Nerdjenni
Dryer sheet wannabe
Hi all - After reading Jacob Lund Fisker's book Early Retirement Extreme, I've been enlightened
My job as a middle manager at a Silicon Valley megacorp is okay, but I'm yearning to leave the rat race altogether and find a different path that's not driven by consumption and would give me the luxury of time and space to explore my passions. I've taken two year-long sabbaticals since starting my career (spent first year volunteering in Asia, spent second year filming a documentary on LGBT rights around the world with my spouse) and those have absolutely helped define who I am.
To do this, I've been considering two options, both of which require some degree of FI:
Option 1: Keep my megacorp career, but break it up every ~5 years by taking an extended 1-2 year sabbatical, similar to what I have been doing. Pros: I earn a good salary, and I probably would only have to do this for 2-3 more cycles before retiring for good in my mid-40s. Cons: The idea of spending another ~10 years in megacorp life feels a bit depressing, as I wonder how I could have otherwise used those years of my life to explore and accomplish something potentially much more meaningful?
Option 2: Leave my megacorp career altogether after a couple more years to aggressively build up a bigger nest egg, and retire from the rat race immediately. We'd still do some kind of income-producing work to cover our annual expenses, at least for next 10 yrs so that our nest egg has a chance to grow, but it may mean that only my spouse works, or that I pursue a totally different job (e.g. non-profit, entrepreneur) that may only bring in a fraction of the income I have at my megacorp.
Some more about my situation:
Me: 33y/o. $250K income, reasonably expected to grow if I stay at megacorp.
Spouse: 35y/o. $90K income, pretty fixed. She just vested for her pension, but she's only 5 years in so the payout is still pretty small and many decades away.
We just got married last year (though been together for much longer) and combined all assets.
Taxable account: $450K
Tax-deferred account: $450K
Housing: We're lucky enough that we live in a family house that we'll eventually inherit. On another note, we're considering building out the lower level (currently a humongous garage and storage space) for rental income. Expect that a $150K investment could conservatively yield $15K/year in rental income. Does that kind of investment make sense? Not really sure how to think about this one.
No debt.
Expenses: We're undergoing dramatic cost cutting measures, which should get us to $60K/year in expenses.
Savings rate: If we go with Option 2, the plan is to sock away at least $150K for next three years (2015-2017), which means by 2017 (my age 36) its reasonable to assume we'd have at least $1.5M if markets don't have a massive downswing.
Kids: That's the big question mark. We're in process of starting a family, and we hope to have two kids. We think we're wise enough to be able to raise our kids well without spending hand over fist, and we don't feel the need to pay for their college educations, but unclear what that will do to our expenses.
What do you guys think about option 1 vs option 2? Does my plan seem viable, or am I missing something?
Thanks!!
Nerdjenni
My job as a middle manager at a Silicon Valley megacorp is okay, but I'm yearning to leave the rat race altogether and find a different path that's not driven by consumption and would give me the luxury of time and space to explore my passions. I've taken two year-long sabbaticals since starting my career (spent first year volunteering in Asia, spent second year filming a documentary on LGBT rights around the world with my spouse) and those have absolutely helped define who I am.
To do this, I've been considering two options, both of which require some degree of FI:
Option 1: Keep my megacorp career, but break it up every ~5 years by taking an extended 1-2 year sabbatical, similar to what I have been doing. Pros: I earn a good salary, and I probably would only have to do this for 2-3 more cycles before retiring for good in my mid-40s. Cons: The idea of spending another ~10 years in megacorp life feels a bit depressing, as I wonder how I could have otherwise used those years of my life to explore and accomplish something potentially much more meaningful?
Option 2: Leave my megacorp career altogether after a couple more years to aggressively build up a bigger nest egg, and retire from the rat race immediately. We'd still do some kind of income-producing work to cover our annual expenses, at least for next 10 yrs so that our nest egg has a chance to grow, but it may mean that only my spouse works, or that I pursue a totally different job (e.g. non-profit, entrepreneur) that may only bring in a fraction of the income I have at my megacorp.
Some more about my situation:
Me: 33y/o. $250K income, reasonably expected to grow if I stay at megacorp.
Spouse: 35y/o. $90K income, pretty fixed. She just vested for her pension, but she's only 5 years in so the payout is still pretty small and many decades away.
We just got married last year (though been together for much longer) and combined all assets.
Taxable account: $450K
Tax-deferred account: $450K
Housing: We're lucky enough that we live in a family house that we'll eventually inherit. On another note, we're considering building out the lower level (currently a humongous garage and storage space) for rental income. Expect that a $150K investment could conservatively yield $15K/year in rental income. Does that kind of investment make sense? Not really sure how to think about this one.
No debt.
Expenses: We're undergoing dramatic cost cutting measures, which should get us to $60K/year in expenses.
Savings rate: If we go with Option 2, the plan is to sock away at least $150K for next three years (2015-2017), which means by 2017 (my age 36) its reasonable to assume we'd have at least $1.5M if markets don't have a massive downswing.
Kids: That's the big question mark. We're in process of starting a family, and we hope to have two kids. We think we're wise enough to be able to raise our kids well without spending hand over fist, and we don't feel the need to pay for their college educations, but unclear what that will do to our expenses.
What do you guys think about option 1 vs option 2? Does my plan seem viable, or am I missing something?
Thanks!!
Nerdjenni