46
General Discussion / Re: Divorce and the clean slate
« on: October 23, 2018, 04:26:41 PM »
Thanks, that's the hope. To at least get some positive out of something negative.
Retire Early. Travel the World.
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47
Taxes / Re: Mega Roth Rollover for Post-Tax Contributions for 401k
« on: October 23, 2018, 03:00:10 PM »
I don't think so as most conversions are done to free up tradition 401k/Roth funds without penalties before you are able to withdraw them penalty free, however since you are 61 all of your withdrawals should be penalty free.
48
Journals / Re: First month of moving to FIRE
« on: October 23, 2018, 08:13:02 AM »
He is right. The market will take a big dip. The question though is when will this happen and unless you can answer this very accurately and reliably(which no one seems to be able to do) you are more likely than not going to either pull out too early, missing out on gains or put it back in either too soon or too late losing out on earnings. Also during your time out of the market you are also missing out on dividends from the stocks paying those out.
49
General Discussion / Re: credit card living?
« on: October 17, 2018, 07:44:03 AM »
Good point on the 0% offers, in those cases I would agree with paying it off before interest starts accruing.
50
General Discussion / Re: credit card living?
« on: October 16, 2018, 11:03:17 AM »
I probably wouldn't take out credit card debt unless I can pay it off before the billing cycle ends.
If you are FIREd already in the event of a severe crash(1 year or more) I would probably reduce spending to the minimum necessary until things have recovered. For most shorter crash's unless they occur just before you withdraw your annual amount you can probably ride it out with the cash you still have until recovery.
If you are still working then it's not much of a concern since cash is coming in.
If you are FIREd already in the event of a severe crash(1 year or more) I would probably reduce spending to the minimum necessary until things have recovered. For most shorter crash's unless they occur just before you withdraw your annual amount you can probably ride it out with the cash you still have until recovery.
If you are still working then it's not much of a concern since cash is coming in.
51
Early Retirement / Re: FI - Am I there?
« on: October 12, 2018, 07:55:15 AM »
The 4% rule purely applies to funds invested in index funds. Other parts of your net worth don't have a study to determine such a rule for them. You could still only withdraw 4% of your investments and the spend that plus whatever income your other sources generate.
52
Early Retirement / Re: FI - Am I there?
« on: October 11, 2018, 07:53:32 AM »
You should be able to spend about $30,000(adjusted for inflation) annually based on your investments of course not counting any rental income you may receive. That's a 4% Safe Withdrawal Rate(SWR) which has been successful in about 95% of all 30 year periods in the US market. If you are really risk intolerant getting to a 3.5% SWR would mean about a 100% historical success rate in the US market for any 30 year period, but would mean you would either need to spend less than 30k annually or grow your investments some more. Of course if any of the events that you mentioned lead to additional money invested that would speed things up of course.
53
General Discussion / Re: Asset allocation?
« on: October 01, 2018, 08:54:34 AM »
If you are going with index funds trying to match the market performance rather than beat it going with a 4% SWR I would probably hold less cash and instead adjust withdrawals/spending down during a bear market to improve the chances of your portfolio surviving rather than holding that much cash which would be a drag on your portfolio's performance if the market does perform well.
As for my allocation it's pretty close to JL Collins'. It's heavy on US stock market funds. Light on foreign markets and no REITs. I'm also pretty light on bonds with a 95/5 split though I plan on adjusting this down some once I near the end of my accumulation phase.
As for my allocation it's pretty close to JL Collins'. It's heavy on US stock market funds. Light on foreign markets and no REITs. I'm also pretty light on bonds with a 95/5 split though I plan on adjusting this down some once I near the end of my accumulation phase.
54
General Discussion / Re: one more year syndrome
« on: October 01, 2018, 08:45:56 AM »
I'd say 23x is maybe cutting it close for my tastes, even more so since part of your portfolio is in investments with lower than average returns. I'd probably make sure you have at least 25x expected expenses in 75/25 Stock/Bond split.
As for predicting the market you're probably as capable as most(as in incapable of doing so accurately).
My personal plan is getting to 4% SWR and then switching careers to jobs in fields I'm interested in learning skills in while coasting to 3.5%.
If you have room to and feel comfortable cutting down your expenses if there is a downturn early on in your FIRE then you would probably make it through just fine if you did so at 4%. I would be hesitant to do so if the 4% SWR only covers your absolute minimum expenses.
As for predicting the market you're probably as capable as most(as in incapable of doing so accurately).
My personal plan is getting to 4% SWR and then switching careers to jobs in fields I'm interested in learning skills in while coasting to 3.5%.
If you have room to and feel comfortable cutting down your expenses if there is a downturn early on in your FIRE then you would probably make it through just fine if you did so at 4%. I would be hesitant to do so if the 4% SWR only covers your absolute minimum expenses.
55
General Discussion / Re: 3.3% SFR then 5% after 5 yrs?
« on: September 25, 2018, 06:27:35 PM »
Two upside that people who FIRE have over those that retire at the regular age are:
1. Chances are you might still make money somehow during your long time being FIRE.
2. If things turn bad you are young enough that you could still work a job to recover if a worst case scenario does decide to ruin your carefully planned strategy.
1. Chances are you might still make money somehow during your long time being FIRE.
2. If things turn bad you are young enough that you could still work a job to recover if a worst case scenario does decide to ruin your carefully planned strategy.
56
General Discussion / Re: 3.3% SFR then 5% after 5 yrs?
« on: September 22, 2018, 04:22:11 PM »
It's based on the performance history of the US stock market.
Certain calculators such as FIREcalc take your planned spending amount and your starting amount and create multiple historical projections on how it would have fared during different 30 year periods in the market and then calculates in how many of those you would have made it to the end of those 30 years without running out. the 4% rule simply comes from the fact that at about 4% you have about 95% chance of still have some amount of money left after 30 years. It's a little arbitrary in the sense that it's simply that enough people agreed with 95% chance of success being a good level of risk and so the rule spread.
As such there's also a 3.5% rule which is that if you have a SWR of 3.5% you would never have run out of money after 30 years in any 30 year period of the US stock market's history.
This would of course assume a 100% stock portfolio and one matching the stock market as closely as possible. Often something like a S&P 500 index funds etc.
There is also a camp of people that say the 4% rule is way to conservative for early retirees as you are still capable of working and you could always take on a side job if there is a market downturn and reduce your withdrawal rate during down times to avoid some of the losses that lead to you running out of money.
In the end it comes down to how much risk you are personally comfortable with, as you can see from my own plan I'm pretty risk averse in that I'm shooting for 4%, but then planning on coasting to 3.5% before fully considering myself FIRE. I'm comfortable enough with quitting my current job and moving to less lucrative things once I do reach 4% though. As for my actual allocation between stocks and bonds I'm far more comfortable with risk as I have about 95% in stocks, I feel comfortable that once I reach 3.5% SWR even with an allocation of 100% stocks there isn't really any risk of running out.
Certain calculators such as FIREcalc take your planned spending amount and your starting amount and create multiple historical projections on how it would have fared during different 30 year periods in the market and then calculates in how many of those you would have made it to the end of those 30 years without running out. the 4% rule simply comes from the fact that at about 4% you have about 95% chance of still have some amount of money left after 30 years. It's a little arbitrary in the sense that it's simply that enough people agreed with 95% chance of success being a good level of risk and so the rule spread.
As such there's also a 3.5% rule which is that if you have a SWR of 3.5% you would never have run out of money after 30 years in any 30 year period of the US stock market's history.
This would of course assume a 100% stock portfolio and one matching the stock market as closely as possible. Often something like a S&P 500 index funds etc.
There is also a camp of people that say the 4% rule is way to conservative for early retirees as you are still capable of working and you could always take on a side job if there is a market downturn and reduce your withdrawal rate during down times to avoid some of the losses that lead to you running out of money.
In the end it comes down to how much risk you are personally comfortable with, as you can see from my own plan I'm pretty risk averse in that I'm shooting for 4%, but then planning on coasting to 3.5% before fully considering myself FIRE. I'm comfortable enough with quitting my current job and moving to less lucrative things once I do reach 4% though. As for my actual allocation between stocks and bonds I'm far more comfortable with risk as I have about 95% in stocks, I feel comfortable that once I reach 3.5% SWR even with an allocation of 100% stocks there isn't really any risk of running out.
57
General Discussion / Re: 3.3% SFR then 5% after 5 yrs?
« on: September 22, 2018, 01:21:31 PM »
It's mostly...well really it's all about risk. When you go with a 4% SWR in FIRE you have a 95% chance of success of not running out over a 30 year period. However most failures happen due to a bad market the first few years and never successfully recovering from this, if you make it through the first few years with a good return your odds go up even higher that you will make it to 30 years and probably even end up with much more than your started with.
GCC had good returns and lower spending leading him to make it through those first years successfully. He could have kept his spending the same only adjusting his original amount by inflation each year and would probably be close to a 100% odds of success if he had kept it that way. He decided though that if he found a 95% success rate acceptable when he originally FIREd that he would/should be ok with the same risk now and that it was worth it to him to increase his spending. So he is back to a 95% chance of succeeding over a 30 year period if he withdraws 4% of the amount he had when he decided to "reset". This does mean his chance of success will be lower than it was before he decided to reset his SWR % yet no more than the amount of risk he accepted when he originally FIREd.
It's all up to the amount of risk you are willing to take. Some people save enough to maintain a 3.5% SWR of the initial savings inflation adjusted at which point you would have been successful over any 30 year period over the past 100 or so years. Some feel confident with the 95% success of a 4% SWR. Some feel confident they can adjust their spending down if they have a bad run in the market early on to compensate for greater risk.
My current plan is to work my current job/field until I achieve a 4% SWR then to coast doing jobs that I have an interest in learning rather than what they pay and use those to coast to 3.5% at which point I could RE with 0% risk whenever I don't feel like doing anything else anymore.
As for your situation you could underspend up front and then at a later time reset your risk, but I would stick with at least a 4% SWR at the 5 year mark you mention. Depending on the returns in the market this likely would be quite a bit more than 4% was at the year 0 mark.
GCC had good returns and lower spending leading him to make it through those first years successfully. He could have kept his spending the same only adjusting his original amount by inflation each year and would probably be close to a 100% odds of success if he had kept it that way. He decided though that if he found a 95% success rate acceptable when he originally FIREd that he would/should be ok with the same risk now and that it was worth it to him to increase his spending. So he is back to a 95% chance of succeeding over a 30 year period if he withdraws 4% of the amount he had when he decided to "reset". This does mean his chance of success will be lower than it was before he decided to reset his SWR % yet no more than the amount of risk he accepted when he originally FIREd.
It's all up to the amount of risk you are willing to take. Some people save enough to maintain a 3.5% SWR of the initial savings inflation adjusted at which point you would have been successful over any 30 year period over the past 100 or so years. Some feel confident with the 95% success of a 4% SWR. Some feel confident they can adjust their spending down if they have a bad run in the market early on to compensate for greater risk.
My current plan is to work my current job/field until I achieve a 4% SWR then to coast doing jobs that I have an interest in learning rather than what they pay and use those to coast to 3.5% at which point I could RE with 0% risk whenever I don't feel like doing anything else anymore.
As for your situation you could underspend up front and then at a later time reset your risk, but I would stick with at least a 4% SWR at the 5 year mark you mention. Depending on the returns in the market this likely would be quite a bit more than 4% was at the year 0 mark.
58
Travel hacking / Re: Best data plans for travel
« on: September 20, 2018, 08:44:04 AM »
I just buy a pre-paid SIM locally and use those, but I usually only go to one country.
I also tend to use WiFi as much as possible and cellular as little as possible. How long are you planning on being in the countries that aren't covered? If it's a long time it might be worthwhile to get a pre-paid SIM locally, if not can you get by without?
I also tend to use WiFi as much as possible and cellular as little as possible. How long are you planning on being in the countries that aren't covered? If it's a long time it might be worthwhile to get a pre-paid SIM locally, if not can you get by without?
59
Early Retirement / Re: serious conversation concerning early retirement
« on: September 18, 2018, 11:50:32 AM »
I was actually referring to GCC having a consulting job on the side. I myself am not FIRE yet and simply work fulltime in my accumulation fase.
60
General Discussion / Re: Divorce and the clean slate
« on: September 18, 2018, 08:17:39 AM »
Thanks, I appreciate it(sorry for the slow response here too. Was actually away on a vacation myself)
It's unfortunate, but definitely for the best as we have been trying to work through things for years now and we are just unable to come to an agreement/compromise on some major life decisions.
Thankfully we both agree that it is best to move on rather than to keep trying to fix it at this point.
It's unfortunate, but definitely for the best as we have been trying to work through things for years now and we are just unable to come to an agreement/compromise on some major life decisions.
Thankfully we both agree that it is best to move on rather than to keep trying to fix it at this point.