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Plan to FIRE at 42 (2017)
Old 05-08-2013, 08:56 AM   #1
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Plan to FIRE at 42 (2017)

Hi everyone!

Last time I posted here I made the mistake of posting absolute numbers. Mods were very generous and allowed me a rare mulligan for which I am grateful.

Since then, I've done a lot more lurking and am ready to post about our situation again.

AGE: 38, 36 (DW), 5 (DD), 3 (DD)

OCCUPATIONS:

Me: Solo practitioner specialist in private practice, 4 days (28 hours) of surgical type procedures

DW: analyst at Canadian Bank (MBA, CFA); 3 days part time

ASSETS:

Home: 33% of NW (equity portion), approximately 17% of home value is non-discretionary mortgage at 2.15% interest, house has more than doubled since we bought in 2006

Calgary Investment Property: 2% of NW (equity portion)

Stocks/Bonds = 70/30 AA: 65% of NW, Buy and Hold forever (I am a "stock collector") (DIY) including major positions in Canadian Banks especially TD Bank, Canadian National Railway, Berkshire Hathaway, Nike, McDonalds, Home Depot, Exxon Mobil, Coach, index for energy, index for invesment grade bonds (HYG, XCB), Altria, amongst others. Hedged 50/50 between US/CDN. Will post another thread elsewhere for opinions/ideas here.

INCOME: mid to high six figures since the age of 26, have been saving 50-70% with exception of the year we made large downpayment on home

EXPENSES:

Current Living Expenses (property tax, all utilities, food, transportation, live-in nanny, kids extracurriculars, entertainment/sports, clothing, gifts, charity, vacation, taxes) < 3% WR of investable assets. There are definitely expenses here that can be trimmed but it appears the investments can sustain the fluff. We have a soft spot especially in the kids extracurricular dept.

Future Plans


With the help of this forum, we are much closer to being FI than we originally thought and also feeling more financially secure. I originally thought I needed a "gazillion dollars" in order to FIRE when I initially learned about a safe 3% WR and erroneously extrapolated my current high expenses (which includes a hefty but non-discretionary mortgage for one), overestimated tax burden, and double counting of expenses between personal/business.

We are still a little short of being completely FI if we decide to include private school tuition, college tuition and the remaining portion of the non-discretionary mortgage (we really do not need to live in such a big house but its a nice area with very good public schools and we consider ourselves living/enjoying our real estate investment which is capital gains exempt here in Canada). Including these "non-perpetual" expenses and using the spending reduction features on FIREcalc, it says working until 42 will give us 100% success for a 50 year retirement period!! I will probably work a few more years just to add some cushion. I am guessing that as I approach my early 40's, I will have difficulty pulling the FIRE trigger being a very goal oriented individual all my life. Not sure if two young able bodied semi-type A personalities can just bum around all day. Parenting will keep us busy for sure but what about the meat of the day while kids are in school??!! Fortunately, being a practice owner, there will be options including hiring an associate and reducing my work days to completely selling off the practice and being an associate myself.

DW is planning to try the RE thing next year and be a SAHM since she no longer feels the need to be my "backup" income. To be fair, I am somewhat worried for her as she is giving up an enjoyable and meaningful work situation and even her boss! For me, I kinda like my work but cannot say it is my passion in life (I enjoy hockey/golfing much more!), it has its pros/cons like everything in life.

We've only begun to scratch the tip of the iceberg in terms of the possibilities after ER. Possibly living / international schooling for a year in another country to immerse in our native culture (we are canadian born but roots are overseas)when the kids are around 10 years old and even possibly combining it into a missionary venture for ourselves. For sure, it seems a little too dreamy at this point so I'll end it off here.

Again, thanks for reading and any advice is appreciated!
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Old 05-08-2013, 09:06 AM   #2
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So are you counting your home equity in the Firecalc equation? I hang out on Bogleheads a lot, and usually they consider that a no-no. Typically they consider a home a consumption item and only your stocks/bonds/investments to be the investable assets used for a draw down. So how does the Firecalc result look without the home equity? On the positive size, it sounds like your DW and you are on the same page and that she'd be happy to downsize, so if that's a realistic possibility and you really plan to do it, then I think you can include whatever you'd gain on that sale. Short of that I'd be cautious about considering the home in the equation.
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Old 05-08-2013, 09:13 AM   #3
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Thanks Hamachi for taking a look, I am not including home equity in my investable assets..... only the stock/bonds portion. We do not plan to downsize or another 20 years...... it is only a back-up plan.
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Old 05-08-2013, 02:46 PM   #4
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I agree that deciding to retire at such a young age is a little "scary". 50 years is a long time for things to go wrong. Its also a long time to entertain oneself. I am thinking about doing some temp work on and off to keep my skills fresh and my resume filled. I'm hoping to do this until I'm at a 3% WR before Social Security (I am at 3.3% right now). Since you are already at 3% I dont know if you have that much risk to worry about. Are you considering doing soem volunteer work ?

Congratulations to you and DW for being such diligent savers and having the option to ER !
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Old 05-08-2013, 03:32 PM   #5
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I agree that deciding to retire at such a young age is a little "scary". 50 years is a long time for things to go wrong. Its also a long time to entertain oneself. I am thinking about doing some temp work on and off to keep my skills fresh and my resume filled. I'm hoping to do this until I'm at a 3% WR before Social Security (I am at 3.3% right now). Since you are already at 3% I dont know if you have that much risk to worry about. Are you considering doing soem volunteer work ?

Congratulations to you and DW for being such diligent savers and having the option to ER !
Thank you Live and Learn for the words of encouragment! Knowing that we are on the doorsteps to ER is very scary indeed. I think going to part-time temp work is a good gradual transition before complete ER. I am likely to do the same.

There is no question in our minds that we will do volunteer work in a less fortunate part of the world. The kids are still too young at this point but I hope there is something we can do as a family in a few more years. We are too blessed not to pay it forward without a clear conscience.
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Old 05-08-2013, 04:26 PM   #6
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There is no question in our minds that we will do volunteer work in a less fortunate part of the world. The kids are still too young at this point but I hope there is something we can do as a family in a few more years. We are too blessed not to pay it forward without a clear conscience.
Thank you for that lovely post.
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ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
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Old 05-08-2013, 08:54 PM   #7
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In reading the OP's post I am reminded of the other active thread which inquires about career paths and choices. Apex, I have only the utmost admiration for your successes and skill level as a surgeon. But I wanted to ask if you're surprised to find yourself with a near term exit strategy and still in your late 30's? It takes such effort and advanced schooling to become a doctor, I was wondering if this length of tenure was always your plan or if it evolved in the last few years. Of course I could totally accept if this was the plan from the beginning since being able to draw a consistent high income is the perfect means to and end. I have a young relative interested in becoming a doctor and when he talks about the number of school years and long, sleepless shifts of residency I picture him in his career for decades to come to make it seem "worth it". Just curious to get your first hand experience. Thanks
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Old 05-08-2013, 09:08 PM   #8
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I'm not Apex and I'm not a surgeon, but I did train for 16 years to become an attending physician: 10 of those years were postgraduate, with responsibility and earnings. I REd after 33 years of working in medicine. I have always felt that I had no need to justify my existence by continuing to work for an arbitrary number of years. It is not commonly understood that physicians in training are in their earning years, but are earning low salaries and have little time to spend money. Those years of near slavery shorten your life and they count.
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Old 05-09-2013, 11:51 AM   #9
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But I wanted to ask if you're surprised to find yourself with a near term exit strategy and still in your late 30's? It takes such effort and advanced schooling to become a doctor, I was wondering if this length of tenure was always your plan or if it evolved in the last few years. Of course I could totally accept if this was the plan from the beginning since being able to draw a consistent high income is the perfect means to and end. I have a young relative interested in becoming a doctor and when he talks about the number of school years and long, sleepless shifts of residency I picture him in his career for decades to come to make it seem "worth it". Just curious to get your first hand experience. Thanks
Thanks SecretlyFI! I would concur with what Meadbh has posted. In my case, of course it was worth it. The consistent high income is definitely not a given nor the lifestyle that my specialty affords. These specialties are extremely competitive and there were many many equally qualified docs that did not get the bounces that I did. The chances would be against me if I had to do it again to be this close to FI. Most of the graduating specialists in my year were also 4-5 years my senior so of course that went a long way as well. If your relative chooses medicine, please do it because they are passionate about it. Its a long road with many sacrifices that may or may not have a "good ROI".
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Old 05-09-2013, 08:46 PM   #10
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Thank you both for your insight and advice. Apex I think you're in great shape. Congratulations! You're going to achieve both financial freedom and have many options for shaping your kids' childhood. That's real peace of mind.
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Old 05-13-2013, 05:45 PM   #11
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Thank you for that lovely post.
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Old 05-15-2013, 11:37 AM   #12
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Welcome.

Don't think of ER as just "bummibg around." That works for some people, especially for those who burned out during their career.

FIRE is simply Freedom to choose how you want to live your life. You decide!

FYI, I retired in 2012 at age 43 with a DW and two school aged children. I accomplished that lifelong goal by building and selling a successful business.
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Old 05-15-2013, 04:18 PM   #13
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Welcome.

Don't think of ER as just "bummibg around." That works for some people, especially for those who burned out during their career.

FIRE is simply Freedom to choose how you want to live your life. You decide!

FYI, I retired in 2012 at age 43 with a DW and two school aged children. I accomplished that lifelong goal by building and selling a successful business.
Thank you AIR for posting! Kudos on your accomplishments!! I'm always lurking and always trying to learn something from everyone here but I find it most relatable from those in a similar young family situation.

When I am 43, I hope to be in a similar boat as you (pun intended lol) while my kids will be a little younger 10 and 7. DW and I always discuss that this would be a great time to travel together as a family before they get to their teens and not want to hang out with us.

oh…..... the "bumming around" comment was made tongue in cheek. I do find myself playing mind tricks to get through these next 4-5 years to make it more bearable..... but trust me I've got my eye on the prize!

One question for you now that you have taken a year off....... do you foresee going back to work at all?
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Old 05-16-2013, 08:41 AM   #14
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Hi Apex,

I will never work for someone else again, in a full time career, for sure. I will probably always work at some level, though, but on my own projects involving writing, research, invention, creation, and physical and intellectual growth.

I remember in my teens and twenties, reading the works of Socrates and other classical writers and feeling envious that they lived in circumstances that allowed unprecedented amounts of free time to think, write, explore, and grow as a human being. (Of course, much of that leisure was unfortunately enabled by the labor of slaves and indentured servants.)

As a teenager I had visions of making my first million by 40 by building a business and then retiring to live a life of travel and intellectual exploration.

Well, I failed. I didn't retire until I was 43. And, it took more than a million to make it a reality.

Retiring early for me is allowing me to pursue my passions. One of those is entrepreneurship--but I don't currently want to start a new venture. It is difficult beyond any 9-to-5 job. Instead, I am teaching an entrepreneurship graduate class at my alma mater a few times a year and also sitting on the advisory board of a few entrepreneurial businesses. I'm also working on the outline of a book on technology entrepreneurship. None of these activities involve any meaningful financial gain, but hopefully, they will be enough to satiate my need to be involved in entrepreneurship.

I have other strong interests too that I am spending significant effort on all involving learning something and/or mastering something.

And, of course, the biggest incentive for me to retire now instead of in five years was so that I can spend much of my days with my children and help them grow into strong and centered adults. I've thoroughly soaked up every day I've spent with my two kids over the past 9 months as we've been on our family sailing "sabbatical."

We were blessed to be making a lot of money when I retired. So, retiring at 48 vs 43 would have had a significant financial impact on our family, possibly doubling our net worth by staying in it for only five more years. We have enough money now, though, and we'll never have enough time, hence our decision to retire last year.
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Old 05-16-2013, 11:53 PM   #15
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Hi Apex.......
Hi AIR

Thank you for sharing! So you're telling me your brain doesn't go dead just because you FIRE?

At 26, I had set-up a successful practice from scratch and the money started rolling. But it still took a lot of effort and my time and so my goal since my 30's, has been to achieve an investment income stream than can equal my practice income and FIRE. With the help of the recent market run-up, I've done that for the first time this year! However, this will not be a realistic expectation going forward nor does it have to be. In the last few years especially, I've felt guilty for having too much and in essence, lost sight of the value of a dollar spending foolishly at times under the guise of LBYM. Its slowly coming back now lurking here.

We are in a unique life stage that can be a little exhausting at times although I think some would argue here that with our means it is all self imposed......and to an extent, I can see that POV.

Yes, time is most definitely limited and is not for sale last time I checked ebay. I am working to 42 (and making some adjustments along the way to keep the BS bucket from overflowing). There may be some personally defined utility here yet. Still evaluating/evolving one day at a time...
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