Could I FIRE now?

[santiago]

Could I do it?

I just turned 40 – net worth about $770K. Have $600K taxable accounts; $170K sheltered. No debt. No house ownership. No pension. It’s definitely on the low side for a full retirement. I am fairly frugal (typical spending about $30K year over the past five years). I could be even more frugal if I could reduce my home/rent expenditures.

I started a consulting business a little over six years ago – and it has been financially successful; however, it has taken a considerable personal toll over the past few years. I was recently diagnosed with chronic fatigue syndrome; my physician suggested an extended period of rest and gradual physical recovery as part of my rehabilitation. My energy and motivation have been waning more and more with each passing month – I feel completely spent. A long-term relationship ended recently. My father passed away in his mid-60s a couple of years ago – the same age as many men in my family.

I have not loved my career, and maybe these personal challenges are conspiring to tell me to drastically change gears and try out an early retirement – or at least a prolonged sabbatical where I could explore the many dreams and other interests I have tabled to keep the business moving forward.

My question to myself is: is this the time to let it go and try something new? Could I be FIREd now? Is there a way to make it work? The current job allows me to save about $100-125K annually – which in a couple of years makes FIRE much more viable. But two more years of doing what I’m doing now feels unbearably taxing. There is a possibility of reducing client load, so that could be an option, but I’d like to at least explore what it might look like to fully get away from it.

I know this is open-ended, but are there any suggestions you might have? Any ideas to consider? Is this a total fantasy? Is this close to viable with some creative maneuvering?

One of the other questions I had: would buying a small house/condo (say $100-125Kish) outright make the math work better? (FIREcalc seems to suggest yes.) I would also be willing to relocate abroad (I’m in the US now) or perpetually travel to lower my expenditures.

Anyway, I know there’s no right answer – but I appreciate this insight and suggestions of the members of this community. It helps to hear opinions and receive input from others who have considered these kinds of issues. Thanks.

[haha]

IMO a guy who is willing to move to Asia or other LDC should be able to survive easily on what you have. I think living in the US without a job is pretty much out of consideration at your asset level.

The only rub is a possible loss of flexibility. However, you have shown great earning ability in a self generated busienss, so you should be OK.

Would it be possible for you to get coverage for your accounts and pick a place to go for 6 weeks or so to see how you respond? There are several people here who do budget travel as a way of life or survival strategy, they could likely help you with very good information. But you wouldn't want to head out after shutting down only to discover that you hate it.

Ha

[TooFrugal]

If you qualify for health insurance and didn't mind living like a college student or the guy in this blog Early Retirement Extreme: — written by Jacob Lund Fisker, Freelancer you might be able to do it.

[photoguy]

The general rule of thumb for sustained withdrawals on a portfolio is about 4% to have a high probability of 30 year success. At 770K * 0.04 yields 30k which is your current spending level. However this leaves no margin of safety and I personally would not feel comfortable with that level of risk.

However, since you are still relatively young, you could FIRE now and if the portfolio experiences a bad set of returns in the first few years, simply go back to work. If the first few years have good returns, then your portfolio is unlikely to experience failure.

Another alternative might be to reduce your hours (as you suggest) or even try switching careers to something that is more fulfilling. Since you have a large amount of savings, you don't really need to earn a lot of money in your new career but and can let it grow on it's own.

[DoingHomework]

Is the nature of your consulting something that would allow you to take on an assistant to help out and reduce workload? Yes it would cut into that $125k/year you save but it might be an alternative to switching to $0 per year.

[santiago]

Thanks for the many suggestions. It's helpful to hear your opinions about the risks involved with trying to FIRE at my current savings, and I also appreciate the many creative ideas of stretching the money and of making the working situation something less draining.

[Rich_by_the_Bay]

What are your plans for health insurance?

[santiago]

I currently use a very high deductible for health insurance to keep costs down - and thus pay most costs out of pocket. Assuming my health does not get worse, I was considering staying high deductible/catastrophic and gradually shifting into greater coverage as I got older. Depending on how legislation ensues (I'm in the US), it is possible with the lower income of drawing retirement savings I might be elible for less expensive health care in the future. I am certainly open to any suggestions you might have.

[Dawg52]

Quote:

Originally Posted by santiago Could I do it? My father passed away in his mid-60s a couple of years ago – the same age as many men in my family. My question to myself is: is this the time to let it go and try something new? Could I be FIREd now? Is there a way to make it work? The current job allows me to save about $100-125K annually – which in a couple of years makes FIRE much more viable. But two more years of doing what I’m doing now feels unbearably taxing. There is a possibility of reducing client load, so that could be an option, but I’d like to at least explore what it might look like to fully get away from it. One of the other questions I had: would buying a small house/condo (say $100-125Kish) outright make the math work better? (FIREcalc seems to suggest yes.) I would also be willing to relocate abroad (I’m in the US now) or perpetually travel to lower my expenditures.

I think I would lighten the work load for the next year. See how that goes as that might relieve more stress than you anticipate. Giving you more time to explore where you might want to live one day. Considering your family's history of a short life span, I might be exploring my options too. But you never know, you could beat the odds and live to a ripe old age. Needing more funds than you currently have.

Best of luck with your future. Keep us up to date.

[aida2003]

I'd be worried to fully retire at this time. What if you're a lucky one to outlive your family but not so lucky to work even part-time due to an illness or a disability? Like others I think reducing your workload or hiring an assistant would be a safer way to go. Could your business be sold, BTW?

[ziggy29]

Personally, in your situation I'd hang on until at least 2014 and see how the health insurance situation plays out.

[Bestwifeever]

Quote:

Originally Posted by TooFrugal If you qualify for health insurance and didn't mind living like a college student or the guy in this blog Early Retirement Extreme: — written by Jacob Lund Fisker, Freelancer you might be able to do it.

Jacob is pretty open about being semi-retired as he still earns money freelancing part-time and writing his blog, and he does share common expenses with a spouse who is employed, it sounds like from his FAQ page and "about me" page.

Santiago, imho you could retire tomorrow if you could find a partner (and wanted to) whose assets match yours.

[REWahoo]

Quote:

Originally Posted by Bestwifeever Santiago, imho you could retire tomorrow if you could find a partner (and wanted to) whose assets match yours.

Yep, I could have retired much earlier if I'd been able to talk DW into supporting me.

(Is it just me or does anyone else see a similarity in how Jacob is "retired" and the infamous MMND? )

[TooFrugal]

Quote:

Jacob is pretty open about being semi-retired as he still earns money freelancing part-time and writing his blog, and he does share common expenses with a spouse who is employed, it sounds like from his FAQ page and "about me" page.

I guess I should have added not what he lives on now, but his ideas for living really cheap, like this post -

» How to get wealthy on minimum wage Early Retirement Extreme: — written by Jacob Lund Fisker, Freelancer

Quote:

Is it just me or does anyone else see a similarity in how Jacob is "retired" and the infamous MMND?

I checked his blog rankings on Alexa, and I'm guessing he gets at least 1,000,000 page views a month with those kind of rankings, conservatively earning $10 cpm for a financial blog, which means his blogging income should be at least 10K a month, could be a lot more.

So I doubt he really lives as he suggests in his blog, but I still like his blog as I do think it may be possible, if you don't mind living like a college kid, to live as cheaply as he describes. I just doubt anyone with his kind of likely combined husband and wife income would really choose to live that way.

[wanaberetiree]

Quote:

Originally Posted by santiago Could I do it? I was recently diagnosed with chronic fatigue syndrome; my physician suggested an extended period of rest and gradual physical recovery as part of my rehabilitation. My energy and motivation have been waning more and more with each passing month – I feel completely spent. A long-term relationship ended recently. My father passed away in his mid-60s a couple of years ago – the same age as many men in my family.

Can you apply for disability benefits with this?

[ESRwannabe]

Age 40 with $770k, if it were me I would ESR immediately... I wouldn't retire. Instead I would find something part-time, that I don't mind doing.

I would rather work a part-time job that is tolerable and has low stress, for the rest of my life, than continue working full-time at a job I don't like and has lots of stress, for many more years, in order to save enough for ER.

Once I hit $500k I will ESR. At a 2% withdrawal I could take out $10k a year. That coupled with a tolerable part-time job, that pays $10k or so, would cover my expenses just fine in the US.

I have never lived on more than approx $30k a year... last year was roughly $10k taxes, $10k rent, and $10k for everything else...

[santiago]

Thanks again everyone for the thoughtful comments. I am now thinking more about creative "semi-retirement" scenarios. It is helpful to start contrasting my known semi-retirement option (reducing work within my current job, with current clients and good pay) with the unknown (perhaps finding more meaningful work down the line). It is also helpful to hear that the consensus feel that there is a considerable level of risk with retiring at my current status.

Hiring an assistant is unfortunately not a particular easy option - I'm in a very specialized field and it would require a lot of training to get even a well-qualified assistant up to speed. However, it's not something I have seriously considered to this point, so I will definitely think about whether it might be worth the effort. I have little overhead and infrastructure in the business itself - so also there's not much work for an 'office assistant' sort of role (maybe a couple of hours a week). Selling the business would also be challenging due to the specialized nature of what I do, but it is also worth considering this option more seriously.

I'm grateful to hear that a couple of people feel that lightening the workload may make a considerable difference in quality of life. I feel so inundated right now that perhaps the "complete escape" feelings are running a little strong...

Bestwifeever: alas, no current partner - but I agree with you in principle! That would be ideal.

Thanks again everyone for your many comments - your feedback is providing lots of fodder for thought and helping to show me where a few of the potential pitfalls may lie. I really appreciate it.

[haha]

Quote:

Originally Posted by TooFrugal I checked his blog rankings on Alexa, and I'm guessing he gets at least 1,000,000 page views a month with those kind of rankings, conservatively earning $10 cpm for a financial blog, which means his blogging income should be at least 10K a month, could be a lot more. So I doubt he really lives as he suggests in his blog, but I still like his blog as I do think it may be possible, if you don't mind living like a college kid, to live as cheaply as he describes. I just doubt anyone with his kind of likely combined husband and wife income would really choose to live that way.

In other words, buy my fantasy 'cause that is what I can sell you. Worry not that it is pure fantasy.

It seems to me that I've heard that song before.

http://www.youtube.com/watch?v=MA2hk_CIZeo

[chinaco]

The complicating factor you threw in is the potential for an early death.

Longevity is a very important factor in your decisions and planning.

Get a checkup with your doctor and talk to him/her about your family history. There may be treatments for the problem.


IMO - You are 40... you have time to think about it an plan. Take your time and do not make any hasty or rash decisions.

[fisherman]

I went through a very similar situation due to my family history in deciding to ESR at 43. No male in my family had lived past 67 including my Dad who made it to only 65. It appeared to be heart related.

The difference is at 22 when I graduated college I set a plan to retire around 45 influenced by this knowledge. DW who at that time was my fiancé was in total agreement with a similar plan. After 21 years and most of them both of us working two jobs and living way way below our means while investing well the planned worked. Additionally we both have pensions coming at 55 early or 62 full and hopefully SS later.

Now at 46 I do not show any heart problems and have been through a slew of tests due to chest pains six years ago that turned out to be work stress related. Also one male in my family has now made it past 67. My uncle recently passed at 70 and it was not a heart problem but a work related cancer.

I my very well live past 67 and certainly planned for that. I also think my odds are higher to live longer now in ESR as I am able to exercise more and am motivated to eat better so that I feel good in order to participate in the hobbies I enjoy.

In summary the desire to have sometime in retirement should my demise come around 65 was a real motivator to ESR but if I was not financially safe in doing so I would find the stress of worrying worse than working. Additionally for us we planned and have used most of the increases in spending to cover more travel and leisure activities. These activities and the money to do them have made ESR a wonderful time for us to date.

You might look at living for a few years at what your savings can safely cover and save any additional money from part time work. In a few years you will have a higher SWR and a good feel for your retirement expenses. This combination will remove a lot of financial uncertainty.

Good luck and do not give up as you likely can make it happen with a good plan.