FIRE Movement (Financially Ind./Retire Early)

[caulfield12]

https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html

 

Who's on board, and why/why not?  Discuss.

[Jenksismyhero]

Would love to but:

1) Most of these people probably don't have kids or student loan debt they are still paying off in their 30's;

2) Living on 40k a year doesn't account for college expenses for their kids in the future;

3) when I retire I want to be traveling 6 months out of the year; I don't want to retire and just sit at my house;

4) healthcare costs;

5) most importantly, i'm a habitual consumer of all things so I need money!

 

Edited October 17, 2018 by Jenksismyhero

[maggsmaggs]

Also, the FIRE movement has coincided (not coincidentally) with a bull market. What happens in a bear market? A lot these FIRE people may not be able to achieve the same financial independence when they are not getting huge returns.

[illinilaw08]

1 hour ago, Jenksismyhero said:

Would love to but:

1) Most of these people probably don't have kids or student loan debt they are still paying off in their 30's;

2) Living on 40k a year doesn't account for college expenses for their kids in the future;

3) when I retire I want to be traveling 6 months out of the year; I don't want to retire and just sit at my house;

4) healthcare costs;

5) most importantly, i'm a habitual consumer of all things so I need money!

 

Yeah, with Jenks on this one.  I have no kids (and no plans to have kids), and the wife and I are comfortable, but until I'm out of student loan debt, I could't even consider retirement in my future (no idea how people have both student loan debt and children).  I'm planning to retire as early as I can (and I think our society puts far too little emphasis on work/life balance), but retiring in my 40s is a flat out impossibility.  

[bigruss]

I've thought about this more, not really in that style but I've wanted to become more financially independent from work.  I switched jobs about 15 months ago and ended up working for a boss that I couldn't stand and I was so nervous going into work everyday that I felt like I was breaking down.  Fortunately he left and my career is way beyond where I thought it would be at this point, but I realized in that time that I never want to feel like that again.  I want to save better but also get into investments that could supplement my income (or lack thereof) at some point.

 

I've rented out my condo in Chicago after moving to Milwaukee and I'm contemplating keeping that and paying it off and pocketing the monthly income.  Not sure if that makes sense financially yet compared to selling.  I would love to be able to take a job that is less stressful and something I want to do at some point and be ok with supplemental income.

[Chisoxfn]

36 minutes ago, bigruss said:

I've thought about this more, not really in that style but I've wanted to become more financially independent from work.  I switched jobs about 15 months ago and ended up working for a boss that I couldn't stand and I was so nervous going into work everyday that I felt like I was breaking down.  Fortunately he left and my career is way beyond where I thought it would be at this point, but I realized in that time that I never want to feel like that again.  I want to save better but also get into investments that could supplement my income (or lack thereof) at some point.

 

I've rented out my condo in Chicago after moving to Milwaukee and I'm contemplating keeping that and paying it off and pocketing the monthly income.  Not sure if that makes sense financially yet compared to selling.  I would love to be able to take a job that is less stressful and something I want to do at some point and be ok with supplemental income.

My view is in line with this. I want to accumulate enough so that I always have that financial comfort to be able to do what I want. I don't want to be "forced" to deal with a horrific situation just because I need it to make ends meet. Too many times have I seen people put up with miserable bosses / people, etc, purely because they had to do it (and these were people who were old enough and had done well enough in their careers where they shouldn't have had to do so).

My goal is to be in a position that when I'm 50, I could comfortably walk away from it all.  I don't actually intend to, but I want to know that I have the luxury and freedom to make a change and that I can make the decisions professionally that make me the happiest.  *Knock on wood* I'm very lucky and quite happy with my current situation and have been truly blessed thus far in my career, but I also know that can change at any moment (or health or something else can get in the way).  *knock on wood*. 

Note: I don't consider "enough" or financial flexibility being able to walk away and live out of a truck having to eat McDonalds every day.  I also have a view that you need to make sure you decision based upon a significantly "shocked" portion of your assets. Especially if someone were making that decision today, I'd tell them they are probably making that decision at a "high point" in their asset valuation and it is one that will likely experience some short-term shocks. If they can't stomach what the "annual" income would be post "shock", than they probably need to rethink their decision. After the run up in the markets the past few years and the general long recovery process, way more people feel good....but we are all probably feeling a little too good right now and are in for an asset shock (sometime in the next 6-24 months).  

[raBBit]

33 minutes ago, bigruss said:

I've thought about this more, not really in that style but I've wanted to become more financially independent from work.  I switched jobs about 15 months ago and ended up working for a boss that I couldn't stand and I was so nervous going into work everyday that I felt like I was breaking down.  Fortunately he left and my career is way beyond where I thought it would be at this point, but I realized in that time that I never want to feel like that again.  I want to save better but also get into investments that could supplement my income (or lack thereof) at some point.

 

I've rented out my condo in Chicago after moving to Milwaukee and I'm contemplating keeping that and paying it off and pocketing the monthly income.  Not sure if that makes sense financially yet compared to selling.  I would love to be able to take a job that is less stressful and something I want to do at some point and be ok with supplemental income.

https://www.merrilledge.com/article/what-are-tax-issues-associated-with-gain-or-loss-on-primary-residence

Not sure of your tax knowledge but just the beginning of that article very simply explains the considerations that go along with your primary residence changing. 

[Jack Parkman]

I wish I could make enough money to save a dime. I wouldn't be able to function in any way whatsoever without my parents helping me. This is a situation that has befallen far too many people in their 20s and 30s. Those who have a job which allows them to be independent should consider themselves incredibly lucky. My student loans alone take up 40% of my monthly income. Those of us who graduated college in 2009-2013 got the worst of it.  There are a lot of grads from those years who never got the opportunity to even start their career. A lot of us had to take whatever we could get and have been paying for it ever since. 

Edited October 18, 2018 by Jack Parkman

[Harry Chappas]

These folks will leave nothing for their kids but also all seem to be able to jump back in if needed.

once a bubble bursts they may be screwed.  You need fixed income return to live like that.

[caulfield12]

In my mind, it's having somewhere between $2-3 million in my fifties...

I still have to travel around the world (been to 40+ countries and 47 states), but it's now on hold with a 3 1/2 year, except for coming back to the US once every summer and maybe one "international" one week trip per year, and another one week trip somewhere in China or SE Asia.

Most importantly, I want to do more volunteer/service-based work for non-profits...still not sure if I want to devote myself to actually running an agency, prefer to pick and choose and not be weighed down by a long-term, 3-5+ year commitment.

It means being able to have a primary residence in Iowa and then a vacation or timeshare somewhere in Central America, Colombia/Ecuador or, more likely, somewhere like the Philippines/Vietnam/Malaysia/Indonesia.  Maybe running a small boutique eco-resort on the ocean if the right opportunity presents itself.

Of course, I also need to think about my son's future college/university expenses, that's the big one.

[LittleHurt05]

I hope they do a "Where are they now?" five and ten years from now, because I have a feeling that things won't be so rosy then, especially if the market takes any hits.

Writers love to do these pieces to get clicks, but there's always some minor details left out about the subjects, and in reality 99.9% of the population just doesn't have the ability to pull these moves.

[caulfield12]

They’re usually either geeks with 2 (incomes combined) $100k+ careers working in Silicon Valley or cashed in on IPO shares, have significant inheritances/trust funds, lucked into houses or parents loaned down payments or simply couples who would rather have a life without kids.

Then there are the financial bloggers, as well as the travel/tourism bloggers...

Edited October 18, 2018 by caulfield12

[Jenksismyhero]

On 10/17/2018 at 1:17 PM, illinilaw08 said:

Yeah, with Jenks on this one.  I have no kids (and no plans to have kids), and the wife and I are comfortable, but until I'm out of student loan debt, I could't even consider retirement in my future (no idea how people have both student loan debt and children).  I'm planning to retire as early as I can (and I think our society puts far too little emphasis on work/life balance), but retiring in my 40s is a flat out impossibility.  

Oh it's a good time. Between daycare for 2 and student loan payments (law school + graduate school) ... My wife wants #3. I'm terrified of college expenses in 15-20 years.

[soxfan49]

The cost of college education is rising 7-8% each year. Contributing to a 529 if you have children becomes important. 

Inflation is at about a 2.5% increase annually. The only solution here is to stop putting your money in savings accounts that get you 0.01-0.08% each year.

Taxes are likely to remain the same or go up, not decrease (which make roth products even more important).

Unless you want a shitty retirement, (like another poster pointed out) you're going to need about 2-3 million in investment accounts when you retire.

Edited October 19, 2018 by soxfan49

[ptatc]

22 hours ago, Jenksismyhero said:

Oh it's a good time. Between daycare for 2 and student loan payments (law school + graduate school) ... My wife wants #3. I'm terrified of college expenses in 15-20 years.

Been where you are and now I'm in the 1 kid in college and another starting next year. Luckily i just paid off my last student loan (doc).

It's a ball of laughs.

[ptatc]

1 hour ago, soxfan49 said:

The cost of college education is rising 7-8% each year. Contributing to a 529 if you have children becomes important. 

Inflation is at about a 2.5% increase annually. The only solution here is to stop putting your money in savings accounts that get you 0.01-0.08% each year.

Taxes are likely to remain the same or go up, not decrease (which make roth products even more important).

Unless you want a shitty retirement, (like another poster pointed out) you're going to need about 2-3 million in investment accounts when you retire.

My advice is start a college illinois plan when they are in kindergarten. My wife and I are terrible savers. They send you a payment book like a car loan. You pay over 10 years pre-tax (plan paid when they are sophomores in high school). 

You pay the current rate of illinois universities now. The plan pays for all tuition and mandatory fees at illinois public universities. If they go to a private school or out of state (my daughter is in Colorado) they average the costs at the illinois schools and pay that to the school they attend.

We paid 53,000 over 10 years and she will get about 77,000 out of it.

[soxfan49]

23 minutes ago, ptatc said:

My advice is start a college illinois plan when they are in kindergarten. My wife and I are terrible savers. They send you a payment book like a car loan. You pay over 10 years pre-tax (plan paid when they are sophomores in high school). 

You pay the current rate of illinois universities now. The plan pays for all tuition and mandatory fees at illinois public universities. If they go to a private school or out of state (my daughter is in Colorado) they average the costs at the illinois schools and pay that to the school they attend.

We paid 53,000 over 10 years and she will get about 77,000 out of it.

Good plan. A 529 is similar. There are tax advantages to the payer now as well. In Illinois, annual contributions are tax deductions (if you claim $100,000 and contribute $5,000 to a 529, you now only have to claim $95,000). In Indiana, the payer receives 20% back up to $5,500 contributed on their taxes (if you contribute $5,000, you receive $1,000 back). The rules are becoming more lenient as well in that in the past, it could only be used for school but now they're expanding to dorms, books, etc.

Either way, it's best to start when the child is either not born or very young, as you said.

Edited October 19, 2018 by soxfan49

[Chisoxfn]

I wish that "Illinois" plan existed in California. Great plan (or at least on paper it seems to be). Without that option, I at least use the 529 plan, albeit, being in the state I live in, the benefits are greatly reduced vs. a state that at least gives you a state tax deduction.  That said, when each of my kids were born...I set up a monthly direct deposit to feed into each of their plans and hopefully by doing so, the chunk by chunk approach will allow me (and them) to not sweat where they go to college.  

[StrangeSox]

The College Illinois plan stopped taking new applicants last year and is at risk of not actually being able to cover the tuition expenses down the road.

529's are good but you might not want to load everything in there as that money is more locked up for specific education expenses. If for some reasony our child doesn't go to college or gets scholarships etc. there will be penalties for withdrawing.

 

[Marky Mark]

If there's one thing to learn from the responses in this thread....its place less pressure on your kids to go to college and more pressure on them to be learning job skills while they're young (whether it be software engineering, plumbing, etc.)  College does not appear to have helped some of the people in this thread.  I've got 529's for my kids, but I hope they never use them.  I know personally that I did not learn 1 thing in the classrooms of college that has helped my career today and I'm betting a lot of others could say something similar.

Ok aside from that...My wife and I were trying to get to the point of early retirement by age 45.  As some on here have said, I would imagine it to be very difficult if you don't have 2 incomes and dealing with student debt.  However, I think the important lesson [even if this FIRE thing is overly idealistic], you can set yourself up in a much much much better financial position in life if you minimize your spending, maximize your investing/saving.  If you go over to bogleheads you might be inspired.

Our plan has definitely took a hit when our daughter had a medical issue that caused my wife to quit her job over a year ago.  Looking to get her back in the workforce and get back to a 60-70% saving rate and maybe we can still retire fairly early or at least have some nice $ to rely on.

For those who say its impossible to save, that may definitely be true for a while.  Just do everything you can to find extra income in the meantime.  Otherwise, if you aren't doing this, you aren't trying that hard with saving.

• Make a budget and live by it.  You should always know where your money is going each month.
• Shop Aldis or the lowest possible priced grocery store
  • If you shop at Whole Foods and complain about not being able to save....you're a super confusing individual.
• Never ever spend money going out to lunch during work week (unless its a special occasion that requires it)
  • Always bring a lunch.  If you forgot to, your punishment is hunger for lunch.
• Take pride in driving the crappiest car at work [or having no car].  The idea of taking out a car loan should be unfathomable to you.  Drive that thing into the ground until the engine or transmission goes out.
• Buy new clothes as rarely as needed.  Unless you're a lawyer or something high profile job, no dude's going to know that you bought your clothes at Target vs some expensive place.
• Learn how to fix things yourself (housework/car maintenance).  The internet has blessed us with information (yes you may be like me and screw some stuff up in the process).
• If you pay over $75 a month for internet, get it cheaper.  Keep calling your provider with threats to leave them until they give in.  They will.  Or do you even need internet?  Can you use your phone?  Or library internet?
• If you don't have the ability to pay off your credit card bill for the month, then do not use your credit card. 
  • Eat free samples at grocery stores until you can pay off that bill.  [Half joking on that one]
• View your saving goals as must dos.  Look at where you spend your money each month and if you aren't able to do these things below, but your spending on things you value less, ask yourself why?  
  • If you aren't maxing out your companies 401k match, do everything in your power to match it.
  • Then do everything in your power to max out your Roth IRA contributions.
  • Then do everything in your power to max out your 401k contributions for the year.
  • Then do everything in your power to investing your money in index funds.
• Learn to be ok being known as cheap when it come to spending on yourself.  If spending money on others is important to you, than don't let up there. 

Now how people who retire early deal with medical care....that will be tricky.

 

 

[Chisoxfn]

1 hour ago, StrangeSox said:

The College Illinois plan stopped taking new applicants last year and is at risk of not actually being able to cover the tuition expenses down the road.

529's are good but you might not want to load everything in there as that money is more locked up for specific education expenses. If for some reasony our child doesn't go to college or gets scholarships etc. there will be penalties for withdrawing.

 

Yep -The concept of a 529 is good but there are other vehicles you want to put your money in first and you certainly have to be cautious of some of the limitations of 529's. The use of 529's to me depends on how much you already put in 401K + other vehicles and what amount of liquidity you need.  

[ptatc]

2 hours ago, soxfan49 said:

Good plan. A 529 is similar. There are tax advantages to the payer now as well. In Illinois, annual contributions are tax deductions (if you claim $100,000 and contribute $5,000 to a 529, you now only have to claim $95,000). In Indiana, the payer receives 20% back up to $5,500 contributed on their taxes (if you contribute $5,000, you receive $1,000 back). The rules are becoming more lenient as well in that in the past, it could only be used for school but now they're expanding to dorms, books, etc.

Either way, it's best to start when the child is either not born or very young, as you said.

Yeah, this is technically a 529 just with a specific state of illinois involvement. We liked it because it "forced" us to save every month with the coupon book. Otherwise we may not have been that consistent with putting money away each month. We certainly could have used that money elsewhere at that time of our lives.

[ptatc]

2 hours ago, StrangeSox said:

The College Illinois plan stopped taking new applicants last year and is at risk of not actually being able to cover the tuition expenses down the road.

529's are good but you might not want to load everything in there as that money is more locked up for specific education expenses. If for some reasony our child doesn't go to college or gets scholarships etc. there will be penalties for withdrawing.

 

I need to look into that. My daughter getting that money out of it is probably part of the reason. 😁

With the college illinois plan as it stands, if they don't go to college you get your money back with 2% interest. It's not much but you don't lose money.

Edited October 19, 2018 by ptatc

[ptatc]

1 hour ago, Markbilliards said:

If there's one thing to learn from the responses in this thread....its place less pressure on your kids to go to college and more pressure on them to be learning job skills while they're young (whether it be software engineering, plumbing, etc.)  College does not appear to have helped some of the people in this thread.  I've got 529's for my kids, but I hope they never use them.  I know personally that I did not learn 1 thing in the classrooms of college that has helped my career today and I'm betting a lot of others could say something similar.

 

 

Picking a major is a significant part of it.

[Jenksismyhero]

1 hour ago, Markbilliards said:

If there's one thing to learn from the responses in this thread....its place less pressure on your kids to go to college and more pressure on them to be learning job skills while they're young (whether it be software engineering, plumbing, etc.)  College does not appear to have helped some of the people in this thread.  I've got 529's for my kids, but I hope they never use them.  I know personally that I did not learn 1 thing in the classrooms of college that has helped my career today and I'm betting a lot of others could say something similar.

Ok aside from that...My wife and I were trying to get to the point of early retirement by age 45.  As some on here have said, I would imagine it to be very difficult if you don't have 2 incomes and dealing with student debt.  However, I think the important lesson [even if this FIRE thing is overly idealistic], you can set yourself up in a much much much better financial position in life if you minimize your spending, maximize your investing/saving.  If you go over to bogleheads you might be inspired.

Our plan has definitely took a hit when our daughter had a medical issue that caused my wife to quit her job over a year ago.  Looking to get her back in the workforce and get back to a 60-70% saving rate and maybe we can still retire fairly early or at least have some nice $ to rely on.

For those who say its impossible to save, that may definitely be true for a while.  Just do everything you can to find extra income in the meantime.  Otherwise, if you aren't doing this, you aren't trying that hard with saving.

• Make a budget and live by it.  You should always know where your money is going each month.
• Shop Aldis or the lowest possible priced grocery store
  • If you shop at Whole Foods and complain about not being able to save....you're a super confusing individual.
• Never ever spend money going out to lunch during work week (unless its a special occasion that requires it)
  • Always bring a lunch.  If you forgot to, your punishment is hunger for lunch.
• Take pride in driving the crappiest car at work [or having no car].  The idea of taking out a car loan should be unfathomable to you.  Drive that thing into the ground until the engine or transmission goes out.
• Buy new clothes as rarely as needed.  Unless you're a lawyer or something high profile job, no dude's going to know that you bought your clothes at Target vs some expensive place.
• Learn how to fix things yourself (housework/car maintenance).  The internet has blessed us with information (yes you may be like me and screw some stuff up in the process).
• If you pay over $75 a month for internet, get it cheaper.  Keep calling your provider with threats to leave them until they give in.  They will.  Or do you even need internet?  Can you use your phone?  Or library internet?
• If you don't have the ability to pay off your credit card bill for the month, then do not use your credit card. 
  • Eat free samples at grocery stores until you can pay off that bill.  [Half joking on that one]
• View your saving goals as must dos.  Look at where you spend your money each month and if you aren't able to do these things below, but your spending on things you value less, ask yourself why?  
  • If you aren't maxing out your companies 401k match, do everything in your power to match it.
  • Then do everything in your power to max out your Roth IRA contributions.
  • Then do everything in your power to max out your 401k contributions for the year.
  • Then do everything in your power to investing your money in index funds.
• Learn to be ok being known as cheap when it come to spending on yourself.  If spending money on others is important to you, than don't let up there. 

Now how people who retire early deal with medical care....that will be tricky.

 

 

I agree with a lot of this, though I also subscribe to the "treat yo self" model. For example, if you are in your car for 1-2 hrs a day, why not splurge a little and be happy with what you're driving? Same with the occasional gadget purchase, lunch, etc. You don't have to go crazy and you shouldn't do that stuff routinely, but the worst case scenario is you live a pretty boring life because all you're doing is thinking about saving for the future and then you die at 55. What a waste. You gotta live a little. There's a happy medium between being frugal and saving and enjoying life as you go.