Fire ?

[ecowtent]

When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?

 

[Amethyst]

I'll put it another way: Why would you leave out any expenses for which you expect to need money?

If you want to travel and you like to give to charities, those are part of your yearly expenses, just as food and housing are. So are any income taxes you must pay. And don't forget yearly contributions to your emergency fund.

When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?

 

[ERD50]

The only expenses you do not need to include are those expenses that are paid for by the money fairy.

If you don't have a money fairy, don't exclude anything. As Amethyst asks, why would you exclude anything? What is your thinking behind that?

-ERD50

 

[REWahoo]

Include everything, and don't forget "everything" includes taxes.

 

[RunningBum]

And that car you're going to buy in the next few years. And eventually the new roof, furnace, etc. Best to budget a yearly fund for those things.

 

[EastWest Gal]

When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.


Sent from my iPhone using Early Retirement Forum

 

[RunningBum]

When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.


Sent from my iPhone using Early Retirement Forum

That's great for you. Do you think everyone on here do that? Or do you think if they're trying to retire as early as they safely can, that being reminded of irregular large expenses might be helpful?

 

[Which Roger]

When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?

I read the OP's question to mean "do you include all expenses, or only non-discretionary?". I think it makes sense to do both calculations. Depending on how desperate you are to get out of the workforce, you may be more or less willing to forego discretionary expenses if your portfolio experiences a bad sequence of returns. So it's good to know if you at least have the bare minimum to survive the worst cases.

 

[Bestwifeever]

We actually did put together what I called a bare-bones budget very early in the game before making the decision to retire, with every fixed expense. Yes, it left out travel, and gifts, and health club membership. It was reassuring to see that if we lost our jobs, we would have been okay--miserable, but okay (and many people would rather leave their jobs the minute they can afford to, regardless of the future scrimping that might be involved). We both knew that level wasn't what we wanted (I believe DH's actual words were that he would work forever before he would live like that, but I was pretty impressed that we were able to finance even that level of retirement), and we then put together two more scenarios, of current and projected expenses (quite heavy on the travel and gifts). When we did fall off the cliff eight years ago yesterday, we knew we would be fine. So I don't see a problem with setting the baseline--lots of people live at that level, some forced to, some by choice.

 

[RetireAge50]

My first thought was, of course, you have to include them. But the more I think about it you probably don't.

100% Firecalc safe will most likely leave plenty of money for travel and giving.

So just depends on you and how bummed you would be if the worse happens and couldn't travel.

 

[marko]

Include everything, and don't forget "everything" includes taxes.

...and throw in a little bit more; just in case.

 

[Katiek]

I read the OP's question to mean "do you include all expenses, or only non-discretionary?". I think it makes sense to do both calculations. Depending on how desperate you are to get out of the workforce, you may be more or less willing to forego discretionary expenses if your portfolio experiences a bad sequence of returns. So it's good to know if you at least have the bare minimum to survive the worst cases.

This is how I approached it. Did the calculations with a more "bare bones" budget that includes all necessary expenses (including accruals for infrequent costs such as a new car) and then again for a budget that includes more discretionary items and buffer. I'm aiming for the second, but it's nice to know what the first is for planning purposes.

 

[ecowtent]

Thank you all. I understand the feedback about planning for every bit you can. I will retire earlier than my husband- health issues and I worked while he went back to school (twice). He will continue to earn more than we have projected for retirement for several years which will help to not touch our nest egg.


I want to know that bare bones we can make it even just in case he has to retire earlier than expected. I just want to know that we are FIRE'd! Then we can add on or skimp as much as we want or don't want in the last few years of earning a salary.

 

[eta2020]

Include everything, and don't forget "everything" includes taxes.

+1

And any medical expenses.

To me 10k a month means about 6k for housing/fun rest is taxes and medical care.

 

[NW-Bound]

Been spending 50% more than what I thought was our basic but comfortable needs.

Good thing it's still below what FIRECalc says I can spend, but with future SS included in the plan.

 

[DrRoy]

I would put in everything that you can think of, because there will likely be things you didn't expect.

 

[nash031]

I've calculated expected expenses based on the life we want to live. We can "survive" on less, but I wanted my FI number to be no-kidding the number where I think we could both quit. We will likely work beyond FI, allowing for more buffer for charitable expenses, augmenting travel, other luxuries that maybe we don't enjoy right now. Whenever we feel out-of-balance in terms of need for more ___________ vs. need for more time, that's when we'll RE.

So in short, there are two numbers:

- Bare minimum to get by - some call this FI.
- Bare minimum to live the life you want - I call this FI.


We plan to RE at our FI + something.

 

[Rustic23]

I included everything I could think of, the added some more just in case! I could not sleep well knowing I was at the bare minimum.

 

[pb4uski]

When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?

It depends. If you want to just sit around the house and not give anything to charity then exclude them. You need to include the cost of everything that you want to do.

 

[CardsFan]

When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.

I think a fair number of people here take this conservative approach, I know I do. In my case, I took the largest spend we had in the 5 years prior to retiring. Since I used the checking account to calculate this, I had to add in HI and income taxes. To be (more) conservative I used only one SS income. I put this into FireCalc and got 100%. Then I used the investigate tab to check spending for 95% success. The graph will also show 100% success. With a 30% cushion, I am not too worried about unusual 1 time expenses, or the purchase of a new car.

 

[fishndad42]

We ran 3 models. Bare bones, modest and "generous" (my term - DW says it's to show what it could end up being if I buy too many toys). The bare bones reduces charity, travel and so forth, and we did it more to agree in advance what cuts to make if some part of our financial plan evaporates - e.g. if SS fails. It's not likely to happen, but having a plan in advance made us feel better.

Sent from my SM-G900V using Early Retirement Forum mobile app

 

[YVRRocketSurgery]

As much as I hate to quote Anthony Robbins...

After he put out his personal finance book, I came across a few reviews and discussions on it. One concept I liked was how he characterized different levels of financial independence:

• Financial Security = Core spend is covered
• Financial Independence = Overall regular spend is covered
• Financial Freedom = Everything you want to buy is covered

I would edit it to 4 levels, taking Freedom down a notch and adding a top level of Financial Abundance.

Without putting a tag on it, the rungs of my Financial Independence ladder are as follows:

1. My passive income covers my half of our core spend (utilities, groceries, etc. No discretionary)
2. My passive income covers my half of our average yearly spend (including travel, fun, eating out)
3. My passive income covers all of our core spend
4. My passive income covers all of our average yearly spend
5. My passive income covers all of our average yearly spend and allows us to travel internationally 6 months/yr.
6. My passive income covers all of our average yearly spend and allows us to travel internationally 6 months/yr and we can be splurgy.

The missus and I kind of calculate our FIRE separately because she has a DB plan (though we still keep a holistic view on things).
I calculate my FIRE, against all these levels but I specifically want to achieve level 5 so if the missus' retirement nest egg/DB Pension doesn't pan out, I've got it covered. If it does pan out, then we can hit level 6.

 

[Fermion]

I have GAAP expenses but I prefer to use non GAAP like most of the stock market

Thus the $2000 for those new injectors is not reported.

 

[tdv2]

As much as I hate to quote Anthony Robbins...

After he put out his personal finance book, I came across a few reviews and discussions on it. One concept I liked was how he characterized different levels of financial independence:

• Financial Security = Core spend is covered
• Financial Independence = Overall regular spend is covered
• Financial Freedom = Everything you want to buy is covered

I would edit it to 4 levels, taking Freedom down a notch and adding a top level of Financial Abundance.

Without putting a tag on it, the rungs of my Financial Independence ladder are as follows:

1. My passive income covers my half of our core spend (utilities, groceries, etc. No discretionary)
2. My passive income covers my half of our average yearly spend (including travel, fun, eating out)
3. My passive income covers all of our core spend
4. My passive income covers all of our average yearly spend
5. My passive income covers all of our average yearly spend and allows us to travel internationally 6 months/yr.
6. My passive income covers all of our average yearly spend and allows us to travel internationally 6 months/yr and we can be splurgy.

The missus and I kind of calculate our FIRE separately because she has a DB plan (though we still keep a holistic view on things).
I calculate my FIRE, against all these levels but I specifically want to achieve level 5 so if the missus' retirement nest egg/DB Pension doesn't pan out, I've got it covered. If it does pan out, then we can hit level 6.

What dollar amount do you use to figure international expenses for 6 months? Just curious.

 

[YVRRocketSurgery]

What dollar amount do you use to figure international expenses for 6 months? Just curious.

I'm using $60k CDN for the 6 months of international travel combined for the two of us. It's based on total spend (for a 3 week trip to Japan and Korea last year which ended up being somewhat less than $300/day CDN and rounded up. I'm going to track expenses for an upcoming 2 week European cruise to see how closely the daily spend aligns. I'm expecting the cruise trip though to end up being closer to $400/day combined.

The Japan and Korea numbers were all budget hotel stays and eating out. When we retire, I'm expecting our trips are a bit longer which would possibly allow us to cut accommodation costs via a longer term rental on some occasions and food costs by cooking local ourselves. Also, the plan would be to do a mix of four, 1.5 month trips instead of one long 6 month trip which would hopefully average out higher cost destinations with lower cost destinations.

We're read about singles travelling a year for about $20k but staying in hostels, primarily travelling to SE Asia, some working under the table a bit, etc. We want a bit more flexibility than that. Hoping our budget will allow that.