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FIRE in 4-6 years; what do you wish you'd done at this stage
01-01-2022, 01:30 PM
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#1
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Dryer sheet wannabe
Join Date: Dec 2021
Posts: 17
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FIRE in 4-6 years; what do you wish you'd done at this stage
I'll have enough in 4-6 years to FIRE fully. What do you wish you'd done at this stage? Any advice on what needs to be done at this stage?
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01-01-2022, 01:40 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Jun 2021
Posts: 1,577
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- Make sure your AA is where you want them to be.
- Review whether you want to stay in your existing home/state or move somewhere else. If you want to move out of state, check it out for home price, cost of living, climate and spend some time there.
- Think about what are you going to do in retirement. Doing things that will keep you busy - more time to develop old hobbies and possible new hobbies/skills. Routine is important to most of us, like having a reason to wake up in the morning to do things and be active.
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01-01-2022, 01:48 PM
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#3
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Full time employment: Posting here.
Join Date: Nov 2020
Posts: 761
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start looking at whether it makes sense to convert some taxable IRA money to Roth IRA (e.g. to the top of the 12% bracket seems like a no brainer)
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01-01-2022, 02:07 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,521
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1) I would make a plan on where you are going to pull money from for living expenses. You can setup cash (MM CD) to live on and let your investments stay working for you no matter what markets do.
2) Know what your expenses are for a year and pad that with incidental events
3) Not financial but retire to something just don't retire.
Good Luck! Make the best bullet proof plan and work that plan.
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01-01-2022, 02:10 PM
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#5
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Dryer sheet aficionado
Join Date: Dec 2021
Posts: 25
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Quote:
Originally Posted by qwerty3656
start looking at whether it makes sense to convert some taxable IRA money to Roth IRA (e.g. to the top of the 12% bracket seems like a no brainer)
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This is the #1 thing I wish I knew about 5 years ago. For the OP, a good search term to use to research this technique is “Roth conversion ladder.”
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01-01-2022, 02:13 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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I wish I had analyzed and optimized all our expenses sooner than we did, like making the house water and energy efficient. We could have retired even earlier than we did if we had paid closer attention to the little expenses. They all add up.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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01-02-2022, 12:30 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2015
Posts: 5,862
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*Check and double check all expenses, routine and one off.
*Check all possible income, any old jobs that had retirement savings or pensions?
*Review SS estimate amounts, especially if retirement is prior to SS ages, since they figure you to continue working.
*Answer the questions:Early Retirement & Financial Independence Community > Community Forums > Early Retirement FAQs
Some Important Questions to Answer Before Asking - Can I Retire?
Enjoy each day, retirement will be here before you know it!
__________________
Give a Man a fish, he will eat for a day.
Teach a Man to fish, he will eat for a lifetime.
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01-02-2022, 03:53 PM
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#8
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Dryer sheet wannabe
Join Date: Dec 2021
Posts: 17
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Additional info
Thanks all!
Some additional info that may be helpful:
I will be retiring in my mid-40's. The FIRE number is based on taxable accounts, meaning I'll have enough until the age of 59 1/2 with just my non-retirement accounts. And the FIRE number, at a 4% withdrawal, would be essentially double what I spend now.
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01-03-2022, 07:19 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
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Nothing I can advise. Like my sig, I should have done it earlier, but you are plenty early enough.
I can only advise that my spending went up times 3 after I retired.
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01-04-2022, 02:41 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,914
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If I could do it over in the 4 - 6 years prior to FIRE, I would NOT emphasize qualified plans (401(k) tIRAs, etc.). Instead I'd do Roths to the max and the rest of my investments would be in taxable funds. I ended up with way too much qualified money (big RMDs now and not enough easy cash for stuff that comes early in ER.) Naturally, YMMV as we are all different in our incomes, needs, plans, etc.
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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01-04-2022, 03:46 AM
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#11
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Recycles dryer sheets
Join Date: Jan 2017
Posts: 264
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Quote:
Originally Posted by Koolau
If I could do it over in the 4 - 6 years prior to FIRE, I would NOT emphasize qualified plans (401(k) tIRAs, etc.). Instead I'd do Roths to the max and the rest of my investments would be in taxable funds. I ended up with way too much qualified money (big RMDs now and not enough easy cash for stuff that comes early in ER.) Naturally, YMMV as we are all different in our incomes, needs, plans, etc.
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+100!
Also; figure out how to qualify and stay on ACA subsidies as long as possible.
Take care of your health - read "Younger Next Year"
Plan how you want to spend your time and money after you retire. Goals, adventures, family, hobbies, etc.
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01-04-2022, 06:08 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Nov 2008
Posts: 3,408
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Since you know what you will need in retirement then take a year to live on that budget if it is less than what you spend now. That would be a good way to find out what your lifestyle might be. If there is money left over then do a backdoor Roth and use the extra money for the taxes.
Cheers!
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01-04-2022, 06:35 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Feb 2019
Location: St Pete
Posts: 1,242
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Make it closer to 4 than 6.
Build a cash balance to fund first couple years, my last year, I only contributed to deferred accounts up to the match and saved cash. I am coasting on cash till the end of my first calendar/tax year when I will decide what to sell to replenish and manage taxes.
Study up on your employer's benefits/processes and know your rights and the rules/laws better than them.
Research HI, ACA might be a better/cheaper option than Cobra once you pay the full cost of the employer plan. -Make sure any preferred docs will be on the plans you consider.
Don't give early notice... enough threads on this but I didn't listen and gave about 9 weeks.
Mentally, prepare/expect a market crash the day you leave or just before! It's going to happen sometime so if you expect it, it won't be shocking and less likely to deviate from your plan.
__________________
FIREd 7/2021 at age 47
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01-04-2022, 07:02 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Dallas
Posts: 1,155
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Quote:
Originally Posted by Hermes
Thanks all!
Some additional info that may be helpful:
I will be retiring in my mid-40's. The FIRE number is based on taxable accounts, meaning I'll have enough until the age of 59 1/2 with just my non-retirement accounts. And the FIRE number, at a 4% withdrawal, would be essentially double what I spend now.
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I would not use 4% WR for retiring in mid-40’s at current PE levels. My target FIRE age is 50 and I am using WR less than 3%. YMMV.
As to what to do:
* Estimate your taxes considering Roth IRA conversion amount AND ACA subsidies. Add that amount to your expenses.
* Plan cash flow streams to cover expenses and taxes. What are the risks to each cash flow and how to mitigate them?
* If you have kids then plan how you are going to fund college?
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01-04-2022, 07:05 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Feb 2004
Location: Switzerland
Posts: 1,047
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Take care of any elective surgery while still on the company plan. Eyeglasses, covered dental procedures, etc. Plan these out now for implementation over the remaining years.
__________________
FIREd, April 1, 2015. My Retirement Benefits Package includes: 6 months vacation, twice a year.
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01-04-2022, 07:17 AM
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#16
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Moderator
Join Date: Nov 2015
Posts: 13,920
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Quote:
Originally Posted by Hermes
...I'll have enough until the age of 59 1/2 with just my non-retirement accounts...
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Very good. I am always surprised when I see posts from folks with just a year or two to go, but have all their savings in tax advantaged. Rich enough to retire but can't actually touch it yet.
I would also suggest maxing your HSA. Having that nice little medical egg takes the edge off your first years if you go Cobra, or have high deductibles. Because your medical expenses will increase in the next decade if you are like most people.
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01-04-2022, 08:03 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Aug 2012
Posts: 1,829
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Quote:
Originally Posted by FLSUnFIRE
Make it closer to 4 than 6.
Build a cash balance to fund first couple years, my last year, I only contributed to deferred accounts up to the match and saved cash. I am coasting on cash till the end of my first calendar/tax year when I will decide what to sell to replenish and manage taxes.
Study up on your employer's benefits/processes and know your rights and the rules/laws better than them.
Research HI, ACA might be a better/cheaper option than Cobra once you pay the full cost of the employer plan. -Make sure any preferred docs will be on the plans you consider.
Don't give early notice... enough threads on this but I didn't listen and gave about 9 weeks.
Mentally, prepare/expect a market crash the day you leave or just before! It's going to happen sometime so if you expect it, it won't be shocking and less likely to deviate from your plan.
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^ This! All of This. Excellent points.
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01-04-2022, 09:03 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Apr 2013
Location: Ormond Beach
Posts: 1,407
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Quote:
Originally Posted by Aerides
Very good. I am always surprised when I see posts from folks with just a year or two to go, but have all their savings in tax advantaged. Rich enough to retire but can't actually touch it yet.
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Agreed that OP is good to go with taxable savings, but a 72(t) WD is possible for IRAs and most (if not all?) 401k plans. So there is a way to live off of tax-advantaged as long as you don't mind the 72(t) restrictions.
OP I second the recommendation to keep income as low as you can manage it if health insurance is expensive for you. Silver ACA plans are cheap and have great cost reductions if you can keep income below 200% FPL.
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01-04-2022, 09:54 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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Really, really drill down into the non financial side. Start to develop a vision of what life after work looks like. The money stuff is easy if you plan right. The mental is more challenging.
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01-04-2022, 10:02 AM
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#20
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Recycles dryer sheets
Join Date: May 2016
Posts: 313
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Use an easy nest egg calculator like Vanguard's. You enter how much you've saved, and the percentage of stocks vs bonds. You input your annual spending, and how many years you want it (you!) to last. And then it runs thousands of simulations and gives you a percentage chance. That can reduce your nervousness. I like to push the spending higher, or stocks lower, to see how much success percentage changes.
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