Hi everyone - 3 years after finding this great forum, I'm finally on the verge of giving notice at work. I'm giving myself a 'cooldown' period until the end of the month to finish thinking things through, however, and make sure I'm not hurrying through this or missing anything. I'd love to hear your thoughts on whether my plan makes sense to you, as well as any personal opinions.
So, here's my story:
Three years ago, I found the best resource for someone thinking about FIRE - this board. I over-analyze by nature (I think I'm INTJ?), so all this additional input is both a blessing and a curse. In the end, it's taken me these three long years to convince myself that I'm finally ready to FIRE. Back then, my net worth (excluding home equity) was about 25x my annual expenses, and I was fretting about how to account for expenses related to child-raising (my child was one year old at the time), dealing with elder care issues with my parents' deteriorating health, and generally unsure about how my portfolio would perform. Add to that a manageable job (mentally painful but easy, low hours, high pay), and I ended up sticking it out the last three years.
So why, three years later, am I now ready to pull the plug?
* Income has been great, and now my liquid net worth is about 30x pre-tax annual expenses. Artificially lowering market performance by 2% (by raising investment expenses by that amount) in FIRECALC still gets me 90% on a 55 year plan.
* I have a much better understanding of my expenses, and know that I can dial down expenses if needed to be only 1/35 of my portfolio
* My parents' are still iffy on health, but I've realized that I can't worry (too much) about the unknown, and that my time will likely be a much bigger factor to them than my money in the event things turn for the worse
* Although I'm still young (40), I can't believe the last three years are already down the drain - and would hate to look back when I'm 43 and have the same sad realization that I've lost time trying to build up my portfolio further.
* DW has always been hesitant about my doing this, but I've worked on her long enough to get her comfortable with it
* I've build up a cash/bond reserve that could provide 7 years of living expenses w/o impacting my equity investments in the event the market crashes again
* I've talked myself into being comfortable with the idea that, if my portfolio doesn't perform as well as I am hoping, I'd rather take the time now and get back to work in the future, than give up my quality years in my 40's to work.
* My child is about 2 years away from starting real school (Kindergarten/elementary). The next two years would be a great opportunity to explore the world, and I'd hate to lose this opportunity by waiting.
And why am I still not sure if I'm doing the right thing?
* The biggest factor is giving up the income. I know I don't need it to support my lifestyle (I'm definitely LBYM), but my annual income, after taxes, works out to about 3x annual expenses - and the extra cushion each extra year of work provides sure would be reassuring. As much as I've talked myself into believing that I'm OK with returning to work if need be, I sure would hate to know that a couple more years of work now, when I'm earning a very high income, could have prevented it.
* Early retirement guilt - related to the above, I find it hard to justify cutting out when I'm only 40 - I keep thinking 45 sounds more reasonable, and the extra 5 years of income would make a big impact to the survivability of the plan (although based on my analysis, it would be very unlikely I would need it, but I could use it for more travel, helping parents, etc.)
* My job is still quite easy, so it wouldn't be that hard to stay another couple years. I know a lot of people hate their jobs, and I do too - but the demands of my job are quite minimal - it's easy, close to home, and barely requires me to work 40hr weeks. However, what I've come to realize is that it's not the type of job, but rather the fact that any job will take me away from what I want to do.
* What's my kid going to think? I know this has been recently discussed on the boards, and I definitely have concerns about my kid seeing me not work during the bulk of his childhood
Misc
* House is essentially paid off. Assuming the real estate market doesn't fall significantly further, I could always move to a lower cost region of the country and cash out about $400K as a fail-safe
* I'm budgeting $12K/yr to cover medical expenses. Family is in generally good health, and we plan to get a high-deductible HSA plan once COBRA runs out. Based on eHealthInsurance.com, it looks like such a plan would cost about $5K/yr, so I can budget the difference for the expectedly high premium increases
* One child, no more planned.
* No pensions, about 70%/30% split between taxable and retirement accounts
* Approx 80%/20% split between equity/cash-FI
* Discounted expected social security payments by 25%
* DW is currently a stay at home mom, but is willing to return to work with me if the plan falls apart
Questions
* Am I being overly conservative? Any holes in this plan?
* What's your opinion on a FIRE age of 40? Any thoughts on balancing earning power vs. lost time at this age?
* Potentially returning to work later in life is a big safety net in my plan. Do most of you even consider this an option? If anyone has a similar 'safety net' in their plan, can you share your logic around it?
Thanks to anyone/everyone for their responses...
So, here's my story:
Three years ago, I found the best resource for someone thinking about FIRE - this board. I over-analyze by nature (I think I'm INTJ?), so all this additional input is both a blessing and a curse. In the end, it's taken me these three long years to convince myself that I'm finally ready to FIRE. Back then, my net worth (excluding home equity) was about 25x my annual expenses, and I was fretting about how to account for expenses related to child-raising (my child was one year old at the time), dealing with elder care issues with my parents' deteriorating health, and generally unsure about how my portfolio would perform. Add to that a manageable job (mentally painful but easy, low hours, high pay), and I ended up sticking it out the last three years.
So why, three years later, am I now ready to pull the plug?
* Income has been great, and now my liquid net worth is about 30x pre-tax annual expenses. Artificially lowering market performance by 2% (by raising investment expenses by that amount) in FIRECALC still gets me 90% on a 55 year plan.
* I have a much better understanding of my expenses, and know that I can dial down expenses if needed to be only 1/35 of my portfolio
* My parents' are still iffy on health, but I've realized that I can't worry (too much) about the unknown, and that my time will likely be a much bigger factor to them than my money in the event things turn for the worse
* Although I'm still young (40), I can't believe the last three years are already down the drain - and would hate to look back when I'm 43 and have the same sad realization that I've lost time trying to build up my portfolio further.
* DW has always been hesitant about my doing this, but I've worked on her long enough to get her comfortable with it
* I've build up a cash/bond reserve that could provide 7 years of living expenses w/o impacting my equity investments in the event the market crashes again
* I've talked myself into being comfortable with the idea that, if my portfolio doesn't perform as well as I am hoping, I'd rather take the time now and get back to work in the future, than give up my quality years in my 40's to work.
* My child is about 2 years away from starting real school (Kindergarten/elementary). The next two years would be a great opportunity to explore the world, and I'd hate to lose this opportunity by waiting.
And why am I still not sure if I'm doing the right thing?
* The biggest factor is giving up the income. I know I don't need it to support my lifestyle (I'm definitely LBYM), but my annual income, after taxes, works out to about 3x annual expenses - and the extra cushion each extra year of work provides sure would be reassuring. As much as I've talked myself into believing that I'm OK with returning to work if need be, I sure would hate to know that a couple more years of work now, when I'm earning a very high income, could have prevented it.
* Early retirement guilt - related to the above, I find it hard to justify cutting out when I'm only 40 - I keep thinking 45 sounds more reasonable, and the extra 5 years of income would make a big impact to the survivability of the plan (although based on my analysis, it would be very unlikely I would need it, but I could use it for more travel, helping parents, etc.)
* My job is still quite easy, so it wouldn't be that hard to stay another couple years. I know a lot of people hate their jobs, and I do too - but the demands of my job are quite minimal - it's easy, close to home, and barely requires me to work 40hr weeks. However, what I've come to realize is that it's not the type of job, but rather the fact that any job will take me away from what I want to do.
* What's my kid going to think? I know this has been recently discussed on the boards, and I definitely have concerns about my kid seeing me not work during the bulk of his childhood
Misc
* House is essentially paid off. Assuming the real estate market doesn't fall significantly further, I could always move to a lower cost region of the country and cash out about $400K as a fail-safe
* I'm budgeting $12K/yr to cover medical expenses. Family is in generally good health, and we plan to get a high-deductible HSA plan once COBRA runs out. Based on eHealthInsurance.com, it looks like such a plan would cost about $5K/yr, so I can budget the difference for the expectedly high premium increases
* One child, no more planned.
* No pensions, about 70%/30% split between taxable and retirement accounts
* Approx 80%/20% split between equity/cash-FI
* Discounted expected social security payments by 25%
* DW is currently a stay at home mom, but is willing to return to work with me if the plan falls apart
Questions
* Am I being overly conservative? Any holes in this plan?
* What's your opinion on a FIRE age of 40? Any thoughts on balancing earning power vs. lost time at this age?
* Potentially returning to work later in life is a big safety net in my plan. Do most of you even consider this an option? If anyone has a similar 'safety net' in their plan, can you share your logic around it?
Thanks to anyone/everyone for their responses...
Last edited: