FIRE in 4-6 years; what do you wish you'd done at this stage

[Hermes]

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?

 

[RetiredHappy]

- 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.

 

[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)

 

[street]

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.

 

[Drewjd]

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)

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.”

 

[daylatedollarshort]

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.

 

[pacergal]

*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!

 

[Hermes]

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.

 

[RobbieB]

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.

 

[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.

 

[conversationalphrase]

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.

+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.

 

[Badger]

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!

 

[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.

 

[pjigar]

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.

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?

 

[Bryan Barnfellow]

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.

 

[Aerides]

...I'll have enough until the age of 59 1/2 with just my non-retirement accounts...

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.

 

[finnski1]

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.

^ This! All of This. Excellent points.

 

[GTFan]

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.

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.

 

[COcheesehead]

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.

 

[OverThinkMuch]

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.

 

[jabbahop]

perhaps figure out housing/mortgage. some have had trouble getting mortgage after retirement since unless they have pensions/SS income, some banks will not loan despite assets. If you are thinking of relocating, this might become an issue.

Good to see you are planning ahead - I think we only started really planning 1-2 years ahead.

 

[pacergal]

It sounds like you have the financial part down. Being mid 40's, I would plan less than 4% wd as others have said.
Congratulations on getting yourself financially prepared! Now the "what do I do all day/" part comes.
Ernie Zelinski retirement book and "Get a Life" tree exercise is a good start.
Every day is yours to fill as you wish. Enjoy

 

[freedomatlast]

If there is a spouse or significant other in your life, touch base with them from time to time to make sure they are on board with your plans, and if they aren't, iron out any differences well before it comes time to pull the plug.

 

[brett]

We did several things a few years prior to retirement.

-we fired our stock broker, bank financial advisor. Most to on line for trading. Spent 6 or 7 months shopping for a new financical advisor. This worked out extremely well for us. Had a complete review of our investment strategies, goals, etc.

-reviewed out tax situation and built a tax plan going forward with a tax professional. We avoided some tax pitfalls, avoided some tax. Paid for itself many times over.

-dropped my term life policy. premiums were increasing and we had no need for the insurance.

-updated our wills, and have done again after retirement

-moved all of our banking to no cost or low cost service. HISAs to on line bank with good IT, good service, and higher rates

-passed on doing any home renovations. Decided to sell, travel for a year, then decide what typed of downsized accommodation we wanted.

-started to downsize slowly. Not so successful. We ended up doing it in a compressed timetable between retirement and putting our home on the market.

 

[FLSUnFIRE]

Another big one. If you want a HELOC, get it approved while you have income. I'd go for the max on the credit line (I didn't but wish I had). It is my ultimate emergency fund/quick liquidity for anything unexpected and I may use it to "defer" realizing income in a future tax year if advantageous.


Practice smiling a lot too, don't want to get cheek cramps once you taste freedom!