Lay off: FIRE Sooner than Expected/Planned?
- Thread starter jmb1855
- Start date
Seems to me you are all set. Even with no investing gains you have enough set aside until the official retirement. Minor lifestyle reductions and sales could reap both long and short term gains.
Given your spending, might want to consider allocation.
I did the involuntary FIRE, acknowledging the obvious 7 years later. I had 5 Xmas layoffs, so more practice than you.
Given your spending, might want to consider allocation.
I did the involuntary FIRE, acknowledging the obvious 7 years later. I had 5 Xmas layoffs, so more practice than you.
Thanks for the review and thoughts. What do you mean by ‘allocation’?
My estimated budget is lowering. I’ve mainly set the bar higher for risk mitigation since I could go back to work now if it was going to be tighter financially or require significant lifestyle changes
My estimated budget is lowering. I’ve mainly set the bar higher for risk mitigation since I could go back to work now if it was going to be tighter financially or require significant lifestyle changes
Apologies, I was a bit vague. When I had regular cash coming in, I kept perhaps 3 months in cash and all the rest in small caps, international, seeking out capital growth. I shifted my investment allocation radically when I had no cash coming in from employment. I keep at least a year in cash equivalents, 20% in high yield mortgage/LendingClub. That way my barebones budget is covered. The remaining 80% (not counting cash) has solid chunk of international dividend, mlp, and REITS to top up my budget. The rest is put toward capital gains, which I top up in my tax bracket annually. I buy/sell during the year with an eye towards the totals which I even up in December. If I do it right, I end up with about 40k/yr and almost no taxes. This is roughly my desired allocation today.
5% 12% 11% 19% 18% 20% 4% 3% 7%
cash uslg ussm intllg intlsm bond ener cmdy REIT
I am drifting toward a 66/37 EX-US/US split in equities. Since my bills are still in $, so are my interest and dividends.
This is my overall allocation, tax and roth are necessarily pushed by the rules in different directions
5% 12% 11% 19% 18% 20% 4% 3% 7%
cash uslg ussm intllg intlsm bond ener cmdy REIT
I am drifting toward a 66/37 EX-US/US split in equities. Since my bills are still in $, so are my interest and dividends.
This is my overall allocation, tax and roth are necessarily pushed by the rules in different directions
Last edited:
Thank you for the very detailed write up. I had been planning my shift in investments and the plan to generate cash. You’ve given me a bunch to think about. My planning so far had been much more simplified since I’m new to the withdrawal phase.
I’ll post back with what I end up doing.
I’ll post back with what I end up doing.
Diversification is the only free lunch you get. Allocation is what you put on your tray in the lunch line. Read around widely, you can successfully allocate with 2 vanguard funds. Or individual equities, etfs, ROBO account. Infinite variety in this line. But it all has consequences. I followed a book that came out in 06-07 timeframe, reissued a decade later.
If there is a key to the process: It has to work for you. A plan you don't/can't/won't follow is a risk trap, since the value of allocation decays. Read widely and get recommendations and criticism (with the why's) from as many directions as you can stand. I include the algo's and robo's (like betterment/personal capital/schwab...)
If there is a key to the process: It has to work for you. A plan you don't/can't/won't follow is a risk trap, since the value of allocation decays. Read widely and get recommendations and criticism (with the why's) from as many directions as you can stand. I include the algo's and robo's (like betterment/personal capital/schwab...)
I finalized my decision after a review with the planner. I'm done! My final date is up in the air based upon my layoff date but it's expected sometime between May and early fall. 
Some of the key next steps and plan updates are:
1) Due to the accumulated value within the life insurance policy I can stop paying on the policy premium annually and still keep it intact at the same payout level. They take payment from the accumulated value on the 'investment' portion of the policy. That's a $10K reduction in my budget spending plan each year. I might need to start paying again in the future so I'll monitor the value each year.
2) I am going to significantly simplify my asset allocation and will target 85/15. This might sound high but over my entire plan it works well for me. I'm also going to reallocate within the 85% and remove some overweight sectors.
3) I am going to begin Roth conversions next year (I need to come up to speed on learning how to estimate and optimize this). This will give me additional pre-59.5 funding if I need it on the contribution values and not the gains. It'll of course also minimize future taxes.
4) I will withdrawal annual budget money ~4 months at a time out of the taxable investment account. Between that account, a reduced annual budget, and potentially Roth conversion contribution withdrawals I should be good until 59.5.
If anyone has any comments please let me know. Thank you, thank you, thank you all for this forum which I've lurked for a long time and for everyone that's helped me review the plan.
Exciting times!
Some of the key next steps and plan updates are:
1) Due to the accumulated value within the life insurance policy I can stop paying on the policy premium annually and still keep it intact at the same payout level. They take payment from the accumulated value on the 'investment' portion of the policy. That's a $10K reduction in my budget spending plan each year. I might need to start paying again in the future so I'll monitor the value each year.
2) I am going to significantly simplify my asset allocation and will target 85/15. This might sound high but over my entire plan it works well for me. I'm also going to reallocate within the 85% and remove some overweight sectors.
3) I am going to begin Roth conversions next year (I need to come up to speed on learning how to estimate and optimize this). This will give me additional pre-59.5 funding if I need it on the contribution values and not the gains. It'll of course also minimize future taxes.
4) I will withdrawal annual budget money ~4 months at a time out of the taxable investment account. Between that account, a reduced annual budget, and potentially Roth conversion contribution withdrawals I should be good until 59.5.
If anyone has any comments please let me know. Thank you, thank you, thank you all for this forum which I've lurked for a long time and for everyone that's helped me review the plan.
Exciting times!
Agreed. I expected that so I should probably provide more info on why I decided to have higher risk on the allocation. I feel comfortable with the potential for market timing risk because:
My discretionary spend is high. I can dial down my budget considerably at will.
Over the next few years I can go back to work if I choose to. The contracting open ended offers are already being made to me.
There is additional significant inheritance that I haven't included in my introduction. I left it out due to it not being my money but in all normal scenarios it would be there.
My discretionary spend is high. I can dial down my budget considerably at will.
Over the next few years I can go back to work if I choose to. The contracting open ended offers are already being made to me.
There is additional significant inheritance that I haven't included in my introduction. I left it out due to it not being my money but in all normal scenarios it would be there.
WyomingLife
Recycles dryer sheets
Seconded.
There are, however, some recent analyses suggesting, counterintuitively perhaps, a equity-heavier AA earlier in retirement.
Every situation is different and personal. And YMMV.
WyomingLife
Recycles dryer sheets
Can’t resist weighing in on the above.
1. Why is your discretionary spending high, if the same imperils a more secure future (and perhaps that spending is the reason for your AA)?
2. Optimism about future biz opportunities may be misplaced. I awake every day assuming it is the last day on this insignificant Rock I can bring in another $1.
3. Good luck if your financial plan depends upon an inheritance.
Thanks for the challenges.
1. My wife and I have been tracking our budget closely for the last 20 years. The number we picked to use for planning and estimates is a high estimate. It's the number that we said is higher than actuals but if that works then it gives us higher confidence in budgets below that. It has high flexibility for decreased spend if needed. I haven't seen a probable outcome using the host of online tools and calculators that shows this as an imperiled plan. The advisor review also came to the same conclusion. The proposed target AA wasn't picked based on required returns. I picked it based upon our risk tolerance, results from multiple calculator forecasts, and belief in the future.
2. Both my wife and I have marketable skills with quick employment options. As time goes on, as we age, as our skills become stale, as we lose industry contacts, this will of course fade. My wife quit working two years ago and is still getting called for work. I am 5-6 months away from losing my job and am getting calls. The calls will stop one day but from a contingency planning standpoint the option to return to work is very feasible.
3. It doesn't. Planning and forecasting runs with calculators have been done with zero inheritance built in. Just like planning for market downturns is part of my contingency planning, acknowledging that there is a high possibility of inheritance in the future also seems prudent.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
WRT inheritance, I agree there is nothing wrong with keeping it in the thought equation, that there could be a likely inheritance one day, even though it doesn't enter into any financial calculation.
I expect some inheritance is very likely. I control my parents' investments, so I see everything, plus they both have long term care plans/medicaid planning and ~15% equity exposure.
I expect some inheritance is very likely. I control my parents' investments, so I see everything, plus they both have long term care plans/medicaid planning and ~15% equity exposure.
One other thought is that I have ~5 months until I get laid off. With severance and bonuses I’ll then have 12+ months before any withdrawals. That gives me 18 months from now to watch and evaluate before touching any retirement funds.
