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47 / 49 DINK Couple - One Looking to FIRE
Old 04-26-2014, 08:07 PM   #1
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Vincenzo Corleone's Avatar
Join Date: Jul 2005
Posts: 63
47 / 49 DINK Couple - One Looking to FIRE

Hi - I've introduced myself here before, but I post so infrequently, I thought I should re-introduce myself.

I'm 47, DW is 49. Here is our situation:
  • Residence: Live in a two-bedroom, one-story highrise condo in NJ
    • Mortgage paid off last year
    • We plan on living here until we kick the bucket or get put into an old folks home, so I don't think the value of our residence really matters and I don't count it in my FIRE calculations
  • Debt: None
  • Taxable accounts: Me, about 80% in individual dividend-paying / dividend-growing stocks, 20% in stock mutual funds (with high-ish expense ratios but healthy gains); DW mostly Vanguard stock mutual funds
  • Non-Taxable/Retirement accounts: Me, 75% Vanguard Total Stock Market Index fund (and loving that .05% expense ratio), 25% Schwab S&P Index fund; DW 100% stock index funds (not with Vanguard - not sure where)
  • Cash: About one year of non-discretionary expenses in cash
  • Employment Situation: Both of our incomes from employment, while well above the national average, have fallen over the years due to age discrimination/layoffs (in our field - I.T. - 35 is considered too old). I was unemployed for close to two years. That hurt (in more ways than one). I was lucky I eventually got another job.
  • Spending: We live below our means (but we take one or two nice vacations overseas a year while we're still relatively young and physically able to do so). Keeping close tabs on our expenses; we know how much is discretionary and how much is non-discretionary
  • Extraordinary Events: I will most likely be inheriting a large-ish stash at some point in time (I'm feeling guilty planning for it, but it is what it is)
  • FIRE Goal: I would retire today if I could but I'll have to wait at least another eight years; DW thinks she might want to wait until she reaches 65 to retire so that she can collect a pension

The Plan (actually, there's a plan A and a plan B):

Plan A - If I do inherit aforementioned money:
Inherited money will be put into an 80%/20% (or maybe 70%/30% - not sure yet) allocation in Vanguard index funds. By the time we're in our mid-50s, spreadsheets/projections (assuming a real return of 2%, inflation of 4%) tell me that about 60% of our expenses can be covered by the dividend income that I currently hold in my taxable accounts. The shortfall can be covered with the inheritance money. Projections tell me that this draw on principal will represent only approximately a little over 1.5% of the inheritance money, and about 1% of (inheritance money + retirement accounts); less if I take on a part-time, no-stress job ("Good morning, and welcome to Walmart!"). By the time we're old enough to tap into our retirement accounts, change allocation to something a little more conservative (70%/30%?). There are a lot of assumptions in my projections (e.g., average dividend growth/yr, inheritance amount, inheritance timing, etc.), but I'm monitoring the situation and making improvements. We have no children to leave money to and I can't help but wonder if we'll end up leaving money on the table with this plan. We'll see - I may have to revise to ensure that we blow it all by the time we're dead.

Plan B - If I do not inherit aforementioned money:
We might not be able to RE, however at some point I will certainly be able to slow down and get a lower stress job near home (I currently drive over 100 miles every day for work). I'll do my best to keep my sanity until retirement age. We should be OK by then. There may even be a chance that we can RE, but it's by no means a foregone conclusion.
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