"One More Year" strikes the rich the hardest

[Bateaux]

My OMY is actually 3 to 5 more years.  There is plenty more than enough to make it right now at a 4% withdrawl.   I plan on a 3% withdrawl and there are multiple reasons for this.   In 3 to five years my savings will likely double or more.  What took nearly 2.5 decades to build for us will double in a half a decade more.  I'm 46 and my goal is to Retire at 50 respectively young and old enough to feel I earned it. There is a recession on the way and I want to keep my good paying job so that I have money to buy bargains all the way down and all the way back up.  I hope to retire on the rising market post recession. I want a blue water sailing catamaran to live on.  These boats are expensive during the good times and cheap in the bad.  I'll want to save for that.   I'm also thinking about legacy funds.  I hope not to spend all I've earned.  My son's life was saved by Saint's Jude's Children's Resarch Hospital.   They work miracles there. I want every dime I can save to go there when I die.  Even if just one child is saved it will be worth it to me.

[JCfire]

If you want to help people, you can almost definitionally do a lot more of it when you're not trapped in an office for the whole day. Throwing money at people isn't the only way to help them.

The interesting problem with this is that, if you donate your entire income to your chosen charity, that charity could use it to hire a full time worker.  Then the question just becomes, if that charity posted the job that would be most helpful to it within the salary range you could fund with your annual salary, and you applied for the job, would you be the best candidate?  If not, then you can probably do more good for your chosen cause by trapping yourself in an office.

In my personal case, I know that companies in my professional field think my time is worth way more than any non-profit thinks that it is worth.

[blainem13]

I think the delta between FI and RE is entirely explained by OMY, and how many OMY's is just a measure of how conservative someone is financially.

Personally, I will be FI in about 2 or 3 years, but I'm planning to work for 10-11 more years (age 41ish) given my age and the huge opportunity cost to not working.  This scenario could change if I didn't like my job as much, if I was forced to work longer hours, etc.; but for now that's my plan.  I agree that the higher one's income and pace of FI, the smaller SWR one will seek since the marginal effort isn't that great.

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

[Blindsquirrel]

OMY or actually 3-5 years is where I am. Absolutely FI now by any measure but want to have 4 things before we pull the plug on our huge fire hose of cash jobs. End of parental support of 36K a year(will not like it when it happens but dementia is terrible), Paid off house, gross a ton off investment houses, great big stack of liquid loot 100-200K.  We are stacking ridiculous amounts of cash and my DGAF attitude will one day catch up. If it is tomorrow I am good but not ready yet. Def a first world problem.

[EarlyStart]

I'm only 22 and have a ways to go, but my significant other and I have talked about just going part time once we hit the FI number. This might make the transition easier as it's less dramatic. If part time was just enough to live on without investing further, we at least get to see it grow a little on it's own or endure another business cycle.

[goodlife]

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world. To me, that is morally repugnant. It is in fact the rich (which by my definition is anyone who is FI by whatever standard) who should take on responsibility for creating a better world and for sure that doesn't happen if you just ignore things around you. Of course you can't solve every problem in the world, but I strongly believe that everyone can make an impact, whether that be helping the poor in Bangladesh or being involved in local politics of your small town. If everyone just aims to gobble up enough money to live off forever in this unencumbered lifestyle with no care for the world, then that's how you hand over power to despots and dictators. Ignorance, especially if by choice, is a tragedy in my opinion and very very dangeours. I could FIRE in 3 years at age 33 and just move some place nice and not bother anymore with making a difference, but I find something morally wrong with that. Maybe I will keep working, I do a lot of impact investing in developing countries, it can sometimes be stressful, but I am also deeply involved in the world and have the opportunity to make an impact. Or maybe I will move somewhere else and work on more local issues. But whatever it is, I feel like I have a moral obligation to use my time in a socially beneficial manner. I am no longer occupied with making a living and surviving. I truly believe I now need to dedicate my time to some sort of higher purpose, even if that purpose is not always 100% enjoyable. On that one, I agree with MM: life is not about seeking out pleasures and comfort. But comfort does not just mean buying a BMW and driving across the street to the supermarket. There is also comfort of the mind and that is equally dangerous. Your mind needs to be challenged as much as your muscles. And part of that is seeking out situations that may be uncomfortable, learning about things that make you uncomfortable and taking action that might be intellectually uncomfortable. If nobody is willing to sacrifice their time, comfort and money for such important work then the world is in a truly dire situation. All the riding my bike, not buying crap and having a small footprint on the world is not going to relieve me of that responsibility. Your footprint on the world's resources should be small....but maybe we should all aim at having a bigger footprint on the world when it comes to making a difference.

[innerscorecard]

Independent and self-sustaining people are the original building block of a free society.

[Knapptyme]

Thought-provoking idea. I feel as though when time with one's kids is involved in the decision, the effect of OMY working for money lessens the impact of one more year instilling these same values in your children. Not that you couldn't do it while working, but being that example to them without any obligation can likely have an effect greater than whatever interest or safety margin generated.

It's a peculiar trade-off, but if by working one year fewer, or at least stopping when FI is reached, I could ensure that my children go and do likewise while maintaining a charitable attitude and/or habit, I would do it every time. That investment will live longer than I will (hopefully), and it is my entire reason to reach FI sooner.

[jmusic]

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world...

At the risk of continuing off-topic along with you, I've read the MMM post that you're referring to, and I don't think that he means to be 100% oblivious to any and all current events.  The philosophy is in keeping with the "low-information" diet (a la Tim Ferriss). 

In other words, if the event is important enough, you WILL hear about it unless you never leave your house and only read books.  Case in point, I was in a college classroom with no TV on during the 9/11 attacks, and we were all informed with enough time for me to walk 1/4 mile back to the lobby of my dormitory in time to see the second impact LIVE.

The real benefit is that we free up brain space and avoid the 99% of the junk on the news media which only serves to propagate fear (and keep your attention through the ads that sell useless crap).  "What you didn't know about your toothbrush may be killing you!  More at 10..."

[blainem13]

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world. To me, that is morally repugnant. It is in fact the rich (which by my definition is anyone who is FI by whatever standard) who should take on responsibility for creating a better world and for sure that doesn't happen if you just ignore things around you. Of course you can't solve every problem in the world, but I strongly believe that everyone can make an impact, whether that be helping the poor in Bangladesh or being involved in local politics of your small town. If everyone just aims to gobble up enough money to live off forever in this unencumbered lifestyle with no care for the world, then that's how you hand over power to despots and dictators. Ignorance, especially if by choice, is a tragedy in my opinion and very very dangeours. I could FIRE in 3 years at age 33 and just move some place nice and not bother anymore with making a difference, but I find something morally wrong with that. Maybe I will keep working, I do a lot of impact investing in developing countries, it can sometimes be stressful, but I am also deeply involved in the world and have the opportunity to make an impact. Or maybe I will move somewhere else and work on more local issues. But whatever it is, I feel like I have a moral obligation to use my time in a socially beneficial manner. I am no longer occupied with making a living and surviving. I truly believe I now need to dedicate my time to some sort of higher purpose, even if that purpose is not always 100% enjoyable. On that one, I agree with MM: life is not about seeking out pleasures and comfort. But comfort does not just mean buying a BMW and driving across the street to the supermarket. There is also comfort of the mind and that is equally dangerous. Your mind needs to be challenged as much as your muscles. And part of that is seeking out situations that may be uncomfortable, learning about things that make you uncomfortable and taking action that might be intellectually uncomfortable. If nobody is willing to sacrifice their time, comfort and money for such important work then the world is in a truly dire situation. All the riding my bike, not buying crap and having a small footprint on the world is not going to relieve me of that responsibility. Your footprint on the world's resources should be small....but maybe we should all aim at having a bigger footprint on the world when it comes to making a difference.

Perhaps.  I'm still undecided as to whether microfinance is helpful or predatory, or perhaps whether western intervention in the developing world is helpful or predatory.  Sorry for the cynicism, but I'm very wary of the white savior complex, and I think it is possible that locally governed development might be more in the interest of the people. 

I think most people do more harm by consuming oil that funds despots and dictators and climate change versus stepping out of that cycle.  Last year, MMM used about 40 gallons of gasoline by my estimate, which is pretty minimal funding of either of those "bads."  Opting out of oil consumption, iphones made in foxconn factories with suicidal depressed employees, electronics and a stream of new cars with hundreds of pounds of rare earth elements mined by virtual slaves, new clothes made in bangledashi garment factories, etc. seems like it can do quite a bit of good.  I realize you and I wouldn't engage in much of that working or not, but many people need a reason not to do/buy those stupid things.  I'm pretty sure that's the real motivation for MMM's blog.

I would also argue that being FIRE allows you to have a much greater impact locally - be it working/being active in your local coop governance, local government, student mentoring, school board, etc.  Alternatively, it would allow more time to do international volunteer/nonprofit work; but, again, I'm a sceptical of the real benefit there.

[Daisy]

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world. To me, that is morally repugnant. It is in fact the rich (which by my definition is anyone who is FI by whatever standard) who should take on responsibility for creating a better world and for sure that doesn't happen if you just ignore things around you. Of course you can't solve every problem in the world, but I strongly believe that everyone can make an impact, whether that be helping the poor in Bangladesh or being involved in local politics of your small town. If everyone just aims to gobble up enough money to live off forever in this unencumbered lifestyle with no care for the world, then that's how you hand over power to despots and dictators. Ignorance, especially if by choice, is a tragedy in my opinion and very very dangeours. I could FIRE in 3 years at age 33 and just move some place nice and not bother anymore with making a difference, but I find something morally wrong with that. Maybe I will keep working, I do a lot of impact investing in developing countries, it can sometimes be stressful, but I am also deeply involved in the world and have the opportunity to make an impact. Or maybe I will move somewhere else and work on more local issues. But whatever it is, I feel like I have a moral obligation to use my time in a socially beneficial manner. I am no longer occupied with making a living and surviving. I truly believe I now need to dedicate my time to some sort of higher purpose, even if that purpose is not always 100% enjoyable. On that one, I agree with MM: life is not about seeking out pleasures and comfort. But comfort does not just mean buying a BMW and driving across the street to the supermarket. There is also comfort of the mind and that is equally dangerous. Your mind needs to be challenged as much as your muscles. And part of that is seeking out situations that may be uncomfortable, learning about things that make you uncomfortable and taking action that might be intellectually uncomfortable. If nobody is willing to sacrifice their time, comfort and money for such important work then the world is in a truly dire situation. All the riding my bike, not buying crap and having a small footprint on the world is not going to relieve me of that responsibility. Your footprint on the world's resources should be small....but maybe we should all aim at having a bigger footprint on the world when it comes to making a difference.

I totally agree. Not even sure which is my favorite part. I just agree.

I'm hoping by having the ability to FIRE, I can have some time to reflect on what it is I would like to do for the rest of my life. I do plan on having some chill down time for a while after FIRE'ing to decompress, reflect, do some personal stuff, but I feel having a purpose for something outside of me is very important in my post-FIRE life.

[James]

That really speaks to me sol, I can definitely see your struggle. I could easily be in your shoes in the future, and have no idea what choice I would make. For me there is the additional aspect that I do medical missions work and can't continue that if I retire. I could for a while, but eventually doing something a couple times a year just isn't enough to maintain quality work. But would I continue to work part time just so I can volunteer?


My thoughts right now is to work part time to keep my abilities and fund the trips. And I can cut back to part time once I have enough money to fund my lifestyle outside those trips. The pay would cover medical mission work, and the rest of the money can go to others, helping my kids with college, supporting some third world efforts I'm involved in, donating to local causes, etc. But how far to cut back will be a hard decision, and how long to keep the part time gig will be hard to know. Or do I just pick up per diem work to cover those things? Or do I go part time earlier at a higher level so I can do more medical mission now?


At least I have a decent while to figure it out for myself. Best of luck to those making the decisions, there isn't any right answer, just finding what works for you.

[sol]

I'm reviving this thread because someone posted a related question over here and it reminded me I wanted to respond to this but never got around to it.

Like 2lazy2retire posted in that thread, working OMY can do a lot of good for other people if you give it all away, and I've about decided to run with the idea.  Help me over the edge.

Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.

In some sense this is an act of cowardice.  If the market crashes horribly or someone in my family gets sick and incurs huge medical bills, I will still have my firehose of cash (the job) on hand to support me.  I could cut back on the charity if my needs changed for the worse, and keeping the job is a form of insurance against that early-retirement nightmare financial meltdown scenario that might otherwise put you in the 5% of cases where a 4% SWR doesn't work.

If the market holds up for another year, and I've added significantly to my savings, then I've done a bunch of good in the world and lowered my SWR a bit, and all I had to do was endure one more Christmas party.  If the market crashes and my early retirement would have been a failure, I can always keep on working and will report back on how glad I am that I didn't bail the moment I hit my number, and you can all point to me as a cautionary tale for other would-be FIRE types.

And I think I might enjoy going to work a little more if I knew that Monday's eight hours of work bought Thanksgiving dinners for 25 needy families, and Tuesday's staff meeting saved 5 acres of rainforest, and that my government-mandated three-day first-aid/CPR/safety course provided a full semester of job training for a disabled person.  Those goals are more motivating to me than reducing my SWR from 4.04% to 4.02%.

The question then becomes one of logistics.  How do you give away that much money? 

[brooklynguy]

Very commendable.  Don't see why logistics should be a problem.  People commonly give away sums far greater than half a year's salary of Sol the Mensch and manage to overcome any logistical hurdles.  If the goal is maximization of benefit to the world with your dollars, just donate them all to a data-driven philanthropic organization like the Gates Foundation.  Or follow J. Collins' advice and  start your own.

[Retire-Canada]

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

As long as you know you are staying OMY for some specific goal and it means enough to you to give up another precious year from your life I see no problem with it.

My solution is to switch to part-time work.

- I get a lot of free time to do stuff I love.

- I earn enough to live off and keep saving a little bit.

- I allow my investments to keep growing to whatever arbitrary %WR makes me happy

- And I keep my foot in the door at work should I hit sequence of returns crisis early in my ER

Frankly I am not sure I will stop working 100% once I am down in the 3-6 months/yr range.

With Fuck You Money, a solid skill set plus experience you can negotiate a sweet part-time gig where you do the fun tasks and someone who needs 40hrs/wk x 52 wks/year of pay to deal with their consumer debt can do the crappy jobs.

Either way congrats on being successful at work and at your FIRE planning. The problem you pose is a nice one to have. :)

-- Vik

[DoubleDown]

@sol, your plan is fine and can certainly help others. I'm planning a similar but somewhat different strategy that might also appeal to you. I'm sitting on the "extra" money I earned with OMY as a hedge against bad sequencing up front. So far so good, and that extra money is compounding even more. Once I get through a few years, and it becomes clear that I'll likely end up in the group whose ending stash is far greater than the starting amount, I'll start giving it away.

It's the same idea as you with having a safety net and being able to help others. The downside, unlike your plan, is that there's no plum, regular 9-5 job to fall back on if investments go far south. The upside is that I quit already, and there will be likely even more to give away through compounding as long as no zombies. I guess one could also argue that I'm not helping as many right now (beyond my regular charitable giving), but like Jesus said, we will always have the poor among us, so there's no danger of not having someone to help in a couple of years.

[Candace]

Sol,

Congratulations, and you definitely have my admiration for thinking this way about helping other people.

My opinion is that we strive for FI so that we can decide what to do with our time and with our energy.

If you decide that you would like to make some significant gifts to charities that help people in the ways you describe, as a way of starting off your post - FI life, then great. Further, if you see that an efficient way for you to contribute to very worthwhile causes is to work OMY and contribute a large percentage of your salary to those causes, then you ARE doing what it is you want to do with your time and energy. This is the point of being FI. You may be making sacrifices by staying at work, but nothing dear is bought without a cost. Even though you're still at work, you're using your talents and energy for YOUR purposes. You will have a different perspective on the job. You won't be there because you need the income. You'll be there because you have plans for the income that will make you feel good. And, you can quit whenever you want during the year if something happens at work that makes it not worth staying. That's the power of FI.

I would suggest you decide how much of a gift you want to make (perhaps the amount is equal to half your yearly salary), and then stick to that plan by funneling the money directly. Then, you can RE -- as in REally leave work -- and know you've accomplished one of your goals already.

One tip-- you might want to consider how you make your gifts. The charities see a large one-time gift and think you're going to give that much every year. They'll never stop hounding you. I know this from experience. An anonymous gift might get you out of years of hounding.

[dandarc]

Sol - feeling you on this one.  Granted, we are something like 8-10 years away from hitting our number, but I could see us continuing to work at our lucrative jobs in order to give a lot of it away.

I was thinking our model might look like:

1.  Put whatever we can into tax-deferred vehicles.
2.  Pull our living budget.
3.  Split whatever is left between charitable giving and a "do cool one-off things with / for our family" fund.
4.  Give most of our estate to charity way down the road.

Eventually, maybe 2 gets pulled from assets instead of income (in our minds any way - money is fungible and such).

[brooklynguy]

The upside is that I quit already, and there will be likely even more to give away through compounding as long as no zombies.

Related to this point, it's worth keeping in mind that, because the type of early retirement planning most of us are doing is based on avoiding worst case (or near-worst-case) scenarios, most of us will end up with large estates that we can leave to charity.

The median historical early retiree using a 4% WR and cfiresim's default settings for the other variables (75/25 stock/bond allocation and 0.18% investment fees) ended up with a portfolio equal to more than 32x their annual withdrawals after 30 years and more than 53x their annual withdrawals after 50 years (in each case, in inflation-adjusted terms).  So more than 50% of the time, early retirees would have amassed a fortune allowing them to make a charitable donation at the end of their retirement period greater than their total cumulative spending during their entire retirement (in real dollars).  If you adjust the variables (such as increasing the stock allocation or decreasing the investment expenses) and factor in the various levels of safety margin that are unaccounted for by cfiresim but will be utilized in practice, the real portfolio ending values are correspondingly higher.

It's informative to plug in your own numbers to get a sense of what kind of estate you could expect to end up with.  It may be that half a year's salary is a relative drop in the bucket.

[PatStab]

We are going to go from about $250k per year to $65k per year.  That's going to be OH MY GOD!

I keep working the numbers, yes we are saving a lot but we enjoy life too.

It will happen but I know the first year or two will be different.

[arebelspy]

I'm reviving this thread because someone posted a related question over here and it reminded me I wanted to respond to this but never got around to it.

Like 2lazy2retire posted in that thread, working OMY can do a lot of good for other people if you give it all away, and I've about decided to run with the idea.  Help me over the edge.

Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.

In some sense this is an act of cowardice.  If the market crashes horribly or someone in my family gets sick and incurs huge medical bills, I will still have my firehose of cash (the job) on hand to support me.  I could cut back on the charity if my needs changed for the worse, and keeping the job is a form of insurance against that early-retirement nightmare financial meltdown scenario that might otherwise put you in the 5% of cases where a 4% SWR doesn't work.

If the market holds up for another year, and I've added significantly to my savings, then I've done a bunch of good in the world and lowered my SWR a bit, and all I had to do was endure one more Christmas party.  If the market crashes and my early retirement would have been a failure, I can always keep on working and will report back on how glad I am that I didn't bail the moment I hit my number, and you can all point to me as a cautionary tale for other would-be FIRE types.

And I think I might enjoy going to work a little more if I knew that Monday's eight hours of work bought Thanksgiving dinners for 25 needy families, and Tuesday's staff meeting saved 5 acres of rainforest, and that my government-mandated three-day first-aid/CPR/safety course provided a full semester of job training for a disabled person.  Those goals are more motivating to me than reducing my SWR from 4.04% to 4.02%.

The question then becomes one of logistics.  How do you give away that much money?

You are an inspiration.

[coachese]

If one more year increases the nest egg 20% then I see the way as clear. One more year. That rhymes.

[brooklynguy]

Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.

I've been thinking about this a lot since your update post.

My (amorphous, undeveloped) plan had always been to get to the retirement finish line ASAP (which necessarily means deferring any charitable giving until after achieving FIRE, except that I have been making some relatively nominal contributions during my working career), and then focus on charitable giving in retirement.  Because I am, like most of us, in all likelihood grossly oversaving, I expect to have substantial excess over "enough" to give away once it becomes clear that my retirement is on a successful trajectory.

A side benefit of this strategy, I had always assumed, is that it would maximize my net lifetime charitable contributions (because every dollar that I defer giving away now will turn into many multiple real dollars that I can give away later).  But this ignores the tax considerations, which I never really focused on.

Your "OMY with half the proceeds going to charity" plan will allow you to take a substantial tax deduction in your final year of high-income employment.  Plus, instead of contributing the cash you earn, you can contribute an amount of appreciated taxable portfolio assets of equal value (allowing you to take a deduction for the full market value and avoid capital gains tax), and replace them with new shares purchased with your income at full market value, thereby permanently stepping up your tax basis.  Double plus, if you establish your own charitable fund (as described in the Jim Collins article I linked to above), you can even allow the contributions to continue to grow on a tax-free basis through investments of your choosing, to be allocated as and when you decide (plus get a host of other benefits outlined in Jim's article).  So there goes my idea of maximizing the total contributions by deferring them.

My projected FIRE date is (I believe) similar to yours -- probably within three years or so.  I have lots more thinking to do about this.  Thanks for planting the seed.

[msilenus]

Brooklynguy just referred me over to this thread.  My thoughts have been skewing similar to Sol's and his.  Some quick comments:

* Big +1 to the suggestion of using a DDF for this.
* Deferring big charitable contributions until the last year might be a little wasteful, because it might push you into a lower marginal rate.  It's usually going to be optimal to spread out contributions over more high-earning years.  A compromise might be phasing up into this approach slowly.

I don't think supporting a cause in an ongoing way while working indefinitely is going to wind up being the most impactful way to donate.  You agree with their aims, but what do you know about them, really?  Have you worked there?  Have you seen the impact they're having?

My current thinking is that I'll build up a DDF balance while I'm working and have more time than money, but not worry about allocating to causes.  After I retire, when I have more time than money, I'll spend that time figuring out where the money will go.  That will involve spending serious time figuring out both where the money is needed most, and who can do the best work with it

Another factor to consider is that nonprofits have huge downswings in revenue during recessions.  So another philanthropic role you can play that might be superior to an ongoing contributor, is to try to be a revenue stabilizer.

[brooklynguy]

Deferring big charitable contributions until the last year might be a little wasteful, because it might push you into a lower marginal rate.  It's usually going to be optimal to spread out contributions over more high-earning years.

This is an excellent point, but a tradeoff of this approach is that it may cut against the psychological appeal of Sol's plan to "first reach FI, then work OMY for charity's benefit."  Sol described it as "an act of cowardice" to continue working OMY after attainment of FI for the nominal purpose of benefitting charity when that approach just so happens to also provide the personal benefit of leaving your umbilical cord / firehose of cash unsevered as an insurance policy against the shit hitting the fan.  You're right that deferring major charitable giving until the last year is probably suboptimal from the charity's perspective, but I like the mental compromise of "taking care of #1" by reaching FI as soon as possible and only then shifting gears to more altruistic concerns.

By the way, for anyone following along, "DDF" stands for "Donor Directed Fund," which, as msilenus described in the thread that led him to this one, is the type of vehicle described in the Jim Collin's article linked to earlier in this thread.

[brooklynguy]

Also, my understanding is that Vanguard's DDF option has a $25K minimum initial investment threshold, which creates a barrier to spreading contributions out over time.  Msilenus, have you found other good alternatives?  (I haven't done much (any, really) research into this myself yet, beyond reading Jim Collins' article.)

[asauer]

That's a great point.  One reason my husband and I are projecting 7 years until ER instead of 5 is b/c we want to be key players in our favorite charity's capital campaign.  Plus, we want to have a certain amount per child for college.  It's completely worth two years of extra work to make these happen.  Though, to avoid potential OMY issues after that, we're sticking to very specific goals for the extra $. 

[grantmeaname]

Like most threads started by Sol this is definitely an interesting conversation. Since I'm 8 or so years out from retirement even under an optimistic scenario it's hard to say how I'll feel when the target date comes around, since people change a lot and it's hard to imagine what 8-years-older me will value. Despite this I've been pondering over the concept as well. Since I'm thinking about downshifting into a job that will make a firehose of cash ($250k/year or more) it's a much different situation than many people find themselves in, but my thought has always been to direct a lot of the money to philanthropy. I'll definitely be watching in the time between now and then to see what your experience is.

[msilenus]

Also, my understanding is that Vanguard's DDF option has a $25K minimum initial investment threshold, which creates a barrier to spreading contributions out over time.  Msilenus, have you found other good alternatives?  (I haven't done much (any, really) research into this myself yet, beyond reading Jim Collins' article.)

Fidelity Charitable has much lower minimums, and very good integration with Fidelity.

[Aussiegirl]

I worked 4 more years after I hit FIRE. I am a very risk averse person and wanted lots of "buffer" in my ER plan. I wanted to limit the "do I have enough?" thoughts as much as possible.

Now ER'ed and looking back, I'm not sure the physical and mental toll of those 4 years was worth saving another 400k or so. In hindsight, probably should have quit my job the MOMENT I hit the number.

This is interesting Jon_Snow.   I estimate that we'll be FI in 2 years, but find myself thinking we should work another 2 years post that "just to be sure".   What advice would you give me?

[brooklynguy]

FYI, Pfau recently wrote an article about charitable giving through Donor Advised Funds (which I believe is interchangeable with Donor Directed Funds).  It doesn't really say anything new, but the discussion of concentrating contributions into high-marginal-rate years made me rethink this point from the earlier discussion in this thread:

Deferring big charitable contributions until the last year might be a little wasteful, because it might push you into a lower marginal rate.  It's usually going to be optimal to spread out contributions over more high-earning years.

This is an excellent point, but a tradeoff of this approach is that it may cut against the psychological appeal of Sol's plan to "first reach FI, then work OMY for charity's benefit."  Sol described it as "an act of cowardice" to continue working OMY after attainment of FI for the nominal purpose of benefitting charity when that approach just so happens to also provide the personal benefit of leaving your umbilical cord / firehose of cash unsevered as an insurance policy against the shit hitting the fan.  You're right that deferring major charitable giving until the last year is probably suboptimal from the charity's perspective, but I like the mental compromise of "taking care of #1" by reaching FI as soon as possible and only then shifting gears to more altruistic concerns.

If deferring all contributions to the final "one more year (or partial year)" will push you into a lower marginal rate, there's an obvious middle ground between that approach and msilenus' optimal approach of spreading out contributions over as many years as it takes to never push you into a lower marginal rate:  don't defer contributions entirely until the final year (or partial year), but defer contributions to the final period of years of your choosing (for example, the penultimate year + the final year (or partial year)).  In other words, it doesn't have to be an all or nothing approach between the two extremes.  Of course, for every additional year you include in the contribution spread-out period, you defer your attainment of FIRE by a corresponding amount of time, and incur some additional risk of the excrement making physical contact with the oscillating air current distribution device (such as job loss) before you get to the finish line.

[brooklynguy]

FYI, Kitces just published a truly excellent (in typical Kitces fashion) write-up of donor advised funds, which covers the finer tax and other nuances (some of which were discussed earlier in this thread, but many of which were not):

https://www.kitces.com/blog/rules-strategies-and-tactics-when-using-donor-advised-funds-for-charitable-giving/

[Guesl982374]

Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.
...
The question then becomes one of logistics.  How do you give away that much money?

Sol - Sounds like a great plan and no, it is not cowardice.

When you originally posted this thread back in Januaray it got me seriously thinking. While I will most likely take 3-6 months to decompress, there is a significant chance I will want to continue earning money in different, riskier ways (one of my core reasons to acheive FI is to be able to take risks without putting my family at risk). There's a good chance my wife will most likely want to continue working in her field. For us, the question won't necessarily be OMY vs. RE, but rather what to do with the surplus of cash. My wife and I discussed this a few times and we are most likely going to set up a scholarship fund to help low-income kids to go college (we are passionate about education reform) with a large portion of the extra cash generated. The idea would be to set up a fund and utilitize the 4% rule for "indefinite" scholarship payouts. As we continue to earn money we can keep throwing money on the pile for bigger and bigger scholarships. It's still a pretty rough idea and FI is still (more than) a few years away but it's definitely on the table.

Thanks for kicking off the thought process.

[Bearded Man]

What about working one more year and then changing careers to something else?

This. I might try this and am creating a plan for this as an option. Although FI now, if I work another 2 years my QOL goes up. Plan was/is to get while the getting is good for the next 9 years. I have 7 to go, but at the 5 year mark I may decide to either FIRE or change careers. If I can let my nest egg grow a few more years by doing so while still putting some money away and I can stomach the BS I might just work the full 7 years I have left.

[Bearded Man]

I worked 4 more years after I hit FIRE. I am a very risk averse person and wanted lots of "buffer" in my ER plan. I wanted to limit the "do I have enough?" thoughts as much as possible.

Now ER'ed and looking back, I'm not sure the physical and mental toll of those 4 years was worth saving another 400k or so. In hindsight, probably should have quit my job the MOMENT I hit the number.

Interesting...I wonder if I will feel the same.

[patrickza]

I also don't really have a year, but a number. It's simple for me $1m and I walk out the door never to return. That's a 2% SWR for me if I exclude any side gigs. Realistically, I'm good to go now with the side gigs, but I want that number! I expect to hit it in about 3-5 years, and I'll be around 40, unless of course a side gig goes big, or work just drives me insane.

[grantmeaname]

If I were you I'd read this thread and then retire tomorrow!

[ender]

One of the reasons we are generous now (not FI) is that I don't expect I can magically change my attitude someday when I have wealth.

OMY only makes sense if you have a purpose that you believe in behind it. Charity can be a purpose. Scholarships can be a purpose.

I fully expect I will work some until I am in my mid-50s and potentially even 60s (assuming I live that long, I guess). I also fully expect work will become optional well before then.

But if I get to a point where I am close to FI or past it, my lifestyle will allow me to have immense freedom with my resources - whether working and giving crazy amounts financially or giving my time, choosing a more satisfying or less stressful career, or taking a 3 month sabbatical/vacation JUST CUZ or spending much more time with my hopeful children.

This is what pursuit of FI and MMM lifestyle is for me. It's not a "hurry up and quit working and do nothing" thing for me. It's a pursuit of a state where I can "live life how I want to live it and live it to the full." FI and anti-materialism fit perfectly with that goal. But when I'm at that point, who knows where I'll be. Maybe I'll be making $150k a year at a job I love and will be able to give away $5,000 a month to charities I support. Maybe I could fully fund a new one myself. Maybe I request to work 32 hours a week. Who knows. But what I do know is I want the freedom to make those choices.

Pursuing FI lets me dream of this. These dreams are not going to change if I actually hit there but will become reality. Maybe I'll continue working and nothing will really change. I don't know.

If you look at MMM he still works, too. Just on his terms completely and with no "I need a paycheck" incentive whatsoever.

[MLKnits]

You're assuming the millionaire salary person is saving the same quantity of money as the other person, rather than only saving a similar percent.  I've noticed *most* people with high salaries tend to increase their spending substantially as the salary rises, and thus don't save so much.

Also in the OP's hypothetical case, the rich person has only been saving for less than a year.  I would be worried about those frugal habits not being ingrained, because the rich person has a much longer time of being used to living large than the $20K/year person.

This would be one of the biggest risks, IMO. And as a higher earner, my OMY plan (still a good ways away) is to switch to a lower-paying, hopefully lower-stress (or at least different stress types!) job for a year and live only off that income, so that I may not be saving more but my existing investments will continue to grow. That way it's a test run of "can I live off X for real, without cheating" (too easy to cheat with a high income!) while not actually drawing down the stash. Plus, some of the potential profession shifts could actually be things that would make me happy, who knows.

[Captain and Mrs Slow]

Along the same lines a lot of Baby Boomers are easing into retirement. Some twke low paying jobs so they can interact with the public, others the companies are suddenly very worried about losing too many staff all at once, so you ease into retirement maybe by working 2-3 days a week for a year or two.

[41918]

For me I don't think I'll ever stop earning. I get bored easily and need a new challenge. Once I hit the number i'll downshift into something less stressful and let my nut grow for a few years. Downshift will likely be something full time with benefits and less stress. A few years later start something on the side. Ive always thought an adjunct position at a small college would be ideal.

[Pigeon]

Most adjunct positions aren't full time and don't have benefits.

[sol]

Most adjunct positions aren't full time and don't have benefits.

Perfect!  If I wanted a regular job, why would I retire?

[MM_MG]

Holy thread revival Batman!

But I'm glad it was.   We've been thinking about this a lot lately.   I am fortunate to work in a profession where I could easily work into my 70s+ (so could my SO to a certain extent), but we are on track to likely be able to be FIRE at age 50.   We could "take our money and run" and shouldn't feel an ounce of regret.   However, I've recently started thinking about the positive benefits we could have on society in general by working for free or cheaply after age 50.   I am starting to believe that time working and "giving away" our services would likely be the most enjoyable time we've spent working.  Whether that is in the form of offering our services for free or giving away the money we make I don't think it matters.  To Sol's point, I believe I can tolerate a lot of corporate BS knowing that it is helping those much less fortunate.  Of course, it helps that we currently take at least a month off a year and could probably negotiate more time off after age 50.   Regardless, I agree with Sol that OMYS strikes the rich more...as it probably should.   My $.02.   

[NorthernBlitz]

For high incomes, retirement has a higher opportunity cost.  Although it doesn't sound like it in your case, are higher paying jobs more likely to fulfill an individual's self actualization needs?

Opportunity cost was the first thing I thought of too.

I also think that wealthy people generally come from good family situations. My parents and grandparents have provided me with tremendous opportunities. They have never asked for anything in return, but my grandfather has said that he always felt that it was important for him to help us because his parents and grandparents helped him.

Paying it forward is part of my family's culture and I have benefited from it. I want to be able to do it for my kids so that they can be at or close to zero after their college education. If working for a few more years enables me to do that, I'll probably make that sacrifice.

[arebelspy]

For high incomes, retirement has a higher opportunity cost.  Although it doesn't sound like it in your case, are higher paying jobs more likely to fulfill an individual's self actualization needs?

Opportunity cost was the first thing I thought of too.

The opportunity cost is another YEAR of your life.

You only get so many of those.  Money stops being worth much of anything, at that point.

Someone used an analogy in another thread that when you have enough it's like getting paid in packs of gum when you only eat a pack or two a year.

What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

Yes, the opportunity cost is more money. Maybe a lot more money.

...so?

Trading more of my life for money? That's a hard pass, for me.

[sol]

What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

[Retire-Canada]

Do you do a desk job? If so how do you feel about the deleterious health effects of all the sitting and computer work when you no longer need money?

[SwordGuy]

Most adjunct positions aren't full time and don't have benefits.

And the pay is generally piss-poor.   

[Tabaxus]

What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

I struggle with this. 

Someone else may have mentioned this, but it almost poses a similar problem as the old thought experiment where a train is speeding toward a group of [X] people, and you can save those people if you flip a switch to instead kill [some number less than X] people.

A particularly hard version of this that comes up is whether you would flip the switch to save a ton of people, if you were the person who would be killed from flipping the switch.

Except here, I can literally save thousands of people, and the switch won't kill me, though it may take years off my life (stress, health, etc.) or otherwise significantly lower my enjoyment of life.

When I frame it in this light, doing anything other than working until I can no longer really do the job seems like a morally bankrupt thing to do.  And it's hard to grapple with.