TallTim
Recycles dryer sheets
A little confused by output of some of the modeling tools … would love insight from the more experienced members here in terms of what’s the best approach.
Until about 3 yrs ago, I had not anticipated being able to FIRE (at least <55 or so), but the past couple years of market performance, a bit of inheritance from DM (~$500k across several sources) and reductions in our spending has me seriously looking at getting out sooner. (I will freely add that I am approaching a bit of burnout in current role and that is a real factor).
In short, putting our scenarios (details below) into many of the free online tools is providing wildly divergent results and of course causing no small degree of stress to me and DW … hoping for some insights into the best ways to model and which tools are better predictors than others.
Background Stats (from my Hi, I am thread plus more detail):
47 YO, DW is 45, currently SAHM but also has a side business that generates about $10k/yr in income. BTW, if I FIRE and/or the kids are out of the house, this can easily double for several years if desired.
I have a VP/Officer level job with public corp
2 teens @ home
Current portfolio:
• Tax advantaged and tax free accts ~$900k all in equity indexes and set and forget it stuff (for now).
• UTMAs for each child, ~$250k each in same type of portfolio – designated to cover college for each
• Employer equity plan ~$500k vested and 3-4x that unvested (most would vest over time if I stick around) – this moves around a bit as the stock price moves. Additional investments from employer through annual vesting increments and additional vesting from performance (company and personal) grants. If/when I leave I will have 90 days to exercise/sell; I plan to time this so that I can sell in a year when I will have lower income and roll the proceeds into the taxable savings acct in order to be at least a little tax efficient
• Taxable brokerage ~ $2.1MM. This is 80% short term and the rest in blue chip equities. I trade this acct monthly or weekly in derivatives, primarily put and call options, and use the cash to backstop the trades, usually not holding any given position for more than about a month or so … during bad downturns I may hold longer or wait in cash.
* Past 4+ yrs, we have banked all incentive cash compensation and/or bonuses and I have had a 10b-5 plan in place for orderly sales from employer’s stock plan – and all of that cash has flowed into the taxable acct. Have benefited from the equity markets considerably in the past 2 yrs, the annual gains in this account from trading activity > my gross salary.
No debt.
We rent, no mortgage (downsized to current about 4 yrs ago and sold primary residence)
No pension (I wish!)
Our current annual expenses are admittedly high (10+ yrs of Quicken averages and trends), and will probably be about $175k until the kids go to school (2-3yrs), after that based on our estimates will go down to about $150k for a while. (<50% of pre-retirement gross excluding equity and incentives)
We area assuming we (at least one of us) will be long-lived. My MIL/FIL are still very active and travel extensively in their mid-70s; DW’s maternal GPs lived to 99 and 102 and paternal GPs lived to 92 and 96 … I am adopted so a total black box (my adoptive parents went early – DD @ 60, DM @ 77 – hoping that’s not me!)
Running this all through FIRECALC yields anywhere from 58% to 90+% success rate depending on spending model (Bernicke or flat), investment returns (fixed returns and conservative investments or equities) and SS (~ $40k/yr for primary plus spousal benefits @70) … i-Orp suggests that we will be more than fine … ******** suggest we can make it, but just barely …Vangaurd's free tool, Fidelity RIP and TDA Wealthbuilder on the other hand suggest we need a ~$6MM total NW (!?). ESPlanner is about the same as ******** – we can make it but will be right on the number if DW lives to 95-100.
Hence the confusion … and my Qs.
• Since we have been living on my take-home salary and banking the bonuses and stock comp, shouldn’t I use the gross salary (and not W-2 wages) for modeling?
• My current thinking is to FIRE Dec 31 of the first year I can , sell the co equity plan holdings in Jan-Mar of FIRE year, placing the proceeds in the brokerage … using the net investment proceeds of that acct to fund expenses until SS and ROTH/IRA/401k MRDs start @70.
• Of the online tools, which is really the best at addressing this kind of situation?
• We will be close to 4% WR for a LONG time, and that has me scared from all the stuff I have been reading about SWD lately.
• Are we nuts to pull the cord this soon?
Until about 3 yrs ago, I had not anticipated being able to FIRE (at least <55 or so), but the past couple years of market performance, a bit of inheritance from DM (~$500k across several sources) and reductions in our spending has me seriously looking at getting out sooner. (I will freely add that I am approaching a bit of burnout in current role and that is a real factor).
In short, putting our scenarios (details below) into many of the free online tools is providing wildly divergent results and of course causing no small degree of stress to me and DW … hoping for some insights into the best ways to model and which tools are better predictors than others.
Background Stats (from my Hi, I am thread plus more detail):
47 YO, DW is 45, currently SAHM but also has a side business that generates about $10k/yr in income. BTW, if I FIRE and/or the kids are out of the house, this can easily double for several years if desired.
I have a VP/Officer level job with public corp
2 teens @ home
Current portfolio:
• Tax advantaged and tax free accts ~$900k all in equity indexes and set and forget it stuff (for now).
• UTMAs for each child, ~$250k each in same type of portfolio – designated to cover college for each
• Employer equity plan ~$500k vested and 3-4x that unvested (most would vest over time if I stick around) – this moves around a bit as the stock price moves. Additional investments from employer through annual vesting increments and additional vesting from performance (company and personal) grants. If/when I leave I will have 90 days to exercise/sell; I plan to time this so that I can sell in a year when I will have lower income and roll the proceeds into the taxable savings acct in order to be at least a little tax efficient
• Taxable brokerage ~ $2.1MM. This is 80% short term and the rest in blue chip equities. I trade this acct monthly or weekly in derivatives, primarily put and call options, and use the cash to backstop the trades, usually not holding any given position for more than about a month or so … during bad downturns I may hold longer or wait in cash.
* Past 4+ yrs, we have banked all incentive cash compensation and/or bonuses and I have had a 10b-5 plan in place for orderly sales from employer’s stock plan – and all of that cash has flowed into the taxable acct. Have benefited from the equity markets considerably in the past 2 yrs, the annual gains in this account from trading activity > my gross salary.
No debt.
We rent, no mortgage (downsized to current about 4 yrs ago and sold primary residence)
No pension (I wish!)
Our current annual expenses are admittedly high (10+ yrs of Quicken averages and trends), and will probably be about $175k until the kids go to school (2-3yrs), after that based on our estimates will go down to about $150k for a while. (<50% of pre-retirement gross excluding equity and incentives)
We area assuming we (at least one of us) will be long-lived. My MIL/FIL are still very active and travel extensively in their mid-70s; DW’s maternal GPs lived to 99 and 102 and paternal GPs lived to 92 and 96 … I am adopted so a total black box (my adoptive parents went early – DD @ 60, DM @ 77 – hoping that’s not me!)
Running this all through FIRECALC yields anywhere from 58% to 90+% success rate depending on spending model (Bernicke or flat), investment returns (fixed returns and conservative investments or equities) and SS (~ $40k/yr for primary plus spousal benefits @70) … i-Orp suggests that we will be more than fine … ******** suggest we can make it, but just barely …Vangaurd's free tool, Fidelity RIP and TDA Wealthbuilder on the other hand suggest we need a ~$6MM total NW (!?). ESPlanner is about the same as ******** – we can make it but will be right on the number if DW lives to 95-100.
Hence the confusion … and my Qs.
• Since we have been living on my take-home salary and banking the bonuses and stock comp, shouldn’t I use the gross salary (and not W-2 wages) for modeling?
• My current thinking is to FIRE Dec 31 of the first year I can , sell the co equity plan holdings in Jan-Mar of FIRE year, placing the proceeds in the brokerage … using the net investment proceeds of that acct to fund expenses until SS and ROTH/IRA/401k MRDs start @70.
• Of the online tools, which is really the best at addressing this kind of situation?
• We will be close to 4% WR for a LONG time, and that has me scared from all the stuff I have been reading about SWD lately.
• Are we nuts to pull the cord this soon?