32 year old, shooting for 35?

[Totoro]

I am genuinely curious, what do you see as the big difference between a $5-6 million net worth (what I'm targeting in 2 years) and an $8 million net worth? It seems to me that either should allow one to rule out having to go back to work again in the event of a bad scenario. Or put another way, if I find myself having to go back to work after having saved $5-6 million, would an additional $2 have really made a difference? Thanks

If you spend 100k even 5-6M is borderline ridiculous imo. That's 50 years of living expenses, assuming a portfolio just keeping up with inflation. But you know that already.

Another perspective: 1M per annum vs. 4M net worth is basically a 25% "return on investment". In turn you do have to work full-time. That's really good. Once you hit 8M it drops to 12%, still good but less impressive.

Anyway, the only thing in my view what you need to consider from a financial perspective is what will extra money do for you other than providing you with a decent living? e.g. Do you want to fund startups, donate to charity, collect art, etc ..

If there is nothing there, only work if you enjoy it. You are one of the very lucky ones: wealthy enough to be free, young enough to have all the options to enjoy it.

(In case you were wondering: I'm 34 with +/- 750k usd or so)

 

[rb35]

If you spend 100k even 5-6M is borderline ridiculous imo. That's 50 years of living expenses, assuming a portfolio just keeping up with inflation. But you know that already.

Another perspective: 1M per annum vs. 4M net worth is basically a 25% "return on investment". In turn you do have to work full-time. That's really good. Once you hit 8M it drops to 12%, still good but less impressive.

Anyway, the only thing in my view what you need to consider from a financial perspective is what will extra money do for you other than providing you with a decent living? e.g. Do you want to fund startups, donate to charity, collect art, etc ..

If there is nothing there, only work if you enjoy it. You are one of the very lucky ones: wealthy enough to be free, young enough to have all the options to enjoy it.

(In case you were wondering: I'm 34 with +/- 750k usd or so)

Totoro - Well done on the 750k. It really starts to accelerate around there IMO.

I agree with everything you've said. I have no burning desire to fund startups or collect fancy material possessions.

I expect we will spend a decent amount of our time in charitable activities. We'll also donate financially, but I don't feel obliged to donate very large sums of money.

Mainly, the money will find freedom and travel (what we enjoy doing most).


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[Totoro]

Keep the timer countdown going then and set a fixed date, in my book you are way off in OMY territory (I mean this in a good way, you're already there!).

 

[rb35]

You got it . I will be checking in at least once a year.


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[mohenjo]

RB like I mentioned the extra 2mil could be useful in many circumstances. If you decide to have kids would be an obvious one. A massive market correction early on in your retirement. A huge increase in healthcare costs. A disability or severe illness. You like travel (so do I, I've been too many many countries and traveled dirt cheap for $1 a day to $1000+ a day) and that can easily add up. If you only had 20-30 years to go it would be different. What is the vol term structure? Its not an easy straightford answer, even with 5m in the bank and <100k in current expenses. I'm not even talking about charities and starting companies.
So I got finance right, but NYC prob wrong as 70k would cover just housing costs unless you are a trust fund baby.
FYI, I'm in a similar situation as you, except older, lower NW, kids, higher expenses. Ok so maybe not so similar! I plan to be FI @ 40 or early forties maximizing my saving while I'm young, able and still find my job exciting and being able to enjoy life at the same rimw.

 

[Symbiotic]

I "retired" today at a few years older than you, with much the same financial picture.

I wrestled a lot with omy, but I finally decided the opportunity cost of not doing what I want to do at this age was too high. I already feel old. (Sorry, older people -- no offense!) I have a lot of interests outside of my companies' specialized domain.

I'm about 80% sure I'll go back to "work" in some form after taking a while to decompress and get outside for a while. In my industry, with my specific skillset, it would not be too hard to get back into something approximating 1M a year (ahem, before taxes). I think it is really unlikely I'll do that, though. I'd rather work with kids or volunteer or something and just live cheaper.

I can definitely empathize with your scenario, and I think your choices are fine. I expect to see your upate in a year with that same stopping date, though.

 

[rb35]

I "retired" today at a few years older than you, with much the same financial picture.

I wrestled a lot with omy, but I finally decided the opportunity cost of not doing what I want to do at this age was too high. I already feel old. (Sorry, older people -- no offense!) I have a lot of interests outside of my companies' specialized domain.

I'm about 80% sure I'll go back to "work" in some form after taking a while to decompress and get outside for a while. In my industry, with my specific skillset, it would not be too hard to get back into something approximating 1M a year (ahem, before taxes). I think it is really unlikely I'll do that, though. I'd rather work with kids or volunteer or something and just live cheaper.

I can definitely empathize with your scenario, and I think your choices are fine. I expect to see your upate in a year with that same stopping date, though.

Symbiotic, thanks for posting here. I read your introduction thread with great interest. Congratulations on ER!

I'll be sure to check back in a year with an update and look forward to hearing what you're doing a year into ER as well.


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[rb35]

Hi everyone, time for another yearly update.

* 34 now and net worth has increased to about $5 million
* Still thinking next year is when I call it quits with a net worth of around $6 million hopefully. We do need to set aside money for a house so approximately 600k to 1 million of that net worth number will not be in investable assets.
* With more history under my belt, I'm comfortable that we'll have passive income of about 175k - 200k from a combination of rental income, dividends and interest.

I worry less about the financial aspects of early retirement at this point as I do feel financially independent now. I think hitting the $5 million mark and having consistent passive income got me there psychologically. Before, I struggled with feeling FI just based on the 4% rule. Having passive income come in every month has really boosted my confidence.

So at the moment, instead of finances, my focus is more on what our lives will be like post-work. Where we'll live, how much travel we'll do, what forms of volunteer activities we'll participate in, etc.

Symbiotic - if you're still on this board, I'd love to hear how your first year of retirement went. Any words of wisdom you can impart?



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[YeahNo]

Thanks for the update rb35...its cool to see the journey. If you don't mind me asking, what do you do for a living?

 

[rb35]

Thanks for the update rb35...its cool to see the journey. If you don't mind me asking, what do you do for a living?

Thanks, YeahNo. It's a finance / Wall Street type job.


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[Trueace]

IBD?? Lol no problem if you don't want to disclose more.

 

[Symbiotic]

Symbiotic - if you're still on this board, I'd love to hear how your first year of retirement went. Any words of wisdom you can impart?

Hey, great news to see your update. Yes, I'm still here, I've just been hard at work not working lately. I will post an (overdue) update in that other thread soon... thanks for reminding me.

 

[NYEXPAT]

Hi everyone, time for another yearly update.

* 34 now and net worth has increased to about $5 million
* Still thinking next year is when I call it quits with a net worth of around $6 million hopefully. We do need to set aside money for a house so approximately 600k to 1 million of that net worth number will not be in investable assets.
* With more history under my belt, I'm comfortable that we'll have passive income of about 175k - 200k from a combination of rental income, dividends and interest.

I worry less about the financial aspects of early retirement at this point as I do feel financially independent now. I think hitting the $5 million mark and having consistent passive income got me there psychologically. Before, I struggled with feeling FI just based on the 4% rule. Having passive income come in every month has really boosted my confidence.

So at the moment, instead of finances, my focus is more on what our lives will be like post-work. Where we'll live, how much travel we'll do, what forms of volunteer activities we'll participate in, etc.

Symbiotic - if you're still on this board, I'd love to hear how your first year of retirement went. Any words of wisdom you can impart?



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RB35,
Just came across this thread. I had a flashback to 28 years ago when I retired from the same field at 33 and 11 months, same Dollars, location,marital status,no children, etc. Congratulations on your success. Despite what others have said, I never felt the desire to work again but owned several companies over the years. I gave away most too my ex-Wife years ago, moved to a new country, started a new life and am at the happiest point in my life right now with my 2 Sons aged 11 and 1. I can only wish you the same in your life.

 

[rb35]

NYExpat,

Thanks for posting. It's rare to find people who voluntarily take an early exit from Wall Street so great to hear your experience. That kind of money 28 years ago would've been really something so congrats! I'm glad things have gone so well for you.


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[jmp470]

RB35, I've enjoyed your story. I'm not a WS guy, but, I'm in a similar situation as you. I have a few friends that retired at 35, 1 with kids and 1 without kids. Both of them are working again, in some form or fashion to support their hobbies. We have found that hobbies become very expensive over time. Do you want a boat, do you like to travel in style, do you want an airplane, etc. I'm still working at 40 to support my flying addiction! I plan on retiring at 41, but, offers keep rolling in for different jobs. The one thing I noticed is that being FI, I dictate the terms, which is extremely important to me. However, I do realize that my RE might not happen soon as I wish, as I'm having fun with my job. I've lived in Europe for several years, that was great, and I stopped counting the countries I've visited at 50. Additionally, I started having kids @ 34 and I now have 3 younglins running around. So now, I work when they are in school and travel when they are not.

The one thing my friends and I have discussed in great lengths is that we didn't have a good work / life balance when we were young. This was financially rewarding, but, very taxing on our lives. Now that we have balanced out, working isn't so bad. Actually, we all do different things and enjoy it. Hell, just the other day, we all laughed at ourselves because we find ourselves doing jobs we wouldn't do in our 20's. 1 friend owns multiple car dealerships... he works the floor now and enjoys his interactions with his customers. The other friend is a commercial real estate developer and finds himself doing some of the basic maintenance work on his buildings. Just the other day, he was helping change toilets out. I work in the healthcare industry and found myself working the front desk at one of our locations. When we were all younger, all of us, said we would have never done these jobs.

So I'm not saying you will get bored, but, once you leave the grind, you might potentially find something you really want to do.

 

[rb35]

Jmp470, thanks for posting, I appreciate the perspective. We don't have any expensive hobbies, never really had time to develop them . We do love to travel so I'm planning on that expense category increasing after I stop working.

I can relate to what you said about work life balance. I've often said that if I could work half the time for half the pay, I'd gladly do it. I'm definitely not opposed to doing some type of work after FIRE, but I haven't quite figured out what I can do on my own terms that pays enough to make it worthwhile.

Thanks again and all the best on your early retirement plans.


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[rb35]

Hi Everyone, I skipped the 2017 update because I was embarrassed that I succumbed to OMY syndrome. BUT 2018 is going to be the year, I just need to wait for a key date or two to pass!

I feel really ready both financially and personally to take the plunge. I don’t regret the OMY as we accomplished a lot both in terms of net worth addition as well as resolving some important issues regarding our post-work life.

I’m so excited and feel like time is moving so slowly right now, but I know it will all be over soon.

It was really interesting looking back at my 2014, 2015 and 2016 posts. Things have fallen into place more or less as planned which I’m happy and grateful about. The bull market in all risk assets and the extra year have increased my net worth and passive income to above what I had originally planned for so that is a welcome development.

I’ll post a more detailed update on the financials if anyone cares when the dust has settled in a couple of months. Sorry this isn’t much of an update, but I just needed to share my excitement with someone and this community has always been a great source of support!

I hope everyone else is making great strides toward achieving their FI goals (or enjoying retirement)!

 

[ReadySetGo]

Hi Everyone, I skipped the 2017 update because I was embarrassed that I succumbed to OMY syndrome. BUT 2018 is going to be the year, I just need to wait for a key date or two to pass!

I feel really ready both financially and personally to take the plunge. I don’t regret the OMY as we accomplished a lot both in terms of net worth addition as well as resolving some important issues regarding our post-work life.

I’m so excited and feel like time is moving so slowly right now, but I know it will all be over soon.

It was really interesting looking back at my 2014, 2015 and 2016 posts. Things have fallen into place more or less as planned which I’m happy and grateful about. The bull market in all risk assets and the extra year have increased my net worth and passive income to above what I had originally planned for so that is a welcome development.

I’ll post a more detailed update on the financials if anyone cares when the dust has settled in a couple of months. Sorry this isn’t much of an update, but I just needed to share my excitement with someone and this community has always been a great source of support!

I hope everyone else is making great strides toward achieving their FI goals (or enjoying retirement)!

Good luck! I enjoy reading your story and will be interested in what you move on to after work.

 

[chad]

Great news, glad to hear you're on target as planned

 

[rb35]

Ok, guys. I’m ready for a final update.

I’m walking away from my corporate job with around $10 million net worth. The breakdown is $6 million in taxable and $4 million in tax advantaged. Off the taxable money, I generate over $300,000 of passive income from rents, dividends and interest.

Spending has averaged 90k for the past few years, but I’m projecting that to increase to $150k (+10k for health insurance, +25k for moving into larger house, +25k for more travel).

We have extensive travel planned for this year already, as well as goals for eating better and working out more.

A few plot twists (all positive) since my last update:

1. I knew we wanted to buy our dream home and it would cost between 600k and 1mm. Initially, I was concerned about the additional expense that would add to our annual budget. After some research, we discovered short-term rentals which not only allowed us to buy a dream home that more than pays for itself if we want it to, but allowed us to expand our real estate investments into this strategy which has added to our passive income. So amazingly, the one thing I was worried about hurting our budget has helped our income!

2. The new tax law has been an unexpected gift, netting us 20+k more than previously projected.

3. I had assumed that once I walked away from my job, it’d be close to impossible to make anything close to that income again, especially in our new location. In a complete stroke of luck, an opportunity has come up where I could get back in the game if I wanted to. I highly doubt I will, but it’s nice to know the option exists.

One thing I am trying to figure out is how aggressively to manage our assets. I could hit singles the rest of our lives and know we’d be fine. But it’s in my nature to always optimize and look for the best risk/return trades. We have a large enough capital base where I think I could really grow it at above market returns, but I need to balance that versus the additional risk that would introduce.

That’s about it, thanks for listening! Can’t wait to get our FIRE life started!

 

[CaliKid]

Congrats on your success. I would seriously think about taking a long break rather than retiring. Take a year or two and see the world. You apparently have the ability to make a great income so you could come back for 5-10 years of work and then retire well before 50 with more money than you could ever spend. You are young my friend. Good luck to you.

 

[rb35]

Thanks, that’s great advice that I intend to take. The window of opportunity to get back in the game at a 7-figure income probably does close in 1-2 years so that’ll be a good time to reassess anyway. As it stands, I can’t see myself going back to a corporate job. After deferred compensation and taxes, I’d only net about 1/3 of my stated gross income. Maybe my tune will change in 1-2 years, but for now, travel the world it is!

 

[NYEXPAT]

Congrats on things working out for you! I retired at 34 (31 years ago) with less than half of your net worth, got a divorce,moved overseas,remarried and at 65 have two young children. Other than the divorce, nothing else was in my retirement plan. I too own property but prefer to rent for the reasons you stated.

I was not planning on responding to your thread until I saw you mention ed high end ST rentals.

15 years ago, I bought our "Dream Penthouse overlooking the Pacific Ocean" as a wedding gift for my new bride. We lived in it for a few months until I realized my young bride was afraid of heights and earthquakes. We moved out and started renting our Penthouse ST. I would have sold it years ago as it has tripled in value, but since AirBnB arrived on the scene, it throws off such income and everything can be handled with a smartphone.

I hope everything works out for you as it did for me!

 

[rb35]

Nyexpat - thank you for replying! Great to hear your experience with your ST rental. I’m so excited by the returns we’ve been getting I’m considering throwing my energy into doing more of them.

 

[Katiek]

Congrats and enjoy. I hope you still post from time to time so we can hear how the next stage of your life is going!