Hi All,
Long-time lurker, first-time poster. I'm posting from a new account, because my regular ID would link me to lots of other forums and a careful spelunker could determine my identity. I hope this is okay.
I apologize if there is too much detail here. I would like to (try to) present the whole picture and then encourage any comments, suggestions, or criticisms you care to share. I have thick skin.
I am 29 and have been working for 10 years. I bought a house with my wife after year 3, got very lucky with the real estate market, and sold at the top after a +$250k tax-free profit two years later. I subsequently splurged most of that cash on depreciating "assets" that might as well be worth zero by now. I did purchase two cars that we're still enjoying 7 years later. And I did get a lot of enjoyment and intellectual value out of the rest of the expenditures... just nothing to show for it financially today.
I've maxed out a 401k or equivalent contribution over about the last 8 years resulting in about $170k in the account today.
I have about $100k in a lovely 0.15% savings account today. (See below for important note.)
I have about 30% equity in my $600k home, most through appreciation.
I have "extra" personal property assets of on-order $150k that depreciate at roughly 10% per year. All could be liquidated almost instantly if we needed the cash. I own a very unusual extra vehicle that is probably worth about $65k, with negligible further depreciation, after frictional costs.
My wife suffered some severe medical maladies a few years ago and will never be able to work again. We have not attempted to have her classified as permanently disabled for government benefit purposes. Her medical issues seem mostly resolved, but it is possible they will recur at high cost. She is completely "uninsurable" under standard health and life criteria. She also cannot drive, but she can use public transportation and do most normal things on most days.
We have one infant child. We expect in-home care assistance of about $25k/year for the first 5 years, augmented by me when I am home (I travel extensively but otherwise am home) and family members who will provide support.
I earn approximately $200k in direct compensation per year. The amount can vary by -$25k to +$75k based upon company performance. I expect this amount to slightly outpace inflation as long as I stay with the company. I occupy a senior executive position with almost complete autonomy and no management responsibility.
I have accrued a significant amount of equity options, but my company is not public. We will likely be acquired or go public in the next few years. Our company is quite profitable, we dominate our space, and our business model is about as rock solid as it gets, though we will never grow like a Google (or a Webvan, for that matter). A conservative estimate today for my vested stock today is +$400k before taxes. A moderate estimate is $600k. An aggressive estimate is $800k. We have recent market validation for ~$700k, but I express the range here since I prefer some considerable degree of conservatism.
I have a much larger assortment of unvested stock options that are accruing to me at a valued rate of between $20k and $45k per month -- again depending on where one puts one's estimate -- for roughly the next three years. I expect I will be granted additional stock each year at a velocity that will roughly sustain that extra income figure, modulo the deferral that drags the realization out for numerous years, of course.
I have a reasonable "own-income" LTD insurnace at 80% through my company. I believe I cannot reasonably obtain additional incremental LTD at any favorable price. I would prefer my own policy, but the game is rigged as far as I can tell.
I have a $2.5MM 20-year level term life policy that just went into effect. I don't think I will need it for that long, but this covers my child's pre-earning years.
I am reasonably healthy and quite happy. I like my job and my colleagues, but I would also like to do other things, including other paying jobs, at some point in the next 3 to 5 years. It will be hard to justify quitting at any point as long as my equity compensation is sustained at this level, though. I'm pretty sure that is by design.
I am unable to see myself "retiring" as long as I can feasibly contribute to society. I will volunteer, teach, or work in a non-profit capacity until I fall over, if I can help it. I do want to reserve more time for my own interests in the future, most of which are in various "casual" research or engineering domains. But I would be bored just staying home or even living in three countries and skiing, surfing, and hiking every day.
Both sets of parents are quite frugal and financially stable, and they share their financial status with us to help with planning (for them and us). It is somewhat likely that my family will pass along a reasonable inheritance based on my models -- perhaps $1-2MM in today's dollars -- to two children. My wife's family got very lucky during the dotcom boom and will likely share an inheritance of perhaps $5-8MM in today's dollars to two children. If it seems morbid or presumptuous for me to include these figures, feel free to treat them as zero. I do, sometimes, but statistically I think zero is just really unlikely, especially as long as the estate tax continues to be so generous.
I am completely in indexed stocks today, with a significant allocation to foreign markets including the BRIC. I don't see any reason to change that any time soon. I have an extremely high tolerance for variance. I have a small side hobby that requires me to maintain at least an extra $50k in cash at all times. No, it does not involve selling illegal drugs.
I have about $150k in various credit card balances mostly fixed at between 0 and 3% APR. I used to play this game much more, but I probably lost about $750k in lines during the meltdown. I no longer find this game fun or especially worthwhile, so these will get paid off over the next few years so I don't have to bother with them.
At this point, with the baby redrawing my life picture around me, I am trying to assess where I stand. Please let me wax philosophic here for a few paragraphs:
On the one hand, determination of my FI age seems completely dominated by what value I ascribe to the aforementioned equity holdings. I am a long way off if I set that to zero. I am almost done if we have two exceptional more years and valuation goes well past what I think it should be today. I think it is reasonable to expect a gaussian about the average I delineated above with perhaps a slight skew towards a lower value.
On another hand, I have been (mostly knowingly) irrational about our expenses. I sometimes agonize over squeezing the last dollar out of a deal. The intrinsic value of getting razor blades on a slickdeal is so worth it. On the other hand, I sometimes make near-impulse $15k purchases of esoteric electronics gear and other silly stuff. I could eliminate most of those, but I allow myself to get away with it under some gestalt sense that my NPV can justify it.
We actually live at a fairly benign base spending rate. We have no desire to be in a big mansion. I pay my housekeeper mostly with frequent flier miles. I don't fly helicopters for a hobby. We have reasonable cashflow. I have almost a year of vacation banked at work through a special (and historical) arrangement.
In summary, I feel exceptionally lucky and blessed to be where I am. I have extremely marketable skills and a strong network such that I could probably find another similar job at the same or slightly better direct compensation but probably with a stock compensation package that would take many years to match my current rate -- and only then at considerably higher standard deviation.
I believe I could maybe have $500K in retirement savings and a paid-off house if I had truly optimized for financial net worth over the last decade. I am not sure I would make that tradeoff if I could go back in time given what I know right now. (Although I would definitely have skipped a few particularly shoddy "acquisitions." )
I would like to know if you folks have any thoughts or guidance. I am finding the retirement calculators out there to be pretty weak at modeling my scenario. The Fido one is maybe the best I've tried so far, and even with it I have to make a bunch of gross simplifying assumptions about my income. It is weak enough that I am thinking about writing my own piece of software to better accommodate more complex forms of compensation over time. But then, sometimes, I stop and say -- "wait, why bother with all that? Just keep living and don't worry so much about it."
It feels good to finally get on here and post my story. I guess I'm both proud of most of it and a little embarrassed at some of the dumber choices I've made. (I'd be even more embarrassed if I could expound upon some of my crappier spending choices for you, but doing so would make it really easy for someone to uniquely identify me. Sorry!) Mostly I just feel fortunate and not particularly special. I'd appreciate a dose of reality from some of you who might be -- or have been -- in similar spots.
I harbor immense respect for those of you, especially at lower income levels, who manage to save at incredible proportional rates. I have never met someone in real life who comes anywhere close to some of the examples I see on this forum, but I find myself really wanting to. I imagine it is a needle and haystack exercise, though.
Thanks for reading,
Symbiotic
Long-time lurker, first-time poster. I'm posting from a new account, because my regular ID would link me to lots of other forums and a careful spelunker could determine my identity. I hope this is okay.
I apologize if there is too much detail here. I would like to (try to) present the whole picture and then encourage any comments, suggestions, or criticisms you care to share. I have thick skin.
I am 29 and have been working for 10 years. I bought a house with my wife after year 3, got very lucky with the real estate market, and sold at the top after a +$250k tax-free profit two years later. I subsequently splurged most of that cash on depreciating "assets" that might as well be worth zero by now. I did purchase two cars that we're still enjoying 7 years later. And I did get a lot of enjoyment and intellectual value out of the rest of the expenditures... just nothing to show for it financially today.
I've maxed out a 401k or equivalent contribution over about the last 8 years resulting in about $170k in the account today.
I have about $100k in a lovely 0.15% savings account today. (See below for important note.)
I have about 30% equity in my $600k home, most through appreciation.
I have "extra" personal property assets of on-order $150k that depreciate at roughly 10% per year. All could be liquidated almost instantly if we needed the cash. I own a very unusual extra vehicle that is probably worth about $65k, with negligible further depreciation, after frictional costs.
My wife suffered some severe medical maladies a few years ago and will never be able to work again. We have not attempted to have her classified as permanently disabled for government benefit purposes. Her medical issues seem mostly resolved, but it is possible they will recur at high cost. She is completely "uninsurable" under standard health and life criteria. She also cannot drive, but she can use public transportation and do most normal things on most days.
We have one infant child. We expect in-home care assistance of about $25k/year for the first 5 years, augmented by me when I am home (I travel extensively but otherwise am home) and family members who will provide support.
I earn approximately $200k in direct compensation per year. The amount can vary by -$25k to +$75k based upon company performance. I expect this amount to slightly outpace inflation as long as I stay with the company. I occupy a senior executive position with almost complete autonomy and no management responsibility.
I have accrued a significant amount of equity options, but my company is not public. We will likely be acquired or go public in the next few years. Our company is quite profitable, we dominate our space, and our business model is about as rock solid as it gets, though we will never grow like a Google (or a Webvan, for that matter). A conservative estimate today for my vested stock today is +$400k before taxes. A moderate estimate is $600k. An aggressive estimate is $800k. We have recent market validation for ~$700k, but I express the range here since I prefer some considerable degree of conservatism.
I have a much larger assortment of unvested stock options that are accruing to me at a valued rate of between $20k and $45k per month -- again depending on where one puts one's estimate -- for roughly the next three years. I expect I will be granted additional stock each year at a velocity that will roughly sustain that extra income figure, modulo the deferral that drags the realization out for numerous years, of course.
I have a reasonable "own-income" LTD insurnace at 80% through my company. I believe I cannot reasonably obtain additional incremental LTD at any favorable price. I would prefer my own policy, but the game is rigged as far as I can tell.
I have a $2.5MM 20-year level term life policy that just went into effect. I don't think I will need it for that long, but this covers my child's pre-earning years.
I am reasonably healthy and quite happy. I like my job and my colleagues, but I would also like to do other things, including other paying jobs, at some point in the next 3 to 5 years. It will be hard to justify quitting at any point as long as my equity compensation is sustained at this level, though. I'm pretty sure that is by design.
I am unable to see myself "retiring" as long as I can feasibly contribute to society. I will volunteer, teach, or work in a non-profit capacity until I fall over, if I can help it. I do want to reserve more time for my own interests in the future, most of which are in various "casual" research or engineering domains. But I would be bored just staying home or even living in three countries and skiing, surfing, and hiking every day.
Both sets of parents are quite frugal and financially stable, and they share their financial status with us to help with planning (for them and us). It is somewhat likely that my family will pass along a reasonable inheritance based on my models -- perhaps $1-2MM in today's dollars -- to two children. My wife's family got very lucky during the dotcom boom and will likely share an inheritance of perhaps $5-8MM in today's dollars to two children. If it seems morbid or presumptuous for me to include these figures, feel free to treat them as zero. I do, sometimes, but statistically I think zero is just really unlikely, especially as long as the estate tax continues to be so generous.
I am completely in indexed stocks today, with a significant allocation to foreign markets including the BRIC. I don't see any reason to change that any time soon. I have an extremely high tolerance for variance. I have a small side hobby that requires me to maintain at least an extra $50k in cash at all times. No, it does not involve selling illegal drugs.
I have about $150k in various credit card balances mostly fixed at between 0 and 3% APR. I used to play this game much more, but I probably lost about $750k in lines during the meltdown. I no longer find this game fun or especially worthwhile, so these will get paid off over the next few years so I don't have to bother with them.
At this point, with the baby redrawing my life picture around me, I am trying to assess where I stand. Please let me wax philosophic here for a few paragraphs:
On the one hand, determination of my FI age seems completely dominated by what value I ascribe to the aforementioned equity holdings. I am a long way off if I set that to zero. I am almost done if we have two exceptional more years and valuation goes well past what I think it should be today. I think it is reasonable to expect a gaussian about the average I delineated above with perhaps a slight skew towards a lower value.
On another hand, I have been (mostly knowingly) irrational about our expenses. I sometimes agonize over squeezing the last dollar out of a deal. The intrinsic value of getting razor blades on a slickdeal is so worth it. On the other hand, I sometimes make near-impulse $15k purchases of esoteric electronics gear and other silly stuff. I could eliminate most of those, but I allow myself to get away with it under some gestalt sense that my NPV can justify it.
We actually live at a fairly benign base spending rate. We have no desire to be in a big mansion. I pay my housekeeper mostly with frequent flier miles. I don't fly helicopters for a hobby. We have reasonable cashflow. I have almost a year of vacation banked at work through a special (and historical) arrangement.
In summary, I feel exceptionally lucky and blessed to be where I am. I have extremely marketable skills and a strong network such that I could probably find another similar job at the same or slightly better direct compensation but probably with a stock compensation package that would take many years to match my current rate -- and only then at considerably higher standard deviation.
I believe I could maybe have $500K in retirement savings and a paid-off house if I had truly optimized for financial net worth over the last decade. I am not sure I would make that tradeoff if I could go back in time given what I know right now. (Although I would definitely have skipped a few particularly shoddy "acquisitions." )
I would like to know if you folks have any thoughts or guidance. I am finding the retirement calculators out there to be pretty weak at modeling my scenario. The Fido one is maybe the best I've tried so far, and even with it I have to make a bunch of gross simplifying assumptions about my income. It is weak enough that I am thinking about writing my own piece of software to better accommodate more complex forms of compensation over time. But then, sometimes, I stop and say -- "wait, why bother with all that? Just keep living and don't worry so much about it."
It feels good to finally get on here and post my story. I guess I'm both proud of most of it and a little embarrassed at some of the dumber choices I've made. (I'd be even more embarrassed if I could expound upon some of my crappier spending choices for you, but doing so would make it really easy for someone to uniquely identify me. Sorry!) Mostly I just feel fortunate and not particularly special. I'd appreciate a dose of reality from some of you who might be -- or have been -- in similar spots.
I harbor immense respect for those of you, especially at lower income levels, who manage to save at incredible proportional rates. I have never met someone in real life who comes anywhere close to some of the examples I see on this forum, but I find myself really wanting to. I imagine it is a needle and haystack exercise, though.
Thanks for reading,
Symbiotic