FIRE in Early 40's?

[WashingtonianJimmy]

Hi Bogleheads,
I’ve been a longtime reader and could use the advice and perspective of the board. There’s no one IRL I can discuss this with. I’ve tried, without disclosing numbers, and have yet to find others who are able to listen without envy or judgment. I have a Vanguard financial advisor but I mainly use her for rebalancing and allocation discussions. If I FIRE she’ll help with drawdown approach to limit income taxes and maximize growth.

Do my numbers point to FIRE in the coming months? I overall enjoy working, contributing, and learning, plus the social aspect of a job, however my job is slowly destroying me. My sabbatical was denied and I’m ineligible for FMLA so time-away to evaluate isn’t an option. While I don’t foresee not working again, either as a perm employee or a contractor, I want to know if it turns out I love early retirement I’m safe, with what we know now, and I don’t need to work.

Age: 41
Marital status: Single. I hope to marry someday but currently not in a relationship.
Kids: 0 and firmly do not want them
State: WA
Annual spending: $108,000 (includes estimated ACA premium and H.S.A max contribution but no income taxes or adding to any other savings)
Debt: 0. I rent and pay all bills in full.

Cash on hand: $5,000
Taxable investments: $2,800,000
Tax deferred investments: $1,315,000
Total net worth: $4,120,000

There are no upcoming major purchases. I like the flexibility of renting plus WA housing is insanely unaffordable. My car is 10 years old, but with only 75,000 miles I intend to get many more years out of it.

What else can I share? Some of my taxable investments have significant capital gains so I’ll need to be deliberate in drawdown approach. My portfolio, like many investors, is down over 20% YTD so between the market rollercoaster and recession indicators I’m conflicted.

I appreciate any input,
Jimmy

[PowderDay9]

The numbers look good to me. A few additional questions.

What is your asset allocation?

Are you expecting social security?

What are you planning to do with all your free time?

If you went back to work, what type of work would you do?

[willthrill81]

Your planned spending is only 2.6% of your portfolio, which is below the historic perpetual withdrawal rate of about 3%. I suggest that you read up on perpetual withdrawal rates here.

One day, SS benefits will reduce your needed withdrawals even further.

Bottom line: as long as your planned expenses are reasonably accurate (they could easily increase by at least 15%), you're golden.

Congratulations!

[Atgard]

Even a very conservative 33x spending would need $3,564,000, and you are over that. Assuming your expenses are accurate, you should be golden (and, without kids, it should be relatively easy to live on $108K a year, even in a HCOL area).

[AnEngineer]

One option is to tell your employer you're taking a break and they can choose to let it be a sabbatical or a resignation.

How did you come up with your expenses number? Is it actual averaged over several years, or a guess based on adding things up? I think you should consider taxes, or at least make sure you can avoid paying them. But you probably have enough unless there are large errors.

[WashingtonianJimmy]

What is your asset allocation? Domestic stock 80%, international stock 2%, bonds 10%, cash that is ladder investing in bonds 8%.

Are you expecting social security? Yes, waiting until 67 is estimated at $2,500. None of that is in my planning.

What are you planning to do with all your free time? There's a few charities I've donated large sum to I want to donate time and become more active in. I've got a slew of hobbies to develop. I'd plan to visit my family for more than a long weekend, both parents are aging and while healthy enough have less than 20 good years left. Be a Big Brother in the Big Brother/Big Sister program. I'm sure I'd be overwhelmed and bored by all the free time. Realistically, after a six to twelve months of mental recovery, I'd likely do paid contract work.

If you went back to work, what type of work would you do? Financial planning and analysis. I analyze corporate budget to actual spend and make recommendations to internal business partners. If I wanted a fun job, where I'm paid a pittance, I'd work for the local parks department cleaning, restoring and maintaining parks.

[WashingtonianJimmy]

Thanks, everyone. I've read, on here, about 40x for expenses and my expenses are accurate, baring an emergency. I live a solid, middle class life with all my needs met and many wants (annual vacation, pool membership, concerts). For my expenses I took the last 6 months and increased areas I know I haven't spent in but will with more time. For example, this year my employer has denied all PTO requests, for my entire team, so other than company holidays not had time off. For travel expense I used 2021 which was a normal travel spend year.

Good point on taxes, I need to do back of the envelope math to see what I should estimate for that. I plan to manage earnings, when possible, to utilize the ACA subsidies. That won't be possible this year but maybe next year. I have $900,000 in a rollover IRA that I might do Roth conversions on. My Roth is relatively small as my income has been over the annual limit.

I feel as if I'm missing something big or glaring in my "plan" but perhaps it's the overall unrest with the market, economy and world.

[sailaway]

I feel as if I'm missing something big or glaring in my "plan" but perhaps it's the overall unrest with the market, economy and world.

Nah, it is just scary as to walk away from an income, even if your plan is solid.

If it helps, with an average age of about 43, our numbers are very nearly scaled to yours (have less, but also spend less). DH has chosen to go part time, rather than quit completely, but mostly because they asked him to, rather than concerns about the numbers. It is unclear if he will be permitted to do this for more than a year, anyway.

[mikejuss]

Why do you want to FIRE?

[KyleAAA]

You don't have much wiggle room with your current spending after taxes, but the math works if you're confident in your annual expense number

[scrabbler1]

I retired back in 2008 at age 45. In the years leading up to my ER, I split my overall ER plan into 2 parts. The first part (the tougher one) was getting from age 45 to around age 60, using only my non-retirement assets. After that, I would begin being able to access what I call my "reinforcements" consisting of unfettered access to my tIRA, my frozen company pension, and Social Security. I wasn't really worried about having enough money readily available starting at age 60 because I knew my financial picture would be much, much better.

I am less than a year from age 60 and these last 13.5 years have gone very well, better than I had projected. I thought I would have to dip into principal these last few years, but that hasn't happened. My taxable portfolio has been able to generate enough income to pay my bills.

My suggestion to you, OP, is to do a similar split in the timeline and make sure you can get by easily enough using only the subset of your portfolio you have unfettered access to.

[CletusCaddy]

$108k in expenses for a single person is high. Is there fat you could cut there?

[willthrill81]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

[Marseille07]

Is this thread a repeat of that "Windfall of $5M" thread?

The OP has enough. 108K is fine when they have 4.1M.

[mikejuss]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

[KlangFool]

Annual spending: $108,000 (includes estimated ACA premium and H.S.A max contribution but no income taxes or adding to any other savings)

Cash on hand: $5,000
Taxable investments: $2,800,000
Tax deferred investments: $1,315,000
Total net worth: $4,120,000

WashingtonianJimmy,

My gut feeling tells me that your estimate of annual expense of 108K without mortgage is wrong. You may want to show us how you arrive to that number. And, if this estimate is wrong, then, no one can really tells you whether 4 million is good enough for early retirement.

KlangFool

[JoeRetire]

my job is slowly destroying me.

Are there other jobs that wouldn't destroy you?

Do my numbers point to FIRE in the coming months?

Age: 41
Annual spending: $108,000

Cash on hand: $5,000
Taxable investments: $2,800,000
Tax deferred investments: $1,315,000
Total net worth: $4,120,000

You'll probably be fine if you continue to live on $108k.

Other than not working, do you have plans for how you will use your time in retirement?

[aaaaaa111111]

Because work gives life meaning.

Well now, that's a life I'd never want to live.

[sailaway]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

John Calvin and Queen Victoria have a lasting influence, don't they?

[mikejuss]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

John Calvin and Queen Victoria have a lasting influence, don't they?

Yes, America began as, and remains (in some ways), a Puritan society.

[Marseille07]

WashingtonianJimmy,

My gut feeling tells me that your estimate of annual expense of 108K without mortgage is wrong. You may want to show us how you arrive to that number. And, if this estimate is wrong, then, no one can really tells you whether 4 million is good enough for early retirement.

KlangFool

I don't see why you think it's wrong. A good rental in HCOL WA is like $3000/mo, and that's only 36K/year. It's not that easy to spend 108K even if you wanted to, unless you go out to eat every single day or something.

[sailaway]

WashingtonianJimmy,

My gut feeling tells me that your estimate of annual expense of 108K without mortgage is wrong. You may want to show us how you arrive to that number. And, if this estimate is wrong, then, no one can really tells you whether 4 million is good enough for early retirement.

KlangFool

I don't see why you think it's wrong. A good rental in HCOL WA is like $3000/mo, and that's only 36K/year. It's not that easy to spend 108K even if you wanted to, unless you go out to eat every single day or something.

We spend slightly less than $100k for two while paying that kind of rent and owning a boat. I was already wondering what OP spends it on, certainly not thinking "oh, that's is clearly low."

[WashingtonianJimmy]

This isn't a repost of a $5M windfall thread, this is my first post. I've worked a W-2 job since 13 and saved, then invested, religiously. Other than receiving a $100,000 in inheritance last year I've not gotten any windfalls or unearned money.

Why FIRE? Because I potentially can and am incredibly burnt out. My time isn't my own and I would like the ability to step away for a bit. Will I end up working again? Probably but it's nice to get feedback as there aren't people IRL to have these conversations with and that ask questions or share experiences. Scrabbler1 brought up a great exercise to undertake to split the timeline so I'll do that in the coming days to see how I fare.

My expenses are reasonable for the Seattle area but, yes, there's fat I could cut if I need to. I'm definitely willing to do that. I love food, travel and live entertainment. I also donate $1,000 a month two local charities. $108K is a bit more than I spend now as that includes estimated ACA premiums and HSA contributions. I'll cash flow as many medical/dental/vision expenses as I can. I'm relatively healthy but I still spend $3K or so in out of pocket costs a year. I'll post my expenses later, if folks are genuinely interested. It's a pretty boring spend list!

[Tamalak]

You look to be in great shape! Take your freedom!

[Picasso]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

Nahh

[mikejuss]

Why FIRE? Because I potentially can and am incredibly burnt out. My time isn't my own and I would like the ability to step away for a bit. Will I end up working again? Probably but it's nice to get feedback as there aren't people IRL to have these conversations with and that ask questions, or share experiences, I haven't thought of. Scrabbler1 brought up a great exercise to undertake to split the timeline. I will do that in the coming days to see how I fare.

Nothing wrong with that. Take some time to mentally regroup. You've literally earned it.

[mikejuss]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

Nahh

The real Picasso would almost certainly have agreed with me.

[Picasso]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

Nahh

The real Picasso would almost certainly have agreed with me.

Haha that is probably true!

[Marseille07]

This isn't a repost of a $5M windfall thread, this is my first post. I've worked a W-2 job since 13 and saved, then invested, religiously. Other than receiving a $100,000 in inheritance last year I've not gotten any windfalls or unearned money.

Why FIRE? Because I potentially can and am incredibly burnt out. My time isn't my own and I would like the ability to step away for a bit. Will I end up working again? Probably but it's nice to get feedback as there aren't people IRL to have these conversations with and that ask questions, or share experiences, I haven't thought of. Scrabbler1 brought up a great exercise to undertake to split the timeline. I will do that in the coming days to see how I fare.

My expenses are reasonable for the Seattle area but, yes, there's fat I could cut if I need to. I'm definitely willing to do that. I love food, travel and live entertainment. I also donate $1,000 a month two local charities. $108K is a bit more than I spend now as that includes estimated ACA premiums and HSA contributions. I'll cash flow as many medical/dental/vision expenses as I can. I'm relatively healthy but I still spend $3K or so in out of pocket costs a year. I'll post my expenses later, if folks are genuinely interested. It's a pretty boring spend list!

I know, by "repeat" I was talking about people's reaction in which some people think 4M or 5M ain't enough to retire.

You can retire and you deserve it.

[Marseille07]

We spend slightly less than $100k for two while paying that kind of rent and owning a boat. I was already wondering what OP spends it on, certainly not thinking "oh, that's is clearly low."

Right. Even if it were above 108K, it's usually trivial to cut back such as reducing travel, cooking more at home etc etc.

Of course, there's nothing stopping them from moving to M/LCOL and FIRE there.

[WashingtonianJimmy]

Doh, sorry! I know plenty of people retire with way less so I'm not immune that I'm asking a question a large percentage of the population never will. However, I don't want to FIRE to sit at home or eat canned cat food. My quality of life, outside of work, is good so some of my question is does my current savings support continuing and expanding that. My asset allocation might be too heavy in domestic stock so if I'm looking at preserving capital do I invest more in bonds and increase cash on hand?

I appreciate everyone responding and asking questions. I'm an FP&A analyst, all I do is analyze data and ask questions!

[mbasherp]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

[Marseille07]

I mean...you can pretty much do whatever you want, but given what you posted, here is what I'd suggest:

AA: 80/10/10 where stocks are 80% US 20% international; 10% bonds of your choice, 10% cash.

[scrabbler1]

Doh, sorry! I know plenty of people retire with way less so I'm not immune that I'm asking a question a large percentage of the population never will. However, I don't want to FIRE to sit at home or eat canned cat food. My quality of life, outside of work, is good so some of my question is does my current savings support continuing and expanding that. My asset allocation might be too heavy in domestic stock so if I'm looking at preserving capital do I invest more in bonds and increase cash on hand?

I appreciate everyone responding and asking questions. I'm an FP&A analyst, all I do is analyze data and ask questions!

One unbreakable condition for me to RE was that there would be no change to my everyday lifestyle or spending. If I decided to go on a little spending spree once in a while, I could do so without worrying about messing up my budget. This was achieved in part by building into my budget a regular cushion or surplus I could tap into at any time to cover the added spending. This has served me well in the last 13.5 years.

[sailaway]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Not everybody's right work is paid, or paid well enough to support their desired lifestyle. FIRE might let them explore that without an actual career or paycheck. And work certainly isn't the only way to find meaning.

[KlangFool]

$108K is a bit more than I spend now as that includes estimated ACA premiums and HSA contributions. I'll cash flow as many medical/dental/vision expenses as I can. I'm relatively healthy but I still spend $3K or so in out of pocket costs a year. I'll post my expenses later, if folks are genuinely interested. It's a pretty boring spend list!

WashingtonianJimmy,

1) What is your estimated ACA premiums and HSA contribution?

"$108K is a bit more than I spend now"

2) What do you spend now?

"I'll post my expenses later, if folks are genuinely interested. It's a pretty boring spend list!"

3) It cannot be. It takes a fair amount of effort to spend that much without a mortgage.

My main goal is for you to come up a good estimate. Right now, the number looks wrong to me. It could be too high or too low.

The basic question is how do you arrive at this number? It looks very strange to me.

KlangFool

[strummer6969]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Not everybody's right work is paid, or paid well enough to support their desired lifestyle. FIRE might let them explore that without an actual career or paycheck. And work certainly isn't the only way to find meaning.

No work, no wife, no kids, and 40+ more years to live. When everyone else your age is busy with their families, it might get a little depressing.

[Normchad]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Not everybody's right work is paid, or paid well enough to support their desired lifestyle. FIRE might let them explore that without an actual career or paycheck. And work certainly isn't the only way to find meaning.

The idea that work gives life meaning is such complete nonsense.

Maybe some people find meaning in their work, but that’s pretty rare. And in the flip side, I’m sure there are tons of people who have a lot of meaning in their lives, that is not tied to paid employment. I get irrationally angry over such a silly saying.

In my work, I’m trading my time and my health for money; that’s it. There is no higher purpose. That’s why I work; to get money. And I’m sure that’s true for a large majority of people.

[jjunk]

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Not everybody's right work is paid, or paid well enough to support their desired lifestyle. FIRE might let them explore that without an actual career or paycheck. And work certainly isn't the only way to find meaning.

No work, no wife, no kids, and 40+ more years to live. When everyone else your age is busy with their families, it might get a little depressing.

It's only depressing if you actually enjoy those things. Many people live happy and fulfilling lives as single people. I'm married but we have no kids. Forever and ever we heard we needed to have them to be happy. Every single time I see kids, I find them interesting as small adults but would never want one full time. Others gain immense joy from the experience. Everyone is different.

[jjunk]

OP, one thing to consider being in Seattle is how the rate of rent increases will impact your overall plan viability. We're on the Eastside and rents here are going up 20-30% YoY right now. Most of that seems to be landlords trying to recover losses during COVID but it wouldnt shock me with 10%++ increases continuing. Our smallest increase in 10yrs has been 7%. Something to keep in mind for planning.

IMO, you look good to me. Our expenses are roughly in the same ballpark and you have more than us while also being younger. We're considering retiring for the same reasons you are, burn out is a real problem. I have health issues as well, which I always figure have a work based component to them but my insurance is too good to risk testing the hypothesis (at least for now). Have you considered taking an unpaid leave of absence? Given you've been denied everything else, it would likely get denied also but you might be able to speak with a therapist and see if they recommend one. I believe that might get covered under FMLA.

Either way, congrats on your success.

[strummer6969]

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Not everybody's right work is paid, or paid well enough to support their desired lifestyle. FIRE might let them explore that without an actual career or paycheck. And work certainly isn't the only way to find meaning.

No work, no wife, no kids, and 40+ more years to live. When everyone else your age is busy with their families, it might get a little depressing.

It's only depressing if you actually enjoy those things. Many people live happy and fulfilling lives as single people. I'm married but we have no kids. Forever and ever we heard we needed to have them to be happy. Every single time I see kids, I find them interesting as small adults but would never want one full time. Others gain immense joy from the experience. Everyone is different.

I'm not saying you need all of those things. But if you have none, what's left to keep you anchored? I'm fairly certain I'd destroy myself without any of those aforementioned things. Maybe some people are built different.

[scrabbler1]

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Not everybody's right work is paid, or paid well enough to support their desired lifestyle. FIRE might let them explore that without an actual career or paycheck. And work certainly isn't the only way to find meaning.

No work, no wife, no kids, and 40+ more years to live. When everyone else your age is busy with their families, it might get a little depressing.

Totally disagree. I am never married with no kids, as I am not interested in either. While I liked my job for much of the 23 years I worked, it was very easy to put it behind me when I left. I hated the commute, even when I had reduced it 1-3 days per week the last 7 years I worked. Ridding myself of that was the biggest improvement to my everyday life.

The combination of economic freedom and personal freedom is unbeatable.

[dboeger1]

I think it's pretty funny that people against FIRE seem to assume OP can never work another day again. You may very well decide 2 years from "retiring" that you want to go back to work. Nothing wrong with that. You have the money to try it.

[AlohaJoe]

Your planned spending is only 2.6% of your portfolio, which is below the historic perpetual withdrawal rate of about 3%.

While I agree that the OP is almost certainly fine, I think this kind of calculation can be slightly deceiving when talking about early FIRE people like the OP with their portfolio split between taxable and tax-deferred. Not deceiving "wrong" but more like "needs a quick closer investigation to check to be sure".

For people that far from "normal retirement age" (i.e. triggers for 401k withdrawals and Social Security), people are often better off thinking of "before 60" and "after 60" as two different sanity checks that need to be done.

The OP has $2.8 million in taxable. That's a 3.8% withdrawal rate for ages 41 to 60; i.e. a 20-year period. Off the top of my head I don't remember the SWR for a 20-year horizon. Probably around 5% or something like that? So still okay.

And if "tax-deferred" means something like a Roth where they can pull stuff penalty-free in some way then it adds even more flexibility.

I do have a slight concern about their not owning property, unless the OP is willing to move to a completely new area at some point. "Property is too expensive to buy here" almost exactly means "national CPI calculations are wrong for my situation because local housing inflation is way higher than the national average". So their own personal inflation rate could be substantially higher than the numbers you get from firecalc stuff.

Given all that I'd still say "you're fine; but you might have to move in 20 years in a worst case kind of scenario". I personally would be willing to take that risk in order to not work another 5 or 10 years.

[AerialWombat]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

Wrong. Not even close.

Work was the thing I did to accumulate the assets I needed so as to never have to work again.

[mmmodem]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because the right work gives life meaning.

I added that in red, not because you’re wrong, but because others never realized that there’s a thing such as capital W work… Work with meaning. Their loss, on a continuing basis unfortunately.

Retired at 42. Unretired at 43 because work gives my life meaning. Getting paid way more than I ever did. Not that I am complaining. Odd how it works out that way. I didn't hate retirement. I enjoyed it immensely. An opportunity presented itself and I, haphazardly, accepted.

OP, you're fine. Only on BH would you get people doubting a retirement with $4m. [disrespectful comment removed by moderator oldcomputerguy] Good luck, OP.

[AerialWombat]

Do my numbers point to FIRE in the coming months?

Yes. As other commenters have pointed out, you have more than sufficient assets to FIRE.

I'm just a couple years older than you, live not too far away from you, and my net worth is significantly less than yours. I FIREd at the end of 2021.

FIRE forward, and never look back.

[invest4]

Even a very conservative 33x spending would need $3,564,000, and you are over that. Assuming your expenses are accurate, you should be golden (and, without kids, it should be relatively easy to live on $108K a year, even in a HCOL area).

This is how I looked at it (33x)....you're good to go in my estimation. Congratulations.

[marcopolo]

Why do you want to FIRE?

Why do you want to trade your finite time on this planet for money you don't need?

Because work gives life meaning.

Are you suggesting life can't have meaning without work?

I would posit that the vast, vast majority of jobs are essentially meaningless endeavors.
We humans assign "meaning" to them as a way to rationalize doing them year after year.

[59Gibson]

I think it's pretty funny that people against FIRE seem to assume OP can never work another day again. You may very well decide 2 years from "retiring" that you want to go back to work. Nothing wrong with that. You have the money to try it.

Absolutely. The options are limitless, f/t, p/t, seasonal, contractual etc. Work for awhile and if you don't like it bounce and repeat if you want. Having 33X+ changes employment dynamics completely. Many here get caught up in "if you leave your current postiion, you won't be able to get it back in 10 years". So what?