Is my FIRE plan for 2025 realistic?

[HenryD]

I am 50, DW is 47, both on our second marriages. DW has a corporate job, I’m self-employed, both in tech. In a typical year, we gross $275k. We mostly w*rk from home in a midwest exurb.

These income levels are recent for us and we have only been together a few years. Perhaps ominously I registered here in 2013 a couple of months before my original 2020-ish FIRE plans were thrown out the window and I ran away crying: Divorce dropped my NW from $765k to $125k and I, now we, have spent the time since building it back up. DW spent many years as the sole provider for 2 kids on a modest income so she brought some debt and a small NW to our marriage; her income is much better now. The upshot is that we are behind, but if we can hang in there another 6 years I think/hope we can reach our $2MM NW goal.

Current situation (excl $80k 529 plans):
$ 34k in cash, of which $6k is in HSAs
$575k pre-tax retirement, 90% in various Vanguard funds
$ 60k Roth retirement, Vanguard
$ 32k HSA invested, Vanguard
$110k Home equity, to be sold at RE
$811k NW +/-

We expect income to remain steady or improve a little, and expenses to moderate once the remaining 2 kids leave the house by 2021 (fewer family vacations, our extravagance). College costs should not be a significant drain.

Prior to my divorce I was a sole provider on less than half our current income and managed a 17% average annual NW increase 1999-2014. Since the divorce, we’ve rebuilt at an average 31% thanks to the lowered NW and higher income. The back of the envelope projection looks like this:

Year	NW
2019	827000	17.5%
2020	967590	17.0%
2021	1127242	16.5%
2022	1307601	16.0%
2023	1510279	15.5%
2024	1736821	15.0%
2025	1988660	14.5%

If we can meet our specific savings goals, we might do a little better, although I am not sure how realistic it is for us to hit those goals every year. Presumably whatever volatility is going to happen could help or hurt us.

Year	Growth	401k	HSA	401k	Cash	Mort	NW
2019							827000
2020	45965	25611	7100	36000	40000	6486	988162	19.5%
2021	58003	31111	7200	36000	40000	6725	1167202	18.1%
2022	71823	31611	7300	36000	40000	6973	1360909	16.6%
2023	87336	32111	7400	36000	40000	7230	1570987	15.4%
2024	104747	32611	8500	36000	40000	7497	1800342	14.6%
2025	124343	33111	8600	36000	40000	7773	2050169	13.9%

RE involves leaving the country. Hopefully to a relatively inexpensive liveaboard sailboat, or on the hard in someplace like Panama. Hope to do some digital nomad stuff to cover living expenses and keep something trickling into social security until 2029. This all feels like it *could* work out, but only if things go right. It doesn’t seem like there is a lot of contingency in there. Ultimately, I think we’ll just go with whatever we have by then and adjust expenses to match. We both really want to be done with w*rk.

Am I dreaming?

 

[Golden sunsets]

What does the second column entitled 401K represent? Employer match? Also you can add catch up contributions once you are each 50,

 

[joeea]

Ultimately, I think we’ll just go with whatever we have by then and adjust expenses to match.

If you can actually make such an adjustment, then obviously it will be successful (by definition).

Some folks have a hard time adjusting as much as necessary or determining by how much they must adjust.

 

[HenryD]

What does the second column entitled 401K represent? Employer match? Also you can add catch up contributions once you are each 50,

First 401k is DWs and includes the match.

Second 401k is mine and includes both empoyee and employer sides since I am self-employed. Some years before my divorce I had been able to max out the $20k+ employer side, will try to again, but I am not assuming I will. This will be my first year for 401k employee catch up! I try to hit that first since the employer match can still be made through April the following year.

 

[pb4uski]

Have you plugged your situation into FIRECalc? Or another good planner that would probably work well for you is Quicken Lifetime Planner which is included in Quicken Deluxe or higher versions of Quicken.

 

[HenryD]

Some folks have a hard time adjusting as much as necessary or determining by how much they must adjust.

DW is more apt to be able to adjust down since she spent more years on a lower income. I am the one driven by the number, she by the clock. I need to make sure I listen to her if/when the crunch comes.

 

[HenryD]

Have you plugged your situation into FIRECalc? Or another good planner that would probably work well for you is Quicken Lifetime Planner which is included in Quicken Deluxe or higher versions of Quicken.

I've been so fixated on net worth recovery that I haven't really done FIRECalc since I ran away in 2013. Thank you for the suggestions. I should revisit.

 

[pb4uski]

I've been so fixated on net worth recovery that I haven't really done FIRECalc since I ran away in 2013. Thank you for the suggestions. I should revisit.

Also, how much do you need to live on? If it is $50k a year then $2m is plenty... if it is $100k a year then not so much.

 

[HenryD]

Also, how much do you need to live on? If it is $50k a year then $2m is plenty... if it is $100k a year then not so much.

People claim, although it's hard for me to believe, that one can live well somewhere like Panama on $25k a year. I've lurked on other threads here discussing the feasibility of that and I still don't totally buy it. We've done some research and travel in the region but need to do more. We do gravitate towards wanting to live like locals, not ex-pats, which helps.

I think $50k is a decent minimum for us. I'm hoping we can generate $20k between us remote consulting in the early years to keep topping up SS and add some margin. I'm expecting another $35-40k from social security if we both start at 62 in 2031 and 2033; hopefully, that will allow for some lifestyle creep/bad assumptions.

$55k from $1.7MM for 50 years gave me 99% on firecalc. Right now I'm just more worried about being able to accumulate that big a portfolio.

 

[pb4uski]

.... I think $50k is a decent minimum for us. ...

$55k from $1.7MM for 50 years gave me 99% on firecalc. Right now I'm just more worried about being able to accumulate that big a portfolio.

Check out the Investigate tab in FIRECalc... you can solve for a spending level given a success rate.

On the first part, don't guess... do some analysis of your current spending and adjust it as needed to get a better idea of what your spending will be. Include periodic car replacements if you'll have a car or rental costs if you don't, major repairs to your retirement home or yacht, etc.

With your assets, I don't think that you need to leave the US unless you really want to... there are lots of couples that live quite nicely on $50k a year. We spend more because we have two homes and because we can, but if we downsized to one and trimmed our recreation spending we could live quite nicely within $50k a year with a paid off home.

On the very last part.... see my third byline.

 

[meekie]

People claim, although it's hard for me to believe, that one can live well somewhere like Panama on $25k a year.

I'm looking into living in mexico for a few years as well, and am also seeing extremely low numbers for living expenses. While I'm sure people do live that low, I know we would be spending a bit more, but it sounds like I could live pretty well for 60k, which is half of what I'm spending in my HCOL area, and would include local healthcare.

Do you plan on staying in Panama forever? I'm looking at staying a few years, but I don't know if I could move permanently. If that were the only option, I'd be afraid of getting stuck and not being able to afford to move back if I wanted to.

I think your 2m target number is pretty reasonable, and looks possible. I'm 3-4 years from my target number if the stock market behaves, but in this short of a term, it's hard to depend on those gains.

 

[HenryD]

Check out the Investigate tab in FIRECalc... you can solve for a spending level given a success rate.

Thank you, will do.

On the first part, don't guess... do some analysis of your current spending and adjust it as needed to get a better idea of what your spending will be. Include periodic car replacements if you'll have a car or rental costs if you don't, major repairs to your retirement home or yacht, etc.

Yes, this needs to be done. We are expecting to firm up some land-based numbers on a fact-finding trip next year and I have some liveaboard budgets started.

With your assets, I don't think that you need to leave the US unless you really want to... there are lots of couples that live quite nicely on $50k a year. We spend more because we have two homes and because we can, but if we downsized to one and trimmed our recreation spending we could live quite nicely within $50k a year with a paid off home.

Good point. DW's lived her whole life in the midwest and hadn't traveled much before we met. Her FIRE plan before we met was van/RV life in Mexico. I'm originally from the UK and been around a bit more but I'm ready to go too; my original plan was to mess around the tropics in a $50k boat. All of our kids have expressed at least some interest in leaving and all qualify for European passports of one nationality or another. They won't be keeping us here. Mostly we just want to go do something different.

On the very last part.... see my third byline.

Words to live by! Thank you for your advice and conversation.

 

[HenryD]

I'm looking into living in mexico for a few years as well, and am also seeing extremely low numbers for living expenses. While I'm sure people do live that low, I know we would be spending a bit more, but it sounds like I could live pretty well for 60k, which is half of what I'm spending in my HCOL area, and would include local healthcare.

From what I have seen so far the COL is unsurprisingly very location and lifestyle dependent. We actually want to live like locals; no gated communities with spas for us. Do you have specific communities you are looking at in Mexico? Have you been fact-finding?

Do you plan on staying in Panama forever? I'm looking at staying a few years, but I don't know if I could move permanently. If that were the only option, I'd be afraid of getting stuck and not being able to afford to move back if I wanted to.

Political instability or a debilitating chronic medical issue that couldn't reasonably be handled in the country would be reasons to consider leaving. Given the global power's incentive to keep the canal open Panama looks fairly safe, and Costa Rica is the best in the region. Worst case we'd downgrade lifestyle and try to hop to Costa Rica or the UK (I am a dual citizen). Assuming we stay there, growing old in a place that respects their elders, with access to world-class medical care at a reasonable price look like reasons to stay there to us. If we do the liveaboard sailboat thing first I'm not sure where we'll end up when we are done with it, but Central America is likely. I don't see us coming back to the US. Are you worried that US inflation might prevent you from moving back later on? If you LWYM in Mexico why would you be running out of money?

I think your 2m target number is pretty reasonable, and looks possible. I'm 3-4 years from my target number if the stock market behaves, but in this short of a term, it's hard to depend on those gains.

Good luck on reaching your number! Market underperformance and income disruption for me are the biggest risks I see. I am assuming a 6% growth rate and will have to rely on my wits to keep the income flowing, as it has for the last 10 years with only one break. I just hope the next recession is at least no worse than 2008, and happens sooner rather than later. I'm not a timer but confess to holding about 10% more cash than usual right now in anticipation of that.

 

[HI Bill]

Have you considered any pension or SS income?
Have you established a budget for age 56+?

Retiring at 56 with $2M and SS at 67 or 70 should give you close to a 100% success rate, if taking $100K annually from that point.

Let's hope that the economy, your jobs, your health, and the markets (SORR) support your plan! Best of luck!

 

[HenryD]

Have you considered any pension or SS income?
Have you established a budget for age 56+?

Retiring at 56 with $2M and SS at 67 or 70 should give you close to a 100% success rate, if taking $100K annually from that point.

Let's hope that the economy, your jobs, your health, and the markets (SORR) support your plan! Best of luck!

No pensions. I'm estimating SS at $1800 each starting at 62, but would like to build our lifestyle without it. We do need to nail down a budget, and some of that $2M is going to be locked up in property or a boat. If the budget and updated FIRECalc runs show us we can jump a year or two sooner we will. Thanks!

 

[meekie]

From what I have seen so far the COL is unsurprisingly very location and lifestyle dependent. We actually want to live like locals; no gated communities with spas for us. Do you have specific communities you are looking at in Mexico? Have you been fact-finding?

Going in the next month! Starting with Puerto Vallarta, I'm hoping I'll like the size of the town (big enough to have a Costco) with lots of restaurants. I think I'd love living downtown, but the pricing might put me in a suburb that could be gated. I do plan on eating a lot of street tacos to keep the food costs down. It's definitely at the higher end of places to live in Mexico, but it's so much cheaper than Southern CA. Also like being relatively close to home.

If you LWYM in Mexico why would you be running out of money?

I'm hoping to make the move before I hit my retire at home number, and then worry that I'll spend too much/hit a dip in the market that would keep me from getting to my target. I don't want to plan on going back to work FT, so I need to balance that with how far we are from our target.