I am new here... and almost ready for FIRE

[neihn]

Hi all,

I am so glad to find this board. I have been reading a lot of messages in the last two days - so insprise.

Anyway, I am 46 yoa and my wife is 56 yoa (don't ask me how that happenned, it just happenned and I have been happy .

I have 2 kids (16 and 13 yo and have $70k saved in 529 and taxable account for their college). The rest in 401k+IRA+roth IRA (about $450k) and the house equity is about $300k, $25K in MM + CD.

My question to all of you is when you are aiming for your 1M, do you count the equity for house? Plan to FIRE in a few years, perhaps after the kids enter college (5 or 6 years from now).

Thanks, Hien

 

[travelover]

Welcome Hien.

You need to do a bit more reading, but it sounds like you are on the right track with your savings to date.

Setting a 1M goal is too simplistic - you need to figure out what your expenses will be in retirement and then determine how much you need in investments to provide that income over your anticipated retirement period.

 

[Martha]

Welcome Hien!

If you are aiming for a million in order to live off that money when you retire, I wouldn't count the house unless you plan to sell it and add the equity to the retirement pot. But then, of course, your expenses will increase because you have to rent.

It all depends on why you are aiming to hit a million. If it is a goal to reach as motivation for saving, by all means count the house equity. You can then say you have a million net worth.

 

[Gumby]

Welcome aboard Hien. The issue of whether to include home equity in your net worth has been debated on this board many times. Try the "search" feature to find the relevant threads.

Personally, I do not count my home equity when running Firecalc. In my view, I will have to live somewhere, so the equity will remain locked up. Although a reverse mortgage or a sale and downsizing could be my emergency plan if I find myself running short later in life. I would not want to count on that, however, so I will just use the size of my liquid assets to determine if can retire or not.

 

[megacorp-firee]

Welcome Hein. IMO $1M is not a magic number. As others have suggested, you need to figure out how much you will need to live on and work backwards to see what the 'magic number' is. Most on the board DO NOT include home equity in their magic number. It is not readily accessible for use for expenses.
Best of luck to you.

 

[neihn]

Folks,

Thanks for the warm welcome.
Not counting the house equity for the 1M goal is what I thought too. We are always LBYM and currently I am max out 401k and roth IRA for both of us (my wife doesn't work)+ 10k/year to taxable acct, looks like I am going to hit 1M mark in 6 or 7 years. Also, I plan to live in Vietnam when the kids all go to college (building a house overthere now). You don't need much to live comfortably over there, health care also very in-expensive. My mother in law needs dialysis twice a week it cost her $40 per week (so you get an idea).

Thanks, Hien.

 

[CourtneyC]

Since you are trading down, you could probably count a portion of your home equity, but make sure that amount is conservative. Your travel expenses will likely increase when you move, since you will be in a different country than your children.

 

[Salaryman]

Welcome to the board.
I've heard many folks swear by living on 3-4% of one's saving as a comfortable measure of spending your loot without going thru it too quickly.

Not a golden rule, but it's a good yard stick to measure how far you are along the road to FIRE.

Me, i'd like to have min 100k annually after tax which means I'd need to shoot for 4 to 5.5 mm
Good luck.

Salaryman

 

[neihn]

Welcome to the board.
Me, i'd like to have min 100k annually after tax which means I'd need to shoot for 4 to 5.5 mm
Good luck.

Salaryman

I probably die slaving for mega-corp before I could make 4 or 5 M. I will be glad to pull the plug when I have 1-1.5M

Thanks, Hien.

 

[neihn]

Since you are trading down, you could probably count a portion of your home equity, but make sure that amount is conservative. Your travel expenses will likely increase when you move, since you will be in a different country than your children.

CourtneyC,

Yes, the travel expenses will be included in my calculation.

 

[Caroline]

I probably die slaving for mega-corp before I could make 4 or 5 M.

It's been done. I saw three folks I knew carried out feet first from our Megacorp Department in 3 years. Two under 50, one under 60.

And my brother the cop thinks HIS job is risky!

 

[neihn]

Caroline,

Me too, I saw at least two folks gt carried out in the last 5 years. They are around 50ish, hard working and pretty smart too (or not too smart to stay to long).

 

[Salaryman]

I hear ya. I've seen it too.

Sounds like we're on a similar track.
I'm 41 & DW is 38. We have 3 kids (5,2 & newborn).
Retirement 700K+
529 plan/education 72k
Aftertax accts 100k
Real estate (rentals) 200k
Home equity, not counting for net calc.

Funny thing about 'wealth inflation'...when you have less, 1mm seems like a lot. But the thing is, when you reach 1mm, then you'd want 5mm....ad infinitum.
Never underestimate the power and capacity of human greed.

Current game plan is to get to 4-5mm in 5 to 10 years, raise kids and stay alive

We're lucky in having decent paying jobs with stable outlooks. If we stay on course and increase our savings, we can get there quicker.
Meantime, I participate in this forum to see how the other half lives.

Retirement in Vietnam sounds great, I wish you all the best in your life journey.


Salaryman

 

[CriticalMass]

Current game plan is to get to 4-5mm in 5 to 10 years, raise kids and stay alive

We're lucky in having decent paying jobs with stable outlooks. If we stay on course and increase our savings, we can get there quicker.
Salaryman

Care to show us how to get from 1m to 5m in 5 to 10 year, or even quicker? thanks

 

[Salaryman]

Care to show us how to get from 1m to 5m in 5 to 10 year, or even quicker? thanks

No way our situation will be the same as others but;

-our current savings rate is 25% of our income
-our investments are in a well diversified portfolio which has doubled every 5-6 years for the last 15years
-DW will finish grad school soon & her income will be substantial (we're currently making do on my income)
-not that we need it, but our parents are not exactly poor. if they want to bequeath $$ to the kids, that'll be nice.

It basically boils down to:

-LBYM
-investing wisely/aggressively
-keeping a long term view (not easily done when looking at volatile markets of 87, asian and tech mkt crashs)
-having a good head on shoulders & realizing that your **** does stink and that money really does not make you happy
-meeting a life partner that shares your views and is not afraid to sacrifice to achieve the common goals
-a lot of luck
-and most importantly for me, faith in G-d.

But I can safely say for sure that the first 1mm was earned the hard way, a penny at a time.

Salaryman

 

[CriticalMass]

No way our situation will be the same as others but;

-our current savings rate is 25% of our income
-our investments are in a well diversified portfolio which has doubled every 5-6 years for the last 15years
-DW will finish grad school soon & her income will be substantial (we're currently making do on my income)
-not that we need it, but our parents are not exactly poor. if they want to bequeath $$ to the kids, that'll be nice.

It basically boils down to:

-LBYM
-investing wisely/aggressively
-keeping a long term view (not easily done when looking at volatile markets of 87, asian and tech mkt crashs)
-having a good head on shoulders & realizing that your **** does stink and that money really does not make you happy
-meeting a life partner that shares your views and is not afraid to sacrifice to achieve the common goals
-a lot of luck
-and most importantly for me, faith in G-d.

But I can safely say for sure that the first 1mm was earned the hard way, a penny at a time.

Salaryman

Congrats on your impressive return (~14% annual compound would do this, which is achievable yet certainly no small feat, especially given the severe downturns in 2000~2002)

Can't agree more on those points. Good luck to you.

It certainly does not hurt to have parents who can lend a helping hand when needed (or not needed)