FIRE [financial independence/retire early]

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mark39
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FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 1:14 pm

I've been reading and listening to choosefi.com and have followed Mr. Money Mustache for some time now and I've always wondered what some Bogleheads think of these topics? Specifically, the ability to declare yourself "financially independent" once you have 25x your annual expenses invested in a 50/50 or 60/40 stock/bond portfolio. I understand the 4% rule works in your favor over 95% of the time, but to my knowledge, this doesn't factor in health care. Unless there is something these groups have addressed and I have somehow missed.

Granted, they typically don't "retire" in the sense of never working again, but they have gotten out of the rat race as people typically think of it. Basically, I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.

Mark

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Re: FIRE

Post by The Wizard » Tue Nov 28, 2017 1:28 pm

FI isn't a black&white thing.
It's a range from minimal to extravagant.
Healthcare is just one expense out of many...
Attempted new signature...

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Sandtrap
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Re: FIRE [financial independence/retire early]

Post by Sandtrap » Tue Nov 28, 2017 1:35 pm

. . . . I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.
For those retiring early and Financially Independent.
Depending on circumstance and size of portfolio. . might include the following, and more not listed:

1. Retiring with health care included in the retirement pension. IE: Military retiree, Gov't pension with health care, etc. Coverage until Medicare.
2. ACA or other, paid out of pocket from one's portfolio until Medicare.
3. Cobra or other insurance coverage extension/gap post employment until it runs out, then #2.
4. Self insure out of one's portfolio until Medicare.
5. For those in financial need. . . . then assistance and so forth.
6. Other creative options.

j :D
Last edited by Sandtrap on Tue Nov 28, 2017 1:37 pm, edited 1 time in total.

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prudent
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Re: FIRE [financial independence/retire early]

Post by prudent » Tue Nov 28, 2017 1:36 pm

The 4% "rule" doesn't have anything to do with health care directly. It says you can most likely withdraw 4% of your assets yearly to finance a 30-year retirement and not run out of money. How it is spent (health care, food, housing, whatever) is up to the individual. You don't add health care costs to the 4% to withdraw more.

Of course, there could be other sources of income besides withdrawing from assets - Social Security, any passive income sources, pensions, etc.

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Re: FIRE [financial independence/retire early]

Post by runner3081 » Tue Nov 28, 2017 2:43 pm

mark39 wrote:
Tue Nov 28, 2017 1:14 pm
I understand the 4% rule works in your favor over 95% of the time, but to my knowledge, this doesn't factor in health care. Unless there is something these groups have addressed and I have somehow missed.
Isn't healthcare an expense?

To properly calculate your expenses, you must include healthcare costs. The "rule" still applies in that case.

That (not doing so) would be no different than saying your house is not an expense and you only need 25x non-housing costs. Nonsense :)

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Re: FIRE [financial independence/retire early]

Post by alfaspider » Tue Nov 28, 2017 3:12 pm

mark39 wrote:
Tue Nov 28, 2017 1:14 pm
I've been reading and listening to choosefi.com and have followed Mr. Money Mustache for some time now and I've always wondered what some Bogleheads think of these topics? Specifically, the ability to declare yourself "financially independent" once you have 25x your annual expenses invested in a 50/50 or 60/40 stock/bond portfolio. I understand the 4% rule works in your favor over 95% of the time, but to my knowledge, this doesn't factor in health care. Unless there is something these groups have addressed and I have somehow missed.

Granted, they typically don't "retire" in the sense of never working again, but they have gotten out of the rat race as people typically think of it. Basically, I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.

Mark
The cost of health care has nothing to do with the 4% rule, and everything to do with your expenses. The thing is, it is almost impossible to predict how much healthcare will cost you 20+ years from now. You could be the picture of health for the rest of your life or you could need round the clock care for over a decade. Add to that uncertainty is the uncertainty of what the healthcare system will look like over those timescales. There's simply no way to know.

Long story short, if you are actually retiring from an employer with benefits, you will need to think carefully about your healthcare risk tolerance. If it worries you, 25x current expenses may be nowhere near enough.

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Re: FIRE [financial independence/retire early]

Post by ReadyToRetire » Tue Nov 28, 2017 4:08 pm

+1 to what alfaspider said.

And I also agree with the other responses. Healthcare is a cost like any other. The big problem with healthcare is the rate at which the costs will increase. And that rate is dependent on your health for sure but also on the overall pool of people covered.

I am not at all worried about the price of eggs, television sets, or even new cars. the 4% rule (or whatever percentage you prefer as long as it is not excessively high) will probably cover those costs. Or one can make reasonable substitutions in difficult financial times - chicken breast instead of steaks or an old fashioned pot of boiled rice instead of Uncle Ben's.

But healthcare is scary. I don't know if 20 years from now I will be in need of something major - and have no idea what it will cost.

I'm not certain my 4% will cover it. In my plans I kind of pull healthcare out of my list of expenses and inflate the cost at a higher rate then try to add that new inflated rate back in to my projected expense and make sure that the new somewhat higher "adjusted total expense" is still within my preferred withdrawal percentage. Not a perfect solution - and one that probably leads to a few "one more year syndrome" years - but necessary for me to feel comfortable.

Good luck!

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Re: FIRE [financial independence/retire early]

Post by dbr » Tue Nov 28, 2017 4:33 pm

mark39 wrote:
Tue Nov 28, 2017 1:14 pm
I've been reading and listening to choosefi.com and have followed Mr. Money Mustache for some time now and I've always wondered what some Bogleheads think of these topics? Specifically, the ability to declare yourself "financially independent" once you have 25x your annual expenses invested in a 50/50 or 60/40 stock/bond portfolio. I understand the 4% rule works in your favor over 95% of the time, but to my knowledge, this doesn't factor in health care. Unless there is something these groups have addressed and I have somehow missed.

Granted, they typically don't "retire" in the sense of never working again, but they have gotten out of the rat race as people typically think of it. Basically, I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.

Mark
The 4% rule does not have anything to do with costs. It is a characterization of how portfolios progress under a certain artificial set of withdrawals. There are models for retirement spending such as FireCalc that use the same methodology that produces the 4% rule to project how a person's retirement can go. Part of the data entered is the proposed annual spending in real dollars. It is possible to enter additional spending in most models. A shortcoming might be that of adding additional spending and having that spending increase faster than inflation. I am not sure what models do that. It is a possible correct observation that this area could use more attention.

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Re: FIRE [financial independence/retire early]

Post by onthecusp » Tue Nov 28, 2017 5:15 pm

I don't have anything to add to the health care forecasts, but I think the general idea of early Financial Independence, 25x basic expenses (including current healthcare costs), and supplementing that with income producing activities that you prefer to "normal jobs" is a great concept. I will probably implement such after I leave my current employment and go part time before fully retiring.

If done really early e.g. 30's I would want to be pretty sure that those income activities would normally allow me to withdraw much less than 4%.
Note I didn't use the word "retire". The "normal jobs" would typically allow for wealth accumulation where the alternate activities might be more sporadic.

I find MMM's ideals of low spending to be lower than I intend to deal with, but I believe it is possible and a personal choice, which can be a fine and fulfilling life. Reading over there has given me a good idea of the lower limits of retirement income needs for planning purposes as well. They are limits I could deal with, though DW has other ideas, and we are in this together.

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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 5:26 pm

I should have been more specific. From what I can read from their websites and listening to podcasts I hear them talk about having annual expenses of $25k, for example. There is no way that I can see based on what they write/talk about that they include health care in the annual spending. So, my question was if I was missing something? I wasn't trying to say health care isn't a cost or implying it had something special to do with the 4% rule. On the contrary, I was saying the exact opposite. Hope that makes a bit more sense.

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Re: FIRE [financial independence/retire early]

Post by jebmke » Tue Nov 28, 2017 5:30 pm

whatever your rule-of-thumb multiple is (25x, 30x or whatever) the expenses (x) have to include everything, including income taxes, large items like replacing a car -- everything -- then subtract known income that might offset it -- like social security or a pension. Someone may say $25K and often the replies will try to clarify that if they haven't included everything they need to go back to the drawing board.
When you discover that you are riding a dead horse, the best strategy is to dismount.

mark39
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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 5:31 pm

Sandtrap wrote:
Tue Nov 28, 2017 1:35 pm
. . . . I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.
For those retiring early and Financially Independent.
Depending on circumstance and size of portfolio. . might include the following, and more not listed:

1. Retiring with health care included in the retirement pension. IE: Military retiree, Gov't pension with health care, etc. Coverage until Medicare.
2. ACA or other, paid out of pocket from one's portfolio until Medicare.
3. Cobra or other insurance coverage extension/gap post employment until it runs out, then #2.
4. Self insure out of one's portfolio until Medicare.
5. For those in financial need. . . . then assistance and so forth.
6. Other creative options.

j :D
Thank you.

These were some of the thoughts I had as well. Though health care always scares me a bit with things that may not be covered. Side note: COBRA is outrageously expensive.

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Re: FIRE [financial independence/retire early]

Post by Meg77 » Tue Nov 28, 2017 5:39 pm

I read a lot of FIRE blogs and enjoy them. There is no real difference in the way FIRE proponents define FI and the way Bogleheads do. Both groups generally embrace the 4% rule - though there is plenty of discussion/disagreement about exact asset allocation optimization targets, whether the 4% rule should be lowered to 3% when you're retiring super early, etc.

The primary difference between the two groups is in level of expenses that is considered appropriate/desirable - and the speed at which retiring is a goal. FIRE bloggers and advocates usually want to retire ASAP and embrace relatively "extreme" frugality in order to do so (and on principal); they argue that you can live well on $30k a year more or less. This usually requires a lot of DIY, geo-arbitrage (living cheaply outside the US for parts of the year) and even eschewing ownership of expensive items like cars and homes and even children.

Bogleheads as a group are fine with expensive homes and cars and dining out and first class travel as long as you are paying cash. Many have rewarding careers they aren't necessarily in a hurry to give up. They tend to keep working and saving longer than most would deem necessary in order to make SURE they have 25x (or 35x) ANY conceivable level of expenses that they may decide to incur in some future universe - including things like financing kids' and grandkids' educations, being able to cash flow any cancer treatment or disability, making sure they could 20 years in a nursing home for both spouses, etc.

The sweet spot is probably somewhere in the middle. But the 4% rule is pretty much the starting point for everyone.
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Re: FIRE [financial independence/retire early]

Post by Meg77 » Tue Nov 28, 2017 5:44 pm

mark39 wrote:
Tue Nov 28, 2017 5:31 pm
Sandtrap wrote:
Tue Nov 28, 2017 1:35 pm
. . . . I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.
For those retiring early and Financially Independent.
Depending on circumstance and size of portfolio. . might include the following, and more not listed:

1. Retiring with health care included in the retirement pension. IE: Military retiree, Gov't pension with health care, etc. Coverage until Medicare.
2. ACA or other, paid out of pocket from one's portfolio until Medicare.
3. Cobra or other insurance coverage extension/gap post employment until it runs out, then #2.
4. Self insure out of one's portfolio until Medicare.
5. For those in financial need. . . . then assistance and so forth.
6. Other creative options.

j :D
Thank you.

These were some of the thoughts I had as well. Though health care always scares me a bit with things that may not be covered. Side note: COBRA is outrageously expensive.
Some FIRE bloggers have been discussing international healthcare plans as of late. I haven't looked into them but apparently they are cheaper and even more comprehensive than many US ACA plans - but they require you to be traveling (defined I believe as not staying in any country more than 3 months or some other such rules). There is also the matter of simply traveling to another country to have a procedure or surgery, or even to buy prescription drugs. Many even mainstream Americans do this and receive equal/superior care for a fraction of the cost. The "downside" is that you may have to spend an extended period of time in a foreign country, but that's considered a bonus for many retirees with time on their hands.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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Re: FIRE [financial independence/retire early]

Post by delamer » Tue Nov 28, 2017 5:48 pm

mark39 wrote:
Tue Nov 28, 2017 5:26 pm
I should have been more specific. From what I can read from their websites and listening to podcasts I hear them talk about having annual expenses of $25k, for example. There is no way that I can see based on what they write/talk about that they include health care in the annual spending. So, my question was if I was missing something? I wasn't trying to say health care isn't a cost or implying it had something special to do with the 4% rule. On the contrary, I was saying the exact opposite. Hope that makes a bit more sense.
When I was looking at ObamaCare costs for our child who was aging out of our family plan, the subsidized cost was quite low -- less than $100/month for child's income level. So yes, I imagine that some people could cover health insurance/health care on an income of $25,000/year. But that assumes that the current health insurance laws stay in place, which is not a prospect that I would stake my future on.

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Re: FIRE [financial independence/retire early]

Post by lostdog » Tue Nov 28, 2017 5:52 pm

A ton of blogs on FI now because of the 10 year bull run. They rarely talk about health insurance. When the bear market hits I wonder how many of those blogs will stick around.
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mark39
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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 5:56 pm

Meg77 wrote:
Tue Nov 28, 2017 5:39 pm

The primary difference between the two groups is in level of expenses that is considered appropriate/desirable - and the speed at which retiring is a goal. FIRE bloggers and advocates usually want to retire ASAP and embrace relatively "extreme" frugality in order to do so (and on principal); they argue that you can live well on $30k a year more or less. This usually requires a lot of DIY, geo-arbitrage (living cheaply outside the US for parts of the year) and even eschewing ownership of expensive items like cars and homes and even children.

Bogleheads as a group are fine with expensive homes and cars and dining out and first class travel as long as you are paying cash. Many have rewarding careers they aren't necessarily in a hurry to give up. They tend to keep working and saving longer than most would deem necessary in order to make SURE they have 25x (or 35x) ANY conceivable level of expenses that they may decide to incur in some future universe - including things like financing kids' and grandkids' educations, being able to cash flow any cancer treatment or disability, making sure they could 20 years in a nursing home for both spouses, etc.

The sweet spot is probably somewhere in the middle. But the 4% rule is pretty much the starting point for everyone.
Ok, so I wasn't really "missing" anything. As is typically the case, the sweet spot probably is in the middle. I am always hard on myself and never realized how little I spend. So I always tried to have a goal of saving a percentage of gross income. I don't have a budget and I tend to spend money on the same things every week or month. My only goal has always been to save as much as I can and invest it intelligently. But when I go look at things I see I very easily live on under $30k a year. Am I happy? I think so, but I don't want for any material things. Would I like season tickets to the Indians or Browns? Absolutely, but I don't need them and I don't feel deprived without it.

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Re: FIRE [financial independence/retire early]

Post by Darwin » Tue Nov 28, 2017 6:10 pm

I've been mulling over this problem for several years. Health care seems to be the single biggest unknown for my wife and I, who are hoping to "semi-retire" (MMM-style) when I hit 50 in a couple years. We're lucky to have enjoyable careers where stepping in/out of the workforce is easy, but we would have to give up our subsidized insurance. One possibility we've been playing around with is to keep (rent) our house but move abroad somewhere with decent affordable healthcare (Ireland and Mexico come to mind), then return when we qualify for Medicare. Not a solution for everyone, but thinking outside the box can have advantages. :idea:

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Re: FIRE [financial independence/retire early]

Post by dbr » Tue Nov 28, 2017 6:28 pm

mark39 wrote:
Tue Nov 28, 2017 5:26 pm
I should have been more specific. From what I can read from their websites and listening to podcasts I hear them talk about having annual expenses of $25k, for example. There is no way that I can see based on what they write/talk about that they include health care in the annual spending. So, my question was if I was missing something? I wasn't trying to say health care isn't a cost or implying it had something special to do with the 4% rule. On the contrary, I was saying the exact opposite. Hope that makes a bit more sense.
I guess one issue is I don't actually know what you are reading as I don't read websites and blogs about finance, investing, and retirement mostly. It may be you are reading garbage as most of the material out there is garbage. Without a doubt the early retiree has to take a close look at the expenses he might expect over the course of a long retirement. Frankly, however, the even more likely and more costly event that would upset the plans of a couple is divorce, so there is another thought.

mark39
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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 6:59 pm

lostdog wrote:
Tue Nov 28, 2017 5:52 pm
A ton of blogs on FI now because of the 10 year bull run. They rarely talk about health insurance. When the bear market hits I wonder how many of those blogs will stick around.
I wonder the same thing.

mark39
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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 7:06 pm

Darwin wrote:
Tue Nov 28, 2017 6:10 pm
I've been mulling over this problem for several years. Health care seems to be the single biggest unknown for my wife and I, who are hoping to "semi-retire" (MMM-style) when I hit 50 in a couple years. We're lucky to have enjoyable careers where stepping in/out of the workforce is easy, but we would have to give up our subsidized insurance. One possibility we've been playing around with is to keep (rent) our house but move abroad somewhere with decent affordable healthcare (Ireland and Mexico come to mind), then return when we qualify for Medicare. Not a solution for everyone, but thinking outside the box can have advantages. :idea:
That flexibility is definitely an advantage. One of the reasons I like this topic is the idea of not having total dependence on a single job and having options. I tend to prepare for the worst in all situations. So for me, I would never "retire" with 25x my expenditures. Especially if it was a prolonged retirement of more than 12-15 years depending on life expectancy. I live in constant fear of losing my job even though I was recently promoted. I can't explain it. :?

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Re: FIRE [financial independence/retire early]

Post by flyingaway » Tue Nov 28, 2017 7:52 pm

Healthcare and health insurance in the U.S. are not predictable for those who have no place to get reliable health insurance. Hopefully this will change in the future.
In fact, those people who talk about medical tourism miss the critical point. Most FIRE people should be able to pay for routine medical procedures. It is those things like cancers or chronical diseases that will bankrupt many people. You might not want to get cancer treatments or chronical disease treatments in those countries.

mark39
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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 8:06 pm

flyingaway wrote:
Tue Nov 28, 2017 7:52 pm
Healthcare and health insurance in the U.S. are not predictable for those who have no place to get reliable health insurance. Hopefully this will change in the future.
In fact, those people who talk about medical tourism miss the critical point. Most FIRE people should be able to pay for routine medical procedures. It is those things like cancers or chronical diseases that will bankrupt many people. You might not want to get cancer treatments or chronical disease treatments in those countries.
I recognize my views on this are tainted because of where I work as I deal with life ending events. It's shocking to me how many people just assume things won't happen to them whether it be an accident, chronic disease, divorce, etc. I'm all for looking at probabilities and taking those into account but there are so many things that could happen over many years.

I forget where I heard it but "if you want to live 100 years, you have to survive everyday of that 100 years. So, you've got to prepare for that."

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Re: FIRE [financial independence/retire early]

Post by randomguy » Tue Nov 28, 2017 8:08 pm

alfaspider wrote:
Tue Nov 28, 2017 3:12 pm
Long story short, if you are actually retiring from an employer with benefits, you will need to think carefully about your healthcare risk tolerance. If it worries you, 25x current expenses may be nowhere near enough.
Or it can be plenty. If your expenses are 25k/yr, health care costs matter. If your expenses are 250k/year, you can handle pretty much any reasonable health care situation (i.e. you can pay 50k/year for health insurance and copays).

In general the FIRE people have this issue with all expenses. If you need change for any reason and you are living a bare bones life style you might not have a ton of flexibility to adapt. On the other hand they might be able to get a job (but getting one that pays say 20hr instead of the 60 or so you used to get requires you to work a lot more for the same pay) and most likely after 10 years you will be able to drastically increase your SWR (i.e the average withdrawal rate is like 6% or so.) if you didn't retire into the worst case markets.


Right now in the US health care is a nonissue for most of the FIRE crowd. You keep you income in the 20-30k range and ACA subsidies covers most of it and at worst you are on the hook for a deductible. They also tend to be pretty healthy and young. You are not reading about people retiring with an autistic kid and living on 25k/year.

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Re: FIRE [financial independence/retire early]

Post by randomguy » Tue Nov 28, 2017 8:14 pm

mark39 wrote:
Tue Nov 28, 2017 6:59 pm
lostdog wrote:
Tue Nov 28, 2017 5:52 pm
A ton of blogs on FI now because of the 10 year bull run. They rarely talk about health insurance. When the bear market hits I wonder how many of those blogs will stick around.
I wonder the same thing.
I think it is more the blog market will saturate. MMM makes serious bank (300k+). RootOfGood is making an OK amount (50-100k if memory serves). And so on down the chain. The people at the bottom hoping to fund their retirement they way the top guys have done are going to have a rough road. They might start finding the work they put in isn't worth it.

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Re: FIRE [financial independence/retire early]

Post by lostdog » Tue Nov 28, 2017 8:17 pm

mark39 wrote:
Tue Nov 28, 2017 7:06 pm
Darwin wrote:
Tue Nov 28, 2017 6:10 pm
I've been mulling over this problem for several years. Health care seems to be the single biggest unknown for my wife and I, who are hoping to "semi-retire" (MMM-style) when I hit 50 in a couple years. We're lucky to have enjoyable careers where stepping in/out of the workforce is easy, but we would have to give up our subsidized insurance. One possibility we've been playing around with is to keep (rent) our house but move abroad somewhere with decent affordable healthcare (Ireland and Mexico come to mind), then return when we qualify for Medicare. Not a solution for everyone, but thinking outside the box can have advantages. :idea:
That flexibility is definitely an advantage. One of the reasons I like this topic is the idea of not having total dependence on a single job and having options. I tend to prepare for the worst in all situations. So for me, I would never "retire" with 25x my expenditures. Especially if it was a prolonged retirement of more than 12-15 years depending on life expectancy. I live in constant fear of losing my job even though I was recently promoted. I can't explain it. :?

If you were FI would you still work in fear?
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lostdog
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Re: FIRE [financial independence/retire early]

Post by lostdog » Tue Nov 28, 2017 8:21 pm

randomguy wrote:
Tue Nov 28, 2017 8:14 pm
mark39 wrote:
Tue Nov 28, 2017 6:59 pm
lostdog wrote:
Tue Nov 28, 2017 5:52 pm
A ton of blogs on FI now because of the 10 year bull run. They rarely talk about health insurance. When the bear market hits I wonder how many of those blogs will stick around.
I wonder the same thing.
I think it is more the blog market will saturate. MMM makes serious bank (300k+). RootOfGood is making an OK amount (50-100k if memory serves). And so on down the chain. The people at the bottom hoping to fund their retirement they way the top guys have done are going to have a rough road. They might start finding the work they put in isn't worth it.
Yep. When the bear market hits, that gang won't be giving each other virtual high fives as often as they are now. We'll see who stays the course.
Last edited by lostdog on Tue Nov 28, 2017 9:42 pm, edited 1 time in total.
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Re: FIRE [financial independence/retire early]

Post by bhsince87 » Tue Nov 28, 2017 9:11 pm

Health insurance costs are completely irrational right now, and that has been a huge impediment to our FIRE decision.

Wife and I are older (52, 50), and we are way past 25X our annual desired spend of about $64k per year, not including healthcare. Probably closer to 50X. But we're still working. And no kids either. I can't even imagine an early FIRE if we had kids.

A few years back, health insurance (ACA) would have cost us 14k per year, with a 4k deductable. Next year, we have two choices: 24k per year with a 14k deductable, or 28k with a 4k deductable.

But wait! If we keep our income below about $65k, we get subsidies. Then the 14K deductable policy is free. The $4k deductable would cost us about $60 a month. Duh, easy choice there. But next year it will be different.

Without any kind of serious health emergency, we could see our healthcare costs vary from about $5000 max to $32000 max next year!

How can you possibly plan for that????

This is why we're still working. We're just about at the point where we could afford the extra $32,000 if need be.

We'd probably be better off buying a non-compliant plan and paying the tax penalty. But I haven't ru the numbers on that yet.
BH87

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Re: FIRE [financial independence/retire early]

Post by flyingaway » Tue Nov 28, 2017 9:24 pm

bhsince87 wrote:
Tue Nov 28, 2017 9:11 pm
Health insurance costs are completely irrational right now, and that has been a huge impediment to our FIRE decision.

Wife and I are older (52, 50), and we are way past 25X our annual desired spend of about $64k per year, not including healthcare. Probably closer to 50X. But we're still working. And no kids either. I can't even imagine an early FIRE if we had kids.

A few years back, health insurance (ACA) would have cost us 14k per year, with a 4k deductable. Next year, we have two choices: 24k per year with a 14k deductable, or 28k with a 4k deductable.

But wait! If we keep our income below about $65k, we get subsidies. Then the 14K deductable policy is free. The $4k deductable would cost us about $60 a month. Duh, easy choice there.
But next year it will be different.

Without any kind of serious health emergency, we could see our healthcare costs vary from about $5000 max to $32000 max next year!

How can you possibly plan for that????

This is why we're still working. We're just about at the point where we could afford the extra $32,000 if need be.

We'd probably be better off buying a non-compliant plan and paying the tax penalty. But I haven't ru the numbers on that yet.
If this is sustainable, I am going to retire much sooner than I am considering now.

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Re: FIRE [financial independence/retire early]

Post by bhsince87 » Tue Nov 28, 2017 9:31 pm

flyingaway wrote:
Tue Nov 28, 2017 9:24 pm
bhsince87 wrote:
Tue Nov 28, 2017 9:11 pm
Health insurance costs are completely irrational right now, and that has been a huge impediment to our FIRE decision.

Wife and I are older (52, 50), and we are way past 25X our annual desired spend of about $64k per year, not including healthcare. Probably closer to 50X. But we're still working. And no kids either. I can't even imagine an early FIRE if we had kids.

A few years back, health insurance (ACA) would have cost us 14k per year, with a 4k deductable. Next year, we have two choices: 24k per year with a 14k deductable, or 28k with a 4k deductable.

But wait! If we keep our income below about $65k, we get subsidies. Then the 14K deductable policy is free. The $4k deductable would cost us about $60 a month. Duh, easy choice there.
But next year it will be different.

Without any kind of serious health emergency, we could see our healthcare costs vary from about $5000 max to $32000 max next year!

How can you possibly plan for that????

This is why we're still working. We're just about at the point where we could afford the extra $32,000 if need be.

We'd probably be better off buying a non-compliant plan and paying the tax penalty. But I haven't ru the numbers on that yet.
If this is sustainable, I am going to retire much sooner than I am considering now.
Yes, the $64,000 question, literally!
BH87

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Re: FIRE [financial independence/retire early]

Post by randomguy » Tue Nov 28, 2017 9:44 pm

bhsince87 wrote:
Tue Nov 28, 2017 9:11 pm
Health insurance costs are completely irrational right now, and that has been a huge impediment to our FIRE decision.

Wife and I are older (52, 50), and we are way past 25X our annual desired spend of about $64k per year, not including healthcare. Probably closer to 50X. But we're still working. And no kids either. I can't even imagine an early FIRE if we had kids.

A few years back, health insurance (ACA) would have cost us 14k per year, with a 4k deductable. Next year, we have two choices: 24k per year with a 14k deductable, or 28k with a 4k deductable.

But wait! If we keep our income below about $65k, we get subsidies. Then the 14K deductable policy is free. The $4k deductable would cost us about $60 a month. Duh, easy choice there. But next year it will be different.

Without any kind of serious health emergency, we could see our healthcare costs vary from about $5000 max to $32000 max next year!

How can you possibly plan for that????

This is why we're still working. We're just about at the point where we could afford the extra $32,000 if need be.

We'd probably be better off buying a non-compliant plan and paying the tax penalty. But I haven't ru the numbers on that yet.

By having an extra 32k for expenses:). If your expenses are 64k/year (25x) and you are making 128k (5x), you have a lot of money to pay for health care. And of course you also have the option to moving some place that has better health coverage. Rates are high but yours are among the highest I have seen for 50 year olds.

There will always be risks to retiring early. At some point you have to take the risk and hope things work out. Or keep on working. I fyou enjoy your job, there isn't anywhere nears as much need to retire as soon as possible.

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Re: FIRE [financial independence/retire early]

Post by mark39 » Tue Nov 28, 2017 9:47 pm

lostdog wrote:
Tue Nov 28, 2017 8:17 pm
mark39 wrote:
Tue Nov 28, 2017 7:06 pm
Darwin wrote:
Tue Nov 28, 2017 6:10 pm
I've been mulling over this problem for several years. Health care seems to be the single biggest unknown for my wife and I, who are hoping to "semi-retire" (MMM-style) when I hit 50 in a couple years. We're lucky to have enjoyable careers where stepping in/out of the workforce is easy, but we would have to give up our subsidized insurance. One possibility we've been playing around with is to keep (rent) our house but move abroad somewhere with decent affordable healthcare (Ireland and Mexico come to mind), then return when we qualify for Medicare. Not a solution for everyone, but thinking outside the box can have advantages. :idea:
That flexibility is definitely an advantage. One of the reasons I like this topic is the idea of not having total dependence on a single job and having options. I tend to prepare for the worst in all situations. So for me, I would never "retire" with 25x my expenditures. Especially if it was a prolonged retirement of more than 12-15 years depending on life expectancy. I live in constant fear of losing my job even though I was recently promoted. I can't explain it. :?

If you were FI would you still work in fear?

Yes, but I would put a lot less stress on myself. At least, that's my assumption at this point. I would also try to find something I enjoy as well.

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Re: FIRE [financial independence/retire early]

Post by Sandtrap » Tue Nov 28, 2017 11:21 pm

mark39 wrote:
Tue Nov 28, 2017 5:31 pm
Sandtrap wrote:
Tue Nov 28, 2017 1:35 pm
. . . . I'm just wanting to get others' opinions on these ideas and really interested in how people are financing health care.
For those retiring early and Financially Independent.
Depending on circumstance and size of portfolio. . might include the following, and more not listed:

1. Retiring with health care included in the retirement pension. IE: Military retiree, Gov't pension with health care, etc. Coverage until Medicare.
2. ACA or other, paid out of pocket from one's portfolio until Medicare.
3. Cobra or other insurance coverage extension/gap post employment until it runs out, then #2.
4. Self insure out of one's portfolio until Medicare.
5. For those in financial need. . . . then assistance and so forth.
6. Other creative options.

j :D
Thank you.

These were some of the thoughts I had as well. Though health care always scares me a bit with things that may not be covered. Side note: COBRA is outrageously expensive.
The chasm between early retirement and medicare eligibility can be huge if one retires without health care benefits or a provision for such. The expense of Health "black swans" can sink a ship! if one is not prepared. And, even then, makes for a very very rough ride in the storm.

j :D

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Re: FIRE [financial independence/retire early]

Post by Olemiss540 » Tue Nov 28, 2017 11:40 pm

lostdog wrote:
Tue Nov 28, 2017 8:21 pm
randomguy wrote:
Tue Nov 28, 2017 8:14 pm
mark39 wrote:
Tue Nov 28, 2017 6:59 pm
lostdog wrote:
Tue Nov 28, 2017 5:52 pm
A ton of blogs on FI now because of the 10 year bull run. They rarely talk about health insurance. When the bear market hits I wonder how many of those blogs will stick around.
I wonder the same thing.
I think it is more the blog market will saturate. MMM makes serious bank (300k+). RootOfGood is making an OK amount (50-100k if memory serves). And so on down the chain. The people at the bottom hoping to fund their retirement they way the top guys have done are going to have a rough road. They might start finding the work they put in isn't worth it.
Yep. When the bear market hits, that gang won't be giving each other virtual high fives as often as they are now. We'll see who stays the course.
You bet! Those simpletons will have to go back to work after 5 years of enjoying their young families, all the while you will have been working this whole time! Suckers.....

I always enjoy the local animosity of those frugal fire types. Seems Bogleheads would have more in common than not with them (LBYM, index investing, etc,etc), but it never seems to work out that way.
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Re: FIRE [financial independence/retire early]

Post by HIinvestor » Wed Nov 29, 2017 12:27 am

The thing is folks can’t always return to employment st the same or comparable salary as when they left. For example, I was an associate at a law firm and paid pretty well and then took a break for some years to raise our kids. Breaking back into the workforce was challenging and initially did not pay nearly as well as when I had been an associate in the law firm.

There are surely pros and cons of taking a break and it affects SS contributions and other aspects as well.

IMHO, there is no ONE right vs wrong path or answer, just a lot of options.

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Re: FIRE [financial independence/retire early]

Post by randomguy » Wed Nov 29, 2017 12:37 am

lostdog wrote:
Tue Nov 28, 2017 8:21 pm


You bet! Those simpletons will have to go back to work after 5 years of enjoying their young families, all the while you will have been working this whole time! Suckers.....

I always enjoy the local animosity of those frugal fire types. Seems Bogleheads would have more in common than not with them (LBYM, index investing, etc,etc), but it never seems to work out that way.
Or those simpletons can't get jobs because unemployment is 10% and they have 5 year employment gaps, they spend down assets while being underemployed and end up working to 65 instead of retiring at 55.:) Or they could have worked 5 more years and retired at 40. :) Or ACA gets a asset adjustment and they all get hit with 10k/year health care bills cause they have 1 million in assets:)

There is an intersection between bogleheads and FIRE but it isn't huge. A lot of FIRE people are real estate guys who think rentals are the way to go. And a lot of bogleheads think there is a difference between being frugal and living below your means. Pretty much any of the extreme views get criticism. I think having a 4k house for a family of 3 is pushing it. But I don't think the right action is for a family of 3 to move into a 400 ft small house either. And option in the middle (say 1500 sq ft) seems like better choice.It would be fun to read about how the nonfamous FIRE guys do over the next 10-20 years.

I would also love to know how many people actually do it versus it being escapist fantasys. I know loved reading about the RV life but the odds of me doing it approach 0. :)

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Re: FIRE [financial independence/retire early]

Post by furikake » Wed Nov 29, 2017 1:42 am

The MMM people are afraid that they're going to die young, and they like to brag about retiring early with very little money. They will be scrambling to survive when the market tanks and you won't hear from them again when their "retirement" fails. Anyway, you should always include health insurance, as well as taxes in your retirement calculation. If your retirement income is low enough, you may not have to pay any income tax, and if your retirement income is low enough to qualify for subsidy, when subsidy is still available, then your health insurance may be very cheap or free.

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Re: FIRE [financial independence/retire early]

Post by CurlyDave » Wed Nov 29, 2017 2:37 am

prudent wrote:
Tue Nov 28, 2017 1:36 pm
The 4% "rule" doesn't have anything to do with health care directly. It says you can most likely withdraw 4% of your assets yearly to finance a 30-year retirement and not run out of money...
IMHO, it doesn't say that at all. What it actually says is that that you can withdraw 4% of your starting portfolio and adjust it upward by the consumer CPI each year. If you do this you will have a 95% chance of not running out of money.

In all of the analyses I have seen, there is no real examination of whether that is realistic inflation protection (IMHO it is not) and, while there have been studies on this issue, whether this produces an optimal spending pattern. There are some of us, who believe that 5 or even 6% of one's current portfolio can be withdrawn to produce more overall spending, although the spending will be variable in each year.

* * * * * * * * * * * *

For me, FI did not equate to RE. As I approached FI, my confidence at my job increase dramatically. Not having to worry about appeasing my boss actually made me much more highly valued because I could express alternate opinions without fear. My job became more personally rewarding and I did not really desire early retirement as much as I had once thought. Eventually, the realization that I did not know how long I would live led to me valuing time more and more and I retired slightly early.

To me, the idea of working out, and then living on, a tight budget for the rest of my life is just not appealing at all. DW and I have achieved much more than just minimal FI and are enjoying our retirement. I still manage our rentals, and DW still consults, so maybe we are only semi-retired. But we are both our own bosses, with much less than full time work, which is not difficult at all.

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Re: FIRE [financial independence/retire early]

Post by mark39 » Wed Nov 29, 2017 6:45 am

I agree that FIRE people tend to not take into account the number of things that can happen to them financially or personally. Everyone I can think of has had some surprises happen that they probably never thought would happen. Like someone else already said, there are health care costs that can sink a very large ship. The question then becomes "how do you plan for medical/dental costs if you retire early?" Let's say by decade, retire at 40, 50, or 55? I say 55, and 60 y/o? It seems like such a crapshoot because of all the uncertainty as people have already bought up. But what do you think?

I think the major benefit the FIRE concept has highlighted to me is the importance of spending less than you earn. I always knew that and understood how living well below your means affects both sides of the equation regarding how much you can save and how much less you would need to be financially independent, but this has really driven it home to a greater extent. In a way it gives me a bit more of an optimistic view because losing my job may not be as devastating as I thought because my income isn't high at all and replacing it wouldn't be quite the same issue as someone who had a high income, took some time off, and then tried to re-enter the work force at the same level.

Another thing I think the FIRE people miss out on too is the benefits of staying at the same job for many years. For example, increases in pay (hopefully) and increases in vacation time. Another thing is the ability to invest through bear markets.

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Re: FIRE [financial independence/retire early]

Post by Bigbonds » Wed Nov 29, 2017 7:01 am

Since the ACA is fully implemented in Colorado healthcare is the last thing I worry about. I’m way more concerned about wasting 10 years or more of my healthy years working a high paying, high stress job that will probably cause health problems just so I can pay taxes for a bunch of stuff I don’t agree with. If you make a decent salary, in the the 30% tax bracket and work a 30 year career, 9 of those years were spent paying taxes! I would rather retire early, maybe work an easy part time gig, maybe not, then spend 9 of my healthy years working for someone other than me, that’s what I worry about. I’ll work the system and make sure I get fully subsidized healthcare through the ACA. No worries there at all.

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Re: FIRE [financial independence/retire early]

Post by Lonestarz » Wed Nov 29, 2017 7:13 am

Earlyretirement.org? (I think org) is a good one. Not some of the pie in the sky ideology but more conservative planning.

I wouldn’t go 4% if you can’t cut back substantially and your time period is 30 years or more.

Healthcare seems to be around $1k/month/person if you can’t manage income to get subsidies- who knows where this will go in the next 3-7 years and beyond!

Those living on cheap blogs don’t appeal to me either but if you earn 200k and save half of that you can retire early with quite a comfortable life (or choose to keep working to improve that). I believe that’s why Fire is broken into 2 components. FI starting with not worried about Work and eventually RE (usually some point after reaching FI) when you are comfortable with your savings.

I plan to retire early with about 2x current spend but still less than I earn. I’d rather have free time through my 50s than drive new BMWs. But if the choice was rice and beans vs working to add in a steak once a week - I would reconsider. Some slang terms of LeahFIRE and FatFIRE

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Re: FIRE [financial independence/retire early]

Post by aristotelian » Wed Nov 29, 2017 7:19 am

lostdog wrote:
Tue Nov 28, 2017 5:52 pm
A ton of blogs on FI now because of the 10 year bull run. They rarely talk about health insurance. When the bear market hits I wonder how many of those blogs will stick around.
They also recommend portfolios of 100% stocks and say things like "assuming 10% annual returns..." It all has to be taken with a grain of salt.

The price of health care and the performance of the market are the two biggest question marks, and no amount of research can tell you what is going to happen from one year to the next.

That said, if you have enough cushion to tolerate the uncertainty, I think there is a lot to be said for working less or even retiring when you reach a certain level of financial independence. You can also consider yourself FI but continue working, or work just enough to get health insurance at Starbucks, etc. I think the FIRE blogs and such are best understood as a mentality rather than a set of all-or-nothing rules.

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Re: FIRE [financial independence/retire early]

Post by jlcnuke » Wed Nov 29, 2017 7:43 am

mark39 wrote:
Tue Nov 28, 2017 5:26 pm
I should have been more specific. From what I can read from their websites and listening to podcasts I hear them talk about having annual expenses of $25k, for example. There is no way that I can see based on what they write/talk about that they include health care in the annual spending. So, my question was if I was missing something? I wasn't trying to say health care isn't a cost or implying it had something special to do with the 4% rule. On the contrary, I was saying the exact opposite. Hope that makes a bit more sense.
At $25k/year, a married couple where I live could get a silver plan ($1k deductible, $4k max OOP) for less than $2k/year with current subsidies. If they're healthy and willing to gamble they would stay that way, bronze plans with higher deductibles and OOP max amounts have $0 premiums. Or a bronze plan for $61/month with a max OOP/deductible of $3,700 (meaning the most they'd ever pay would still be under $5k under any normal circumstance).

If they're healthy, it's easy to have $0 or just a few hundred/year in medical costs including premiums.

In addition to that, there are ways to have more "income" than is used as income for the purpose of subsidies. For instance, only the capital gains portion of withdrawals counts towards income. So a couple might have $40k in withdrawals from their investments but only have $25k in taxable income and thus live on $40k/year without having to pay a medical premium if they don't want.

When/if the subsidies are eliminated, then health insurance costs are likely to increase significantly for such people if they don't choose to "gamble" and go without (or go with whatever cheap coverage they can find).


Personally, I'm happy to know that if I choose to, I can have $0 in health care costs for the rest of my life (VA covers my medical 100% if I go through them).

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Re: FIRE [financial independence/retire early]

Post by Meg77 » Wed Nov 29, 2017 9:38 am

mark39 wrote:
Tue Nov 28, 2017 5:56 pm
Meg77 wrote:
Tue Nov 28, 2017 5:39 pm

The primary difference between the two groups is in level of expenses that is considered appropriate/desirable - and the speed at which retiring is a goal. FIRE bloggers and advocates usually want to retire ASAP and embrace relatively "extreme" frugality in order to do so (and on principal); they argue that you can live well on $30k a year more or less. This usually requires a lot of DIY, geo-arbitrage (living cheaply outside the US for parts of the year) and even eschewing ownership of expensive items like cars and homes and even children.

Bogleheads as a group are fine with expensive homes and cars and dining out and first class travel as long as you are paying cash. Many have rewarding careers they aren't necessarily in a hurry to give up. They tend to keep working and saving longer than most would deem necessary in order to make SURE they have 25x (or 35x) ANY conceivable level of expenses that they may decide to incur in some future universe - including things like financing kids' and grandkids' educations, being able to cash flow any cancer treatment or disability, making sure they could 20 years in a nursing home for both spouses, etc.

The sweet spot is probably somewhere in the middle. But the 4% rule is pretty much the starting point for everyone.
Ok, so I wasn't really "missing" anything. As is typically the case, the sweet spot probably is in the middle. I am always hard on myself and never realized how little I spend. So I always tried to have a goal of saving a percentage of gross income. I don't have a budget and I tend to spend money on the same things every week or month. My only goal has always been to save as much as I can and invest it intelligently. But when I go look at things I see I very easily live on under $30k a year. Am I happy? I think so, but I don't want for any material things. Would I like season tickets to the Indians or Browns? Absolutely, but I don't need them and I don't feel deprived without it.
It's certainly possible - even easy - to live on less than $30K a year in many areas. This is especially true if you have no debt and no other dependents. Being happy doesn't have a lot of correlation to how much a person spends, according to many studies. Once basic needs are covered, additional income doesn't make people any happier, at least statistically. I view being able to live on little as a kind of freedom. Maybe not full financial independence unless you have 25x expenses invested, but freedom to do whatever kind of work you want, to move where you want, and basically spend your time more freely than someone who may earn well into the 6 figures but depends on each paycheck to pay the bills.

Then again, based on your post you may want to evaluate your spending and loosen the purse strings a bit. It's OK to spend according to your values - and your values can and maybe should be broader than basic security and future financial independence. Romantic relationships, self-improvement (physical or intellectual), exploration/adventure, and family are values that may cost money but are arguably worth pursuing and dedicating some resources toward.
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Re: FIRE [financial independence/retire early]

Post by Jack FFR1846 » Wed Nov 29, 2017 10:03 am

It's going to depend on upcoming expenses. Health care insurance and costs tend to dominate the discussion. While I agree that this is a big part, for a 35 year old couple with a couple little kids, I guess they're expecting that the kids will go to trade school and come out with plumbing apprenticeships or something. In my state, anyways, state colleges are $132k for 4 years. With a couple kids, this is a future quarter mil cost in today's dollars. I really don't think that a lot of young early retired people realistically look at this. For my wife and me, we want our kids to have the best chance for success and this does mean school choice with private colleges. We're approaching the end of our first kid's college career and will have spent right around $300k. The second starts right after the first graduates and we'll provide the best for him as well. I'm not sure that these thirty somethings would be able to provide this kind of choice and start on their kids' future. Well, unless you start a blog that rakes in $400k a year.
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Re: FIRE [financial independence/retire early]

Post by alfaspider » Wed Nov 29, 2017 10:11 am

randomguy wrote:
Tue Nov 28, 2017 8:08 pm
alfaspider wrote:
Tue Nov 28, 2017 3:12 pm
Long story short, if you are actually retiring from an employer with benefits, you will need to think carefully about your healthcare risk tolerance. If it worries you, 25x current expenses may be nowhere near enough.
Or it can be plenty. If your expenses are 25k/yr, health care costs matter. If your expenses are 250k/year, you can handle pretty much any reasonable health care situation (i.e. you can pay 50k/year for health insurance and copays).

In general the FIRE people have this issue with all expenses. If you need change for any reason and you are living a bare bones life style you might not have a ton of flexibility to adapt. On the other hand they might be able to get a job (but getting one that pays say 20hr instead of the 60 or so you used to get requires you to work a lot more for the same pay) and most likely after 10 years you will be able to drastically increase your SWR (i.e the average withdrawal rate is like 6% or so.) if you didn't retire into the worst case markets.


Right now in the US health care is a nonissue for most of the FIRE crowd. You keep you income in the 20-30k range and ACA subsidies covers most of it and at worst you are on the hook for a deductible. They also tend to be pretty healthy and young. You are not reading about people retiring with an autistic kid and living on 25k/year.
I suspect that very few of the FIRE bloggers are looking at $250k expenses. Sure, if you have very high expenses, you can much more easily adjust to cover unexpectely high costs.

Right NOW, US healthcare isn't a big issue- but that's exactly the point. You know the situation now, but you do not far the the future. In theory, we could have government-run healthcare with no premiums or co-pays, or private health insurance could go away and all care would need to be paid out of pocket- or anything in between. Your future lifetime health expenses could be nominal or they could be millions of dollars. None of those extremes is the most likely outcome, but it all depends on your tolerance for potential outlier situations. FIRE types have a particularly difficult task compared to a 65+ retiree because they are dealing with much longer potential timescales. Someone retiring at 40 in good health needs to be able to plan for events 50+ years in the future. That's not an easy task.

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Re: FIRE [financial independence/retire early]

Post by lostdog » Wed Nov 29, 2017 6:02 pm

randomguy wrote:
Wed Nov 29, 2017 12:37 am
lostdog wrote:
Tue Nov 28, 2017 8:21 pm


You bet! Those simpletons will have to go back to work after 5 years of enjoying their young families, all the while you will have been working this whole time! Suckers.....

I always enjoy the local animosity of those frugal fire types. Seems Bogleheads would have more in common than not with them (LBYM, index investing, etc,etc), but it never seems to work out that way.
Or those simpletons can't get jobs because unemployment is 10% and they have 5 year employment gaps, they spend down assets while being underemployed and end up working to 65 instead of retiring at 55.:) Or they could have worked 5 more years and retired at 40. :) Or ACA gets a asset adjustment and they all get hit with 10k/year health care bills cause they have 1 million in assets:)

There is an intersection between bogleheads and FIRE but it isn't huge. A lot of FIRE people are real estate guys who think rentals are the way to go. And a lot of bogleheads think there is a difference between being frugal and living below your means. Pretty much any of the extreme views get criticism. I think having a 4k house for a family of 3 is pushing it. But I don't think the right action is for a family of 3 to move into a 400 ft small house either. And option in the middle (say 1500 sq ft) seems like better choice.It would be fun to read about how the nonfamous FIRE guys do over the next 10-20 years.

I would also love to know how many people actually do it versus it being escapist fantasys. I know loved reading about the RV life but the odds of me doing it approach 0. :)
I enjoy the root of good blog because he goes over every detail of his finances including health care. Most of the others tend to leave out the details. I also enjoy the choose fi podcast. They don't push traveling the world etc...They push having your options open when you're FI and then going from there.
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Re: FIRE [financial independence/retire early]

Post by flyingaway » Wed Nov 29, 2017 6:31 pm

jlcnuke wrote:
Wed Nov 29, 2017 7:43 am
mark39 wrote:
Tue Nov 28, 2017 5:26 pm
I should have been more specific. From what I can read from their websites and listening to podcasts I hear them talk about having annual expenses of $25k, for example. There is no way that I can see based on what they write/talk about that they include health care in the annual spending. So, my question was if I was missing something? I wasn't trying to say health care isn't a cost or implying it had something special to do with the 4% rule. On the contrary, I was saying the exact opposite. Hope that makes a bit more sense.
At $25k/year, a married couple where I live could get a silver plan ($1k deductible, $4k max OOP) for less than $2k/year with current subsidies. If they're healthy and willing to gamble they would stay that way, bronze plans with higher deductibles and OOP max amounts have $0 premiums. Or a bronze plan for $61/month with a max OOP/deductible of $3,700 (meaning the most they'd ever pay would still be under $5k under any normal circumstance).

If they're healthy, it's easy to have $0 or just a few hundred/year in medical costs including premiums.

In addition to that, there are ways to have more "income" than is used as income for the purpose of subsidies. For instance, only the capital gains portion of withdrawals counts towards income. So a couple might have $40k in withdrawals from their investments but only have $25k in taxable income and thus live on $40k/year without having to pay a medical premium if they don't want.

When/if the subsidies are eliminated, then health insurance costs are likely to increase significantly for such people if they don't choose to "gamble" and go without (or go with whatever cheap coverage they can find).


Personally, I'm happy to know that if I choose to, I can have $0 in health care costs for the rest of my life (VA covers my medical 100% if I go through them).
If they can gamble their careers, they can certainly gamble their health insurance.

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randomizer
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Re: FIRE [financial independence/retire early]

Post by randomizer » Wed Nov 29, 2017 6:33 pm

25x is imprudently optimistic for an early retiree, but everybody in MMM land seems set on pulling the plug the day their accounts hit 25x. I will watch with some interest how they react the next time the market drops 50%.
75:25 AA / Expected retirement: 2097

Traveler
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Re: FIRE [financial independence/retire early]

Post by Traveler » Wed Nov 29, 2017 7:02 pm

So the 25X rule applies no matter one's age? I find it hard to believe that someone with $50K in annual expenses can retire with $1.25M at age 35. Now if that person with the same $50K in expenses was 50 or 55, the $1.25M is more likely enough to retire. That same $1.25M needs to last the 35 year old 50+ years, while it only has to last the 50 year old 35 years.

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