fire on 100k


Thinks s/he gets paid by the post
Feb 27, 2006
ok, well, not really, but i think maybe i broke some fire rules. single guy quits work at 48 (just turned 49) with about 100k in 401k and a few k in savings. owes 60k on 500k house. leases current car & has $s put aside for the next one. has no other debts or obligations. will inherit minimum 1.2mm within a few months or more $s in max 2-3 years (hospice now onboard). to reduce estate, currently tax-free-gifting family members (plus insurance premiums for me). between 401k, savings & gifting, i have enough to remain in my house without working for about 6 years if i also include taking 100k equity towards the middle of that period. likely i will inherit before that draw.

having lurked your forum for the past month, i’m delighted by the knowledge you have about instruments of investment, distribution and making money last a lifetime. the generosity with which you have shared your information encouraged this post. though financially careful, i am far from savvy and so hope to glean some modicum of this board’s wisdom.

my plan is (or was, subject to new info i’m gathering) to sell house at age 55 and move onto a trawler or motorsailer for a life of cruising. i figure by then i’ll have about 1.5mm plus a house worth between 650k & 875k, house could be less but likely more as this locale is just now revving up. before quitting my job, i hadn’t even considered inflation over time (i figured 15k of ss & pension at 65 would pick that up) but you have certainly opened my eyes to that. so, though i’m not in as good of financial shape as i thought i was, i hope my plan is still doable.

i have some questions. please forgive me if i am not familiar with proper terminology. i've been a working stiff till 6 months ago and am just now learning this new stuff.

of the 4% magical number, is that 4% after taxes? that entire 4% is disposable? does that presume preserving all the capital to the end of my life? if i wasn’t trading the house for a boat, or if i buy a boat that maintains much of its value, will i die leaving all that cash on the table? just how well are my niece and nephews gonna make out here to assure my secure future? not to be selfish (they’ll get some boat rides in) but don’t i get to spend that money?

also i think i’ll have a few options which i’m not sure how to play. i could sell house and buy very nice boat to live on full-time. or sell house and buy pretty nice boat and a piece of property. then sell boat to build modest house on property when i'm too old to cruise. or sell house, buy a reasonable boat to live on part time and get a modest house maybe on big island hawaii. then use what’s left of boat later in life to renovate house (this option to protect against rising construction costs). not that i’m sure of any of this, but the next option gives me the most question especially after reading past posts on this board.

assuming i have 1.5mm. would it be reasonable to take 500k of that, buy boat, keep my current house (expenses are minimal here), live on the 1mm taking 6% or so per year. then, later, either sell house, boat or both and have enough for that hawaii house and some comfortable ending years. i figure this might be possible considering that over the next 30 years,  the big island is expected to gain 30,000 population total whereas my current (already built-out) area expects to grow by 30,000 each year. supply & demand seems to indicate that holding this house would afford me well into the future.

sorry for such a long post. i look forward to your illuminating & humbling replies. thank you.
Lazy, I'm pretty new here myself, there are lots of folks who can contribute more knowledgeable replies, but here are my thoughts:

The "magical 4%" includes taxes -- you'll need to pay any applicable taxes from withdrawals. Are you going to leave the nieces and nephews a ton? The answer of course is, nobody knows. 4% is based on lots of assumptions about your behavior and what's going to happen in the future -- firecalc shows that if the future resembles the past, and if you behave in the way firecalc models, your nieces and nephews will probably remember you very lovingly.

The effect of your inheritance is enormous. Assuming the estate manages to avoid estate taxes, getting $1M + tax free with a stepped up basis (0 capital gains liability as of the time you inherit) is going to give you enormous freedom.

I'd bet you'll be able to do any of the options you outlined.
Welcome to the board, you lazygood4nothinbum.

(Reminds me of the kid's Christmas play where the actors playing Joseph & Mary said "Jesus Christ on a crutch, how did you hurt your leg?!?")

You don't explicitly mention how you're covering health insurance. That may turn out to be a sizable chunk of your 4% SWR, and certainly a bigger impact than taxes.

I don't think you'll have to worry about buying a boat that'll retain its value. I'm not certain that such a thing exists! But before you make the irrevocable leap from homeowner to liveaboard you may want to practice the lifestyle. You'll be more easily able to deal with unexpected surprises, especially if those surprises put your home in drydock.

Many people come to Hawaii intending to buying a boat and perhaps even live on it. Some of those people have been seduced by the east coast boating lifestyle, especially on the ICW, and haven't noticed that Hawaii has no continental shelf to moderate the ocean conditions. A half-mile offshore here is really open-ocean conditions and it's not that easy to laze around getting a good tan. Daily papers recount USCG rescues and even an occasional boat loss just getting between Oahu & Molokai or Oahu & Kauai. It can be rough stuff.

Another issue is Hawaii's old, poorly-maintained, and overcrowded marinas. Getting a slip can be a multi-year challenge. Despite being surrounded by more ocean than anyone, the state does not have as much of a recreational boating industry as the Mainland... unless you count kayaks & outrigger canoes.
Coach said:
you'll need to pay any applicable taxes from withdrawals... your nieces and nephews will probably remember you very lovingly....Assuming the estate manages to avoid estate taxes, getting $1M + tax free with a stepped up basis (0 capital gains liability as of the time you inherit) is going to give you enormous freedom.

hi coach, bummer on that taxed 4% news of yours but thanx for enlightening me. i will adjust my expectations downward. the kids already love me. just last week the 10 year old said "you're so much cooler than my dad." i drive them in the t-bird with the top down and james bond theme music playing. they love it. also i let him play his rap music, which seems to have sealed that deal.

estate taxes over next few years couldn't be more screwy. i doubt if mom will survive through to the 3.5mm cutoff in 3 years. so for now i plan on being taxed on about half of all increases to the estate. that might be offset a bit though by some excellent potential increases to very well placed waterfront property. as you suggest, time will tell.
Nords said:
how you're covering health insurance....a boat that'll retain its value.  I'm not certain that such a thing exists!...Daily papers recount USCG rescues and even an occasional boat loss just getting between Oahu & Molokai or Oahu & Kauai.  It can be rough stuff....Another issue is Hawaii's old, poorly-maintained, and overcrowded marinas.  Getting a slip can be a multi-year challenge.

hiya nords. so you are already in hawaii. i'm totally jealous. for now i'm paying cobra 435/month which is gifted from the estate. after that i will find similar insurance. i'm in excellent health, non smoking, non drinking, mostly vegetarian. though watching mom deteriorate (i've been caregiver for about 12 years) has put some chocolate weight on me. my motto is to be "buff by fifty." i thought insurance would cost me about 5-6k/year which seems managable.

thanx for sharing good info on hawaiian boating. i'm aware of much of that. i was thinking very good quality boat like a krogen which actually can increase in value because the newer constructed boats cost even so much more, or an older boat which has already depreciated. i wasn't planning to have the boat in hawaii though even if so i'd have a full displacement vessel which handles such seas. we have similar marina problems in florida though here caused by overdevelopment. i was thinking more of a life of cruising the bahamas and caribbean when the butter breaks the bread, then downeast and great lakes when the butter starts to melt. up and down the icw, the great circle route and maybe a few years on the left coast, baja to alaska. or if i find the right person to join me, who knows what distant harbor we'll find.

sailor said:
Have you been living on a boat before?

ahoy sailor, i was raised in motor boating family in northeast, caribbean and florida. on arriving in florida the ol'man thought it'd be fun to liveaboard. but i was 17 and needed a bit more privacy than that. it lasted 4 months before they got me a house and docked the boat behind it where it belonged. then they moved back aboard when i went to college.

love the link you included. thank you. i was thinking more in line of a boat capable of staying at sea and at anchor for a month at a time while having the cash for daily life at that marina with a pool instead of a fishing fleet. fortunately, i'm fairly flexible.

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