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31 year old, married with two young kids, looking to FIRE in 5 years
Old 02-22-2012, 04:27 PM   #1
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31 year old, married with two young kids, looking to FIRE in 5 years

Hi everyone, long-time lurker here, I thought I might post a little something here to introduce myself.

I'm a 31 year old looking to (mostly) retire in 5 years due to sheer hatred of being stuck in the rat race (especially my current job, which I'm looking to switch from) and the desire to be around and present in my two kids' (age 1 and 2) lives.

My plan is to try to acquire around $1.8 million by 2017, and then live off of gross yearly expenses of around 110K until the kids graduate college and my house is paid off, at which point my yearly expenses would shrink to around $40K.

Due to my relative youth, I'm hoping my wife and I can mitigate risk somewhat by taking on pt w*rk for a few years after 2017 (me: temp work & online poker, her: dog walking, temp/seasonal work) to supplement our incomes by around $20K.

I tried to anticipate health care costs in this plan, but the whole situation seems too difficult to predict, so my current thought is to wait until 2014 and then try to figure it out.

Fortunately (I suppose) my wife is like 13 years older than me, such that even if we FIRE, I anticipate some SS income. Other potential risk mitigators include potential inheritances (macabre to think about, I know) of conservatively anywhere from $50K-$200K down the line and a small (like $5K) pension if I can successfully obtain a job in the government.

Comments/criticisms/questions are most welcome! You basically cannot offend me
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Old 02-22-2012, 04:38 PM   #2
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Welcome to the site. Good luck on your plans going forward.
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Old 02-22-2012, 04:44 PM   #3
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If you spend 110k/year out of a 1.8 mill nestegg, that is a 6%+ SWR.

If you bring in 20k/year from PT work and spend 90k/year out of your nest egg, that is a 5% SWR.

I think most participants on this forum would feel uncomfortable with those SWRs. For those under 40, most of us are pretty conservative and suggest SWRs in the range of 2-3% for younger retirees.

110k in annual expenses for a family of four is high compared to what many here spend, but can be greatly affected by where you live. Have you looked at ways to reduce your living costs, possibly by relocating? You may find that if you are open to living in a less expensive part of the country, you can get by with a nest egg much smaller than 1.8 mill while still having a low SWR.
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Old 02-22-2012, 04:52 PM   #4
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If you bring in 20k/year from PT work and spend 90k/year out of your nest egg, that is a 5% SWR.

I think most participants on this forum would feel uncomfortable with those SWRs. For those under 40, most of us are pretty conservative and suggest SWRs in the range of 2-3% for younger retirees.
True, I agree that a 5% SWR is fairly risky, but I also think a SWR should take into account SS and other income down the line, no? Even if the minimum social security age gets raised, the program itself is highly unlikely to be eliminated.

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Originally Posted by lhamo View Post
110k in annual expenses for a family of four is high compared to what many here spend, but can be greatly affected by where you live. Have you looked at ways to reduce your living costs, possibly by relocating? You may find that if you are open to living in a less expensive part of the country, you can get by with a nest egg much smaller than 1.8 mill while still having a low SWR.
True, I live in a really high cost area, and am hamstrung by wanting to be someplace that has good public schools and is near people I am friends with. Still moving slightly further away into the suburbs/exurbs is a distinct possibility.
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Old 02-22-2012, 04:59 PM   #5
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True, I agree that a 5% SWR is fairly risky, but I also think a SWR should take into account SS and other income down the line, no? Even if the minimum social security age gets raised, the program itself is highly unlikely to be eliminated.
Have you tried putting your numbers into FIRECALC? It takes into account future SS and pension income.
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Old 02-22-2012, 05:09 PM   #6
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Have you tried putting your numbers into FIRECALC? It takes into account future SS and pension income.
I've tried FIRECALC a bunch of times, and suffer from the character flaw of continually monkeying with the numbers/assumptions until I get the result I want. I need to probably do a more serious scenario generator, once I am a few years away.

One interesting thing about FIRECALC seems to be that the decision to pay off my mortgage in full seems to really matter to the calculation. I see the argument for why reducing mortgage expenses cuts down on risk, but I also worry about putting so much money in such a poorly returning asset, especially when I'm going to really need a high rate of long term return to not outlive my portfolio.
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Old 02-22-2012, 05:18 PM   #7
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I confess that I didn't start running retirement calculators until I was in my forties.

As for paying off the mortgage or not, there have many threads discussing the pros and cons.
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Old 02-22-2012, 05:24 PM   #8
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I was gonna say something about you having a 1 and 2 year old at 31. Then I remembered that I had a 1 yo and one on the way at 31. I guess that explains why I have teenagers at home still.

Beyond saving, I'd look at trimming those $110k of expenses. That's a lot! Obviously, I have no idea what you spend it on but that more than most people make in year, much less actually spend (taxes, savings, etc.). Might be some wiggle room in that to reduce spending, hardly notice and meet your goals.
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Old 02-22-2012, 05:40 PM   #9
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I was gonna say something about you having a 1 and 2 year old at 31. Then I remembered that I had a 1 yo and one on the way at 31. I guess that explains why I have teenagers at home still.

Beyond saving, I'd look at trimming those $110k of expenses. That's a lot! Obviously, I have no idea what you spend it on but that more than most people make in year, much less actually spend (taxes, savings, etc.). Might be some wiggle room in that to reduce spending, hardly notice and meet your goals.
Thanks, I agree with you, its a lot! Basically, it breaks down to:
$20K in taxes,
$24K in daycare costs (I've read that when children get older these costs get replaced with other things, e.g. music lessons),
$30K in housing and condo fees (definitely some savings can be had there),
$10K in groceries (this one is crazy),
$5K in clothing (my wife buys a billion children's outfits),
$2K in utilities,
$3K in student loans,
$2K in travel,
$2.5K in petcare (hopefully to be reduced once we can walk our own dogs).
$3.5K in restaurants
$3.5K in entertainment (including cable, internet, and phone)
$2K in healthcare

Lots of room for saving in here, but its tough to eliminate some of the more frivolous categories while I'm still w*rkinng, b/c they are necessary stress relief at this point
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Old 02-22-2012, 05:44 PM   #10
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I confess that I didn't start running retirement calculators until I was in my forties.

As for paying off the mortgage or not, there have many threads discussing the pros and cons.
Thanks! I plugged in my numbers into FIRECALC just now, and unless I did something wrong, I get an 89% success rate factoring in likely inheritance, and a 77% success rate otherwise.
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Old 02-22-2012, 07:18 PM   #11
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Originally Posted by alexbalex View Post
Thanks, I agree with you, its a lot! Basically, it breaks down to:
$20K in taxes,
$24K in daycare costs (I've read that when children get older these costs get replaced with other things, e.g. music lessons),
$30K in housing and condo fees (definitely some savings can be had there),
$10K in groceries (this one is crazy),
$5K in clothing (my wife buys a billion children's outfits),
$2K in utilities,
$3K in student loans,
$2K in travel,
$2.5K in petcare (hopefully to be reduced once we can walk our own dogs).
$3.5K in restaurants
$3.5K in entertainment (including cable, internet, and phone)
$2K in healthcare

Lots of room for saving in here, but its tough to eliminate some of the more frivolous categories while I'm still w*rkinng, b/c they are necessary stress relief at this point
Welcome to the forum!

Interesting budget.... I might of missed it, but how about college funds for the 2 kids? Are the student loans ... yours or the kids? Healthcare might be low without employer contribution.

Budget for 4 = $110k, 2 = $40k... that's a major reduction. Is this correct or is it $40k + SS? It'll be great if you can swing it all. Good luck.
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Old 02-22-2012, 08:05 PM   #12
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Welcome to the board, Alex.

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Originally Posted by alexbalex View Post
You basically cannot offend me
Pretty brave talk for a former lurker who's seen what's happened to others making that statement...

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Originally Posted by alexbalex View Post
(me: temp work & online poker...
I don't know how long you've been lurking, but to my count we've had a handful of online poker players here over the last eight years. "Odd"ly enough, none of them are still with us to explain precisely how many millions of dollars they've accumulated.

Who knows, you might turn out to be hard-wired to make a fortune at it, but at least you're willing to hedge your bets with temp work.

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Originally Posted by flyfishnevada View Post
I guess that explains why I have teenagers at home still.
I think that by now the problem is you keep feeding them, so you've blunted their natural instincts. They have no reason to return to the wild to learn how to forage for themselves...

We've been testing out this theory in our house, but our teen keeps showing up at the houses of friends & neighbors begging for their food. The rehab seems to be a long, complicated process.
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Old 02-22-2012, 09:32 PM   #13
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Welcome and good luck with your plan.

For planning purposes, your $24K in daycare costs should shrink dramatically once the kids are in school unless you choose private school. If you are FIRE by that point, you won't need after school care. And since you'll have time to do things with them, you won't need to over-schedule them with activities. So put some of that into a college fund and some ($200/month/child)? budgeted for lessons, etc.
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Old 02-22-2012, 10:16 PM   #14
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The problem with your plan is that it does not take inflation into account. If you retire at age 36 you or your wife will likely be retired for 50 years. 50 years of seemingly harmless 2 to 4 percent inflation will enormously erode the purchasing power of whatever amount you decide to draw out of your stash. During that same 50 years there very likely could be several years with much higher inflation that will have an even bigger effect on your buying power. That 40K you plan on taking out may have only a small fraction of the buying power that 40K has today. IMO you will either need more money and/or to work longer than 5 more years. OTOH, it is very impressive that at 31 you are thinking about and apparently very successfully working toward an early retirement.
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Old 02-23-2012, 09:09 AM   #15
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Welcome to the forum!

Interesting budget.... I might of missed it, but how about college funds for the 2 kids? Are the student loans ... yours or the kids? Healthcare might be low without employer contribution.

Budget for 4 = $110k, 2 = $40k... that's a major reduction. Is this correct or is it $40k + SS? It'll be great if you can swing it all. Good luck.
Thanks! You're right that I haven't been including college contributions, which is obviously an oversight. I'm hoping to have $160K saved for the little ones by the time I FIRE, which (assuming a 6% real return) means I'll still need to save some more if we assume any of them are going to grad school. Perhaps an additional $5-8K should be assumed.

Healthcare is obviously low, so hopefully savings I can get from daycare/housing will make up for that.

The major reduction isn't just the kids, but also includes savings from having a paid off home/moving somewhere without condo fees.
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Old 02-23-2012, 09:18 AM   #16
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Pretty brave talk for a former lurker who's seen what's happened to others making that statement...


I don't know how long you've been lurking, but to my count we've had a handful of online poker players here over the last eight years. "Odd"ly enough, none of them are still with us to explain precisely how many millions of dollars they've accumulated.

Who knows, you might turn out to be hard-wired to make a fortune at it, but at least you're willing to hedge your bets with temp work.


I think that by now the problem is you keep feeding them, so you've blunted their natural instincts. They have no reason to return to the wild to learn how to forage for themselves...

We've been testing out this theory in our house, but our teen keeps showing up at the houses of friends & neighbors begging for their food. The rehab seems to be a long, complicated process.
Hahaha, yeah, as a former ravenous teenager, I have no doubt that mine will attempt to eat me out of house and home

The online poker thing is kind of a brainstorm for ways to shore up some money to avoid FIRE'ing right at the beginning of a market downturn. If it doesn't work the way I hope, I'll look into other j*bs such as temping (which will most likely be mind numbingly boring)

Basically, the plan would call for an hour or two of low stakes online poker playing ridiculously conservative and pulling down an average of $20 a day or $5000 a year. Plenty of ways this plan could go wrong, in which case, a temping I will go.

W/r/t being offended, I've been dreaming of FIREing for so long now, and being called crazy by everyone (including my wife) that being called crazy doesn't faze me
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Old 02-23-2012, 09:23 AM   #17
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Welcome and good luck with your plan.

For planning purposes, your $24K in daycare costs should shrink dramatically once the kids are in school unless you choose private school. If you are FIRE by that point, you won't need after school care. And since you'll have time to do things with them, you won't need to over-schedule them with activities. So put some of that into a college fund and some ($200/month/child)? budgeted for lessons, etc.
I hope so, though to be honest, I don't really know. I obviously can't teach them how to play the violin or speak Spanish or play on the soccer team. I don't want them to miss out on enriching activities just because their parents are FIRE'd.
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Old 02-23-2012, 09:28 AM   #18
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The problem with your plan is that it does not take inflation into account. If you retire at age 36 you or your wife will likely be retired for 50 years. 50 years of seemingly harmless 2 to 4 percent inflation will enormously erode the purchasing power of whatever amount you decide to draw out of your stash. During that same 50 years there very likely could be several years with much higher inflation that will have an even bigger effect on your buying power. That 40K you plan on taking out may have only a small fraction of the buying power that 40K has today. IMO you will either need more money and/or to work longer than 5 more years. OTOH, it is very impressive that at 31 you are thinking about and apparently very successfully working toward an early retirement.
Doesn't FIRECALC take inflation into account? I think my withdrawal rate (taking in future pensions/inheritances, and cost of living downgrades) is less than 5%, which seems doable, if you assume an 8% return on equities coupled with a 3% inflation rate. Worth pointing out, a significant chunk of my expenses right now are tied to housing, which obviously won't inflate at the same rate (fixed mortgage and all).
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Old 02-23-2012, 10:10 AM   #19
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your withdraw rate should take inflation into account. and the basis of the 4% rule which many cite has recently been taken by some here as not accounting for inflation. I don't have the answer for what a SWR should be, I just know I couldn't sleep at night with anything over 3 for that period of time.

I think your costs are all over the board. Anytime someone says, what about this, you respond, well, maybe this is a little a high and I hope that will cover this shortfall. I would nail down with a good deal of accuracy what your actual costs will be. and when you solve the healthcare riddle, please let me know the answer.

now, if you could share your secret on how to acquire $1.8mil by age 36 (plus pay off the house in a high COLA area and have 80,000 for college saved for each kid), I am all ears.
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Old 02-23-2012, 10:25 AM   #20
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I think your costs are all over the board. Anytime someone says, what about this, you respond, well, maybe this is a little a high and I hope that will cover this shortfall. I would nail down with a good deal of accuracy what your actual costs will be. and when you solve the healthcare riddle, please let me know the answer.

now, if you could share your secret on how to acquire $1.8mil by age 36 (plus pay off the house in a high COLA area and have 80,000 for college saved for each kid), I am all ears.
You're right, my costs are all over the place. Its just very difficult to know where I'm going to be cost-wise in 5 years, given all the huge changes in my life upcoming. My plan is to try to cut down on entertainment, daycare, and housing costs over the next 5 years. Once I FIRE, I'll save a lot on clothing, restaurants, pet care but likely healthcare will be a very high expense. (healthcare seems impossible to predict until 2014)

No secret for me to acquiring lots of dough. Basically involved selling my soul to my employer, neglecting wife and kids, and accepting mockery from people at work for being the only person who didn't buy into golden handcuffs lifestyle (LBYM) People look at me like I'm crazy when I tell them I drive a 6 year old Toyota, take the bus into work, bring my own lunch, and use a pre-paid cellphone rather than the latest Iphone.
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