Approaching FIRE date - How do I look?

[FLSUnFIRE]

I'm getting close and looking at this summer for my FIRE date (unless offered part time in which case I may stick around to help with transition/pad my cash stash). I will probably earn a little bit having fun in FIRE (bar-tending, leading tours, brewery assistant) but not planning on it. I'd appreciate any insights/advice/rocks you'd like to throw at my situation:

47 Male, Single, Own home outright (HOA responsible for exterior M&R)

My plan is to live off of cash for the balance of 2021 and 2022. Starting in 2023 I will withdraw from my Taxable Investments until they reach about 5X expenses (projected in 2025 if I earn no fun money). At that point, I will start SEPP withdrawals from TSP using expected life expectancy as my payout should increase with my portfolio and mortality. This should also help mitigate excessive RMDs later (if my portfolio does well, this could exceed my expenses in which case I would probably reinvest in my taxable account or Roth if I have any earned income). Shortfalls would be made up with my remaining taxable/cash balance as makes sense at the time, my Roth contributions would be available too if needed. I will take a deferred annuity which will pay about $25K/yr pretax in then-year money starting on my 60th birthday which will be inflation adjusted after age 62. I projected this out in a spreadsheet assuming a 30% market drop the day I FIRE and only 2.5% real returns thereafter (linear but I think 2.5% after a 30% drop is fairly conservative).

Expenses:
2020 Real $35,620 (includes mine and employer paid portion of HI and a sinking fund for auto/HH Maintenance)
2022 Projected $44,900 (Includes full cost of HI on marketplace, projected income taxes, and sinking fund for auto/HH Maintenance; probably conservative)

Assets (Current balances):

TSP (42%C/42%S/16%I): $1,141,250

Roth IRA (Small Cap): $332,430

Non-Ded IRA (Small Cap): $5,290

Taxable (Total Market): $291,530

Cash: $61,214 (will increase by $30K with savings/vacation pay out)

Total: 1,831,700

Off Balance Sheet: HSA ~$40K that I expect to fund in FIRE, Value of home ~$300K realizable

I feel like I'm good but I don't feel good (Nerves). Big decision and not easily reversible. Appreciate the peer review, insights, and encouragement (I hear the water is fine)!

FLSunFIRE

[chassis]

Seems ok. Roughly $2m net work with expenses less than $40k per year which is below the 4% “rule”.

What are you going to do with your human capital (time, energy and intellect)?

[flyingaway]

I think you are good, and should feel good. If your expenses is as you stated, you should have no problem financially. You just need to figure out what you want to do in retirement and hope you do not find something to double your retirement expenses.

[USGrant1962]

You are good to go.

At $45K/year your withdrawal is <2.5%. This is not just a safe withdrawal rate but rather a perpetual withdrawal rate. Normally I would suggest you model your situation in FIRECalc, but honestly there is no point - you are so over-funded that it won't tell you much, other than showing that your sustainable spending level is >$60K/year.

If you are due some Social Security and likely to do some hobby job(s) then you are WAY over the top.

Also, there is no reason for your HSA to be off balance sheet. It is just another account (with very good tax treatment) and is part of your portfolio. Including it is not material to your results, but separating it is not useful.

Congratulations.

[ncbill]

If you start by paying expenses out of cash/taxable for the first few years I bet you could also manage your mAGI for ACA subsidies.

TSP but no pension or any subsidized retiree health care?

[FLSUnFIRE]

Quote:

Originally Posted by chassis Seems ok. Roughly $2m net work with expenses less than $40k per year which is below the 4% “rule”. What are you going to do with your human capital (time, energy and intellect)?

The only boredom I experience is at work. I'd really like to get enough sleep, read more, exercise more consistently (pretty fit but time limitations keep me from being where I'd like to be), do those fun "jobs", maybe finally learn to play an instrument once I can get in-person lessons (would like to learn guitar but may pick keyboard as I think it would be easier and allow me to learn more theory), stained glass -have the equipment but no time to develop the skills, financial coaching (sporadically in the past and would like to do more, especially with younger folks from lower economic classes), and I'll have to check out pickle ball (Dtail has pretty much convinced me I need to try it).

[FLSUnFIRE]

Quote:

Originally Posted by ncbill If you start by paying expenses out of cash/taxable for the first few years I bet you could also manage your mAGI for ACA subsidies. TSP but no pension or any subsidized retiree health care?

I am planning to qualify for subsidies but will not plan on them as they are at the whims of the politicians. I am budgeting for the full cost. As I've mentioned in other posts, I set up a HELOC in 2019 (original fire date was 2020) to further disconnect my cashflow from "income", so I can defer realized income a bit better to qualify.


No Healthcare, minimum retirement age is 57 so I do not qualify (walking away from golden handcuffs but 10 more years isn't worth being "rich"). I do get a small pension of $25K in 2021 dollars. If I worked to "retirement age" I would have more money than I know what do to with with a pension that would more than cover my expenses and an insane portfolio. At 46 going on 47 I am very healthy but know I am not getting younger (and can feel it) and I can't get time back!

[FLSUnFIRE]

Quote:

Originally Posted by USGrant1962 You are good to go. At $45K/year your withdrawal is <2.5%. This is not just a safe withdrawal rate but rather a perpetual withdrawal rate. Normally I would suggest you model your situation in FIRECalc, but honestly there is no point - you are so over-funded that it won't tell you much, other than showing that your sustainable spending level is >$60K/year. If you are due some Social Security and likely to do some hobby job(s) then you are WAY over the top. Also, there is no reason for your HSA to be off balance sheet. It is just another account (with very good tax treatment) and is part of your portfolio. Including it is not material to your results, but separating it is not useful. Congratulations.

Thanks... still scared! I know I'm good by the numbers but am pretty conservative but walking away from a very secure conventional retirement. I feel like that scared little kid at the end of the diving board... the drop is 2' but it looks like I'm cliff diving off a mountain!


HSA is off balance sheet as I don't intend to spend it (can afford max out of pocket from expected withdrawals) and I view it more as an an insurance policy for worst case. If it gets to big, I'll start reimbursing myself and blow that dough!



I really do appreciate this community so much. Can't complain (Top 1% of first world problems?!) but FIRE can be a lonely road...

[pb4uski]

Quote:

Originally Posted by FLSUnFIRE Thanks... still scared! ...

We humans are creatures of habit... change is hard.

[Finance Dave]

I've been criticized for this thinking before, but I'll go ahead and say it. I didn't FIRE all at once...instead I left the full-time/high-stress job at Megacorp at age 52 and went to a much lower paying FT *ob for 2 years, then to 20 hours/week for 2 years, and now I do handyman work about 200 hours/year. So mine is more of a "phased" FIRE. But, one thing that helped me was listing out any large "one time" expenses I may have in the coming couple years, then I remained W*rking long enough to save for those items (took less than a year), then left Mega-Corp. This gave me an extra sense of security that I had the money for near-term expenses. I'll give you a fake list below just to get you thinking, but overall it appears you are in great shape.

1) Stain privacy fence - $3,500
2) New furnace - $8,000
3) Leaf guards for gutters - $2,000
4) New engine for my musclecar - $8,000
5) New desktop computer - $1,500

I've since spent all that money except for the furnace...it's 22 years old but still running well. It was nice knowing that I had specifically saved for those items...made it easy to shell out the funds when necessary.

[Dtail]

Quote:

Originally Posted by pb4uski We humans are creatures of habit... change is hard.

Okay if FLSuFIRE does not FIRE this year, you and I need to corner him at the next SWFL get together and no relief until he submits to FIRE.

[Errollyn]

Quote:

Originally Posted by FLSUnFIRE No Healthcare, minimum retirement age is 57 so I do not qualify (walking away from golden handcuffs but 10 more years isn't worth being "rich"). I do get a small pension of $25K in 2021 dollars.

Your numbers look great to me, congrats. I do have a couple questions. I'm assuming you're a Fed based on your hefty TSP balance. Are you getting that pension right away, or is it being deferred until a later date? Also, what kind of costs are you seeing when shopping for health coverage?

[FLSUnFIRE]

I think I'll just post my self-indulgent updates here (for critique, advice, and encouragement from you wonderful people) as I move along this journey/transition!


The past couple weeks I have felt a slight shift. Warned my immediate boss/friend confidentially that I may not be there by the end of summer (he is going away for a development program and planning to spin me up on some of his workload). This week I've been feeling better and think the switch has flipped and that this is something I'm going to do and not something I'm planning/will try to do. I was going to give 6 weeks verbal (but not confidential) so they can start planning around my departure and 4 weeks written if HR needs that to get the ball rolling but think I'll give closer to two months. I'm taking a couple days off to visit family and will likely make it "official" when I return. I think there is a pretty good likelihood I may be offered part time (something I asked for over the last two years and told "there is no appetite for that"). It will be hard to pass up if they do. Mentally, I'd be done but choosing to stick around to ease the transition (especially (only?) if I can define my role) and only as long as it is worth the additional security the compensation provides. I find myself hoping that they don't offer it though so I'm not tempted! -No matter what, 2021 is a year of change and I'll end it with more freedom than I've ever had!



Just played with my spreadsheets for EOM April. I usually do not count my house or HSA balance in my NW (not liquid and I view the HSA as insurance and possible windfall later) but just for today, I'll count my HSA and say my liquid NW just eeked over $2M for the first time bringing my trailing 12mo expenses/NW to 1.92% (ignoring taxes). Still hard to believe that I'm FI (feels a bit surreal as I get so close to quitting) but think I'm good even with a fairly scary correction in the market at this point!


FLSunFIRE

[skyking1]

Quote:

Originally Posted by Finance Dave I've been criticized for this thinking before, but I'll go ahead and say it. I didn't FIRE all at once...instead I left the full-time/high-stress job at Megacorp at age 52 and went to a much lower paying FT *ob for 2 years, then to 20 hours/week for 2 years, and now I do handyman work about 200 hours/year. So mine is more of a "phased" FIRE. But, one thing that helped me was listing out any large "one time" expenses I may have in the coming couple years, then I remained W*rking long enough to save for those items (took less than a year), then left Mega-Corp. This gave me an extra sense of security that I had the money for near-term expenses. I'll give you a fake list below just to get you thinking, but overall it appears you are in great shape. 1) Stain privacy fence - $3,500 2) New furnace - $8,000 3) Leaf guards for gutters - $2,000 4) New engine for my musclecar - $8,000 5) New desktop computer - $1,500 I've since spent all that money except for the furnace...it's 22 years old but still running well. It was nice knowing that I had specifically saved for those items...made it easy to shell out the funds when necessary.

Although you lay it out in terms of money, the psychological aspect of tapering off has an appeal for me too.

[teej1985]

Quote:

Originally Posted by FLSUnFIRE I am planning to qualify for subsidies but will not plan on them as they are at the whims of the politicians. I am budgeting for the full cost. As I've mentioned in other posts, I set up a HELOC in 2019 (original fire date was 2020) to further disconnect my cashflow from "income", so I can defer realized income a bit better to qualify. No Healthcare, minimum retirement age is 57 so I do not qualify (walking away from golden handcuffs but 10 more years isn't worth being "rich"). I do get a small pension of $25K in 2021 dollars. If I worked to "retirement age" I would have more money than I know what do to with with a pension that would more than cover my expenses and an insane portfolio. At 46 going on 47 I am very healthy but know I am not getting younger (and can feel it) and I can't get time back!

Are you sure about the $25K being in 2021 dollars? If you have worked federally for 20+ years, you'd be able to take an unreduced pension at 60, but it wouldn't be adjusted up for inflation, it would still be $25k in the less valuable 2035 dollars....

[FLSUnFIRE]

Quote:

Originally Posted by teej1985 Are you sure about the $25K being in 2021 dollars? If you have worked federally for 20+ years, you'd be able to take an unreduced pension at 60, but it wouldn't be adjusted up for inflation, it would still be $25k in the less valuable 2035 dollars....

You are correct, I mistyped , $25K is in then-year dollars. I may or may not be a 500 series and should not have made that error... Thank you for clarifying for the group. Perhaps I am doing them a favor by FIREing myself!


FLSunFIRE (Pretty sure his portfolio is in current year dollars....)

[teej1985]

Quote:

Originally Posted by FLSUnFIRE You are correct, I mistyped , $25K is in then-year dollars. I may or may not be a 500 series and should not have made that error... Thank you for clarifying for the group. Perhaps I am doing them a favor by FIREing myself! FLSunFIRE (Pretty sure his portfolio is in current year dollars....)

Do you think you'll be able to telework full time after the pandemic is over? if so, can I have your job?

[FLSUnFIRE]

Quote:

Originally Posted by Errollyn Your numbers look great to me, congrats. I do have a couple questions. I'm assuming you're a Fed based on your hefty TSP balance. Are you getting that pension right away, or is it being deferred until a later date? Also, what kind of costs are you seeing when shopping for health coverage?

Sorry, somehow missed a few replies. No pension until age 60 then will be about $25K/year and inflation adjusted after age 62.



Health insurance looks pretty good for me. I'll get a HDHP through ACA marketplace that both of my doctors accept that is similar to the plan I have now. With no subsidy it is $540 this year and next year I should be paying much less ($80) depending on my income. It has a slightly higher deductible that is also the same as the max OOP. I looked at the cost on healthcare.gov out to medicare eligibility and if thing stay the same I should be good. IIRC, it is about $900/mo at that age.


FLSunFIRE

[teej1985]

Quote:

Originally Posted by FLSUnFIRE Sorry, somehow missed a few replies. No pension until age 60 then will be about $25K/year and inflation adjusted after age 62. Health insurance looks pretty good for me. I'll get a HDHP through ACA marketplace that both of my doctors accept that is similar to the plan I have now. With no subsidy it is $540 this year and next year I should be paying much less ($80) depending on my income. It has a slightly higher deductible that is also the same as the max OOP. I looked at the cost on healthcare.gov out to medicare eligibility and if thing stay the same I should be good. IIRC, it is about $900/mo at that age. FLSunFIRE

You might consider silver plans instead of bronze because of the cost sharing reductions, depending on how low your MAGI is. I'm not sure the HSA deduction will be very valuable to you in retirement with lower income...