCounter]

Honestly at this point in the game we just worry about healthcare and unknown kid expenses because we’ve still got two other people we are responsible for.

NW is NW, right. And cash flow is cash flow. By cash flow I mean money coming into the house every year netted against money going out of the house every year. My NW may or may not be able to support the (timing of) cash needed coming into the house to support expenses going out of the house. So I meant household cash flow analysis. Your right my art collection can’t support my household cash flow unless I sell it. Could be fun to look at as I eat cat food tho.

I still think many people shortcut the household cash flow analysis by looking at NW or a modified version of NW like LNW.

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.


Sent from my iPhone using Tapatalk

Maybe this is just semantics, but if you don’t have a pension, or a business, or rental property, you don’t actually have cash coming in once you stop working. This would be the case for us. I HAVE to sell assets to create cash flow. My NW are those assets. If I’m not looking at the value of all of those and how I’ll sell them to fund retirement then I’m shortchanging myself.
[/quote]
Haha i think we are saying the same thing? I should say people need to look at both cash flow and NW. never meant to say one shouldn’t look at NW. but should look at CF too. Many people just look at NW only I think and don’t realize how insightful a year over year household cash flow analysis is. Like you allude to, positive cash flow comes from many sources. jOb, savings, selling assets, Social security., pension, etc. All those things fund the incoming cash flows in my Excel sheet. I have a sheet that projects CFs from now to age 100, but I make sure my CFs are supported to 90 only :-) I also have to project the worth of my assets to do this as well. And assume how much longer I work. And estimate my future expenses. And calc future taxes. I’m an actuary though so I like and feel comfortable with projections!


Sent from my iPhone using Tapatalk
[/quote]

Good cash flow is one of the beauties of rental properties.   It always surprises me to read a list such as you've compiled and rental income isn't even on it.   Most retirement calculators don't even have a spot to include rental income, which in my opinion is missing a key source of income for many millions of people.   Lots of people downsize or upsize or relocate or inherit a property and turn it into a rental with huge success.    It's  a beautiful thing and happens all the time.   You retain the asset AND it cash flows.  (Let's set aside the Great Debate on managing rentals for the purpose of this post)

 Our net worth is most RE, our cash flow is mostly rental income.  As near as I can tell, it both cash flows better and appreciates more than most investment portfolios.  A recent $200K investment is cash flowing a profit of $15,000 a year net and the asset is intact and likely to appreciate.     Rents have a steady and sure tie in to cost of living, which generally goes up.  Our stocks and bonds are a nest egg that can sit there peacefully and be left alone.
[/quote]
$15k of $200k is 7.5%.
My investment portfolio has returned an average of 7.9% over the last ten years and it requires zero work. I could pull out 7.5% each year and still leave the principal alone to appreciate further.
I think rental property is overrated because the checks coming in the door each month give you a false sense of profitability. I’m not saying it doesn’t work out, my great grandfather made his fortune on apartment buildings years ago, but it isn’t as easy as folks make it sound.

[Buffaloski Boris]

$15k of $200k is 7.5%.
My investment portfolio has returned an average of 7.9% over the last ten years and it requires zero work. I could pull out 7.5% each year and still leave the principal alone to appreciate further.
I think rental property is overrated because the checks coming in the door each month give you a false sense of profitability. I’m not saying it doesn’t work out, my great grandfather made his fortune on apartment buildings years ago, but it isn’t as easy as folks make it sound.

I agree that rentals are a pain. I’m planning to do them at some point because they help us achieve our objectives. One of which is passing along generational wealth. A modest, paid off home is an incredible asset for building and retaining wealth.

Sent using iPhone and tapamyfingers because using tapamytongue is too difficult.

[SwordGuy]

The biggest insights I got from this is when am I truly comfortable retiring, when can I comfortably touch certain assets, and most of all what level of household expenses I can truly support. But I know whatever I project out will never happen, because life happens. So myspreadsheet also gives me a tool to see how to adapt

As Eisenhower put it so very succinctly, "Plans are useless but planning is indispensable."

[SwordGuy]

$15k of $200k is 7.5%.
My investment portfolio has returned an average of 7.9% over the last ten years and it requires zero work. I could pull out 7.5% each year and still leave the principal alone to appreciate further.
I think rental property is overrated because the checks coming in the door each month give you a false sense of profitability. I’m not saying it doesn’t work out, my great grandfather made his fortune on apartment buildings years ago, but it isn’t as easy as folks make it sound.

I put a 7.5% withdrawal rate strategy into www.cfiresim.com and it had a 30.43% success rate over 30 years.   

THAT is the difference.

For a 30 year retirement, you need to use a 4% withdrawal rate to have a 95% success rate.   

Functionally, that rental property investment is producing the income that a stock/bond portfolio of $375,000 can sustain over 30 years, but it only required a $200k investment to do it.

[flyingaway]

The biggest insights I got from this is when am I truly comfortable retiring, when can I comfortably touch certain assets, and most of all what level of household expenses I can truly support. But I know whatever I project out will never happen, because life happens. So myspreadsheet also gives me a tool to see how to adapt


Sent from my iPhone using Tapatalk

I don't know if you are retired. If not, working one more year(s) (OMY) solves your problem.

Working OMY, you have one fewer year to support, you do not withdraw from your portfolio for one year, maybe you contribute a certain amount to your portfolio.

[rmorris50]

The biggest insights I got from this is when am I truly comfortable retiring, when can I comfortably touch certain assets, and most of all what level of household expenses I can truly support. But I know whatever I project out will never happen, because life happens. So myspreadsheet also gives me a tool to see how to adapt


Sent from my iPhone using Tapatalk

I don't know if you are retired. If not, working one more year(s) (OMY) solves your problem.

Working OMY, you have one fewer year to support, you do not withdraw from your portfolio for one year, maybe you contribute a certain amount to your portfolio.

I’m on the 3-4 year plan. I also have a spouse the wants to work til he drops. It all goes into the spreadsheet :-)

Rental property is something missing from our portfolio. Have no idea if it’s something I’ll ever do or not.


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[CoffeeR]

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.

I agree, very small chance of SS going away. I personally think it is close to zero chance. Now, SS being means tested, however, that is already happening in multiple countries.

[rmorris50]

And I do include projected SS in my household CF analysis, but at my own peril. Small risk of going away I think.

I agree, very small chance of SS going away. I personally think it is close to zero chance. Now, SS being means tested, however, that is already happening in multiple countries.

I guess as long as I get it when my AGI gown because my assets run out. Then it’s really spend your own assets first...


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[pecunia]

Think about Social Security from a little different viewpoint.  The naysayers are always talking from their fact and figure sheets that it cannot be afforded by the country.  I nod my head and just say," Uh huh."  While we are talking industry is installing machines to make production cheaper and easier.  Farmers are increasing the yields from the same plots of land.  Other nations are happy to sell us clothing and other necessary products at bargain basement prices.  Basic survival is certainly easier than when Social Security was implemented on August 14, 1935.

Large demonstrations have been taking place all Summer for Black Lives Matter.  It just kind of shows people still care about each other.  This shows a willingness to help others.

Back to Social Security - There is the will and there are the means to provide a decent living for folks when they exceed their working years.  Unless people develop a callous indifference in the next few years, I don't think Social Security will suffer much.  The COVID-19 has fostered some realization that we all live on this blue green rock together.

[Buffaloski Boris]

Social security isn’t going anywhere. If the Fed can toss a cool couple trillion at businesses and the financial sector at the drop of a hat, then we can fund Social security. The politicians will exert the proper amount of angst and drama as we would expect, but in the end it gets funded.