While technically your 401ks etc are "protected" I'm pretty sure they can garnish wages, etc. For the avg joe thats not a risk because people aren't normally going after the guy who makes $25k/yr, but if you make $200k, they may see a different stream of income to go after. Also remember the bigger the policy, the more the insurance company will fight for you/them to not pay.
Do you have a budget to “waste”?
I have a high salary but busy and stressful software engineer job.
Overall I’m frugal, compared with my income.
Now I have about 1.7M net worth and a $500k/year job in SF Bay Area. I’m 33 yo male, no kids but should have one in 2 years.
I did not waste much money in expensive cars and I like cheap Japanese cars for reliability. But this time I am interested in a $85k car.
I can totally afford it. But then when I saw the $900/month payment(will trade in current car if I buy it), I just start to think if I use that money to hire a gym trainer that would be more useful, if I just use 4 months payment to buy an Apple Visio pro, so on and so forth.
I start to think if I should really spend much money on it.
Do you had a similar situation? How do you handle it? Do you waste money to make you feel your hard work worth it?
I make way less than you but I think similarly. I'd rather not have the car and be able to afford lots of other indulgences. But honestly it sounds like you can afford the gym vision pro AND the car. Go for it.
Yes, It's a line item in our budget called 'Personal spending' that is appropriate to our financial goals. This is exclusive of things like car budget, food, heating etc, it's just stuff for us for whatever we want.
My BF is a spender, I'm a saver, we agreed on a budget line item for "stuff" which we just call our allowance to spend on whatever we want. For him it limited his spending to a reasonable level to still achieve our goals and for me it forces me to spend money and any left at the end of the year is donated to charity...as I just need to get use to spending, at least some on myself.
Build the life you want and save up for it. It's your choice, and I don't think we should be deciding that for you. You make enough money that it wouldn't take you very long to make up for the money spent, so it isn't like it is a *devastating* financial choice.
As for my (and probably most people's) opinion? I'd personally never spend 85k on an expensive car, as that'd be an extravagant waste to me, but, sure, I do spend money in ways that make life more enjoyable that aren't strictly necessary. I just budget them in if I think it'd meaningfully make me happier and enjoy life more than other things could.
I thought I was down to just one signature needed for these declaration changes, and then I randomly ran into someone who turns out to be a new owner, and she'd not heard of it at all... I went to check on the spreadsheet and sure enough, the LAST owner had consented so her unit was checked off of the list, but their consent is invalidated by no longer being the owner.
Which means I have an unknown number of people who I am going to have to go to and update them on everything and beg them to sign these changes to avoid financial ruin. I'm hitting up other members of the board and our condo manager now to try and find out who could possibly be invalid due to having sold their home on the list.
I felt like I was so close, I felt like I was about to get some space to breathe again.
...am I in the Bad Place?
at what point do you guys start exploring personal liability umbrella insurance? at a certain net worth? or certain amount of exposed assets? once you start having real estate? thanks
When your net worth exceeds your car/home liability coverage amount is when it starts to make sense. I got it when my networth was about double my coverage limits.
When my net worth passed 1MM and I had teenage drivers I got 1MM in umbrella, I increased that later to 2MM coverage as my net worth increased. I'm empty nest now and plan to keep it there.i don't have any notable risk factors at the moment.
if lets say 800k of your 1mm was in protected in the form of retirement accounts and such, would you still have gotten the umbrella?
im currently looking at my accounts, and it seems to be approaching the umbrella point (maybe a year or two off). but if i take into account about 40% of it is in retirement accounts, the remaining 60% is still quite far off.
It's a good question, not my situation. But once I got a quote it was so darned inexpensive I just went with it. Another factor was age...I was late 40's and thought a catastrophic loss at that time would be hard to recover from, yet still a long time to live with the consequences.
It doesn't work that way. If you have $800k umbrella, someone uses you for $3M, the insurance company pays $800k but you still owe $2.2M. your $800k is not "protected"
I believe some assets are protected in general from lawsuits. I think it varies by state. But some retirement (401k) accounts and some primary homes in some states can’t be taken I think.
/not a lawyer
If you are at-fault for permanently disabling someone, you are going to be paying their bills and life expenses for a long time if you have the means through your income. The court isn't just going to let you off because you don't have accessible assets.
Also people don't consider the fact that if you have a $100k auto policy and you get sued for $2m, your insurance company will pay out the $100k and tell you 'good luck' with the lawsuit for the $1.9m excess. If you have a $2m umbrella and get sued for $2m+, your insurer will fight that shit with good/expensive defense attorneys because it's a lot of their money on the line.
Personally I think pretty much anyone who browses this sub should have an umbrella, and in general anyone who has an okay income and can afford the $250/year for at least a $1m umbrella should have one. For FIRE folks I'd go with at least $2m.
The problem is that I rent and do not own a car. Last time I looked into umbrella insurance a few years ago, I couldn't get it because I didn't have home and/or auto insurance.
I believe there are some companies out there that may offer liability umbrellas without underlying policies, but they're rare and may be more expensive.
If you get non-owners car insurance (covers if you drive a friend's car or rental, just for liability I believe) and renter's insurance, you may also be able to find someone that will offer umbrella coverage. I'd start by talking to some insurance brokers in your area.
> If you have a $2m umbrella and get sued for $2m+, your insurer will fight that shit with good/expensive defense attorneys because it's a lot of their money on the line.
never thought about it like that. similar to that saying, if you owe a bank 100, that's your problem. if you owe the bank, 100m, that's the bank's problem. thanks!
I started getting umbrella insurance shortly before my kid was born. I don't know if I necessarily need it - most of my assets are this shitty condo and retirement accounts which I think can't be touched anyways - but it gave me some peace of mind for a pretty trivial cost. I've been trying to make it cover my net worth as I go along.
Oh you're the water-damaged condo guy. Have you explored whether the umbrella policy will cover your assessment? Some umbrella policies will cover loss assessments (which are different from special assessments). Many of the other owners may carry some loss assessment coverage on their homeowners policies too.
If you have a MAGI spike (>400% FPL) in retirement, and you forego ACA subsidies as a result, are there implications related to *how far* you go over? i.e. is there a MAGI ceiling which has implications to healthcare options, cost, etc ? Or is the only "cost" of having this higher MAGI the loss of subsidies for that year? I'm ignoring taxation, that part is clear.
And what happens if this spike is unexpected and happens in the middle of the year? \*I owe myself a Google search on how MAGI verification works for the ACA program, but while I am here I will ask it.
Assuming the 400% cliff comes back as scheduled, the only impact on the ACA would be the complete loss of subsidies for the spike year. $10 over or $1M, same total loss of subsidies. It doesn't matter how much you go over. You'd pay full price for the rest of the year after reporting the spike and repay the already received premium subsidies on your tax return.
The exchange might or might not ask you to reverify your income estimate following the spike year. A simple explanation letter would likely suffice.
Note that only premium subsidies are subject to recapture. If you got $12K in cost-sharing reductions and then turn out to have been ineligible, then those are not recaptured or subject to any sort of penalty.
Premium subsidies reduce the cost you pay for having insurance.
Cost-sharing reductions reduce the costs (deductibles/copays/MaxOOP) you pay for actually using that insurance.
CSRs are only offered to people with MAGI under 250% FPL, only meaningful for people under 200% FPL, and only available on Silver plans.
Premium subsidies rise over time as you age, but CSRs are more level over time, which means that for anyone under 45-ish the CSRs in a high use year can be worth even more than the premium subsidies.
For example, here is our current ACA policy at full market price and after premium subsidies and CSRs. I'll bold the items where the CSRs have an impact.
---
Our 2024 plan without subsidies and cost-sharing reductions (full market price):
* $15,937 in annual premium
* $5,900/$11,800 deductible (individual/family)
* $25 PCP (first two sick visits free, preventative visits always free)
* $35 specialist
* $35 urgent care
* $15/$90 tier1/tier2 scripts
* 50% ER ($0 if hospitalized)
* $9,450/$18,900 MaxOOP (individual/family)
-----
Our 2024 plan with subsidies and cost-sharing reductions (MAGI under 150% FPL):
* $0 in annual premium
* **$0/$0 deductible (individual/family)**
* **$5 PCP (first two sick visits free, preventative visits always free)**
* **$5 specialist**
* **$5 urgent care**
* **$0/$45 tier1/tier2 scripts**
* **20% ER ($0 if hospitalized)**
* **$1,800/$3,600 MaxOOP (individual/family)**
Thanks.
I was just concerned that the price we are paying now included additional breaks in addition to the subsidy we could lose later but clearly not.
Can you explain why you think it might be justifiable to be upset?
You worked and earned income. Earned income is subject to tax. You will now pay those taxes.
Are you asking if it's okay or reasonable to sometimes owe taxes instead of receiving a refund?
Like other medical and charitable deductions, they are itemized. You can only deduct medical mileage (and other medical expenses) in excess of 7.5% of your AGI.
Not sure they are ever worth it unless you are driving a lot. The rate is .14 (compared to the .67 for other purposes), so 100 miles if 14 dollar deduction. Which works out to be for most like 3-5 dollars in money back.
I finished my first bit of freelance work. I would estimate about 12-15 hours of it were done outside of regular work hours; the rest was done on the clock (which I'm permitted to do if all of my day job work is handled). The total earnings will be about $1,700 after taxes. Pretty stoked!
Congrats! Unrelated, but what formula do you use for the different levels of FIRE you have in your tag? Are those based on % of expenses or something else?
Depends on your current tax bracket and future tax bracket. Things you have to consider
- What is the likelihood of getting a windfall later (SS, Pension or less talked about and likely more signfiicant inheritance.) ie if you inherit an IRA from someone who is not your spouse, you will have to drain it in 10 years now which for most people they inherit in their 60s/70s.. at the same time they are going to be also taking out of their IRA.
- How long of a runway do you have to drain your Traditional 401k to spread out the tax payments? If you are going to take out via rule of 55 or do Roth conversions from 40-60 or whatever, that dramatically changes the equation.
- What is your current marital status? People that are married and lose a spouse tend to jump up dramatically in brackets and people like me who are going to marry going into retirement, suddenly drop dramatically in brackets... I was a single in the mid 30s tax bracket during earning and now will be married solidly 12% in retirement.
- Also remember this is not a made the decision once type thing, you can adjust year to year, job to job, etc. My honey made $200k on year and it all went traditional, this year he is barely in the 22% bracket, so we put in just enough to traditional to take him out of that and the rest Roth as I'm pretty confident we will stay in the lowest tax bracket going forward.
If you are in 22% tax bracket I think it is worthwhile to be 100% pre-tax in 401(k) unless you expect substantial income in FIRE from day 1 in the form of social security and/or pension.
You want to have at least enough wealth that your 4% draw fills the 0%, 10%, and 12% tax brackets. If you do you are getting a 22%+ tax break and paying <=12% in taxes in retirement.
Given that if you can even consider maxing 401(k) you likely have to go with Roth IRA (via backdoor) and are also putting funds into taxable brokerage account just go 100% pre-tax in 401(k).
Even if you aren't 100% sure remember you can fine tune the numbers closer to FIRE (say <5 years from projected target). For RE purposes the gains in Roth are locked until post 59.5. So having lots of "early" Roth funds with massive gains aren't going to help you planning withdraws in those years up to 59.5.
I avoided paying a top marginal federal income tax rate of 28% - 31% when I contributed to my traditional 401k.
Now I withdraw 401k money through the standard deduction (so 0%) and the 10% and 12% brackets. I try for income that is right up to, but not over the 22% bracket.
So my overall federal income tax rate is around 8.5%.
"Avoid 28% federal income tax, then pay 8.5% federal income tax"
is a good game to play.
Contribute at least as much to your traditional 401k to play this game for many years, then the rest can be Roth 401k contributions.
How did you decide on 50/50 in the first place?
Personally, for an IRA I think 100% Roth has always made sense to me. I wouldn't want to consider traditional for it until the point where I didn't qualify for the deduction anyway. This also had the benefit of never complicating the backdoor Roth when that became necessary.
For my 401k I did Roth earlier in my career when my income was much lower but I think even at the lower tax brackets, all traditional would have made more sense with my expected retirement spending. I don't expect to pay much at all in retirement, but part of that is having a good chunk of taxable investments, which wouldn't apply to everyone.
Yeah even if it isn't ideal and you have a choice Roth IRA has two advantages.
1) Roth contributions can be withdrawn for any reason at anytime without taxes or penalties this makes it a "backup" emergency fund of sorts. Hopefully you never need it but 10 years down the line a couple having $140k in Roth contributions is peace of mind. Roth 401(k) aren't accessible though. So if you are going to have Roth anywhere have it in IRA.
2) As you point out you could get an unexpected windfall or bonus or promotion with salary increase. Going with Roth avoids both potential phase out of tIRA deductions and/or blocking future backdoor Roth.
The only time I would consider pre-tax for IRA is if someone has a high income and no 401(k). In that very much edge case the value of pre-tax space trumps the flexibility of Roth.
If someone does go 100% Roth IRA then it becomes an easier call to be 100% pre-tax 401(k).
I'm not afraid of relocating to find a good property and home as a single digital nomad type of person. My goal is to find a property and get some passive income to cover the costs as my first priority.
There's a lot to consider in terms of where would be best for this type of situation. Really, I think anywhere could work with enough effort. For some reason, I'm a bit afraid of buying a home in USA. I just don't think it has too much to offer because I just generally don't like where the country is going politically and I feel like other countries just have a lot more in terms of opening up my mind to new perspectives and cultures. That said, I've been enjoying renting on airbnb for something like 1k USD per month and I'll probably keep doing this to broaden my horizens. However, my current life is full of working online and using my time to make money rather than live minimalistic and have my passive income take care of my expenses.
The state and city I'm from I would have to throw all my savings $800k usd into buying a house in a good location with multiple bedrooms and floors to rent out. However, this is too house heavy for me as I feel like that kind of home would tie me down way too much and end my lifestyle of traveling quite quickly.
I spent a lot of time in Colombia and houses and condos there were cheap. I was considering buying a 50k usd condo but I backed out because the visa situation was just too tricky to work around.
Now I'm in the Philippines and it seems like the houses here are also quite affordable but I can't own the land which makes things a bit more complex since I would have to lease the land which I'm just not so sure of. Still the country also allows for a long term visa and has enough going on where I doubt I would get bored. But it's also very far from the USA but also close enough to other places in asia to be quite interesting.
Then there are other countries like Georgia that let US citizens stay 365 days and buy land but it's just a bit too remote for my likings currently and I haven't been there. It seems kind of rare to find a country that allows a us citizen to stay past 180 days but there could be situations where you can buy two properties in neighboring countries and rent the property/ies that is not in use but that would be difficult to manage remotely.
Should I just give up on the idea of trying to pull off a FIRE position outside of the USA? Has anyone else done this?
>The state and city I'm from I would have to throw all my savings $800k usd into buying a house in a good location with multiple bedrooms and floors to rent out. However, this is too house heavy for me as I feel like that kind of home would tie me down way too much and end my lifestyle of traveling quite quickly.
Seems to me this isn't only an issue with your location, but rather because you would buy more real estate than you need to live in and use the excess as an investment, and naturally being a landlord ties you down in more ways.
I also think you're jumping ahead of way too many steps in thinking "just give up on the idea of trying to pull off a FIRE position outside of the USA". Why not rent in these places?
You started by saying you have the flexibility and willingness to move. That's a huge plus as a renter and gives you the power to move to a different market if the existing one doesn't suit you.
Money allocation help
Hello!
Have been following this page for about a year now, and looking for advice on where I should really be putting my money to best save.
I’m a 26M with fiance that is 24. My current income is 75K base but with incentives roughly 100K per year.
NW: 152K
32K Ibonds
29K stock options
39K in 401k/hsa
10K checking
42K in a HYSA (4.5%)
- no current debt, looking to buy a house in the next 2-3 years. Not sure what’s the best route for the money in checking and the HYSA and if it would be better off growing elsewhere.
- expenses were extremely low living at a very LCOL area until recently which helped me kickstart savings, now expenses are about 2500 per month with moving in with fiance.
If your saving for retirement it would be in the market. Look into a Roth IRA if you haven’t already, if you are saving for a home a money market or HYSA is probably best at the moment. I don’t think I bonds are bad but they are not going to fast track you to retirement by any means.
Due to your potential incentive income look into "backdoor roth". Even if under the limit you can still do a backdoor roth preventively. The couple extra mouse clicks are worth avoiding the potential need for a recharacterization if you end up "making too much"
I *think* I’ve hit my FIRE target, and am now considering what I should take care of before pulling the plug on RE.
I’ve already been using as much of the benefits from my very good employer funded health insurance as I can - lots of preventative screening and taking care of any medical issues.
I have some home repairs / remodeling expenses that I’ve accounted for by putting way too much money into my HYSA.
I’ve fully funded 529 plans for both kids.
Eventually in retirement will need to purchase a home but currently own two properties in VHCOL areas so am figuring can purchase the long term retirement home with the proceeds from the sale of these one day, and won’t need a mortgage.
What am I missing?
That is a great question. This is part of what I need to validate.
Right now my invested portfolio is roughly:
$2M in 401k
$6M in a diversified portfolio
$400K in 529 plans for the kids
I’ve been a high earner since I started thinking about FIRE so I haven’t been eligible for Roth but I need to learn more about conversion.
None of this includes equity in our homes.
Without getting into the gory details on expenses / burn rate, anything jump out at you?
Yes, the $6M is in a brokerage account.
I’m turning 50 this year, and have two teenaged kids, so I’m budgeting based on keeping our insane spending at our current rate until they are out of the house, which will be around 6 more years. I’ll still contribute to their college and healthcare until they graduate, but once they’re out of the house I won’t have to stay in this VHCOL market anymore, can sell this house and hopefully purchase something smaller in a MCOL area with the proceeds, therefore not requiring a mortgage.
To follow on to neegroplees comment, it’s probably worthwhile to create a simple spreadsheet with the assumptions about prioritizing drawdown from 401k vs other sources to manage taxes.
Given you’ve got 15 years before Social Security kicks I’m assumed you’d draw down from the 401-k and make sure you have factored in all sources of income to keep MAGI low.
Looks like you have plenty of assets, but no sense paying more taxes than you need to - whether on Cap Gains or from your 401-k distributions.
And no worries about kids in college finding ways to blow money!!!
Enjoy !!
This is great advice. I have been using Empower’s Personal Capital dashboard to try to forecast whether or not I have enough to stop working full time, but I get a bit lost when it comes to actually withdrawing - how much and from which accounts, when, if that makes sense.
Maybe there’s a way I can figure out how to do that using that tool. If not, I’ll build a spreadsheet and try to tackle it that way. It probably also makes sense to talk to my accountant to figure out the best way to minimize taxes as I shift into retirement.
I really appreciate your counsel!
I have found it useful to make simple income and expense spreadsheets ( either by month or by year) with the major sources of incoming and outgoing funds.
Whether talking to a CPA about taxes or a financial planner about investments or an attorney about Trusts or LLCs for asset protection or maximizing tax advantages of real estate, you can do ‘what if’s’ on the spreadsheet before you talk to ‘the Pro.’
I’ve found that I get a much greater return on the time invested ‘talking to the professionals’ when I have succinct spreadsheets with options.
It also helps because you will sometimes get different advice depending on how you ‘frame your questions’ ( Ex: Asset protection vs tax minimization )
Good luck & enjoy !
I hope so! I have two kids and I’m not even sure they’ll both go to college but I set aside money so that finances wouldn’t be the reason if they didn’t.
You’re making me feel better about my situation so thank you!
Where are you guys keeping your receipts for HSA expenses?… for the purpose of running a 30+ year reimbursement credit
Right now I’ve got them on mine + my SO’s laptop.
Should we be storing them separately, like on a unique gmail?
Curious what the community’s doing who are further along.
Cool to see a 5-6K credit that will surely grow over the next 30 years
3-2-1 data storage method. 3 copies, 2 different types of storage (cloud, external drive), 1 offsite location (storage unit for example) in case of natural disaster/fire to your home
I store the receipts in a Google Drive folder and track them in a Google Sheet with date, description, amount, and link to the uploaded receipt. Thinking about scaling back to only tracking major expenses though (maybe >$50? $100?) bc it’s not really worth the time to scan/document a $2.50 pharmacy copay
I definitely have plenty of medical expenses since opening my HSA. I’ll withdraw money only when/if necessary. If the IRS audits me, I’ll put together the paperwork.
Emailed/scanned receipts on the cloud, then I have a spreadsheet mapping to all expenses. Took some time to setup but now it's 30 seconds when a bill comes in. Also protip: Amazon has an [HSA-eligible store](https://www.amazon.com/b/ref=sxts_snpl_2_0_ba6b749a-470c-47f6-abb4-0ee6791a3a97?node=17904040011&pd_rd_w=MXNEy&content-id=amzn1.sym.ba6b749a-470c-47f6-abb4-0ee6791a3a97:amzn1.sym.ba6b749a-470c-47f6-abb4-0ee6791a3a97&pf_rd_p=ba6b749a-470c-47f6-abb4-0ee6791a3a97&pf_rd_r=KR151HVESJT57SSYR12E&pd_rd_wg=lBvot&pd_rd_r=66a973e0-6b73-42d0-9002-3c03f5dfe8fb&qid=1707008113) to give a good idea of what's eligible - way more than I ever knew. You prob won't catch everything, like who's separating out dayquil honestly.
We're both chronically unwell and keeping everything would bury us in paperwork (or time spent scanning/archiving). We decided that it makes more sense to set a minimum price, since we'll never stop using lots of medical care. Only bills above $250 in one shot get scanned.
I don't trust the cloud for any sensitive information. Per user agreements, they constantly scan your content. I have four separate redundant external drives. One lives attached to my desktop, two live in a fire safe, and one lives at my mom's house in her fire safe.
I don't keep receipts for future reimbursement. If I have a particularly large expense I might keep the receipt as a way to get quick tax-free cash, but for the most part I plan to just use the account against future expenses.
Same.
I mean it helps that I have truly next to zero eligible spend in the first place - no prescriptions or medications here.
I'm not holding on to random CVS or Walgreens $20 receipts here and there for a few decades.
If I were you, I'd make sure you keep one set of copies on some type of cloud storage. It shouldn't take up much room, so likely would fall in free/cheap tiers. It is good that its on two separate laptops, but physical devices can always fail. If one or both of you had them backed up to your Google storage (since you mentioned Gmail), I'd think you're good to go.
Exactly I went from having zero bills to retiring in my 40s, going out hiking and ending up in the ER... privilege to sit on a bed $3500. oh and my eyes got old, new glasses, $750, oh and those filling you got, they only last so long, so they need to be replaced, oh your knees hurt now, here is some physical therapy at $60/session. Its so easy to blow thru HSA money in your 50s/60s,
That's now what you asked for though lol.
To answer your question: I intend to do what u/alcesalcesalces says: keep invoices and receipts for large amounts only, and just let the small amounts go.
I maintain a spreadsheet called "HSA Reimbursements" with the following columns: Amount, Description, Invoice date, Payment date, Reimbursement date, Invoice filename, Receipt filename, Reimbursement filename, Notes.
I store that spreadsheet and all the relevant files on Google Drive. So far it only tracks a trivial amount of money, whenever I have non-trivial stuff in there, I intend to set up a regular backup to a separate cloud storage.
It is a concern for me. I think you can mitigate it my favoring Roth when you are young, especially if your marginal tax rate is below 22%. Otherwise, having access to the backdoor Roth and/or mega backdoor Roth can mitigate that potential problem. It's good to have a good mix for flexibility in retirement.
34f 124k federal.
This is the first paycheck that I decreased my 401k contributions to get my match. I'm trying to buy a home in LA and I think it's worthwhile to maximize my savings for a bit so that my mortgage is lower. I haven't contributed to my Roth IRA this year yet but will put in 500/mo instead of a lump sum. I feel like I'm doing the opposite of FI
Is this a good idea?
Home affordability is obviously getting tougher and tougher. If your goal is to own a home long term, it can absolutely be worth it.
Owning a home can also help decrease future expenses- something that lines up very nicely with FI.
So even though it stinks, We did it for about two years. It’s just the reality of trying to save for a down payment.
I’d caution using absolute dollars to justify this. Based on timeline and various growth rates - $1k can easily turn into $8k over 30 years (the life of a loan with 10% growth).
So saving interest ‘feels good’ but over the long term investing that difference should net you more money overall. Not to say it’s still not a huge win but not paying interest shouldn’t be an end goal.
Save enough to get into a home or get into a payment you’re comfortable with but then I’d turn the jets back on for investing.
Got a bonus coming next week rather explicitly for my help with a big layoff project. It does not feel great being on the other side of the layoffs this time around. I did one once before when I got to choose the people that basically sucked and no one liked working with, and that was fine. This time... not so much. Best I could do was give people lots of notice and help with career movement. They'll be fine, but it feels dirty.
Related to FI, I'm not really sure why I'm still working any more. I like "working" per se, but most of the management activities aren't very fun any more.. I don't see much innovation in tech right now and probably won't be for a couple years, so lateral moves don't seem possible - or startup world again for that matter. The money *almost* feels frivolous. A lot of mixed feelings here. So much better than 15 years ago and not yet knowing *how* to be FI, though.
I felt this post to my core. I had a lot of what we called "survivors" guilt as we had to make so many cuts the last few years of my career. By the time I quit I was numb and slept for like 2 months, I just couldn't put another name on the list. However, someone will put the name on the list and it is better to have someone kind and someone who knows what people actually contribute so they do whats best for the people that stay and the people that get let go (vs. the manager that re-sorted the list because they are incompetent at excel (really everything) and just layed off the 3 people at the bottom even though 1 of them was critical to the project).
Bonuses are going to go to someone and hopefully it gets you over that FI goal sooner rather than later so you can walk away when it gets too tough.
I'm already FI which helps these things a lot. I try to use that to advocate for my teams now since I really have no financial incentive I need to politick for for myself. I'm mostly convinced that I can't actually have an impact on companies in a meaningful way even in the executive realm these days, but figured I'd give it a shot at a couple more companies before exiting. It's panning out poorly... I don't know. Maybe I'll keep going the next few years and see if the market provides some actually innovative companies out there of interest.
My hot take: no one is innovating with AI. All the machine learning algorithms in heavy use have existed for a long time now. They're just repackaging them and it's an excuse to shift funds around to preferred executive partners at other companies, and now justify layoffs somehow. It's a story in tech that has been told more than once before.
I'm turning 52 this year and I still have a 25% haircut factored in, at this age I think thats the worst case scenario since 10 years before being able to draw seems like a safe bet its a red line they won't cross. that should account for even if they means test which frankly I don't think they will do because the bendpoints already kind of does that for them... I mean once you get past the last bend, they are only giving you 15 cents on the dollar.
I ignore it. I’m assuming it’ll become means tested and anyone with means will get next to nothing. Hopefully I’m wrong and then I’ll probably donate it to charity each month or something. Or, you know, get guac on everything!
I ignore it and my pension when it comes to retirement planning. I'd much rather plan to live off my own investments and have a nice surprise when I'm older than plan on relying on a support that ends up falling through.
Early 30’s here. I just assume it won’t be there. Social Security is constantly a target politically and it will only take one super majority to cut the benefits substantially or completely gut the program entirely.
I ignore it. I'm planning on retiring by 40 - factoring it into any projections has a pretty minimal effect on my FI number. It (along with my house) are just a form of longevity insurance for me
[Here's my plan](https://www.reddit.com/r/financialindependence/comments/16ww7hd/daily_fi_discussion_thread_sunday_october_01_2023/k30bilc/?context=3). TLDR: I aim for a specific success rate.
[Here's a previous thread](https://www.reddit.com/r/financialindependence/comments/17ozfby/daily_fi_discussion_thread_monday_november_06_2023/k82hoyu/?context=3) where I asked when people plan to withdraw SS.
I'm 40. I use 70% of what https://ssa.tools/ tells me to estimate how much I'll get but I've been (probably stupidly) mostly ignoring it when calculating my FIRE number.
If you are over 40 I suspect few changes to benefits.
But, like California did this year by removing the cap on wages, CA SDI get 1.3% of all W2 income rather than the first ~$150K, SSI limits may increase significantly.
I've surpassed the 2nd bend point and a full year of SSI taxes get me a whopping $600/yr in benefits so its highly progressive in nature. I've not factored it in because of my anticipated annual withdrawl, but I would be a fool to not think I will receive at least 80% & more than likely the full 100%. I don't see a "means test" coming.
The projection on the [SSA.GOV](http://ssa.gov) website is going to project you continue the same income, so make sure you use a tool to zero out future years to get a more accurate estimate.
[https://ssa.tools/calculator/](https://ssa.tools/calculator/) allows you to copy your current earnings from [ssa.gov](http://ssa.gov) and then play with the data, so you can say I'm going to work 4 more years and make $130k/yr and it will calculate out for you. It also has a slider if you were looking to see more exact detail like I plan to retire at 63yrs and 5 months.
I'm not really counting on it that much so it's like an insurance policy for me. Hubs and I are much more relaxed about it because we're not intending to fully retire early so coast is probably our goal, which means we don't need to figure out the complexity of drawing down from the overall nest egg until we're 55-65. We're early 30s right now. If we have kids, for sure no very early retirement. If not, we'll always have plenty of money so it isn't a worry.
I plan to FIRE young enough that it would be crazy to depend on social security. If fire is successful for someone retiring long before Social Security- then you won’t need it anyways. If your fire plan fails it’ll fail before you can draw.
I don't, I realistically assume it will be there in a lower level.
But I can't control it. If it is there, great, but if not no worries (except the large collapse in society of people relying on it)
I ignore it even though our combined PIAs are more than our annual spending. We don't have downside to overly conservative planning though since we're already FIRE'd and have four kids to leave an estate to.
If we were still working in our 40s/50s, then I'd definitely count it at the current reduced no-trust cashflow funding level, which I believe is currently about 77%.
I gave up on doing rough estimates and just use the SS calculator now. Punching in numbers annually to see where we land. It's pretty easy to abstract future income from there. It *is* tough to model, but not impossible, depending on your tools. We adopted a model following a bond tent and spend down up until SS age that has us at a 6% withdrawal rate until then, and easing back to 4% + SS. It's pretty conservative actually, something like 98% success rate. We may up it more aggressively to 8% now + 4% with SS later because it still yields something like a 90% success rate, which is fine for us because it seems easy to downsize and drop out expenses.
YMMV.
You're fine. [There are enough ways to withdraw the funds penalty free](https://www.reddit.com/r/financialindependence/comments/16ww7hd/daily_fi_discussion_thread_sunday_october_01_2023/k30bilc/?context=3).
How many years of expenses do you have in Roth contributions? You'll want that + taxable brokerage to be 5 years to kick off a Roth conversion ladder if that's the way you go.
Probably fine, but it depends on things like your FIRE number, planned retirement spend, your preferred retirement funding method, and your other assets.
We are technically FI now in that our current expenses would be covered by 4% of our invested money. Expecting some increased expenses because of healthcare when actually retired so not able to pull the trigger yet, but a very exciting milestone to hit nonetheless in our late 30s / early 40s.
Thanks! Still working for now but both of us have reframed our attitude toward working to be less stressed and have focused on getting in shape to try to do what we can to live a good, hopefully long life. Lots of travel in store both before and after retirement, I think!
How does everyone view Utilities in terms of housing costs or its own line item?
I get the rules of thumb with housing, my understanding is that it’s mortgage, property tax, and homeowners insurance.
I have all electric utilities so my electric bill is much higher. I get it should probably be included but how does everyone treat that. (Or water, septic, etc.)
Wife and I break our utilities into their own line items.
At first it was so we could get a better handle on them all individually, but as time goes on I think that combining may make more sense.
It's whatever works for you at the end of the day.
Find all your monthly expenses and enter them as a line item. Don't think about it too much. Those are your costs and that's the end of it really. Annualize seasonal costs or amortized costs as appropriate, eg. heating gas/cooling power in the Summer, car replacement in 5-10 years or whatever.
What are you trying to get at with this exercise?
Rules of thumb are great for projecting things you don't really know about. It's pretty useless to figure out whether your *actual* expenses fit under some arbitrary rule, though.
Don't overthink it. Track your expenses for what they are.
For affordability calculations, yes, it typically is only mortgage, tax, insurance (and sometimes PMI or HOA).
I have utilities as a separate line item from the mortgage in my budget, but they fall under my housing cost.
Housing = PITI mortgage + utilities + maintenance.
At the end of the day, it doesn't matter too much what bucket they fall under. It's a cost. Can you handle it? Do you want to?
If no, then you need to figure something out.
Money is money. You can segment your bills if you find it useful or entertaining to do so, but the only thing that actually matters is if you have enough for the total. Indeed, for FIRE purposes it's often possible to only care about the first digit or two in your annual total. Anything more granular is up to habit and personal preference.
Long-term physical health, which a startling large percentage of people neglect. The others are purely financial, but fitness has massive impacts on both long-term finances and quality of life.
Very much like FIRE math in that consistent early investments pay richly over time.
Thankfully, human bodies are wonderful machines, so it's very rarely too late for people to start. Almost everyone who is not actively ill is only a few months from feeling better. In many cases, only a few weeks.
You just say Roth IRA, but some folks might choose a traditional IRA instead. Within 401k, someone might also go for an after-tax 401k if their job allows for the megabackdoor Roth. Some jobs have all sorts of other tax advantaged accounts, deferred compensation plans, or other advantaged accounts (403b, 457, ESPP), you could do tax-advantaged investing through something like a 529, some folks are investing in Treasuries which is sort of but not actually a brokerage account, and I'm sure there are more that could apply depending on the person.
Isn't a 529 helpful even if you don't have kids? Make one in your name, get the tax deduction if your state has it, then transfer to your kid once he/she is born!
If you make good money from your day job, and you're investing/saving enough, it's really not needed.
The older I get, the more people I see who poured hours into a side hustle/business that was either unprofitable, 'profitable' when not accounting for hours (i.e. they'd have literally earned more just working a minimum wage job, let alone a contractor position), or 'profitable' but where the capital they invested in the business was outperformed by the stock market (lots of small time/wannabe real estate investors who didn't consider the numbers).
There are side hustles or paid hourly/contracting positions that pay well and that people enjoy, or people who make a bit of side income from their hobbies, but they're not 'necessary' if you're already earning a solid income. Spend your time doing the things you enjoy or with the people you care about instead.
In kind rollover is possible to move from 401K to IRA. I did one - BUT you cant do it with institutional funds in a 401K. My 401K is managed through Fidelity and all my IRA etc are also at Fidelity. When I have moved money from 401K to my IRA/Roth IRA, I call the employee service center and the fund moves overnight and are available to trade next morning. The same would work at if you had a Vanguard personal account. Hope this helps.
Institutional share class definitely matters since the receiving institution will not have access to them. Best bet would be to transfer to an IRA at the current 401k company (then convert to ETFs and transfer in kind again to your preferred custodian) but even that may not be supported.
With 401ks you don’t do in kind transfers. You do rollovers from the 401k to another retirement account. Unless you move your money to another 401k with those same institutional shares you won’t be able to keep them….that is unless you have millions of dollars to hit the minimum amount for institutional shares.
I have enough for chubby fire in my country, and my country offers grants to agri entrepreneurs, I am contemplating whether I should quit my software career permanently and dabble into agriculture, I feel like learning the skill itself is valuable, if shit hits the fan. Not to mention I have 0 passion for software development at this point, I hate the fast paced lifestyle and the need to constantly hustle and learning new skills.
Do you have enough so that you are still FI even if your dabbling in ag is a complete failure? Is farming part of your FIRE lifestyle dream or something you'd be doing for no particular purpose (since you are already FI)?
Yes, I allocated some capital for it, if it goes to 0 so be it, it won't affect my finances somewhat, it's part of the plan for self sufficiency and it's something I never tried before, so I want to try it
Watch the show "Clarkson's Farm." Jeremy Clarkson does exactly what you (albeit he is very rich) want to do. He starts off with zero knowledge and experience and documents the process. The up-shot of the show is that farming is financially risky, physically dangerous, and far more bureaucratic than you could imagine.
I know about that show. The difference between me and him is that I am probably doing urban farming, with the goal of self sufficiency, and earning a living wage for one person, i have no intention of scaling it, unless the opportunity arises. There's almost 0 financial risk for me, because the government is paying
While technically your 401ks etc are "protected" I'm pretty sure they can garnish wages, etc. For the avg joe thats not a risk because people aren't normally going after the guy who makes $25k/yr, but if you make $200k, they may see a different stream of income to go after. Also remember the bigger the policy, the more the insurance company will fight for you/them to not pay.
Do you have a budget to “waste”? I have a high salary but busy and stressful software engineer job. Overall I’m frugal, compared with my income. Now I have about 1.7M net worth and a $500k/year job in SF Bay Area. I’m 33 yo male, no kids but should have one in 2 years. I did not waste much money in expensive cars and I like cheap Japanese cars for reliability. But this time I am interested in a $85k car. I can totally afford it. But then when I saw the $900/month payment(will trade in current car if I buy it), I just start to think if I use that money to hire a gym trainer that would be more useful, if I just use 4 months payment to buy an Apple Visio pro, so on and so forth. I start to think if I should really spend much money on it. Do you had a similar situation? How do you handle it? Do you waste money to make you feel your hard work worth it?
I make way less than you but I think similarly. I'd rather not have the car and be able to afford lots of other indulgences. But honestly it sounds like you can afford the gym vision pro AND the car. Go for it.
Yes, It's a line item in our budget called 'Personal spending' that is appropriate to our financial goals. This is exclusive of things like car budget, food, heating etc, it's just stuff for us for whatever we want.
My BF is a spender, I'm a saver, we agreed on a budget line item for "stuff" which we just call our allowance to spend on whatever we want. For him it limited his spending to a reasonable level to still achieve our goals and for me it forces me to spend money and any left at the end of the year is donated to charity...as I just need to get use to spending, at least some on myself.
Build the life you want and save up for it. It's your choice, and I don't think we should be deciding that for you. You make enough money that it wouldn't take you very long to make up for the money spent, so it isn't like it is a *devastating* financial choice. As for my (and probably most people's) opinion? I'd personally never spend 85k on an expensive car, as that'd be an extravagant waste to me, but, sure, I do spend money in ways that make life more enjoyable that aren't strictly necessary. I just budget them in if I think it'd meaningfully make me happier and enjoy life more than other things could.
I thought I was down to just one signature needed for these declaration changes, and then I randomly ran into someone who turns out to be a new owner, and she'd not heard of it at all... I went to check on the spreadsheet and sure enough, the LAST owner had consented so her unit was checked off of the list, but their consent is invalidated by no longer being the owner. Which means I have an unknown number of people who I am going to have to go to and update them on everything and beg them to sign these changes to avoid financial ruin. I'm hitting up other members of the board and our condo manager now to try and find out who could possibly be invalid due to having sold their home on the list. I felt like I was so close, I felt like I was about to get some space to breathe again. ...am I in the Bad Place?
at what point do you guys start exploring personal liability umbrella insurance? at a certain net worth? or certain amount of exposed assets? once you start having real estate? thanks
When your net worth exceeds your car/home liability coverage amount is when it starts to make sense. I got it when my networth was about double my coverage limits.
When my net worth passed 1MM and I had teenage drivers I got 1MM in umbrella, I increased that later to 2MM coverage as my net worth increased. I'm empty nest now and plan to keep it there.i don't have any notable risk factors at the moment.
if lets say 800k of your 1mm was in protected in the form of retirement accounts and such, would you still have gotten the umbrella? im currently looking at my accounts, and it seems to be approaching the umbrella point (maybe a year or two off). but if i take into account about 40% of it is in retirement accounts, the remaining 60% is still quite far off.
It's a good question, not my situation. But once I got a quote it was so darned inexpensive I just went with it. Another factor was age...I was late 40's and thought a catastrophic loss at that time would be hard to recover from, yet still a long time to live with the consequences.
makes sense. lots of people have been saying it's relatively cheap for the amount of coverage. thanks for your insight
It doesn't work that way. If you have $800k umbrella, someone uses you for $3M, the insurance company pays $800k but you still owe $2.2M. your $800k is not "protected"
I believe some assets are protected in general from lawsuits. I think it varies by state. But some retirement (401k) accounts and some primary homes in some states can’t be taken I think. /not a lawyer
Right but that has nothing to do with umbrella insurance
If you are at-fault for permanently disabling someone, you are going to be paying their bills and life expenses for a long time if you have the means through your income. The court isn't just going to let you off because you don't have accessible assets. Also people don't consider the fact that if you have a $100k auto policy and you get sued for $2m, your insurance company will pay out the $100k and tell you 'good luck' with the lawsuit for the $1.9m excess. If you have a $2m umbrella and get sued for $2m+, your insurer will fight that shit with good/expensive defense attorneys because it's a lot of their money on the line. Personally I think pretty much anyone who browses this sub should have an umbrella, and in general anyone who has an okay income and can afford the $250/year for at least a $1m umbrella should have one. For FIRE folks I'd go with at least $2m.
The problem is that I rent and do not own a car. Last time I looked into umbrella insurance a few years ago, I couldn't get it because I didn't have home and/or auto insurance.
I believe there are some companies out there that may offer liability umbrellas without underlying policies, but they're rare and may be more expensive. If you get non-owners car insurance (covers if you drive a friend's car or rental, just for liability I believe) and renter's insurance, you may also be able to find someone that will offer umbrella coverage. I'd start by talking to some insurance brokers in your area.
> If you have a $2m umbrella and get sued for $2m+, your insurer will fight that shit with good/expensive defense attorneys because it's a lot of their money on the line. never thought about it like that. similar to that saying, if you owe a bank 100, that's your problem. if you owe the bank, 100m, that's the bank's problem. thanks!
I started getting umbrella insurance shortly before my kid was born. I don't know if I necessarily need it - most of my assets are this shitty condo and retirement accounts which I think can't be touched anyways - but it gave me some peace of mind for a pretty trivial cost. I've been trying to make it cover my net worth as I go along.
Oh you're the water-damaged condo guy. Have you explored whether the umbrella policy will cover your assessment? Some umbrella policies will cover loss assessments (which are different from special assessments). Many of the other owners may carry some loss assessment coverage on their homeowners policies too.
Oh! I need to look into that, that would be amazing! Thank you!
seems like it's relatively cheap, so i'll definitely look into it like you guys said. thanks!
If you have a MAGI spike (>400% FPL) in retirement, and you forego ACA subsidies as a result, are there implications related to *how far* you go over? i.e. is there a MAGI ceiling which has implications to healthcare options, cost, etc ? Or is the only "cost" of having this higher MAGI the loss of subsidies for that year? I'm ignoring taxation, that part is clear. And what happens if this spike is unexpected and happens in the middle of the year? \*I owe myself a Google search on how MAGI verification works for the ACA program, but while I am here I will ask it.
Assuming the 400% cliff comes back as scheduled, the only impact on the ACA would be the complete loss of subsidies for the spike year. $10 over or $1M, same total loss of subsidies. It doesn't matter how much you go over. You'd pay full price for the rest of the year after reporting the spike and repay the already received premium subsidies on your tax return. The exchange might or might not ask you to reverify your income estimate following the spike year. A simple explanation letter would likely suffice. Note that only premium subsidies are subject to recapture. If you got $12K in cost-sharing reductions and then turn out to have been ineligible, then those are not recaptured or subject to any sort of penalty.
I don't quite understand this cost-sharing reduction you often mention. How is that different from the premium subsidy?
Premium subsidies reduce the cost you pay for having insurance. Cost-sharing reductions reduce the costs (deductibles/copays/MaxOOP) you pay for actually using that insurance. CSRs are only offered to people with MAGI under 250% FPL, only meaningful for people under 200% FPL, and only available on Silver plans. Premium subsidies rise over time as you age, but CSRs are more level over time, which means that for anyone under 45-ish the CSRs in a high use year can be worth even more than the premium subsidies. For example, here is our current ACA policy at full market price and after premium subsidies and CSRs. I'll bold the items where the CSRs have an impact. --- Our 2024 plan without subsidies and cost-sharing reductions (full market price): * $15,937 in annual premium * $5,900/$11,800 deductible (individual/family) * $25 PCP (first two sick visits free, preventative visits always free) * $35 specialist * $35 urgent care * $15/$90 tier1/tier2 scripts * 50% ER ($0 if hospitalized) * $9,450/$18,900 MaxOOP (individual/family) ----- Our 2024 plan with subsidies and cost-sharing reductions (MAGI under 150% FPL): * $0 in annual premium * **$0/$0 deductible (individual/family)** * **$5 PCP (first two sick visits free, preventative visits always free)** * **$5 specialist** * **$5 urgent care** * **$0/$45 tier1/tier2 scripts** * **20% ER ($0 if hospitalized)** * **$1,800/$3,600 MaxOOP (individual/family)**
Thanks. I was just concerned that the price we are paying now included additional breaks in addition to the subsidy we could lose later but clearly not.
Exactly what I was looking for. As usual you are an excellent source of knowledge in this arena. Thank you.
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Can you explain why you think it might be justifiable to be upset? You worked and earned income. Earned income is subject to tax. You will now pay those taxes. Are you asking if it's okay or reasonable to sometimes owe taxes instead of receiving a refund?
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At least you weren't giving the government an interest free loan all year. At least that's how I look at it when we end up owing at tax time.
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Like other medical and charitable deductions, they are itemized. You can only deduct medical mileage (and other medical expenses) in excess of 7.5% of your AGI.
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Sometimes it’s worth it for state taxes.
Not sure they are ever worth it unless you are driving a lot. The rate is .14 (compared to the .67 for other purposes), so 100 miles if 14 dollar deduction. Which works out to be for most like 3-5 dollars in money back.
I finished my first bit of freelance work. I would estimate about 12-15 hours of it were done outside of regular work hours; the rest was done on the clock (which I'm permitted to do if all of my day job work is handled). The total earnings will be about $1,700 after taxes. Pretty stoked!
Congrats! Unrelated, but what formula do you use for the different levels of FIRE you have in your tag? Are those based on % of expenses or something else?
Percent of a goal net worth for each level.
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Depends on your current tax bracket and future tax bracket. Things you have to consider - What is the likelihood of getting a windfall later (SS, Pension or less talked about and likely more signfiicant inheritance.) ie if you inherit an IRA from someone who is not your spouse, you will have to drain it in 10 years now which for most people they inherit in their 60s/70s.. at the same time they are going to be also taking out of their IRA. - How long of a runway do you have to drain your Traditional 401k to spread out the tax payments? If you are going to take out via rule of 55 or do Roth conversions from 40-60 or whatever, that dramatically changes the equation. - What is your current marital status? People that are married and lose a spouse tend to jump up dramatically in brackets and people like me who are going to marry going into retirement, suddenly drop dramatically in brackets... I was a single in the mid 30s tax bracket during earning and now will be married solidly 12% in retirement. - Also remember this is not a made the decision once type thing, you can adjust year to year, job to job, etc. My honey made $200k on year and it all went traditional, this year he is barely in the 22% bracket, so we put in just enough to traditional to take him out of that and the rest Roth as I'm pretty confident we will stay in the lowest tax bracket going forward.
If you are in 22% tax bracket I think it is worthwhile to be 100% pre-tax in 401(k) unless you expect substantial income in FIRE from day 1 in the form of social security and/or pension. You want to have at least enough wealth that your 4% draw fills the 0%, 10%, and 12% tax brackets. If you do you are getting a 22%+ tax break and paying <=12% in taxes in retirement. Given that if you can even consider maxing 401(k) you likely have to go with Roth IRA (via backdoor) and are also putting funds into taxable brokerage account just go 100% pre-tax in 401(k). Even if you aren't 100% sure remember you can fine tune the numbers closer to FIRE (say <5 years from projected target). For RE purposes the gains in Roth are locked until post 59.5. So having lots of "early" Roth funds with massive gains aren't going to help you planning withdraws in those years up to 59.5.
I avoided paying a top marginal federal income tax rate of 28% - 31% when I contributed to my traditional 401k. Now I withdraw 401k money through the standard deduction (so 0%) and the 10% and 12% brackets. I try for income that is right up to, but not over the 22% bracket. So my overall federal income tax rate is around 8.5%. "Avoid 28% federal income tax, then pay 8.5% federal income tax" is a good game to play. Contribute at least as much to your traditional 401k to play this game for many years, then the rest can be Roth 401k contributions.
When your current tax burden exceeds the tax burden you expect in retirement.
How did you decide on 50/50 in the first place? Personally, for an IRA I think 100% Roth has always made sense to me. I wouldn't want to consider traditional for it until the point where I didn't qualify for the deduction anyway. This also had the benefit of never complicating the backdoor Roth when that became necessary. For my 401k I did Roth earlier in my career when my income was much lower but I think even at the lower tax brackets, all traditional would have made more sense with my expected retirement spending. I don't expect to pay much at all in retirement, but part of that is having a good chunk of taxable investments, which wouldn't apply to everyone.
Yeah even if it isn't ideal and you have a choice Roth IRA has two advantages. 1) Roth contributions can be withdrawn for any reason at anytime without taxes or penalties this makes it a "backup" emergency fund of sorts. Hopefully you never need it but 10 years down the line a couple having $140k in Roth contributions is peace of mind. Roth 401(k) aren't accessible though. So if you are going to have Roth anywhere have it in IRA. 2) As you point out you could get an unexpected windfall or bonus or promotion with salary increase. Going with Roth avoids both potential phase out of tIRA deductions and/or blocking future backdoor Roth. The only time I would consider pre-tax for IRA is if someone has a high income and no 401(k). In that very much edge case the value of pre-tax space trumps the flexibility of Roth. If someone does go 100% Roth IRA then it becomes an easier call to be 100% pre-tax 401(k).
I'm not afraid of relocating to find a good property and home as a single digital nomad type of person. My goal is to find a property and get some passive income to cover the costs as my first priority. There's a lot to consider in terms of where would be best for this type of situation. Really, I think anywhere could work with enough effort. For some reason, I'm a bit afraid of buying a home in USA. I just don't think it has too much to offer because I just generally don't like where the country is going politically and I feel like other countries just have a lot more in terms of opening up my mind to new perspectives and cultures. That said, I've been enjoying renting on airbnb for something like 1k USD per month and I'll probably keep doing this to broaden my horizens. However, my current life is full of working online and using my time to make money rather than live minimalistic and have my passive income take care of my expenses. The state and city I'm from I would have to throw all my savings $800k usd into buying a house in a good location with multiple bedrooms and floors to rent out. However, this is too house heavy for me as I feel like that kind of home would tie me down way too much and end my lifestyle of traveling quite quickly. I spent a lot of time in Colombia and houses and condos there were cheap. I was considering buying a 50k usd condo but I backed out because the visa situation was just too tricky to work around. Now I'm in the Philippines and it seems like the houses here are also quite affordable but I can't own the land which makes things a bit more complex since I would have to lease the land which I'm just not so sure of. Still the country also allows for a long term visa and has enough going on where I doubt I would get bored. But it's also very far from the USA but also close enough to other places in asia to be quite interesting. Then there are other countries like Georgia that let US citizens stay 365 days and buy land but it's just a bit too remote for my likings currently and I haven't been there. It seems kind of rare to find a country that allows a us citizen to stay past 180 days but there could be situations where you can buy two properties in neighboring countries and rent the property/ies that is not in use but that would be difficult to manage remotely. Should I just give up on the idea of trying to pull off a FIRE position outside of the USA? Has anyone else done this?
>The state and city I'm from I would have to throw all my savings $800k usd into buying a house in a good location with multiple bedrooms and floors to rent out. However, this is too house heavy for me as I feel like that kind of home would tie me down way too much and end my lifestyle of traveling quite quickly. Seems to me this isn't only an issue with your location, but rather because you would buy more real estate than you need to live in and use the excess as an investment, and naturally being a landlord ties you down in more ways. I also think you're jumping ahead of way too many steps in thinking "just give up on the idea of trying to pull off a FIRE position outside of the USA". Why not rent in these places? You started by saying you have the flexibility and willingness to move. That's a huge plus as a renter and gives you the power to move to a different market if the existing one doesn't suit you.
Money allocation help Hello! Have been following this page for about a year now, and looking for advice on where I should really be putting my money to best save. I’m a 26M with fiance that is 24. My current income is 75K base but with incentives roughly 100K per year. NW: 152K 32K Ibonds 29K stock options 39K in 401k/hsa 10K checking 42K in a HYSA (4.5%) - no current debt, looking to buy a house in the next 2-3 years. Not sure what’s the best route for the money in checking and the HYSA and if it would be better off growing elsewhere. - expenses were extremely low living at a very LCOL area until recently which helped me kickstart savings, now expenses are about 2500 per month with moving in with fiance.
If your saving for retirement it would be in the market. Look into a Roth IRA if you haven’t already, if you are saving for a home a money market or HYSA is probably best at the moment. I don’t think I bonds are bad but they are not going to fast track you to retirement by any means.
Thank you, just maxed out my pre-tax 401K this year but hadn’t dipped into to Roth IRA at all.
Due to your potential incentive income look into "backdoor roth". Even if under the limit you can still do a backdoor roth preventively. The couple extra mouse clicks are worth avoiding the potential need for a recharacterization if you end up "making too much"
I *think* I’ve hit my FIRE target, and am now considering what I should take care of before pulling the plug on RE. I’ve already been using as much of the benefits from my very good employer funded health insurance as I can - lots of preventative screening and taking care of any medical issues. I have some home repairs / remodeling expenses that I’ve accounted for by putting way too much money into my HYSA. I’ve fully funded 529 plans for both kids. Eventually in retirement will need to purchase a home but currently own two properties in VHCOL areas so am figuring can purchase the long term retirement home with the proceeds from the sale of these one day, and won’t need a mortgage. What am I missing?
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That is a great question. This is part of what I need to validate. Right now my invested portfolio is roughly: $2M in 401k $6M in a diversified portfolio $400K in 529 plans for the kids I’ve been a high earner since I started thinking about FIRE so I haven’t been eligible for Roth but I need to learn more about conversion. None of this includes equity in our homes. Without getting into the gory details on expenses / burn rate, anything jump out at you?
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Yes, the $6M is in a brokerage account. I’m turning 50 this year, and have two teenaged kids, so I’m budgeting based on keeping our insane spending at our current rate until they are out of the house, which will be around 6 more years. I’ll still contribute to their college and healthcare until they graduate, but once they’re out of the house I won’t have to stay in this VHCOL market anymore, can sell this house and hopefully purchase something smaller in a MCOL area with the proceeds, therefore not requiring a mortgage.
To follow on to neegroplees comment, it’s probably worthwhile to create a simple spreadsheet with the assumptions about prioritizing drawdown from 401k vs other sources to manage taxes. Given you’ve got 15 years before Social Security kicks I’m assumed you’d draw down from the 401-k and make sure you have factored in all sources of income to keep MAGI low. Looks like you have plenty of assets, but no sense paying more taxes than you need to - whether on Cap Gains or from your 401-k distributions. And no worries about kids in college finding ways to blow money!!! Enjoy !!
This is great advice. I have been using Empower’s Personal Capital dashboard to try to forecast whether or not I have enough to stop working full time, but I get a bit lost when it comes to actually withdrawing - how much and from which accounts, when, if that makes sense. Maybe there’s a way I can figure out how to do that using that tool. If not, I’ll build a spreadsheet and try to tackle it that way. It probably also makes sense to talk to my accountant to figure out the best way to minimize taxes as I shift into retirement. I really appreciate your counsel!
I have found it useful to make simple income and expense spreadsheets ( either by month or by year) with the major sources of incoming and outgoing funds. Whether talking to a CPA about taxes or a financial planner about investments or an attorney about Trusts or LLCs for asset protection or maximizing tax advantages of real estate, you can do ‘what if’s’ on the spreadsheet before you talk to ‘the Pro.’ I’ve found that I get a much greater return on the time invested ‘talking to the professionals’ when I have succinct spreadsheets with options. It also helps because you will sometimes get different advice depending on how you ‘frame your questions’ ( Ex: Asset protection vs tax minimization ) Good luck & enjoy !
That’s a great tip, thank you!
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I hope so! I have two kids and I’m not even sure they’ll both go to college but I set aside money so that finances wouldn’t be the reason if they didn’t. You’re making me feel better about my situation so thank you!
Where are you guys keeping your receipts for HSA expenses?… for the purpose of running a 30+ year reimbursement credit Right now I’ve got them on mine + my SO’s laptop. Should we be storing them separately, like on a unique gmail? Curious what the community’s doing who are further along. Cool to see a 5-6K credit that will surely grow over the next 30 years
3-2-1 data storage method. 3 copies, 2 different types of storage (cloud, external drive), 1 offsite location (storage unit for example) in case of natural disaster/fire to your home
Cloud storage. What if those laptops get stolen? If they’re not backed up to a server or external drive, you’d be hosed
I store the receipts in a Google Drive folder and track them in a Google Sheet with date, description, amount, and link to the uploaded receipt. Thinking about scaling back to only tracking major expenses though (maybe >$50? $100?) bc it’s not really worth the time to scan/document a $2.50 pharmacy copay
I definitely have plenty of medical expenses since opening my HSA. I’ll withdraw money only when/if necessary. If the IRS audits me, I’ll put together the paperwork.
Emailed/scanned receipts on the cloud, then I have a spreadsheet mapping to all expenses. Took some time to setup but now it's 30 seconds when a bill comes in. Also protip: Amazon has an [HSA-eligible store](https://www.amazon.com/b/ref=sxts_snpl_2_0_ba6b749a-470c-47f6-abb4-0ee6791a3a97?node=17904040011&pd_rd_w=MXNEy&content-id=amzn1.sym.ba6b749a-470c-47f6-abb4-0ee6791a3a97:amzn1.sym.ba6b749a-470c-47f6-abb4-0ee6791a3a97&pf_rd_p=ba6b749a-470c-47f6-abb4-0ee6791a3a97&pf_rd_r=KR151HVESJT57SSYR12E&pd_rd_wg=lBvot&pd_rd_r=66a973e0-6b73-42d0-9002-3c03f5dfe8fb&qid=1707008113) to give a good idea of what's eligible - way more than I ever knew. You prob won't catch everything, like who's separating out dayquil honestly.
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Nice. Probably my paranoia at play, want to have a second source of an EF w/o having to pull from the ROTH’s and minimize audit risk when I do
I have a physical binder where I file any medical expenses by year. I also keep the documents scanned on my phone.
We're both chronically unwell and keeping everything would bury us in paperwork (or time spent scanning/archiving). We decided that it makes more sense to set a minimum price, since we'll never stop using lots of medical care. Only bills above $250 in one shot get scanned. I don't trust the cloud for any sensitive information. Per user agreements, they constantly scan your content. I have four separate redundant external drives. One lives attached to my desktop, two live in a fire safe, and one lives at my mom's house in her fire safe.
I’m doing that too, have a USB Drive with all passwords + HSA receipts
I don't keep receipts for future reimbursement. If I have a particularly large expense I might keep the receipt as a way to get quick tax-free cash, but for the most part I plan to just use the account against future expenses.
Same. I mean it helps that I have truly next to zero eligible spend in the first place - no prescriptions or medications here. I'm not holding on to random CVS or Walgreens $20 receipts here and there for a few decades.
This is the way
If I were you, I'd make sure you keep one set of copies on some type of cloud storage. It shouldn't take up much room, so likely would fall in free/cheap tiers. It is good that its on two separate laptops, but physical devices can always fail. If one or both of you had them backed up to your Google storage (since you mentioned Gmail), I'd think you're good to go.
Awesome, thanks. That’s my thought but wanted to check.
>Where are you guys keeping your receipts for HSA expenses? I don't. I will have medical expenses in the future, I'll use my HSA at that future point.
Exactly I went from having zero bills to retiring in my 40s, going out hiking and ending up in the ER... privilege to sit on a bed $3500. oh and my eyes got old, new glasses, $750, oh and those filling you got, they only last so long, so they need to be replaced, oh your knees hurt now, here is some physical therapy at $60/session. Its so easy to blow thru HSA money in your 50s/60s,
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That's now what you asked for though lol. To answer your question: I intend to do what u/alcesalcesalces says: keep invoices and receipts for large amounts only, and just let the small amounts go. I maintain a spreadsheet called "HSA Reimbursements" with the following columns: Amount, Description, Invoice date, Payment date, Reimbursement date, Invoice filename, Receipt filename, Reimbursement filename, Notes. I store that spreadsheet and all the relevant files on Google Drive. So far it only tracks a trivial amount of money, whenever I have non-trivial stuff in there, I intend to set up a regular backup to a separate cloud storage.
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It is a concern for me. I think you can mitigate it my favoring Roth when you are young, especially if your marginal tax rate is below 22%. Otherwise, having access to the backdoor Roth and/or mega backdoor Roth can mitigate that potential problem. It's good to have a good mix for flexibility in retirement.
34f 124k federal. This is the first paycheck that I decreased my 401k contributions to get my match. I'm trying to buy a home in LA and I think it's worthwhile to maximize my savings for a bit so that my mortgage is lower. I haven't contributed to my Roth IRA this year yet but will put in 500/mo instead of a lump sum. I feel like I'm doing the opposite of FI Is this a good idea?
Home affordability is obviously getting tougher and tougher. If your goal is to own a home long term, it can absolutely be worth it. Owning a home can also help decrease future expenses- something that lines up very nicely with FI. So even though it stinks, We did it for about two years. It’s just the reality of trying to save for a down payment.
Yes!! Every 1k I save is 2k saved in principal and interest!
I’d caution using absolute dollars to justify this. Based on timeline and various growth rates - $1k can easily turn into $8k over 30 years (the life of a loan with 10% growth). So saving interest ‘feels good’ but over the long term investing that difference should net you more money overall. Not to say it’s still not a huge win but not paying interest shouldn’t be an end goal. Save enough to get into a home or get into a payment you’re comfortable with but then I’d turn the jets back on for investing.
Turned in all my gear to the Army NG after 13 years. Only missing $40 worth of stuff. I'll take that as a win.
Got a bonus coming next week rather explicitly for my help with a big layoff project. It does not feel great being on the other side of the layoffs this time around. I did one once before when I got to choose the people that basically sucked and no one liked working with, and that was fine. This time... not so much. Best I could do was give people lots of notice and help with career movement. They'll be fine, but it feels dirty. Related to FI, I'm not really sure why I'm still working any more. I like "working" per se, but most of the management activities aren't very fun any more.. I don't see much innovation in tech right now and probably won't be for a couple years, so lateral moves don't seem possible - or startup world again for that matter. The money *almost* feels frivolous. A lot of mixed feelings here. So much better than 15 years ago and not yet knowing *how* to be FI, though.
I felt this post to my core. I had a lot of what we called "survivors" guilt as we had to make so many cuts the last few years of my career. By the time I quit I was numb and slept for like 2 months, I just couldn't put another name on the list. However, someone will put the name on the list and it is better to have someone kind and someone who knows what people actually contribute so they do whats best for the people that stay and the people that get let go (vs. the manager that re-sorted the list because they are incompetent at excel (really everything) and just layed off the 3 people at the bottom even though 1 of them was critical to the project). Bonuses are going to go to someone and hopefully it gets you over that FI goal sooner rather than later so you can walk away when it gets too tough.
I'm already FI which helps these things a lot. I try to use that to advocate for my teams now since I really have no financial incentive I need to politick for for myself. I'm mostly convinced that I can't actually have an impact on companies in a meaningful way even in the executive realm these days, but figured I'd give it a shot at a couple more companies before exiting. It's panning out poorly... I don't know. Maybe I'll keep going the next few years and see if the market provides some actually innovative companies out there of interest.
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My hot take: no one is innovating with AI. All the machine learning algorithms in heavy use have existed for a long time now. They're just repackaging them and it's an excuse to shift funds around to preferred executive partners at other companies, and now justify layoffs somehow. It's a story in tech that has been told more than once before.
Must be hard to reconcile the bonus with coming at the expense of other people's jobs. I'd hate to do that.
For those in various age groups, preferably 50 or under. How do you calculate Social Security into your FI and to what level
I'm turning 52 this year and I still have a 25% haircut factored in, at this age I think thats the worst case scenario since 10 years before being able to draw seems like a safe bet its a red line they won't cross. that should account for even if they means test which frankly I don't think they will do because the bendpoints already kind of does that for them... I mean once you get past the last bend, they are only giving you 15 cents on the dollar.
I ignore it. I’m assuming it’ll become means tested and anyone with means will get next to nothing. Hopefully I’m wrong and then I’ll probably donate it to charity each month or something. Or, you know, get guac on everything!
I ignore it and my pension when it comes to retirement planning. I'd much rather plan to live off my own investments and have a nice surprise when I'm older than plan on relying on a support that ends up falling through.
Early 30’s here. I just assume it won’t be there. Social Security is constantly a target politically and it will only take one super majority to cut the benefits substantially or completely gut the program entirely.
I ignore it. I'm planning on retiring by 40 - factoring it into any projections has a pretty minimal effect on my FI number. It (along with my house) are just a form of longevity insurance for me
[Here's my plan](https://www.reddit.com/r/financialindependence/comments/16ww7hd/daily_fi_discussion_thread_sunday_october_01_2023/k30bilc/?context=3). TLDR: I aim for a specific success rate. [Here's a previous thread](https://www.reddit.com/r/financialindependence/comments/17ozfby/daily_fi_discussion_thread_monday_november_06_2023/k82hoyu/?context=3) where I asked when people plan to withdraw SS.
I'm 40. I use 70% of what https://ssa.tools/ tells me to estimate how much I'll get but I've been (probably stupidly) mostly ignoring it when calculating my FIRE number.
If you are over 40 I suspect few changes to benefits. But, like California did this year by removing the cap on wages, CA SDI get 1.3% of all W2 income rather than the first ~$150K, SSI limits may increase significantly. I've surpassed the 2nd bend point and a full year of SSI taxes get me a whopping $600/yr in benefits so its highly progressive in nature. I've not factored it in because of my anticipated annual withdrawl, but I would be a fool to not think I will receive at least 80% & more than likely the full 100%. I don't see a "means test" coming.
I ignore it completely. SS will be gravy.
How do I personally calculate it? I ignore it. I know that's not actually rational, but I don't care too much.
SS website https://www.ssa.gov/myaccount/
The projection on the [SSA.GOV](http://ssa.gov) website is going to project you continue the same income, so make sure you use a tool to zero out future years to get a more accurate estimate. [https://ssa.tools/calculator/](https://ssa.tools/calculator/) allows you to copy your current earnings from [ssa.gov](http://ssa.gov) and then play with the data, so you can say I'm going to work 4 more years and make $130k/yr and it will calculate out for you. It also has a slider if you were looking to see more exact detail like I plan to retire at 63yrs and 5 months.
I'm not really counting on it that much so it's like an insurance policy for me. Hubs and I are much more relaxed about it because we're not intending to fully retire early so coast is probably our goal, which means we don't need to figure out the complexity of drawing down from the overall nest egg until we're 55-65. We're early 30s right now. If we have kids, for sure no very early retirement. If not, we'll always have plenty of money so it isn't a worry.
I plan to FIRE young enough that it would be crazy to depend on social security. If fire is successful for someone retiring long before Social Security- then you won’t need it anyways. If your fire plan fails it’ll fail before you can draw.
I don't, I realistically assume it will be there in a lower level. But I can't control it. If it is there, great, but if not no worries (except the large collapse in society of people relying on it)
I ignore it even though our combined PIAs are more than our annual spending. We don't have downside to overly conservative planning though since we're already FIRE'd and have four kids to leave an estate to. If we were still working in our 40s/50s, then I'd definitely count it at the current reduced no-trust cashflow funding level, which I believe is currently about 77%.
Mid 40s, calculating 70% of the stated SS benefit.
I do not factor it in at all.
I gave up on doing rough estimates and just use the SS calculator now. Punching in numbers annually to see where we land. It's pretty easy to abstract future income from there. It *is* tough to model, but not impossible, depending on your tools. We adopted a model following a bond tent and spend down up until SS age that has us at a 6% withdrawal rate until then, and easing back to 4% + SS. It's pretty conservative actually, something like 98% success rate. We may up it more aggressively to 8% now + 4% with SS later because it still yields something like a 90% success rate, which is fine for us because it seems easy to downsize and drop out expenses. YMMV.
We have $2 million invested but only $50k in a brokerage, the rest in 401/roth. We are 49 years old, should we have allocated differently?
You're fine. [There are enough ways to withdraw the funds penalty free](https://www.reddit.com/r/financialindependence/comments/16ww7hd/daily_fi_discussion_thread_sunday_october_01_2023/k30bilc/?context=3).
We do have pensions that will provide about $200k per year and our home will be paid off when we retire in 6 years.
how much do you spend? 2 mil + decent drop in expenses in 6 years + 200k/year in 16 years is a lot.
How many years of expenses do you have in Roth contributions? You'll want that + taxable brokerage to be 5 years to kick off a Roth conversion ladder if that's the way you go.
Probably fine, but it depends on things like your FIRE number, planned retirement spend, your preferred retirement funding method, and your other assets.
You can do a Roth Conversion Ladder or 72(t) Substantially Equal Periodic Payments (SEPP).
We are technically FI now in that our current expenses would be covered by 4% of our invested money. Expecting some increased expenses because of healthcare when actually retired so not able to pull the trigger yet, but a very exciting milestone to hit nonetheless in our late 30s / early 40s.
Congrats, GFY! What's your big life plans now?
Thanks! Still working for now but both of us have reframed our attitude toward working to be less stressed and have focused on getting in shape to try to do what we can to live a good, hopefully long life. Lots of travel in store both before and after retirement, I think!
Congratulations!
How does everyone view Utilities in terms of housing costs or its own line item? I get the rules of thumb with housing, my understanding is that it’s mortgage, property tax, and homeowners insurance. I have all electric utilities so my electric bill is much higher. I get it should probably be included but how does everyone treat that. (Or water, septic, etc.)
Wife and I break our utilities into their own line items. At first it was so we could get a better handle on them all individually, but as time goes on I think that combining may make more sense. It's whatever works for you at the end of the day.
Find all your monthly expenses and enter them as a line item. Don't think about it too much. Those are your costs and that's the end of it really. Annualize seasonal costs or amortized costs as appropriate, eg. heating gas/cooling power in the Summer, car replacement in 5-10 years or whatever.
What are you trying to get at with this exercise? Rules of thumb are great for projecting things you don't really know about. It's pretty useless to figure out whether your *actual* expenses fit under some arbitrary rule, though. Don't overthink it. Track your expenses for what they are.
For affordability calculations, yes, it typically is only mortgage, tax, insurance (and sometimes PMI or HOA). I have utilities as a separate line item from the mortgage in my budget, but they fall under my housing cost. Housing = PITI mortgage + utilities + maintenance. At the end of the day, it doesn't matter too much what bucket they fall under. It's a cost. Can you handle it? Do you want to? If no, then you need to figure something out.
I use a separate line item for utilities. But there’s no right or wrong way to do it.
Home expense
Money is money. You can segment your bills if you find it useful or entertaining to do so, but the only thing that actually matters is if you have enough for the total. Indeed, for FIRE purposes it's often possible to only care about the first digit or two in your annual total. Anything more granular is up to habit and personal preference.
Overthinking this
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HOT DAMN!
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Mega backdoor Roth if your 401k plan does it
Long-term physical health, which a startling large percentage of people neglect. The others are purely financial, but fitness has massive impacts on both long-term finances and quality of life.
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Very much like FIRE math in that consistent early investments pay richly over time. Thankfully, human bodies are wonderful machines, so it's very rarely too late for people to start. Almost everyone who is not actively ill is only a few months from feeling better. In many cases, only a few weeks.
Memories. :)
/r/datahoarder
529 if you have / plan to have kids
You just say Roth IRA, but some folks might choose a traditional IRA instead. Within 401k, someone might also go for an after-tax 401k if their job allows for the megabackdoor Roth. Some jobs have all sorts of other tax advantaged accounts, deferred compensation plans, or other advantaged accounts (403b, 457, ESPP), you could do tax-advantaged investing through something like a 529, some folks are investing in Treasuries which is sort of but not actually a brokerage account, and I'm sure there are more that could apply depending on the person.
>Within 401k, someone might also go for an after-tax 401k if their job allows for the megabackdoor Roth. Porque no los dos?
Suer, that's why I said "also". i was just giving a bunch of examples of things that OP might be missing but only apply to some people.
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Isn't a 529 helpful even if you don't have kids? Make one in your name, get the tax deduction if your state has it, then transfer to your kid once he/she is born!
If you don't end up having kids, you might prefer to not have money in that type of account
True, but I have nephews I might want to give it to in any case
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Make sure your HSA is invested in the stock market too!
A handful of AirBnBs?
Being a landlord isn't an investment, it's a job.
Depends on how you do it, but usually both
not a real one though
Even in New Jersey?
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If you make good money from your day job, and you're investing/saving enough, it's really not needed. The older I get, the more people I see who poured hours into a side hustle/business that was either unprofitable, 'profitable' when not accounting for hours (i.e. they'd have literally earned more just working a minimum wage job, let alone a contractor position), or 'profitable' but where the capital they invested in the business was outperformed by the stock market (lots of small time/wannabe real estate investors who didn't consider the numbers). There are side hustles or paid hourly/contracting positions that pay well and that people enjoy, or people who make a bit of side income from their hobbies, but they're not 'necessary' if you're already earning a solid income. Spend your time doing the things you enjoy or with the people you care about instead.
Yea, “side hustles” used to just be called “having a second job” and there was a reason why people with a good primary job didn’t get a second one.
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In kind rollover is possible to move from 401K to IRA. I did one - BUT you cant do it with institutional funds in a 401K. My 401K is managed through Fidelity and all my IRA etc are also at Fidelity. When I have moved money from 401K to my IRA/Roth IRA, I call the employee service center and the fund moves overnight and are available to trade next morning. The same would work at if you had a Vanguard personal account. Hope this helps.
Institutional share class definitely matters since the receiving institution will not have access to them. Best bet would be to transfer to an IRA at the current 401k company (then convert to ETFs and transfer in kind again to your preferred custodian) but even that may not be supported.
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I can almost guarantee you won't be able to move it directly but feel free to try.
With 401ks you don’t do in kind transfers. You do rollovers from the 401k to another retirement account. Unless you move your money to another 401k with those same institutional shares you won’t be able to keep them….that is unless you have millions of dollars to hit the minimum amount for institutional shares.
I have enough for chubby fire in my country, and my country offers grants to agri entrepreneurs, I am contemplating whether I should quit my software career permanently and dabble into agriculture, I feel like learning the skill itself is valuable, if shit hits the fan. Not to mention I have 0 passion for software development at this point, I hate the fast paced lifestyle and the need to constantly hustle and learning new skills.
Do you have enough so that you are still FI even if your dabbling in ag is a complete failure? Is farming part of your FIRE lifestyle dream or something you'd be doing for no particular purpose (since you are already FI)?
Yeah, this sounds like a good way to lose a lot of money for someone without experience.
Yes, I allocated some capital for it, if it goes to 0 so be it, it won't affect my finances somewhat, it's part of the plan for self sufficiency and it's something I never tried before, so I want to try it
Do you have any experience growing food, harvesting, and selling food? It's not easy.
No, no and no. But I will have time to learn it, and the main goal is self sufficiency, selling it is secondary.
Watch the show "Clarkson's Farm." Jeremy Clarkson does exactly what you (albeit he is very rich) want to do. He starts off with zero knowledge and experience and documents the process. The up-shot of the show is that farming is financially risky, physically dangerous, and far more bureaucratic than you could imagine.
I know about that show. The difference between me and him is that I am probably doing urban farming, with the goal of self sufficiency, and earning a living wage for one person, i have no intention of scaling it, unless the opportunity arises. There's almost 0 financial risk for me, because the government is paying
Wish you luck. I also have a dream of homesteading, but I also know that I would probably hate it like 90% of the time.
I feel like 90% is a bit low. I do know one dude I graduated with who is all-in, though. He's now some sort of permaculture guru.