I've only recently discovered this whole subculture of FIRE having stumbled upon MMM via his Tim Ferriss podcast interview. I've been kind of obsessively running my numbers for a few weeks now to see if I'm potentially able to FIRE in the not-too-distant future and... I think I just might be!
I recently took the time to change my investment mix, moving out of some actively managed funds and into index funds. I invested some idle cash. I ramped up funding of a Roth IRA.
Now 2022 is looking like it could be my year. My struggle is going to be reducing my spending. I've done a pretty good job (by normal standards, not by Mustachian standards) in the savings category and so I now have a 'stache of around 800K + ~140K home equity (remaining mortgage of 120K). I have a savings rate of around 36% (low by Mustachian standards, I know). My spending is about 50% discretionary (restaurants, mostly) but it will be a hard habit to break.
I'm single w/no kids so I only have to support one person (so long as my mom's $ lasts for her retirement, which it probably will, fingers crossed).
My spending goal for post-FIRE is around 47K/yr so I'm hoping to have my 'stache at the 1.2M level by 2022. That seems to be where things are headed assuming average returns over the next 5 years (7%). There's also a lot of fluff built into that 47K figure, so plenty of room to adjust if needed.
If everything falls into place and I pull the trigger in 2022 at 52 years of age, I should have around 260K in taxable accounts to draw from and 950K or so in retirement accounts. Some reading over at the Mad Fientist site enlightens regarding the access to retirement account funds to bridge the post-FIRE to 59.5yr gap, so I think that would be doable.
My recent research into the world of FIRE has clued me in on the fact that financial freedom is at my fingertips. That makes my job both less frustrating and more frustrating. Less so because I don't have to think so long term anymore regarding my career. I don't need another promotion. I don't have to play the political game. I can be more honest and open about issues. But also more frustrating because I can see the end, so close... yet not quite here.
So this is my one year post-iversary!* How has the plan been going over the past year? Well, let's see...
A couple of things from my initial post can now be revised. First, my savings rate has improved. At the time of my first post, I had approx a 36% savings rate. I ended 2017 with a 49% (post tax) savings rate and so far in 2018 I'm actually at 59% (I include mortgage principle in that calc). So that's a win and works the needle in the FI sooner direction. My spending has reduced just a little bit (maybe 8% so far). I do plan to take a couple of short trips later this year, so that might get me closer to last years spending.
My net worth has increased by $143K since this first post and I became a millionaire, which is also good. That also works the FI needle closer to now.
I no longer intend to pay off my mortgage in any hurry. I've read lots of the posts in these forums about the issue and the math seems to be solidly in the 'keep your mortgage' category. Since I've got 12 more years on my 3.75%, I think I'll stay the course and just pay it off on the normal schedule. I may move before then, anyway.
Now that I am tracking my spending more closely, I have revised my target RE spend upward. Now, I realize that there are many on the forums who rightly point out that MMM is all about finding sufficiency (nay, bounty) in low cost living. I get it. We bigger spenders are dragging up the average on the boards, but we're doing better than we would have without the MMM influence. So while my 2017 self used 47K as my expected RE spend, I'm now looking for something more around 60K. Frankly, healthcare costs have me a little freaked out. Where I live, right now the ACA plan at the Silver level with no subsidies would cost me around 8K/year. It's only going up. I'm expecting to need 10-12K/year when I start my RE life. Trying to predict this is almost pointless, but clearly all signs point to 'more expensive'.
Increasing my target RE spend obviously moves the RE needle away from now.
Now that my stash is adequate to provide for me in a 'skinny FIRE' scenario, I do feel somewhat liberated at work. I find myself being less obliging to early meetings, pointless conference calls, etc. While my job has never been bad by most standards, I chafe at the fundamental reality of being someone else's servant. I don't want to work their schedule. I don't want to be on call in the middle of the night. I don't want other people's crappy work to reflect on me. And I don't want to have to plan my life around being in a cubicle 5 days a week. Having more financial resources takes a little bit of the edge off of that, since I know that I could walk away at any time. But I also have to check myself sometimes because I'm not yet where I want to be when I pull that trigger.
All in all, I see myself still on target for a 2022 RE. I still extrapolate my stash will be somewhere in the $1.2-1.3M range at that point. I have a small pension that kicks in at 60, which should reduce my WR by almost 1.5 percentage points. FIRECalc has me at 100% historical success with my current numbers.
Will I have the guts to really pull the trigger in 2022? I don't know. It's too far away to be real just yet. Of course, 20% of my 5 year horizon from first post has now slipped into the past, and it didn't seem to take very long.
I think my finances are pretty much in snowball mode at this point so the most important thing I need to be doing now to prepare myself for RE is finding new hobbies, interests, and friends that I can spend my time with post-FIRE. I think this is the most likely stumbling block for me come 2022. I couldn't retire today if I had the money, because I'm not mentally and socially prepared. I've got to focus on getting that part in order.
Hope everyone else has made good progress on your goals for the past year and I look forward to the final stretch!
*close enough
And here we are at my 2 year post-iversary! Not sure what the correct gift is for that...
Kind of scary to realize that
since my first post now 2 years or 40% of the time from then to my planned FIRE year has passed. 5 years never seems so short until it's behind you, I guess.
So how did my second year toward the FIRE goal go? Things seem to be pretty much on track, even though market performance last year was... not good. My liquid net worth (a.k.a. the stash) increased by a mere 31K in 2018, helped along by my 2018 saving rate of - wait for it - 53% (yay, me).
In 2019, I think the saving rate will be a bit lower due to no work bonus (boo trade war) and some high home & auto maintenance work that totaled around $7,500. But, as most of us have probably learned, once we're rich enough to be planning our early exit from the workforce, our stash growth isn't really affected by a few thousand dollars of unexpected expenses here or there. Not when mister market can trim off tens of thousands in a week, as he has done lately (boo trade war).
I just looked and see that the S&P 500 is a mere 1% higher today than it was one year ago.
What else has gone right in the second year? My general fitness level has improved. Retiring early only to be physically unable to enjoy my freedom would be sort of sad. Not to mention the chance of departing this plane entirely. I want to improve my chances of having a healthy, long retirement. To that end, I have been able to stick with a very basic workout routine 3x / week for about the past 9 months. Just some stretches, some body weight exercises (planks, push-ups, dips), some free weight and kettle bell routines and then either biking or running. I've been a (casual) runner for years, but I never really stuck with any kind of resistance training. It really doesn't take very much time to make a noticeable (to me, anyway) difference. I am very much looking forward to fall weather, though, to make the outdoor parts more pleasant.
I've been working a small side project with some folks that I hope to keep good business relationships with over the next few years as a way to perhaps ease into RE. It will generate about 10K this year (before tax man gets his cut, so probably net of only about $7K) but it also will only have required 100-120 hours of my time. I took the project more for the relationship and possible future business than I did for the money. I kind of hope to have one or two small (very small) projects each year to keep my mind sharp once I leave corporate America. Bringing in 10-20K each year would do wonders for the withdrawal rate! My pension starts in 2030, and it will be about that amount so this would be a nice little safety bridge if I can pull it off for 6-8 years.
My spending is basically on par with the last couple of years, aside from the noted maintenance stuff above. For planning purposes, I am using $5K / year as my maintenance expense between home and auto. I don't know if I will stay in my current home through my early retirement years or if I will find some other living arrangement. It is something to think about, since acquiring a mortgage without an income producing job might present challenges. I do like my suburban town so I'm actually considering a local move sometime before RE. If I do, it would probably be a net expense of about $100-$150K. That might be the thing that triggers a OMY. We'll see.
I'm still using the $60K/yr number for spending post FIRE, which gives me a 96% fireCalc success rate for the 2022 time frame. The poor markets last year brought that down from a projected 100% a year ago. Noise, I guess.
My spend number obviously includes a great deal of discretionary spending. My 'skinny' FIRE spending - which wouldn't require downsizing or ditching cable or eating only beans and rice or anything like that, is about $40K and my 'slim' FIRE number which would include more frills is about 50K. These levels are pretty much within reach right now, but I am aiming for a more 'husky' FIRE. I think I keep up with these other lower FIRE levels just as a way to stay confident that if I lose my job for some reason before I decide to pull the cord, I don't have to freak out. I can gauge the level of bullshit up with which I am willing to put at the corporate gig. I can stay confident that my corporate overlords don't really have any power over me.
I have >5 years of spending in post-tax accounts, so when I hit the door, I've got the money available. I have a rather conservative asset allocation, at 65/35. I back tested against my portfolio for what would have happened in the 2008 meltdown and my stash would have lost 26%. When I actually FIRE, I will be taking a cash payout for one of my pensions, which I currently consider part of my bond allocation. When that happens, I plan to shift a percentage of that cash into equities and bring my AA to 70/30. I'm sure that will depend on how things look at the time. If we are still at PE levels of 30... maybe not.
2 years into my journey I now recognize that 3 more years until 2022 is not very long at all.
How are everyone else's plans coming along? Do you all have different 'levels' of FIRE that you keep track of? Is work more or less frustrating as we get closer to the finish line? Have you adopted any coping strategies?