intro and dreaming of FIRE

[booey]

Hi everyone. I'm a long-time lurker and first-time poster. About me:
- 40 years old
- married, 2 young children, wife does not work
- w*rk for megacorp, netting $7000/month
- paying extra towards mortgage, total $3000/month, will be paid off 12/19
- no other debt
- we live comfortably on the $4000/month remaining after paying mortgage
- $1.1 million in various retirement accounts, all in Vanguard, most in Vanguard Equity Income

Here are some of the things that I find myself daydreaming about:
1. after paying off mortgage in 12/19, possibly scaling back w*rk and reducing net income to $4000/month. This could be part-time w*rk at megacorp, or else finding something more enjoyable to do.
2. according to FIREcalc, I don't need to save another penny. 100% success rate with the following assumptions:
a. future retirement starting in 2036 (the year I turn 59.5)
b. $0 in contributions per year until then
c. $100k spending per year (which is about double current spending, not counting mortgage which will be paid off)
d. 40 years of retirement (I'll be 100 then)
3. I still need to figure out how to pay for college and health insurance if I end up quitting megacorp.

Anyway, I enjoy reading this forum and appreciate anyone's comments/advice on my current situation.

 

[Whisper66]

booey - welcome to the board and congrads on being in such a good financial situation!

 

[Midpack]

I am guessing you're almost right. I get a 98.9% success rate by entering $100K spending, $1.1M (current) portfolio, 59 years and retiring in 2036 {1}.

Because you indicated a future retirement date (2036), the withdrawals won't start until that year. The tested period is 19 years of preretirement plus 40 years of retirement, or 59 years. For our purposes, failure means the portfolio was depleted before the end of the 59 years. FIRECalc found that 1 cycles failed, for a success rate of 98.9%.

If you did get 100% and you entered 40 years on the first tab, I think FIRECALC considers that 19 years pre-retirement and 20 years retired {2}. Obviously that would result in a much higher success rate.

Because you indicated a future retirement date (2036), the withdrawals won't start until that year. The tested period is 19 years of preretirement plus 21 years of retirement, or 40 years.

Unless you chose otherwise, that assumes your asset allocation is the FIRECALC default ("couch potato" portfolio of 75% stock index and 25% bond funds, with a 0.18% fee to the fund) using historical returns so you're portfolio grows accordingly over the next 19 years and throughout retirement. Some here, and elsewhere, question whether fixed income or cash yields will match history over the next several years or even decades.

But congrats either way, you're in very good shape.

 

[Mdlerth]

Who da man? Booey da man!

You are so far ahead of where I was at your age it's crazy.

Well done, and welcome.

 

[booey]

I am guessing you're almost right. I get a 98.9% success rate by entering $100K spending, $1.1M (current) portfolio, 59 years and retiring in 2036. If you entered 40 years on the first tab, I think FIRECALC considers that 19 years pre-retirement and 20 years retired. Obviously that would result in a much higher success rate.

On the first tab, I entered 100k, 1.1m, and 60 years.
On the third tab, I entered 2036 as retirement year.
The only other thing I changed was in the portfolio - 100% stocks. I have always been in 100% stocks, went through 2008/2009 in 100% stocks and never once thought to change that.

If I leave the default portfolio, then I get the 98.9% success rate that you found - thank you for pointing that out to me.

$100k spending might actually not be realistic for my situation (too high). I can reduce that to $80k which is still way above my current spending and then get back to a 100% success rate with the default portfolio.

 

[NgineER]

On the first tab, I entered 100k, 1.1m, and 60 years.
On the third tab, I entered 2036 as retirement year.
The only other thing I changed was in the portfolio - 100% stocks. I have always been in 100% stocks, went through 2008/2009 in 100% stocks and never once thought to change that.

If I leave the default portfolio, then I get the 98.9% success rate that you found - thank you for pointing that out to me.

$100k spending might actually not be realistic for my situation (too high). I can reduce that to $80k which is still way above my current spending and then get back to a 100% success rate with the default portfolio.

The one thing I would caution you on that choosing 60 year cycles excludes some cycles starting out in a high inflation or recession eras such as the 60's and 70's.

I do think that if you could let your money grow without contributions that you would be fine. I do believe that part-time jobs are more easily eliminated in a downturn.

 

[GravitySucks]

Congrats. You're way farther ahead than I was at your age.

 

[Katiek]

Congrats and welcome.

 

[MBAustin]

Add me to the congratulations list, booey! You'll be an inspiration to some of the younger Young Dreamers here, I'm sure.

Getting to FI is really the goal - then you can decide how to manage w*rk and the rest of your life.

I would caution that for families where only one member is in the workforce, the cost of raising children can go up substantially as they get more involved in extra-curricular activities (sports, the arts, etc.). [The reverse is generally true for dual-income families because of childcare costs.]

It would be good for you and your wife to have some serious discussions over the next couple of years about what's important to you in the future. That will certainly help inform your decisions. All the best!

 

[euro]

Welcome gooey and I add my congrats. You are in terrific shape!

 

[Cap_Scarlet]

c. $100k spending per year (which is about double current spending, not counting mortgage which will be paid off)

Why?

 

[kimcdougc]

Congrats and welcome to the forum. Very impressive for such a young age.

 

[street]

Welcome to the forum.

 

[rodi]

Welcome and great job in getting where you are!