Suggestions/advice/considerations for my personal FIRE strategy...

glasswave

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I am hoping people will help with suggestions and recommendations in developing a FIRE plan.

When I finally landed my first good job that had a savings plan, a TIAA-CREFF advisor said, "Stick your money in a growth fund and forget about it," so that's what I did. I have saved 15% of my gross year since 1994. I have only been looking at retirement for the last few years and seriously, only recently.

Hear goes:
  • 67 is my full retirement age. (spring 2030).
  • I am hoping to take early retirement in June of 2025 at age 62 as my work is becoming over politicized, but I could work longer.
  • I should have about $190k in liquid savings by July of 2025.
  • I have about $1.2mil in a (TIAA) tax deferred retirement savings growth account.
  • I will have $23-25k in a TIAA Roth IRA high growth fund that I stated 1 year ago.
  • I can receive about $18k in salary for 5 years by taking early retirement at 62 or at any time before age 67.
  • House is paid off, no other debt whatsoever.
  • I can stay on the employer health plan until Medicare kicks in at 65 for about $300/yr.
  • My SS,gov projections for social security are $2180 if @62 years old, $3080 if @67 and $4020 if @70.
  • My health is "OK-ish," I am quite a bit overweight (something I am working on), but do not seem to have other major health problems.
  • I’d like $5k/mo for expenses from 62 to 67. $3.5k for monthly living & $1.5k/mo to save towards trips and large purchases.
Preliminary Concerns:
  • I am ready to retire this June but am worried that I don't have enough money.
  • I am irrationally disinclined to spend down my retirement savings account wanting to instead live off the interest. I don't have a gaggle of spawn waiting for me to die, but I have spent my life creating this big pile of savings and now find myself reluctant to spend it.
  • I am also oddly reluctant to take retirement funds out of high growth funds and spread it across safer investment products.
Considerations:
  • I am thinking about living off of liquid savings and my early retirement income for the 5 years of early retirement.
  • I am also are considering converting a fair bit of my retirement account to a Roth IRA over those 5 years, by converting as much as I can per year while still staying in the 22% marginal bracket.
  • I figure that at 67, I might start taking social security.
  • I will also have the added expense of Medicare Premiums starting at age 65, plus the cost of a medicare supplement plan, I'd imagine.

Is this a sound strategy? I am interested in any advice forum members have to offer. What other strategies/consideration might you recommend?

Thanks.
 
My first take is that you would be OK.
You will be quite dependant on SS. I wouldn't be betting that you will get the full amount of SS when the program stops being able to pull from the trust fund.
Are sure you can live on $5k/mo.? I'm overspending my original projection by about 25% (taking care of some deferred maintenance)
I'd be worried about all keeping your money in a growth fund with the market being highly valued and the economy due for a recession. You wouldn't be so happy if the market dropped 40%. If I was in your shoes I'd pull a small amount every month so that I had 6 years of net expenses in something safer than stocks so you can ride out the next downturn.

My 3 cents (inflation)
 
You look pretty safe for the $3500/mo, and fair for up to $1500/mo discretionary. Questionable health is a reason to go sooner.
 
I never give specific financial advice, here, as I defer to others with more expertise. FWIW, here's what I did in the 3 years leading up to my planned ER at age 60: I loaded up our liquid savings, as a potential fund to draw on in the event the markets were down when I ER'd. This strategy gave me an emotional comfort level. OP, with your significant proportions in equities, can you tolerate - financially and emotionally - a significant market correction?
 
Short answer - math says your total of about ~$1.4M at a 4% withdrawal rate = 56,000/year, or 4,666 per month.

So, statistically, you can hit goal of $5k/month counting your retirement income.
 
You're in excellent shape financially and the SS coming in 5 years is a monster positive on top of that.

One thing I would look at is what exactly are these "growth funds" invested in and what are all the ongoing costs that are incurred. They add up.
 
I agree with everything said above, and you may also want to check out this helpful list of things to consider:
Some Important Questions to Ask
Your reluctance to spend your capital is quite normal. Remember that you gave up spending it when you earned it just for this reason - now is the time it's valuable to you. That said, it does take awhile to get used to the idea of spending it.
As you've probably discovered, there are a lot of good threads here - reading them helped me get over the hump and ER, and I'm so glad I did. Good luck!
 
Preliminary Concerns:
  • I am ready to retire this June but am worried that I don't have enough money.
  • I am irrationally disinclined to spend down my retirement savings account wanting to instead live off the interest. I don't have a gaggle of spawn waiting for me to die, but I have spent my life creating this big pile of savings and now find myself reluctant to spend it.
  • I am also oddly reluctant to take retirement funds out of high growth funds and spread it across safer investment products.
1. Assuming your $5k/mo spending estimate is accurate, you look good.

2. Search this site (or the internet, more generally) for income vs. total return. As a practical matter, can your portfolio generate enough interest/dividends to support your spending?

3. A growth stock fund can go down 50% in one year (not particularly likely in any given year, but it does happen). Worst year for VIGAX during 2014-2023 period was 2022, when it lost 33.14% https://www.morningstar.com/funds/xnas/vigax/performance Can you handle the risk of that 1.2MM going to 800k or 600k? Only you can answer that question for you.
 
My first take is that you would be OK.
You will be quite dependant on SS. I wouldn't be betting that you will get the full amount of SS when the program stops being able to pull from the trust fund.
Are sure you can live on $5k/mo.? I'm overspending my original projection by about 25% (taking care of some deferred maintenance)
I'd be worried about all keeping your money in a growth fund with the market being highly valued and the economy due for a recession. You wouldn't be so happy if the market dropped 40%. If I was in your shoes I'd pull a small amount every month so that I had 6 years of net expenses in something safer than stocks so you can ride out the next downturn.

My 3 cents (inflation)
Thanks for your reply.

Yeah, I know. I am worried about being all in growth. I lost 35% in 2022, but made it all back in 2023. , On the other hand, I feel like I really need the money. I tend to have a hard time stopping emotion from overriding pragmatism in this situation for some reason. Oddly, that is not my day to day nature. When you say pull a small amount each month, what would be the advantage of doing that over just redistributing a massive chunk now? I essentially have 3 years living expense built into my liquid savings at this time.

As far as the $5k/month, I should have noted that is an "after tax," estimate.


~~~~~
 
By the time we are in our 50s and 60s, we are "over the hill". Being on that downward slope, in general, this year is the best year of the rest of our live. Do you want to spend your best remaining year working?

If not, it looks like you are good to go. You'll have to figure out a plan, on when to take social security and whatnot, but here is just one example path...

If you set aside 200K of your $1.2 million stash, for the 5 years from 62 to 67, that would be 40K per year. Add in your 18K salary, and you are essentially at your $5K per month / 60K per year goal for those 5 years.

With the remaining $1 million, based on the 4% rule of thumb, you could expect around $40K a year to be a safe withdraw rate. Add in 3K a month / 36K a year from social security at age 67, you'd be at $76K a year.
 
Thanks for the thoughtful replies.

Do you have a spouse or other dependents to “contribute to” or use resources from your plan?
No wife payment. No kid payment.
My siblings should get by OK. My sister is made in the shade, my two brothers will struggle to some degree, but they are both very frugal and will manage to make it work.

My reluctance to spend down my retirement plan is entirely irrational. It's like I have struggled hard to build a big pile of sand in my backyard, but now that I need to start using that sand I am hesitant to see the pile shrink, mostly because it was so hard to make the pile in the first place.
:facepalm: 🤷‍♀️ 🤣

You look pretty safe for the $3500/mo, and fair for up to $1500/mo discretionary. Questionable health is a reason to go sooner.
I should have stated that those are after tax amounts.
Also, by fair you mean 50/50? Or do you mean most likely?
According to an annuity calculator I looked at, if I went all in w/$1.4m, I should be able to get a lifetime $8150/month before taxes. If I add SS to that at 67, I'd think I'd be golden. Am I missing something here?


I am not sure what you mean by "go sooner." That I should retire sooner? That I should collect my SS benefits sooner? That I am likely to die sooner?
In any respect what plan of action do you recommend based upon my health concerns?

I never give specific financial advice, here, as I defer to others with more expertise. FWIW, here's what I did in the 3 years leading up to my planned ER at age 60: I loaded up our liquid savings, as a potential fund to draw on in the event the markets were down when I ER'd. This strategy gave me an emotional comfort level. OP, with your significant proportions in equities, can you tolerate - financially and emotionally - a significant market correction?
As far as risk tolerance and market corrections, I lost 32% in 2022, and was significantly depressed about it, but I managed to make it all back in 2023.
TIAA refuses to show us our accounts before 2009, but if I recall correctly, by the end of 2008 I would have been significantly better off shoving my money under the mattress for the 1st 13 years of my career, than investing it in the TIAA growth account that my money was in. Since 2009, it has averaged 16.14% per year.

Index_Averages.jpg


~~~~~
 
Last edited:
Thanks to everyone for all the valuable advice.
Short answer - math says your total of about ~$1.4M at a 4% withdrawal rate = 56,000/year, or 4,666 per month.

So, statistically, you can hit goal of $5k/month counting your retirement income.

1. Assuming your $5k/mo spending estimate is accurate, you look good.

2. Search this site (or the internet, more generally) for income vs. total return. As a practical matter, can your portfolio generate enough interest/dividends to support your spending?

3. A growth stock fund can go down 50% in one year (not particularly likely in any given year, but it does happen). Worst year for VIGAX during 2014-2023 period was 2022, when it lost 33.14% https://www.morningstar.com/funds/xnas/vigax/performance Can you handle the risk of that 1.2MM going to 800k or 600k? Only you can answer that question for you.
Good points, Retire48 & TickTock.

I should have noted that the $5k is after tax dollars. I am not so sure about my expenses. From my direct deposits from work, after 15% to my retirement account, I put $3k/mo in checking and the rest in savings. When I am spending a lot sometimes I have to boost my checking account with a liquid savings transfer as I like to keep it above $3k between paychecks. Other times I have had as much as $6-7k in my checking at the end of my fiscal year (June) and I transfer more to savings. In general, since paying off my house in 2018, I seem to add $20 to 25k to my liquid savings in any given year.

This includes buy a daily driver in 2018 for $12k, buying ($15k), and selling ($23k) and 370z convertible that I used for a 3/mo. USA tour and $30k for a 1963 Ford Falcon convertible. The Falcon has turned out to be quite more of an expense than expected, but I have enjoyed her very much.

You're in excellent shape financially and the SS coming in 5 years is a monster positive on top of that.

One thing I would look at is what exactly are these "growth funds" invested in and what are all the ongoing costs that are incurred. They add up.
I learned about fee skimming very late in my career, my account is at a .29% expense ratio and I seem to be out performing most of the indexes, but I do need to make some changes in that regard. TIAA-CREF use to be above such shenanigans early on, but nowadays they are just like any of the other Wall Street charlatans.

I agree with everything said above, and you may also want to check out this helpful list of things to consider:
Some Important Questions to Ask
Your reluctance to spend your capital is quite normal. Remember that you gave up spending it when you earned it just for this reason - now is the time it's valuable to you. That said, it does take awhile to get used to the idea of spending it.
As you've probably discovered, there are a lot of good threads here - reading them helped me get over the hump and ER, and I'm so glad I did. Good luck!
I have been doing lots of reading and little posting, but decision time is coming right up and I need to decide if I will keep working or call it a wrap. My organization going through period of disruption which tends to happen every decade or so and I just don't seem to have the energy for it anymore. OTOH, the fact that I take 4 months off every year makes it a little easier to deal with.


~~~~~
 
Thanks for your reply.

Yeah, I know. I am worried about being all in growth. I lost 35% in 2022, but made it all back in 2023. , On the other hand, I feel like I really need the money. I tend to have a hard time stopping emotion from overriding pragmatism in this situation for some reason. Oddly, that is not my day to day nature. When you say pull a small amount each month, what would be the advantage of doing that over just redistributing a massive chunk now? I essentially have 3 years living expense built into my liquid savings at this time.

As far as the $5k/month, I should have noted that is an "after tax," estimate.


~~~~~
I meant as you spend down your liquid assets, replace your spending in your liquid savings and a little bit more to eventually build your liquid savings to 6 years of expenses so you can ride out a down market for a number of years. You could do it all at once but my nature is to do things slowly. Would you be OK if the stock market went up 20% and you pulled $200k in january?
 
Thank for your helpful perspective.
By the time we are in our 50s and 60s, we are "over the hill". Being on that downward slope, in general, this year is the best year of the rest of our live. Do you want to spend your best remaining year working?

If not, it looks like you are good to go.
Your point about one's best years makes a great deal of sense.

You'll have to figure out a plan, on when to take social security and whatnot, but here is just one example path...

If you set aside 200K of your $1.2 million stash, for the 5 years from 62 to 67, that would be 40K per year. Add in your 18K salary, and you are essentially at your $5K per month / 60K per year goal for those 5 years.

With the remaining $1 million, based on the 4% rule of thumb, you could expect around $40K a year to be a safe withdraw rate. Add in 3K a month / 36K a year from social security at age 67, you'd be at $76K a year.
I should have noted that my $5k/mo estimate was and after tax estimate.
So rather using my $18k (pre-tax) income and supplementing this with my liquid savings along with transferring from my retirement growth/savings account to Roth, you'd recommend supplementing my $18k (pretax) income with money from my retirement account for living expenses and keeping my liquid savings at $190K. Is that correct?

Thanks,
again.


~~~~~
 
I meant as you spend down your liquid assets, replace your spending in your liquid savings and a little bit more to eventually build your liquid savings to 6 years of expenses so you can ride out a down market for a number of years. You could do it all at once but my nature is to do things slowly. Would you be OK if the stock market went up 20% and you pulled $200k in january?
I got ya! That makes a lot of sense. An "aim small, miss small" sort of thing. Thank you so much for clarifying.

~~~~~
 
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