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Ersatz posted:I'm wrestling with a financial decision at the moment and I thought it might be beneficial to get some opinions and resources from the thread. Read this (and the entire series): https://earlyretirementnow.com/2017/10/11/the-ultimate-guide-to-safe-withdrawal-rates-part-21-mortgage-in-retirement/ Other than setting realistic expectations and not realizing what are big losses only on paper by selling, sequence of returns risk is abso-loving-lutely the principal concern for FIRE people.
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Oct 12, 2018 21:39
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GoGoGadgetChris posted:for sure. This is a bad answer.
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Oct 12, 2018 21:40
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silvergoose posted:This is a bad answer. Explain how! I disagree emphatically.
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Oct 12, 2018 21:45
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GoGoGadgetChris posted:Explain how! I disagree emphatically. Read my link above!
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Oct 12, 2018 21:50
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baquerd posted:Read this (and the entire series): https://earlyretirementnow.com/2017/10/11/the-ultimate-guide-to-safe-withdrawal-rates-part-21-mortgage-in-retirement/
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Oct 12, 2018 21:55
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baquerd posted:Read my link above! Yeah that link is not good, lol. If you're caught in the exceptionally rare tail event of a down market on day 1 of retirement, the less costly option is to defer retirement for even one year. If your investment strategy has "black swan protection" as a top priority, you're not going to do well. The link even mentions "The median/average retiree will clearly benefit from the leverage".
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Oct 12, 2018 21:58
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GoGoGadgetChris posted:Yeah that link is not good, lol. If you're caught in the exceptionally rare tail event of a down market on day 1 of retirement, the less costly option is to defer retirement for even one year. If you want to go into early retirement betting on the median/happy path use case, you're absolutely right. If you're 100% confident with your ability to procure a job again after retirement, you're also right. If you don't have anyone to take care of but yourself, go for it! I'm going to guess you haven't read the whole series though. Check this one out: https://earlyretirementnow.com/2018/05/09/the-ultimate-guide-to-safe-withdrawal-rates-part-24-flexibility-myths-vs-reality/ Edit: One important point is that you do not need a black swan to gently caress over your early retirement, a simple matter of middling to poor returns in your first decade can gently caress you over. baquerd fucked around with this message at 22:06 on Oct 12, 2018 |
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Oct 12, 2018 22:03
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baquerd posted:procure a job again after retirement, That's a big part of my point. Sequence of return risk is deadlier the closer it is to your Day-you-stopped-working. Procuring a job is easier the closer it is to your Day-you-stopped-working. In fact, often it's possible to know that you are already in a down market (golly, my balances are down 50% YTD!) in which case you defer retirement by even one year to tremendous long-term benefit. I don't care for ERN's tendency toward "peace of mind" emotionally-oriented strategies so no, I have not read beyond Parts 5 or 6, but I think they should acknowledge that the various early retirement bogeymen can be dealt with in better ways than baking them in to your performance.
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Oct 12, 2018 22:11
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I would say it depends what the payoff schedule looks like for the home. I think FIRE’ing without a paid off home is a terrible idea. So if you have 10 years left on the house payments, I wouldn’t accelerate the payoff.
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Oct 12, 2018 22:14
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Harry posted:I think FIRE’ing without a paid off home is a terrible idea. This is interesting to me! Do you feel like home ownership is mandatory for FIRE?
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Oct 12, 2018 22:15
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GoGoGadgetChris posted:That's a big part of my point. Sequence of return risk is deadlier the closer it is to your Day-you-stopped-working. Fair enough, and I have a lot of sympathy towards your position and am emotionally inclined to believe that I can also find work after pulling the trigger in the near-term of the next 5 years or so post-retirement. Albeit having a 90% equity allocation and claiming conservatism on investments seems strange, once you have something to protect, it's important to me that I take care of my loved ones regardless of the market. GoGoGadgetChris posted:This is interesting to me! Do you feel like home ownership is mandatory for FIRE? Not directed towards me, but full home ownership is a strong protection against sequence of returns risk as previously stated. baquerd fucked around with this message at 22:20 on Oct 12, 2018 |
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Oct 12, 2018 22:18
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baquerd posted:once you have something to protect, it's important to me that I take care of my loved ones regardless of the market. How relevant is the size/health of your family to your investment strategy? I think we're all sharing the same goal of "never run out of money", regardless of whether it's servicing our BMWs or paying for Junior's insulin. Full home ownership beats having a mortgage as far as sequence risk, but I'd argue that renters are in the best position of all since they have total control over what their rent will be each year. There's no negotiating with the tax man!
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Oct 12, 2018 22:25
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GoGoGadgetChris posted:How relevant is the size/health of your family to your investment strategy? I think we're all sharing the same goal of "never run out of money", regardless of whether it's servicing our BMWs or paying for Junior's insulin. Right? In some ways, it's all a spectrum of how willing you are to downsize to meet your potential portfolio issues. There is a lively market in contesting property taxes though, so I'm going to have to contest your second statement. I also raise my rents based on tax increases (and make sure to spell it out to my renters about the increase).
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Oct 12, 2018 22:31
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[quote="GoGoGadgetChris" post="4888 Full home ownership beats having a mortgage as far as sequence risk, but I'd argue that renters are in the best position of all since they have total control over what their rent will be each year. There's no negotiating with the tax man! [/quote] How do you have full control over your rent? Unless you live somewhere with rent control. I’ve lived in two cities without rent control. Getting the notice that your rent will be going up 50% is not great! Moving is also not great, and also expensive. One of the major reasons I bought my place is that I have a fixed cost of cling now, more or less, taxes notwithstanding. I honestly can’t see FIRE without owning a home outright.
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Oct 12, 2018 22:34
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Being flexible in where you live helps, including both which city you live in and where you live within a given city. Moving and losing a bunch of money because of a large rent spike sucks but isn't really that different from losing a bunch of money because your fridge or water heater died. I obviously can't generalize but all of my intra-city moves have been <$1000 and only happen every few years, well within the normal range for home maintenance as far as I know. Like I could consider buying a place but it'd be super all-in here and I think the freedom to say "you know what, gently caress this place" without the massive headache that is selling is...something worth considering even if it doesn't outweigh other factors for you personally. Even if there's only one time in your life where you feel compelled to leave, closing costs on selling your house are brutal and often involve paying 6% of the place's value to middlemen, way more than hiring movers to cart your stuff to a new rental unit. Jeffrey of YOSPOS fucked around with this message at 22:46 on Oct 12, 2018 |
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Oct 12, 2018 22:44
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Jeffrey of YOSPOS posted:Being flexible in where you live helps, including both which city you live in and where you live within a given city. Moving and losing a bunch of money because of a large rent spike sucks but isn't really that different from losing a bunch of money because your fridge or water heater died. I obviously can't generalize but all of my intra-city moves have been <$1000 and only happen every few years, well within the normal range for home maintenance as far as I know. Exactly! You've got the freedom to change price points, neighborhoods, cities, states, anything you want. If you do that with a house, you're either going to sell it (and take a haircut from broker's fees) or rent it out, and suddenly you're a landlord to one of the worst investment vessels you could make.
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Oct 12, 2018 22:46
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Jeffrey of YOSPOS posted:Even if there's only one time in your life where you feel compelled to leave, closing costs on selling your house are brutal and often involve paying 6% of the place's value to middlemen, way more than hiring movers to cart your stuff to a new rental unit. Yeah, gently caress the cartel. Realtors are pieces of legacy garbage that need to be removed from society. They can still exist for the tiny few buyers that don't want to educate themselves to save thousands though I guess. GoGoGadgetChris posted:Exactly! You've got the freedom to change price points, neighborhoods, cities, states, anything you want. If you do that with a house, you're either going to sell it (and take a haircut from broker's fees) or rent it out, and suddenly you're a landlord to one of the worst investment vessels you could make. You probably don't have kids. This would mean a likely major disruption in their life. Even without kids, you and your partner's commute and quality of life can be really hosed with by a move if you want to still be playing the "maybe I'll just go back to work" card. baquerd fucked around with this message at 22:52 on Oct 12, 2018 |
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Oct 12, 2018 22:50
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baquerd posted:Yeah, gently caress the cartel. Realtors are pieces of legacy garbage that need to be removed from society. They can still exist for the tiny few buyers that don't want to educate themselves to save thousands though I I think that they will go the way of travel agents within 10 years.
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Oct 12, 2018 22:52
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baquerd posted:
Nah, you're trying to hard to complicate ER. My kids have loved moving. Who wouldn't want to get a new bedroom in a really tall tower? And then a big house?? You can move houses without changing school districts, too. And you can move houses without moving 30 miles away from employment centers. ER is far easier than you're making it out to be, I swear! And this is way off topic but since kids and ER are extremely intertwined to you, I'm going to offer my personal opinion that kids who are terrified of changing schools and making new friends are the ones who need it most. They'll thank you when they have to go to college, or a new job, or [the hardest part] make friends in their 30s!!
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Oct 12, 2018 23:03
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If you live in a cool enough city, then public transportation helps your commute not suck and helps your kids meet up with friends from their old school without needing a license or anything.
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Oct 12, 2018 23:05
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GoGoGadgetChris posted:Nah, you're trying to hard to complicate ER. My kids have loved moving. Who wouldn't want to get a new bedroom in a really tall tower? And then a big house?? You can move houses without changing school districts, too. I'm not going to say your approach is wrong, certainly, to each their own. I hope everything works out for you, but I'm pursuing a more conservative approach.
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Oct 12, 2018 23:11
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GoGoGadgetChris posted:Exactly! You've got the freedom to change price points, neighborhoods, cities, states, anything you want. If you do that with a house, you're either going to sell it (and take a haircut from broker's fees) or rent it out, and suddenly you're a landlord to one of the worst investment vessels you could make. Yeah there's the freedom, but what's the likely hood of you doing it? I was a big fan of that freedom, but I still lived within the same 10 mile area for 10 years (7 years renting). It depends what kind of rental market you're in, but in Dallas for example rents average 6% increases YoY for like 8 years straight. It's leveled off some now, but your options were either pay the increased rent, most likely pay higher rent somewhere else, or move even further out. This wasn't even a market where you need first, last, and a month's security deposit to move places.
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Oct 13, 2018 00:05
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Note that I highlighted the part of your post I disagreed with. It cannot be a guaranteed best course, because there's pros and cons both ways. Don't speak from authority when you're giving an opinion on which of two good choices to choose.
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Oct 13, 2018 00:16
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silvergoose posted:Note that I highlighted the part of your post I disagreed with. When I responded, you hadn't edited it from "7% for sure" so I thought you were disagreeing with my opinion, not my conviction. I wanted to hear why! If it sounded like I was bellowing out "this is my factual opinion, listen upon my words, foolish wrong fellows" that wasn't my intent, sorry!
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Oct 13, 2018 00:21
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Harry posted:Yeah there's the freedom, but what's the likely hood of you doing it? I was a big fan of that freedom, but I still lived within the same 10 mile area for 10 years (7 years renting).
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Oct 13, 2018 00:52
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GoGoGadgetChris posted:When I responded, you hadn't edited it from "7% for sure" so I thought you were disagreeing with my opinion, not my conviction. I wanted to hear why! I don't believe it ever said 7% for sure, but my memory's pretty bad so who knows.  Anyway yeah I was flippantly noting that you shouldn't say that something is better "for sure" when there's solid reasons to choose both ways.
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Oct 13, 2018 01:38
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How do any other FI people deal with government programs for the poor? It appears to be super easy to run with a taxable income that qualifies one for food stamps while having millions in assets and drawing 80k actual expenses. I suppose though, that many actually retired people also run into this question - is this common among traditional retired people? Edit: it actually looks like, after further reading, that assets are a disqualifying thing. My state's online calculator asks for assets but incorrectly says they are fine to have? http://fscalc.dhs.illinois.gov/FSCalc/calculateFS.do baquerd fucked around with this message at 21:28 on Oct 13, 2018 |
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Oct 13, 2018 21:17
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baquerd posted:How do any other FI people deal with government programs for the poor? It appears to be super easy to run with a taxable income that qualifies one for food stamps while having millions in assets and drawing 80k actual expenses. I suppose though, that many actually retired people also run into this question - is this common among traditional retired people? Not all programs use taxable income as the deciding factor. SNAP uses a definition of gross income that includes basically all money coming in, including regular disbursements from retirement plans (although the retirement plans can actually be excluded from asset limit calculations). The IRS might not charge you when you're cashing out your Roth, but that doesn't mean it's not income. Most public assistance programs are going to take a similar view. Also, if you're a FIRE early retiree, and you manage to squeeze in under the income limits with tiny disbursements or something, you'd still run up against work requirements. Able bodied adults who aren't at traditional retirement age (60+) are required to work, or their benefits are cut off after three months; it resets after three years.
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Oct 14, 2018 04:06
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baquerd posted:How do any other FI people deal with government programs for the poor? It appears to be super easy to run with a taxable income that qualifies one for food stamps while having millions in assets and drawing 80k actual expenses. I suppose though, that many actually retired people also run into this question - is this common among traditional retired people? It's difficult to trick benefit programs as others have detailed with asset looks and work requirements, but personally I would find it unethical to successfully go FIRE with millions in assets and claim a public benefit for truly needy people, even if I did pay taxes in support of the program my entire working career.
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Oct 14, 2018 04:42
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BEHOLD: MY CAPE posted:I would find it unethical to successfully go FIRE with millions in assets and claim a public benefit for truly needy people, even if I did pay taxes in support of the program my entire working career. If reddit is indicative of FIRE enthusiasts, there's a significant chunk of libertarian shitheads that would eagerly do just that.
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Oct 14, 2018 15:24
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Federal benefits tend to have asset tests, but some cities require apartment buildings to offer affordable units which basically seems to revolve entirely around taxable income. Not sure how the ethics on that plays out.
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Oct 14, 2018 15:36
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I've been thinking about how I'd like to transition out of a career into FIRE in the near future and I'm wondering if anyone else has a similar story. I'm sure what I'm about to describe is common, but I'm pretty new to the whole idea. I work in tech and I'm currently my early 30s. I'd like to really scale back by 40 or so by taking a low stress remote job of some sort and place much less focus on promos and earnings in my life. I'm not sure if I want to totally retire super early, but planning based on the assumption I don't want a stressful job until I'm 60 feels like the right choice. I think the time to make this transition will be determined by whatever my FIRE number is, which can probably be relatively low since I plan on first transitioning to an easy and low stress remote job that provides an income. At the end of the day, I assume it basically comes down to a combination of my age and total invested amount, especially if that money is not being touched for another 5-10 years due to having an income of some sort. Can I "stop investing" at 33 with 500k in the bank? 38 with 750k? How do I think about this?
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Oct 29, 2018 00:38
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You can play around with FIREcalc, there are lots of advanced options including extra income sources that you can use. That's basically what I'm doing now, just working part time after a few year hiatus and letting my investments coast. I think it's called "CoastFI" by the community if you want to search using that term. Do you anticipate any big life events (marriage, kids) in the future? That can shake things up a lot and it might be good to be conservative if you're uncertain about that sort of thing.
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Oct 29, 2018 00:59
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Dreadite posted:"Can I "stop investing" at 33 with 500k in the bank?" This is almost precisely me, although I'm still managing to dribble a few hundred a week into investments. We've cut work right back to basically dual-stay-at-home parents. Childcare benefits are great in Australia though (the kids are essentially going to be making a profit unless they start costing more as they grow) so YMMV on that point. I might pick up some extra work in the future or I might just let the investments 'coast' us to retirement. It really comes down to just deciding on the lifestyle that you want to be living. I used to be happy slogging 60+ hour work weeks for the sake of investing, but my motivation shifted dramatically after 400k, and then again after children. Nowadays I work minimal hours and just make sure that all the numbers are in the green and don't worry too much about specific 'fully retired' numbers. Personally I think if you can set yourself up with either of those goals you described (33/500 or 38/750) and then be in a position where you can either work significantly less hours or do like a 6 month on/6 month off kinda thing you'll be in a good position to have a lot of control over your own lifestyle.
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Oct 29, 2018 04:04
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How can I buy Bitcoin and shitcoins in a retirement account? Can I start a company that provides digital services and takes payment in Bitcoin and own that company in an IRA of some kind and then purchase that company's services myself, paying with Bitcoin I purchased myself with after-tax dollars?
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Nov 2, 2018 07:36
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oliveoil posted:How can I buy Bitcoin and shitcoins in a retirement account? Yes. This is good for bitcoin.
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Nov 2, 2018 15:59
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oliveoil posted:How can I buy Bitcoin and shitcoins in a retirement account? How to retire on 50 bitcoins while the value of them keeps decreasing.
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Nov 3, 2018 21:15
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Resurrecting this thread to brag. I started reading Mr. Money Mustache and other FI/investing blogs in 2015, and started contributing a small amount to my 403b, opened a Roth IRA, and doubled my monthly student loan payments. Having FI as a long-term goal has allowed me to be a lot more mindful of my spending habits, and increase my emergency fund. I left my job at the end of the year and was able to take my time finding the right next position for me, knowing that I had the savings and good habits to weather up to 4 months with no income. Thankfully, I got a good offer for more money in a transit-accessible location soon after quitting, and because of my savings I was able to push my start date back and enjoy a full month of no job and no responsibilities. Sometimes I get discouraged at my progress: I still have over $12k in student loans, have never been able to max my IRA, pay a premium to live alone, and don't make anywhere close to $TECH MONEY$. However, I feel like I got a taste of true FI this month, and it was a great reminder that I'm on the right track. Not living paycheck to paycheck OWNS, as does the self-confidence boost of turning down job offers that aren't right for you. Can't wait to take my first (larger) paycheck at the new job and buy a horse.
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Jan 27, 2019 20:44
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Etuni posted:Sometimes I get discouraged at my progress: I still have over $12k in student loans, have never been able to max my IRA, pay a premium to live alone, and don't make anywhere close to $TECH MONEY$. However, I feel like I got a taste of true FI this month, and it was a great reminder that I'm on the right track. Not living paycheck to paycheck OWNS, as does the self-confidence boost of turning down job offers that aren't right for you. Can't wait to take my first (larger) paycheck at the new job and buy a horse. I've got a friend of mine taking 3 months off. It's good to take a break to reset your mind and focus. Sometimes I look at my progress and the most annoying thing is the mortgage which is under $250k now but that will be gone by the time I'll be looking at winding down from working.
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Jan 28, 2019 01:28
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How does everyone factor in things like Social Security or Pensions into their future expected income? I was playing around with FIRECalc, and it seems like the pension I have at a former employer won't impact much, but social security (as it works today in the US) could allow me to RE by a few years if I wanted.
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Jan 30, 2019 23:03
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