Did Your FIRE Number change as you got closer to FIRE?

[Senator]

As I look back at different retirement planners, I remember when I used to think ‘If I could make $50K each year, I would leave work tomorrow”. Of course inflation (and salary increases) change things.

Lately, after looking at the FIRE numbers for several months, and seeing my balances and cash flow increase, the ‘old’ numbers from just a couple of years ago, just seem small. Like I have gotten used to them, and now they are not as good any more. Doubts and second guessing start to set in.

My budget has not changed, other than mortgages being paid off. My cash flow has increased due to increased rents and fewer mortgage payments. So I am much better off than my old number, yet the old numbers seem awfully small now. I wonder “Are my current numbers going to seem small, and actually not be enough, in a few years?”

Lately, as I look at the numbers, I sometimes think, Do I have enough buffer? Do I have enough redundancy? Do I have enough of a lifestyle at my chosen budget? Are my current numbers going to be small in a few years too, after I am locked in? Have I planned well enough? Do I really understand what I am doing?

I am not having second thoughts; I am just noting the mental preparation of FIRE is just as important than the financial one. Not so much as in “what will I do when I no longer work?”, but mentally the jumping off point. Sometimes I think getting laid off is an easier transition, but I know that is a mentally devastating thing if it comes out of the blue.

Did you find that your required retirement numbers kept creeping up, or you adjusted them down, as you got closer to leaving the workforce?

 

[eroscott]

<snip>Lately, as I look at the numbers, I sometimes think, Do I have enough buffer? Do I have enough redundancy? Do I have enough of a lifestyle at my chosen budget? Are my current numbers going to be small in a few years too, after I am locked in? Have I planned well enough? Do I really understand what I am doing?

I am not having second thoughts; I am just noting the mental preparation of FIRE is just as important than the financial one. Not so much as in “what will I do when I no longer work?”, but mentally the jumping off point. Sometimes I think getting laid off is an easier transition, but I know that is a mentally devastating thing if it comes out of the blue.

Did you find that your required retirement numbers kept creeping up, or you adjusted them down, as you got closer to leaving the workforce?

About a year and a half before I got laid off, my wife and I went to a fee-only adviser and paid a few grand to have our financial plan mapped out with plans to retire at 52 and 55. Keep in mind that I've done many years of financial planning and bought professional grade tools (Total Planning Suite and Golden Years option). What this gave me AND my wife (important!) was added comfort knowing our plan was totally doable.

Then I was laid off at 47 and choose to retire several months later at 48 after reviewing the plan very closely. It easily worked out.

I'd suggest a fee-only planner and I mean no tricky AUM management stuff afterwards by them, etc. It was well well worth the money to us.

 

[Markola]

I think we've achieved a basic frugal FI but not RE. I stumbled recently on our original plan worked out with a high-fee FA before we knew any better back in 1998. It pegged us with accumulating $3 million at age 59.5 toward our 1998 goal of making work optional at that point. Amazingly, we are still almost exactly on track for that number. Of course, I wish she or we had had any concept of FIRE at 49.5 and aimed for that instead! To answer your question, there is no bleeping way I'm working past 59.5 at the very longest, I don't care what our numbers are at the time, even if we have to adjust lifestyle.

 

[boog]

Senator, I feel your angst. My numbers haven't changed, but my mental readiness for walking away from a decent job has been my biggest challenge. I'm a natural worrier so the decision to retire early has been fraught with "what ifs". Like you, I think it would have been easier to have someone else make the decision for me.
My RE date was May 2 until this past Monday. I turned in my notice about 6 weeks ago and was planning to leisurely sign up for an ACA health plan after my last work day since I'd be covered until the end of May by my work. My work schedule is only posted a couple of weeks in advance and to my dismay, Monday I discovered that my last scheduled day of work was April 28 - meaning my health coverage will end April 30. Luckily, I was able to secure an exchange plan starting May 1. Found a local insurance broker who helped me greatly. That was a "what if" I hadn't even anticipated. I've come to believe that my RE anxiety will only be relieved gradually over time after seeing that we, indeed, are working our plan successfully.

 

[rodi]

I had the opposite experience. When I first started planning I assumed I needed more. Then - after focusing on diverting more money to savings/paying off the mortgage, I realized I was actually living on a lot less than I planned.... I found some other budget trimmings and was able to, again, adjust the FIRE number downward. In the meantime, the market was going up.... pushing me above that new lower FIRE number.

I retired almost 2 years ago - and I found that even with higher medical bills due to a series of sports injuries by my kids - we were significantly under budget last year. This year we're also trending under budget. Yet we're spending on what we want to spend on and have no feelings of deprivation. I've discovered FREE activities to fill my time (walking the dog on the beach every morning, senior water exercise classes, etc) and inexpensive activities (community college classes.)

 

[Options]

The same occurred with me. The more I learned the more I realized I had miscalculated how much I would need. Now retired, I am just beginning to realize I even still that I probably saved too much.

 

[Totoro]

My number has been going up somewhat as time passes on. About 10% - 20%.

Inflation is part of that, another factor is mental anxiety indeed around margin of safety with higher stock market valuations and such. A small amount is lifestyle inflation.

I sort of solved it with scenario planning: my old number is now "barebones" with a mid level return scenario (achieved already) and a few different scenarios have been added, including one extreme one that's 65% higher than the original one.

 

[W2R]

No, not for me personally. I retired in 2009 on the first day after becoming eligible for subsidized retiree medical insurance. A nestegg of a certain size was not the trigger for retiring, in other words; I had to work beyond the year when I reached my FIRE number (which was really a drag, believe me).

Lately, as I look at the numbers, I sometimes think, Do I have enough buffer? Do I have enough redundancy? Do I have enough of a lifestyle at my chosen budget? Are my current numbers going to be small in a few years too, after I am locked in? Have I planned well enough? Do I really understand what I am doing?

Now, this I can relate to and I think it's a smart thing to do. It's only reasonable to constantly question your plan so that you are absolutely sure when you pull the plug, that you won't regret it. Being absolutely sure about your numbers will greatly improve the quality of your sleep after you have retired.

I can already see the effects of inflation which are making the numbers I originally used, seem a little small. But Mr. Market is booming and I can deal with larger numbers. I presume that my planned spending amounts will continue to look smaller and smaller as time passes, due to inflation. Hopefully there will be a SS cost of living increase at some point, and with a low WR my nestegg will continue to grow most of the time.

I do enjoy exercises such as the thread asking us what we would do if our net worth was cut in half. Knowing that I could still survive is very reassuring to me.

 

[TimSF]

My number did not change as I got closer, but I did wait to have a 10% buffer above my number (though you might interpret that as raising my number ).

 

[nash031]

I'm likely not very close to ER. We're aiming for FI at 42 (so 3.5 years). The number I've used for that hasn't really shifted. The RE number has gone up about 25% to where I would feel very comfortable with a high standard of living, and I think I'm more likely to aim for that. That would still have me pulling the plug before 50 without much issue.

Bottom line is I'm tied to those 3.5 years anyway, so I suspect mid-2019 I'll get really serious about whether or not I'm going to bridge career, or if DW is going to continue working, etc., based on where we are. A lot can change between now and then.

I think ultimately the original number I was using for FIRE will go up by a bit, but mostly by choice, not by "need" per se. The basics will be (and were under the original plan) covered by 42, I'm about 95% certain.

 

[daylatedollarshort]

Yet we're spending on what we want to spend on and have no feelings of deprivation. I've discovered FREE activities to fill my time (walking the dog on the beach every morning, senior water exercise classes, etc) and inexpensive activities (community college classes.)

If I'd known how much stuff was available for free (or very low cost) we could have retired a decade earlier. Not including tax credits and college financial aid, in a good month I get $2K or so worth of freebies, deep discounts, contest winnings, reward miles or something along those lines. I keep a list. It has become one of my favorite hobbies.

 

[tmm99]

Not including tax credits and college financial aid, in a good month I get $2K or so worth of freebies, deep discounts, contest winnings, reward miles or something along those lines. I keep a list. It has become one of my favorite hobbies.

COOL!!!! I don't mean to hijack this thread, but tell me MORE. I will open a separate thread for this so you can post

 

[Fedup]

It did for a month because it crossed over tax year. It's nice to have some earnings in 2016 which is the year my husband retired.


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[retire2020]

Yes. It changed. It started with 3M three years ago, then changed to 3.5M and currently it's seating at 3.75M. My portfolio is at 2.85M now. I think this is my final FIRE no.

 

[scrabbler1]

My FIRE number was mostly pegged to the value of the company stock I held. It was very quickly rising toward $300k which was my target. As it neared that amount in 2007 and 2008, I began putting together my ER plan, projecting expenses and stuff. I can't say that my target amount of $300k ever changed, just how fast it got there.

 

[tmm99]

The same occurred with me. The more I learned the more I realized I had miscalculated how much I would need. Now retired, I am just beginning to realize I even still that I probably saved too much.

That sure is a whole lot better than he other way around. Just sayin


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[Greencheese]

It's easier to mentally add just another $50/month when you're looking at $5,000/month versus when you're only at $500/month. Or at least that's what I imagine it'll be like

 

[DrRoy]

My number did change, but some of that was inflation. My first # was $500K in the mid 80's, and that would have been pretty much just subsistance. Inflation takes it to $1.1M, but then my pension was capped and my needs/desires grew. Also, I do believe that in the current market valuation situation, it takes a 2-3% WR to be comfortable. I've been reset at $2.5M for the target and I'll RE early next year.

 

[fishndad42]

My numbers didn't change like that. My timing changed due to a 3rd occurrence of cancer. Now my numbers are being adjusted to timing. I'll hopefully down to 1/2 time on June 1, ER on Dec. 1. Sometimes you gotta shift the numbers instead of the numbers shifting you.

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[jcretire77]

I started with 3 million too as an ideal goal. That would be on top of a paid off house and social security. I don't think that is necessary as we are not that extravagant. So have backed it down to a more reasonable number, but with paid off house and assume 75% of Social Security benefits. Plus 30% of our budget are non necessities. Currently good to go, but work changes have made me delay until we can get more resources in. Not OMY, just not sure how many OMM !!

 

[cyber888]

Actually, my number became smaller - just the opposite.
I thought I needed $50K, like you, but with ACA providing cheap health care, scrutinizing our expenses where we mostly cook our food at home and not eat out, and living in a cheap Southern State with low taxes .. my old number looks bigger.

Our biggest expense is our home amortization (excluding escrow), but that's fixed. So, 0% inflation on the biggest cost item in our budget. And if we sell our 3,500 sq.ft. home, which we plan to do, our budget will become smaller as we move to a 1,600 - 1,800 sq.ft. home.

As I look back at different retirement planners, I remember when I used to think ‘If I could make $50K each year, I would leave work tomorrow”. Of course inflation (and salary increases) change things.

Lately, after looking at the FIRE numbers for several months, and seeing my balances and cash flow increase, the ‘old’ numbers from just a couple of years ago, just seem small. Like I have gotten used to them, and now they are not as good any more. Doubts and second guessing start to set in.

?

 

[imoldernu]

You did a great job in the OP, Senator....
My own story rambles on in another thread, but I can identify with every one of your points.

My "can make it" goal was $35K... but the "safety net" was a return to work and also a spend down of assets. That said... the concern was for naught... Looking back at 27 years without gainful employment and with a bank account much less than anyone on ER has ever mentioned... we are nearly at the same asset level as we had the day we retired.

We spend at whatever level we feel comfortable with. No longer even thinking about anything like a budget. Keeping expenses down, is not a a goal... just a habit that comes easy, with frugality that is a matter of personal pride.

How it all happened is partly a mystery, but did have to do with the times... higher returns, being in the right place and time when buying and selling our homes, and the stability of IBonds that have had a steady return since the early 2000's.

Our FIRE number came at us out of the blue, at age 53, in 1989. Plans came not from a calculator, but from many, many green pages of calculation for every expense and income factor... by year. So the original plans to die at age 85 when the money ran out, now look as if they'll last throughout the early 90's.

And so... we got closer to FIRE before we really had a number to change.

Always, always... during the early years, the ability to go back to even part time work, was the thinking that made it easy. Do it again? In a New York Minute!

 

[ABQ2015]

My number got larger once I started tracking my expenses in 2013. Originally I planned to retire in 2015. After my expenses spiked in 2014 due to unexpected home repairs, sick pets, and a needy family member, I decided to work another two years to increase my pension. Also, cost of housing in my desired relocation area soared and I started reading about the Medicare Part B premiums, future possibility of reducing SS and increasing taxes for higher incomes, etc. which scared me as I'm single and in a higher tax bracket. And once I retire, there is no way I will ever be able to find another job that pays that well so there is no going back to work.

My initial calculations were just too optimistic - I might have been able to make do but it was tight and I needed more of a buffer. However, I plan to retire in 2017 regardless of economic circumstances as I will be age 62 and cannot take it anymore.

 

[Gumby]

In 2007, I left private practice for public service and took a 75% pay cut to do so. I thought we had plenty of money that would more than support our retirement if left to compound until the young wife first became pension eligible. So I felt I could indulge myself by doing white hat work before I retired. The young wife became pension eligible two years ago, and we're still working. I expect we'll work for 3 more years. The Great Recession did two main things: 1) it made a huge dent in the nest egg; and 2) it convinced me that we need a larger margin of safety in our plans.

 

[Sycamore]

I'm not retired and my number has crept up by $200K or so. One big reason is a desire to make sure my college age children get through school and establish their careers. It seems to be a little tougher today compared with 35 years ago when I started my career.

Also I really want a strong margin of safety if future market returns are low.