Fat ER or earlier ER?

[Diogenes]

My tipping point decision when to retire was when I realized "why am I working for money I'll never spend ?"

That's a highly personal decision. For some, the exact and entire measure of financial security, is to have enough, where within reason, all of one's foreseeable expenses are covered. Everything is beyond the point of diminishing return. For others, accumulation is itself an objective. The whole point, is to amass an amount, way beyond the spending-horizon... because the money is a sign of success or achievement or personal worth. This admittedly is dangerous, because it's a never-ending goal. One could then in principle never retire, and never cease saving.

 

[RobLJ]

I think an earlier poster noted, correctly, that you can currently aim towards Fat Fire and readjust.
In our case, we planned for a medium Fire, I semi-retired at 57 (taught 1/2 time online for 5 years with DW retiring at 55) and miracle of miracles, 9 years later it has turned into a (relative) fat fire. Fat Fire for me; probably wouldn't be considered so for many on the blawg, but flying to Scotland first class for our 40th was a big deal, and it didn't make a dent. I told DW that we should fly 1st class to Europe from now on, although not continental flights.
The house and cars are all paid off, so we can live quite frugally if necessary--but it's not going to be necessary, unless Ragnarok occurs.

 

[Jeb-NY]

If you don't think you are ready to go for light FI yet, my PCP a few years back was getting burned out and did something in between. Different situation since he was in private practice but when he ran the numbers he could do part time ER/Urgent Care 2 or 3 days a week and make more than he was making from his practice after all the expenses and headaches and the hospital took care of most of the paper work.

 

[HI Bill]

IMHO, $1M is too little for an age 40 FIRE. I'd look at bumping it to $3M by age 52-55. Then your WR would only be 4%, and you wouldn't have to worry about SORR and would only have a few years until your pension kicks in, making your FIRE plan about as risk-free as possible. Good news is, if you have a fully diversified indexed investment portfolio, your existing investments could double twice according to the "Rule of 72" in 14 years, although that new number isn't inflation-adjusted.

 

[Global Wizzo]

It's not so easy for me to do a career change. I'm a physician, so I have 4 years of college, plus 4 years of medical school, plus 3 years of residency in learning my trade, that cost me a LOT of money. It would be very difficult to find a new career that would match my salary I'm now accustomed to. I do realize this is a good problem to have, FWIW. If I did find a new career that I enjoyed, I think it would likely cause me to work many more years, and even if I did that, I'd still be a slave to the clock...

I have been moving more into administration at my job. I'm now the associate medical director of a large FQHC. This has been a nice change of pace, and has cut down my patient contact hours. However, it has actually added a bit more stress many days.

Ultimately, I don't hate my job, but I am getting burnt out... It's the demanding patients that really take it out of me. 5% of my patients cause 75% of my stress, unfortunately. The other 25% is the administrative/paperwork burden.

I’ll give you our side.
Retired AF O4. Divorced and that zeroed me out.

Fortunate to find fun positions that let me travel. Remarried and between us have a couple M invested and depending on the market income and RMDs put us around 15K/mo.

We travel extensively. Trips run $15-20K each for 2-3 weeks. Comfortable travel. Business and good hotels. Cruises are usually Viking.

Currently living within cash flow. Next year income bumps 60k. Now I’m doing tax management to maximize take home.

I quit at 67 and was having fun even then.

You farm and travel will take some management.

Don’t wait too long, but you done want all your income from a single source (USG)

 

[Surewhitey]

I had the same feeling that 1M was enough to technically live & was able to make it work living in Mexico. We moved back in 2015 & back to work (DW, full time 2018).

Work was less fun & I started a small biz in 2019 and I do mostly what I enjoy. DW is now a 4 day position for big insurance, so working <180 days after PTO & holidays considered.

Short story, I'm glad to have ~3x (next year) our 2015 numbers and coasting with much more travel (& grandkids). Pretty much good from here, my perspective @53&59.

We enjoy travel too, but international is getting a little old. Maybe our age? We seem to enjoy the beach bum life just as much as go-go-go travel.

 

[Happy30]

What about you change career so that you can last a little longer in a more enjoyable job? Since we are pretty much FAT FIRE, retirement life is pretty good. When we retired, I wanted more in the bank before I called it a day, but in the end, it turned out that we have enough.

The same for me and hubby. I retired at 57 and love it!

 

[dirtbiker]

IMHO, $1M is too little for an age 40 FIRE. I'd look at bumping it to $3M by age 52-55. Then your WR would only be 4%, and you wouldn't have to worry about SORR and would only have a few years until your pension kicks in, making your FIRE plan about as risk-free as possible. Good news is, if you have a fully diversified indexed investment portfolio, your existing investments could double twice according to the "Rule of 72" in 14 years, although that new number isn't inflation-adjusted.

Just to be clear, I'm not contemplating retirement now with $1M. I'm looking forward nearly a decade to my late 40s when I hope to have $3.5-4M or so, as that would be minimum for me to retire.

 

[RetMD21]

Just to be clear, I'm not contemplating retirement now with $1M. I'm looking forward nearly a decade to my late 40s when I hope to have $3.5-4M or so, as that would be minimum for me to retire.

Although you say you are sick of working your 3 jobs you don't seem to want to change much. You work more than I would advise but you have accomplished a lot and I'm sure you will figure out what is best for you. You are set to retire young with more money than you need.

 

[kgtest]

I have 5 people in my family. I figure 1 MM per person is good enough. When I have $5million, I'll hang it up. That never seemed possible but I think I can do it before 55 for sure!

 

[dirtbiker]

Although you say you are sick of working your 3 jobs you don't seem to want to change much. You work more than I would advise but you have accomplished a lot and I'm sure you will figure out what is best for you. You are set to retire young with more money than you need.

You're right. I'm not looking to change or work less. I want to work hard and save hard and then retire completely. Working part time longer doesn't appeal to me (at least not at this time).

 

[Koolau]

You're right. I'm not looking to change or work less. I want to work hard and save hard and then retire completely. Working part time longer doesn't appeal to me (at least not at this time).

I decided early on that I would stick it out until I was financially independent - (almost) no matter what. I did NOT want to depend on finding and w*rking a part time j*b after retirement.

 

[livingalmostlarge]

If you are doing well, why not just take each year as it comes? Decide on the fly when to quit the 3 jobs that's a lot. When saving $140k whew that's also a lot a year. A couple of years ago DH upshifted work and downshifted pay. We were in large savings mode before then and living very nicely. We were pretty much living very large and saving very large. Then we had to downsize for the startup life.

I would argue we live still nicely just not saving at the same rate. Are we fat fire? yes. but as the kids get older, 9th and 7th grade, the impetus to keep working is there. Now it's working until the youngest goes to college and launches then we can travel freely. We kinda got handcuffed to the kids not money more funny how that happens. We'd never move the kids at this junction. They are super happy and content. We'd be sitting in our house doing nothing. If we didn't have kids I think the calculus would be different. Instead our lives are busy because of the kids and tied to a location because of the kids. Tied to a school system becaues they want to be here and they would NOT want to be homeschooled. They LOVE their schools. So hello anchors. But seriously I just find pretty easy not worrying about money in the big scheme.

It's also harder to ER with kids. The point where they like to be settled in one place and not traveling around and making friends comes quick. Then suddenly the dream of living in an RV and traveling the country gets harder. Then retiring and medical with family of four. Then stuff happens like tons of medical bills or specialist or just stuff with kids is exponential not additive both financial and time wise.

So now i just save whatever the max is in tax advantaged accounts and call it a day. Our portfolio grows way faster than our contributions now.

 

[Koolau]

So now i just save whatever the max is in tax advantaged accounts and call it a day. Our portfolio grows way faster than our contributions now.

Have you looked ahead to when you will be spending those tax advantaged funds? Have you researched your taxes when RMDs begin?

I mention this only to suggest you can end up with "too much" in tax advantaged funds and too little cash or taxable savings. It's a balancing act with a wide range of parameters.

I just know that I put too much into tax advantaged and am now paying a tax price for it. It's not the worst problem to have, but I'm only suggesting there may be a better mix than all tax advantaged saving.

If you're eligible for Roth IRAs I'd be jumping on those right after getting the maximum company match in tax advantaged (401(k)) or similar. Of course, YMMV.

 

[Surewhitey]

Have you looked ahead to when you will be spending those tax advantaged funds? Have you researched your taxes when RMDs begin?

I mention this only to suggest you can end up with "too much" in tax advantaged funds and too little cash or taxable savings. It's a balancing act with a wide range of parameters.

I just know that I put too much into tax advantaged and am now paying a tax price for it. It's not the worst problem to have, but I'm only suggesting there may be a better mix than all tax advantaged saving.

If you're eligible for Roth IRAs I'd be jumping on those right after getting the maximum company match in tax advantaged (401(k)) or similar. Of course, YMMV.

+1 on this. We're ~60-40 on pre-post & I've been looking for the right balance for Roth rollovers in our future. Not concerned with RMD's but very aware of the consequences of having to take them if one of us pass away (taxed as individual vs joint). We have 15-20 years to implement our plan though.

 

[Koolau]

+1 on this. We're ~60-40 on pre-post & I've been looking for the right balance for Roth rollovers in our future. Not concerned with RMD's but very aware of the consequences of having to take them if one of us pass away (taxed as individual vs joint). We have 15-20 years to implement our plan though.

Yes, I did a lot of Roth conversions and STILL ended up with too much subject to RMDs and also subject to the issues associated with the loss of a spouse.

It's much easier to plan your investments up front than to "fix" issues later though YMMV.

 

[pjigar]

Yes, I did a lot of Roth conversions and STILL ended up with too much subject to RMDs and also subject to the issues associated with the loss of a spouse.

It's much easier to plan your investments up front than to "fix" issues later though YMMV.

I am not anywhere close to RMD but based on my calculations we are marching towards having too much RMD eventually. This is despite moving all our contributions to Roth buckets (Roth 401k and Roth IRA) in the last 3 years. I think it is easier to squash the RMD problem sooner rather than later.

 

[Koolau]

I am not anywhere close to RMD but based on my calculations we are marching towards having too much RMD eventually. This is despite moving all our contributions to Roth buckets (Roth 401k and Roth IRA) in the last 3 years. I think it is easier to squash the RMD problem sooner rather than later.

Well said.

 

[TheWizard]

I am not anywhere close to RMD but based on my calculations we are marching towards having too much RMD eventually. This is despite moving all our contributions to Roth buckets (Roth 401k and Roth IRA) in the last 3 years. I think it is easier to squash the RMD problem sooner rather than later.

At age 74, only about 20% of my AGI is my RMD, so that's not too bad.
And my Roth IRA and especially my taxable account are growing nicely with new money being added.
I'm guessing that in about two years my Roth + Taxable will be equal to my Tax-deferred in nominal dollars...

 

[livingalmostlarge]

Have you looked ahead to when you will be spending those tax advantaged funds? Have you researched your taxes when RMDs begin?

I mention this only to suggest you can end up with "too much" in tax advantaged funds and too little cash or taxable savings. It's a balancing act with a wide range of parameters.

I just know that I put too much into tax advantaged and am now paying a tax price for it. It's not the worst problem to have, but I'm only suggesting there may be a better mix than all tax advantaged saving.

If you're eligible for Roth IRAs I'd be jumping on those right after getting the maximum company match in tax advantaged (401(k)) or similar. Of course, YMMV.

Yep, I've been been it all along. Our retirement portfolio is almost 60 pre tax 40 roth. I plan on converting after we fully retire. Max out 401k and roth ira. Do conversions up to top of 24% bracket right now because we're in a lower bracket than normal. I stop at 32%. Every time we've had an off year I do a conversion. We've always done backdoor roth contributions.

Taxable account is about 50% of entire portfolio then DH's company stock is multiples of our portfolio. Plan is to work for 6 more years for sure while kids finish high school. Then see what we want to do.

Then use those years we'll be about 50 to do conversions on the 401k until age 70. But live off our taxable and pay taxes on our taxable. There are a few variables involved.