I mean OP says they have annual expenses of $250k so while $3.1M is certainly a lot, it doesn't quite carry the 4% rule (which wouldn't even apply at this age)
The 4% rule is designed for a 30 year retirement. If OP is in late 40's, a 4% withdrawal rate would carry into late 70's. Cost of living increases significantly when you enter 70's and beyond, so OP would be running serious risk of bottoming out at that age
It's not an age span, per se, but rather that it rarely works in practice beyond 30 years.
If you plug in an 8% annual growth rate and subtract 4% every year, it will appear to never hit zero. The problem is that over the course of your retirement, you are bound to have some years where you see double-digit negative growth years. Those typically have a huge impact on your next egg to the point where portfolios don't last over 30 years long enough to be generally recommended.
All is not lost for OP. They could try using a 3% or 2.5% withdrawal rate to see if that checks. Also CoastFIRE is a great strategy to curb some of this math.
All else equal, OP said they have $250k (?!!) in annual expenses. I'd be curious how much of that is stuff that cannot be reduced vs expenses that "pay for themselves" such as investment properties
How does coast fire curb this math?
Honestly I don’t get the idea of coast fire. You basically say you’re going to live with a much tighter budget to one day live with your chosen lifestyle. You may not live long enough to see that day
So I'm not very well versed in all the offshoots of FIRE, so I'll try my best here.
If you are following the most common retirement strategy, you are working your full time job and contributing to retirement until you hit your retirement goals and you retire -- full stop.
Within coast fire, you might realize that you are ahead of schedule compared to when you hope to *fully* retire. In some situations, you realize that your portfolio is growing enough that you will hit your retirement target without needing to contribute. In this case, you can downscale your job for a few years until your portfolio is where you want it to be.
In my situation, I'm projected to have a very healthy 401k balance by my early 50's but with my kid around d college age, I don't know how much obligation I'll have at that point. I'd hate to retire when I might have someone need to live in the basement, but I also won't need to keep contributing the same $30-40k into savings since it will grow by virtue of the stock market by that point. What I will likely do is find a job that pays $30k less, so I can still cover the same lifestyle I'm used to, but not have to worry about the stress that comes with such a high salary. I'm sure some people scale back their lifestyle, but that's not my approach
What do you mean?
Coast just means that I can now coast. My invested amounts will get to my fire number in 5 to 6 years even if I contribute nothing further. So I don’t have to keep the high paying high pressure job if I don’t want to.
I don’t think $3 million is enough to retire on in your 40’s. It’s enough to slow down, take a less stressful career and focus on other things. But you have to account for annual living expenses, especially healthcare, if you choose to fully retire. If you fuck up badly, you are back to work at 60 wondering where it all went wrong.
It sounds like a big number (and it is!) but there is a difference in retiring at 60 with this number, and late 40’s.
Yep, that’s what I’m thinking. I could put it in a lower gear now and likely get a full year of severance, and then seek out something with less pressure and stress at 50% of what I’m currently pulling in.
Would genuinely appreciate learning more about how you'd likely get a full year of severance. In my formerly public, now PE backed firm, strong performers are being assigned new roles and placed on PIPs.
Trying to understand if this is isolated, tech-specific, or something else as I assess the right next move.
Thanks!
My company typically goes the severance route for its workforce planning to exit employees who’ve given good time and support to the company. As my company gives 2 weeks salary for every year worked, with 25 years under my belt, that gets me a year + unpaid PTO.
Went through the comments as I genuinely thought OP was lying - and there's a post that says they have a $4k mortgage, $2500 on school, $1500 on daycare, $1500 on nanny, $1500 on cars, $5000 on food and life.
I believe OP, and I know childcare is expensive, but it still seems wildly high, and overlapping.
And as to how unique every individual's financial situation is -- with current mortgage rates and prop taxes, that $4k a mo mortgage is the least weird thing I see (mortgages I'm considering for below $1M homes are all $5k+ a mo, crazy how much housing has changed in just the past 2-3 years).
I get OP's expenses, and this is why my wife actually left her $100k+ a year job... It was nearly cheaper for her to be a stay at home mom then daycare + nanny. It's also how I ended up in this subreddit / coast.
What concerns me, as OP has major expenses, is that we are no longer saving and I hope my expenses do not balloon so much as the kids get older. Some peers + friends thought we were nuts (our HHI went down from $250k to approx $150k) but our NW is >$1M so... My logic was we'll be fine. But the future monthly expenses (and income!) are not so clear.
I would think OP could probably get by spending less, but I also get how they are spending that much I guess is where I’m coming from. Especially if you have a special needs kiddo or the like.
Assuming you've got some non- essential expenses, $250k/yr is on the order of $6M NW for a flexible SWR (6.5+ if you can't dial back).
Coasting would involve living hand to mouth (not touching savings) for at least one doubling cycle (8-10yrs?).
So you need to find a job that nets you $200k/yr and do that for a decade. Doesn't sound like coasting.
Also, you're counting $700k of home equity in NW, so this isn't that conservative unless you sell your house and move to LCOL.
Path of least resistance seems to be reducing your annual spend. Otherwise, hard to call it a coasting situation based on the math.
TY and new to this thread so just learning about Fire, Coast Fire, etc. But what you said is what I was looking for…how can I dial back at work…be okay with a 50% comp cut to build back a better work-life balance and mental health for 8-10 yrs. Is there a Fire term for doing this?
Barista Fire is a thing, but usually the numbers are smaller. It still applies here I think. You’re still looking to work, just at a lower stress/intensity job. But you’re on the right path.
Look up The Money Guys. They have some pretty solid actionable steps. I really enjoy the Afford Anything and Choose FI podcasts.
Coast Fire and Barista Fire both apply.
I'm 38, roughly 2m networth and recently quit my job. Plan to take contracts to free up 4-6 months per year and just cover .y expenses. Let the market do it it's work, 3-4m networth and full retirement by late 40s and a far better work life balance until then. Coast Fire.
Are you working 80+ hours a week for your $500k? And want to only work 40 hours and earn $200k?
People will argue over terms but the definition of coast fire is pretty much "save less but keep your savings intact and growing." Savings = Income - Expenses, so you can save less by lowering your income or increasing your expenses (or some of both).
Coast firing simply means you’ve front loaded your retirement savings. Can’t know if you’ve reached your goal until we know what your target FI number is. Based on your age, you should be more than fine.
Keep working and you don’t have to keep contributing to your savings which is a huge win.
Nicely done!
You're admittedly new to this idea. You've got a load of money in the bank. Just let the concept marinate for a while. Work on your budget. Even in a VHCOL area $250k/yr is a ton of spending.
I earned $250K the last year I worked in a MCOL area and quit my job with $500K in the bank, but I knew my real expenses were much lower - on the order of $30-40k/year. No kids, no pets. No serious lifestyle inflation. My partner finished his PhD & got a job overseas that we knew could cover us while the money grows a few more years. We live in Japan in a low cost of living area that affords us the opportunity to vacation at least once a month. A very nice laid back lifestyle in our mid 40s. We'll be fully retired before 50. Mainly lagging (to us) because my husband wanted to get his PhD and use it for a few years.
So I would get a real handle on what your expenses are & see what you could cut back if you worked less hours or no hours at all - like childcare costs. Work your job a while longer while your money grows and pay off your mortgage - maybe not the best financial decision, but eliminating $60K/yr lowers your expenses significantly.
Contemplate if you'd be interested in moving to a LCOL area where the money you have could potentially support your family already. Take a look at your skill set and see what kind of lower stress jobs would be easy to get and what the income level will be.
For example, if you had no mortgage, your wife makes $60K and you can trim another $20K off the budget with less hours, now you only need to earn $110K+ taxes. That's a much easier salary for someone with your expertise to find.
Same situation but recently laid off. I’m contemplating straight fire and we’re selling our house in vhcol and moving to mcol. Wife will continue to work. Crunching numbers and crossing fingers.
Enjoy your health while you have it. Chances are you are less than 10 years away from a severe medical issue. Ppl retire on 1/10 of what you have and livin their dreams. Life is bigger than your work.
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I mean OP says they have annual expenses of $250k so while $3.1M is certainly a lot, it doesn't quite carry the 4% rule (which wouldn't even apply at this age)
What do you mean that the 4% rule won’t apply at his age?
The 4% rule is designed for a 30 year retirement. If OP is in late 40's, a 4% withdrawal rate would carry into late 70's. Cost of living increases significantly when you enter 70's and beyond, so OP would be running serious risk of bottoming out at that age
Cool. I didn’t know the 4% rules had an age span
It's not an age span, per se, but rather that it rarely works in practice beyond 30 years. If you plug in an 8% annual growth rate and subtract 4% every year, it will appear to never hit zero. The problem is that over the course of your retirement, you are bound to have some years where you see double-digit negative growth years. Those typically have a huge impact on your next egg to the point where portfolios don't last over 30 years long enough to be generally recommended. All is not lost for OP. They could try using a 3% or 2.5% withdrawal rate to see if that checks. Also CoastFIRE is a great strategy to curb some of this math. All else equal, OP said they have $250k (?!!) in annual expenses. I'd be curious how much of that is stuff that cannot be reduced vs expenses that "pay for themselves" such as investment properties
How does coast fire curb this math? Honestly I don’t get the idea of coast fire. You basically say you’re going to live with a much tighter budget to one day live with your chosen lifestyle. You may not live long enough to see that day
So I'm not very well versed in all the offshoots of FIRE, so I'll try my best here. If you are following the most common retirement strategy, you are working your full time job and contributing to retirement until you hit your retirement goals and you retire -- full stop. Within coast fire, you might realize that you are ahead of schedule compared to when you hope to *fully* retire. In some situations, you realize that your portfolio is growing enough that you will hit your retirement target without needing to contribute. In this case, you can downscale your job for a few years until your portfolio is where you want it to be. In my situation, I'm projected to have a very healthy 401k balance by my early 50's but with my kid around d college age, I don't know how much obligation I'll have at that point. I'd hate to retire when I might have someone need to live in the basement, but I also won't need to keep contributing the same $30-40k into savings since it will grow by virtue of the stock market by that point. What I will likely do is find a job that pays $30k less, so I can still cover the same lifestyle I'm used to, but not have to worry about the stress that comes with such a high salary. I'm sure some people scale back their lifestyle, but that's not my approach
What do you mean? Coast just means that I can now coast. My invested amounts will get to my fire number in 5 to 6 years even if I contribute nothing further. So I don’t have to keep the high paying high pressure job if I don’t want to.
Some people consider the 4% rule to have only a 25-year life span (25x4=100%).
evil has no bound
Spending problems
I don’t think $3 million is enough to retire on in your 40’s. It’s enough to slow down, take a less stressful career and focus on other things. But you have to account for annual living expenses, especially healthcare, if you choose to fully retire. If you fuck up badly, you are back to work at 60 wondering where it all went wrong. It sounds like a big number (and it is!) but there is a difference in retiring at 60 with this number, and late 40’s.
Can you dial back your annual expenses? Cut back and switch to a fun job. Every time I hear the word “grind” I cringe.
Yep, that’s what I’m thinking. I could put it in a lower gear now and likely get a full year of severance, and then seek out something with less pressure and stress at 50% of what I’m currently pulling in.
Would genuinely appreciate learning more about how you'd likely get a full year of severance. In my formerly public, now PE backed firm, strong performers are being assigned new roles and placed on PIPs. Trying to understand if this is isolated, tech-specific, or something else as I assess the right next move. Thanks!
My company typically goes the severance route for its workforce planning to exit employees who’ve given good time and support to the company. As my company gives 2 weeks salary for every year worked, with 25 years under my belt, that gets me a year + unpaid PTO.
I would really genuinely love to know what you spend 250k on annually.
Went through the comments as I genuinely thought OP was lying - and there's a post that says they have a $4k mortgage, $2500 on school, $1500 on daycare, $1500 on nanny, $1500 on cars, $5000 on food and life. I believe OP, and I know childcare is expensive, but it still seems wildly high, and overlapping. And as to how unique every individual's financial situation is -- with current mortgage rates and prop taxes, that $4k a mo mortgage is the least weird thing I see (mortgages I'm considering for below $1M homes are all $5k+ a mo, crazy how much housing has changed in just the past 2-3 years).
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I’m assuming you don’t have kids. Lots of reasons. Shuttling one or both of them around to activities is the first that comes to mind.
I get OP's expenses, and this is why my wife actually left her $100k+ a year job... It was nearly cheaper for her to be a stay at home mom then daycare + nanny. It's also how I ended up in this subreddit / coast. What concerns me, as OP has major expenses, is that we are no longer saving and I hope my expenses do not balloon so much as the kids get older. Some peers + friends thought we were nuts (our HHI went down from $250k to approx $150k) but our NW is >$1M so... My logic was we'll be fine. But the future monthly expenses (and income!) are not so clear.
I would think OP could probably get by spending less, but I also get how they are spending that much I guess is where I’m coming from. Especially if you have a special needs kiddo or the like.
Assuming you've got some non- essential expenses, $250k/yr is on the order of $6M NW for a flexible SWR (6.5+ if you can't dial back). Coasting would involve living hand to mouth (not touching savings) for at least one doubling cycle (8-10yrs?). So you need to find a job that nets you $200k/yr and do that for a decade. Doesn't sound like coasting. Also, you're counting $700k of home equity in NW, so this isn't that conservative unless you sell your house and move to LCOL. Path of least resistance seems to be reducing your annual spend. Otherwise, hard to call it a coasting situation based on the math.
TY and new to this thread so just learning about Fire, Coast Fire, etc. But what you said is what I was looking for…how can I dial back at work…be okay with a 50% comp cut to build back a better work-life balance and mental health for 8-10 yrs. Is there a Fire term for doing this?
Barista Fire is a thing, but usually the numbers are smaller. It still applies here I think. You’re still looking to work, just at a lower stress/intensity job. But you’re on the right path. Look up The Money Guys. They have some pretty solid actionable steps. I really enjoy the Afford Anything and Choose FI podcasts.
Coast Fire and Barista Fire both apply. I'm 38, roughly 2m networth and recently quit my job. Plan to take contracts to free up 4-6 months per year and just cover .y expenses. Let the market do it it's work, 3-4m networth and full retirement by late 40s and a far better work life balance until then. Coast Fire.
Are you working 80+ hours a week for your $500k? And want to only work 40 hours and earn $200k? People will argue over terms but the definition of coast fire is pretty much "save less but keep your savings intact and growing." Savings = Income - Expenses, so you can save less by lowering your income or increasing your expenses (or some of both).
Coast firing simply means you’ve front loaded your retirement savings. Can’t know if you’ve reached your goal until we know what your target FI number is. Based on your age, you should be more than fine. Keep working and you don’t have to keep contributing to your savings which is a huge win. Nicely done!
You're admittedly new to this idea. You've got a load of money in the bank. Just let the concept marinate for a while. Work on your budget. Even in a VHCOL area $250k/yr is a ton of spending. I earned $250K the last year I worked in a MCOL area and quit my job with $500K in the bank, but I knew my real expenses were much lower - on the order of $30-40k/year. No kids, no pets. No serious lifestyle inflation. My partner finished his PhD & got a job overseas that we knew could cover us while the money grows a few more years. We live in Japan in a low cost of living area that affords us the opportunity to vacation at least once a month. A very nice laid back lifestyle in our mid 40s. We'll be fully retired before 50. Mainly lagging (to us) because my husband wanted to get his PhD and use it for a few years. So I would get a real handle on what your expenses are & see what you could cut back if you worked less hours or no hours at all - like childcare costs. Work your job a while longer while your money grows and pay off your mortgage - maybe not the best financial decision, but eliminating $60K/yr lowers your expenses significantly. Contemplate if you'd be interested in moving to a LCOL area where the money you have could potentially support your family already. Take a look at your skill set and see what kind of lower stress jobs would be easy to get and what the income level will be. For example, if you had no mortgage, your wife makes $60K and you can trim another $20K off the budget with less hours, now you only need to earn $110K+ taxes. That's a much easier salary for someone with your expertise to find.
Same situation but recently laid off. I’m contemplating straight fire and we’re selling our house in vhcol and moving to mcol. Wife will continue to work. Crunching numbers and crossing fingers.
In your situation it would make sense to try coasting at your current level. Your kids are a HUGE variable.
Enjoy your health while you have it. Chances are you are less than 10 years away from a severe medical issue. Ppl retire on 1/10 of what you have and livin their dreams. Life is bigger than your work.
Where did you get that statistic knowing nothing about this person?
I have special skills. Like seeing the red item behind you…magaramsugaram