dukebound85

macrumors P6
Original poster
Jul 17, 2005
18,510
3,004
5045 feet above sea level
Who else here is shooting for FIRE? What is your date and how do you plan to get there?

My wife and I, with the recent addition of our little one, have changed our perspective and desire to spend as much time with her vs a "job"

We are shooting for 2030 and our FIRE # is 2.5 mill
 

KaliYoni

macrumors 6502
Feb 19, 2016
314
367
I'm not a FIRE aspirant but I do make my living through financial markets. So I have a few comments that will affect you after you reach whatever your trigger number is:
  • Think about your and your spouse's life expectancy. If, say, you want to stop earning salaries at age 35, you could very well need your money to last 50 years or more.
  • Stock market returns are lumpy. In other words, the annual return of 6%-8% you often hear about is an average. Your asset allocation and strategy need to be able to withstand big, potentially multi-year dips.
  • If you live in the US, be sure to factor in how much health insurance will cost you. Individual insurance (as opposed to insurance obtained through an employer) is very, very expensive for relatively minimal coverage.
  • When you rely on investments for income, you have to approach tax planning and payments much differently than when you're a salaried worker.
  • If you don't know much about personal finance, economics, and finance, you will either have to learn or pay advisors. Advisors' fees can be expensive both in the short term and, especially, over time.
  • Families with high levels of assets will not receive much financial aid from colleges and universities.
 
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MacBH928

Contributor
May 17, 2008
6,034
2,419
According to my calculations, you need to save $20,000 a month to achieve that. Also where will you make the 4% from? Interest rate?


I'm not a FIRE aspirant but I do make my living through financial markets. So I have a few comments that will affect you after you reach whatever your trigger number is:
  • Think about your and your spouse's life expectancy. If, say, you want to stop earning salaries at age 35, you could very well need your money to last 50 years or more.
  • Stock market returns are lumpy. In other words, the annual return of 6%-8% you often hear about is an average. Your asset allocation and strategy need to be able to withstand big, potentially multi-year dips.
  • If you live in the US, be sure to factor in how much health insurance will cost you. Individual insurance (as opposed to insurance obtained through an employer) is very, very expensive for relatively minimal coverage.
  • When you rely on investments for income, you have to approach tax planning and payments much differently than when you're a salaried worker.
  • If you don't know much about personal finance, economics, and finance, you will either have to learn or pay advisors. Advisors' fees can be expensive both in the short term and, especially, over time.
  • Families with high levels of assets will not receive much financial aid from colleges and universities.
"How did you go bankrupt?"
"Two ways. Gradually, then suddenly."

🤣🤣🤣
 
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dukebound85

macrumors P6
Original poster
Jul 17, 2005
18,510
3,004
5045 feet above sea level
According to my calculations, you need to save $20,000 a month to achieve that. Also where will you make the 4% from? Interest rate?





🤣🤣🤣
You are assuming:
- starting from 0 savings today
- no growth at all from savings


The 4% safe withdrawal rate will come from the growth of the investments, which have averaged 8-10% before taking into account inflation of ~3%
 
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scubachap

macrumors regular
Aug 30, 2016
235
457
UK
I watched a few videos from proponents a while ago, and they often seemed heavy on philosophy but light on accounting and I always felt I wasn't being told the full story from successful proponents.

I guess if you have a really decent income and can find free or very cheap housing for 20 or so years then saving 70% of your income might be viable. Good luck to you if you're in that fortunate position but the idea that most people here in the UK could do this is bobbins. Lets estimate some figures - after housing costs the average household (2 adults) here is left with around £1600 a month - we then need to take off a further £400 for food (£200 each) and so each adult has about £600 a month to play with for everything else. Save all of that (no car, no kids, no holidays, well no nothing really...) and in 20 years you have £280k ish for two adults. (Sure I haven't allowed for compounding interest but good luck getting any interest at all at the moment.) It's a good lump of money but hardly financial independence and you'll have made enormous sacrifices to save it.

Mind you there's actually plenty of people (the boomers) who have effectively managed to achieve this FIRE thing - independence and retirement in their 50s with assets and and a decent income stream. Their 'secret' was to be well, just lucky - cheap housing (that then soared in price), long periods of steady inflation to inflate away debt and raise wages and the golden egg of a final salary pension scheme, often with a lump sum as well and the desire to boot them out the door in their 50s with sweetners as things were offshored left right and centre 20 years ago,
 
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senseless

macrumors 68000
Apr 23, 2008
1,849
247
Pennsylvania, USA
Many couples who were stuck with each other 24/7 last year may have a different perspective on early retirement now. I think it’s healthy to have a productive work life for a longer period than you suggest.
 
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velocityg4

macrumors 603
Dec 19, 2004
5,887
2,490
Georgia
Many couples who were stuck with each other 24/7 last year may have a different perspective on early retirement now. I think it’s healthy to have a productive work life for a longer period than you suggest.

I know I'd go nuts. If retiring just meant puttering around the house and going on endless vacations.

But I could see retiring early from a high income job. One which may not be something I love doing, just acceptable. To something I love doing but doesn't pay much. If you love your work. It no longer feels like work. You'd still be working and productive. Just with a much smaller income. With your investments paying the bulk of the bills.
 
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Apple fanboy

macrumors Westmere
Feb 21, 2012
43,779
35,272
Behind the Lens, UK
I think my reality will be the exact opposite to this. Despite earning a decent salary, I can't see how I would ever be able to retire with the rather low interest of get on my savings and will get with my stakeholder pension. I also envisage that state pensions will likely only be available for those with no assets in the future. Our house is probably above average in value, but we aren't planning to downsize in the future. We moved into a large bungalow so as we do get older we don't have to worry about mobility.
 
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Richard8655

macrumors 65816
Mar 11, 2009
1,407
918
Chicago
I subscribe to FIRE and believe am already there. Consume less and save more worked for me, and I never felt deprived. I didn't want to be a slave of my employer forever. And for me, there's plenty of interesting things to see and do in early retirement.
 
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Airforcekid

macrumors 68000
Sep 29, 2008
1,576
312
United States of America
Yep just turned 30 will retire from the military at 37 after 20 years of service making around $3k a month from that alone. Plus dividends etc. I should be around $5k a month after tax. Bought some land outside DC in VA a few years ago have it nearly paid off and plan to build a large tiny home on it to avoid having a mortgage. Hopefully I can use my late 30s and 40s to slow down enough to find a husband have kids without needing to work.
 
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chrono1081

macrumors 604
Jan 26, 2008
7,779
2,242
Isla Nublar
I’m not sure what is this

It's basically people who 99% of the time piggy back off of rich relatives/high paying jobs pretending they're "self made" and gaining financial independence through investing.

While there are some very lucky people who did it without help, most have help they don't account for. The last news story I saw on this was a couple who "were financially independent by themselves and how anyone could do it!" The catch was they both got really high paying jobs out of college ($250k+) due to connections their parents had, they paid no rent and lived in a house the ones parents owned, their parents paid for their school so they had no student loans, and they invested almost all the money they had. That's completely typical for FIRE stories too.
 
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Airforcekid

macrumors 68000
Sep 29, 2008
1,576
312
United States of America
It's basically people who 99% of the time piggy back off of rich relatives/high paying jobs pretending they're "self made" and gaining financial independence through investing.

While there are some very lucky people who did it without help, most have help they don't account for. The last news story I saw on this was a couple who "were financially independent by themselves and how anyone could do it!" The catch was they both got really high paying jobs out of college ($250k+) due to connections their parents had, they paid no rent and lived in a house the ones parents owned, their parents paid for their school so they had no student loans, and they invested almost all the money they had. That's completely typical for FIRE stories too.
You can go the other route too I've met a lot of people in the tiny home community that share used cars with neighbors have gardens for food etc and get by on less than $10k a year. A lot of them mid 30s just burned out from the corporate world wanting to do what they want and focus on their kids. I decided at 25 I would be done working full time at 37. It has a cost besides the saving though ill never have the latest Mac/iPhone or travel as much as I do now but at that point in my life I doubt ill care when I can wake up at 9am with a clear schedule.
 
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KaliYoni

macrumors 6502
Feb 19, 2016
314
367
I think the FIRE mentality (keep your burn rate low, save and invest as much as possible) is fine. But the FIRE industry is often bad and detrimental to individuals trying to be financially conservative.

Seminars, investing "systems", influencer subscriptions, and "wealth advisors" all drain away money at critical stages. Worse, if somebody follows bad or scam advice and doesn't hit their FIRE number 15 or 20 years from now, the following 40 or 50 years aren't gonna be much fun. And that cute couple on YouTube or the slick guy who lured you to that hotel conference room will be long gone.
 
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dukebound85

macrumors P6
Original poster
Jul 17, 2005
18,510
3,004
5045 feet above sea level
It's basically people who 99% of the time piggy back off of rich relatives/high paying jobs pretending they're "self made" and gaining financial independence through investing.

While there are some very lucky people who did it without help, most have help they don't account for. The last news story I saw on this was a couple who "were financially independent by themselves and how anyone could do it!" The catch was they both got really high paying jobs out of college ($250k+) due to connections their parents had, they paid no rent and lived in a house the ones parents owned, their parents paid for their school so they had no student loans, and they invested almost all the money they had. That's completely typical for FIRE stories too.
I 100% disagree.

I feel that many get there by being frugal and living below your means and is definitely possible to achieve for many. The key is saving and investing aggressively and with intent and not fall into the trap of lifestyle creep that comes with higher wages.

This means no new iPhones/macs/etc each year or even every 3 years. No new cars, No 3000 mountain bikes, no 2000 patio sets, etc despite having a job that can easily afford it.

For me, FIRE is very much an option and we are doing so without any "help" that you allude to.
- Wife and I both paid 100% of our school and had the loans we had to pay back
- Wife and I didn't get any help with housing or downpayment, etc
- We don't have car loans that eat up to 500-900 a month that many have. I drive a used, but reliable truck with over 500k miles on it for instance.
- We don't get the latest gadgets/etc. We buy products, including apple, that are 2-3 years old used and this saves a fortune when we do upgrade devices.
- We have a savings rate of nearly 60-70%

In fact, the biggest worry we have is our parents on both sides have 0 saved for their retirement and will be a challenging decision on how do we handle that or if we can handle that?

My parent's experience with finances is what motivates me not to be in their shoes. You have to take control of your finances. You won't wake up financially independent without making it a point to do so.

If you do the math, saving 100/month for 45 years will make you nearly a millionaire with a 0 starting balance and the historical average returns in the market. Most people should be able to do this. That 1,000,000 nest egg will then generate 40,000 a year in growth you can take out without ever touching principle based on historical market averages.

I don't know about you, but 40k/yr is definitely a large part of not needing to work
 
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Richard8655

macrumors 65816
Mar 11, 2009
1,407
918
Chicago
Just to add. What prevents many in reaching FIRE is the lure of materialism and consumerism. The constant onslaught of advertising everywhere you look can easily break the will. Competition with what the neighbors have and feeling somehow inadequate is part of the mix. And of course, this leads to revolving credit card debt that often never gets paid off, and comes with incrediblly high interest rates.

No wonder it's so hard to save, let alone retire early. That's the nature of our capitalist society.
 
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Apple fanboy

macrumors Westmere
Feb 21, 2012
43,779
35,272
Behind the Lens, UK
Just to add. What prevents many in reaching FIRE is the lure of materialism and consumerism. The constant onslaught of advertising everywhere you look can easily break the will. Competition with what the neighbors have and feeling somehow inadequate is part of the mix. And of course, this leads to revolving credit card debt that often never gets paid off, and comes with incrediblly high interest rates.

No wonder it's so hard to save, let alone retire early. That's the nature of our capitalist society.
Never had a credit card. Apart from a mortgage never had any debt. Paid our first mortgage of after a few years and lived mortgage free for years. Then we recently moved to a place in the country and have another small mortgage. Just over 8 years to go, but I will aim to have that done in 5.
 
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KaliYoni

macrumors 6502
Feb 19, 2016
314
367
Behavioral and societal influences aside, I think it's important to keep in mind that the oft-quoted "average return" is just that: an average*. Further, a lot of the higher numbers batted around have some baked-in assumptions that are difficult to replicate in real life...such as reinvestment of all dividends, no management fees, and no tax effects.

On top of that, when investments incur a loss, they must make up more ground, percentage-wise, to get back to even.

So, I believe that FIRE aspirants need to plan carefully and thoroughly and should have a contingency plan in case things don't work out as hoped (for example, a lot of people's savings have been slammed by two black swan events in the last 20 years).

*https://finance.yahoo.com/quote/SPY/performance?p=SPY , https://finance.yahoo.com/quote/efa/performance?p=efa
 
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Airforcekid

macrumors 68000
Sep 29, 2008
1,576
312
United States of America
Never had a credit card. Apart from a mortgage never had any debt. Paid our first mortgage of after a few years and lived mortgage free for years. Then we recently moved to a place in the country and have another small mortgage. Just over 8 years to go, but I will aim to have that done in 5.
If you have an interest rate under 3-4% you might be better off putting the extra money into something that pays dividends such as NUSI or SPHD should be easy to beat. I stopped focusing on paying so much towards my mortgage as its value increased and inflation is starting to take off at a higher rate than the interest rate.
 
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Airforcekid

macrumors 68000
Sep 29, 2008
1,576
312
United States of America
Behavioral and societal influences aside, I think it's important to keep in mind that the oft-quoted "average return" is just that: an average*. Further, a lot of the higher numbers batted around have some baked-in assumptions that are difficult to replicate in real life...such as reinvestment of all dividends, no management fees, and no tax effects.

On top of that, when investments incur a loss, they must make up more ground, percentage-wise, to get back to even.

So, I believe that FIRE aspirants need to plan carefully and thoroughly and should have a contingency plan in case things don't work out as hoped (for example, a lot of people's savings have been slammed by two black swan events in the last 20 years).

*https://finance.yahoo.com/quote/SPY/performance?p=SPY , https://finance.yahoo.com/quote/efa/performance?p=efa
This is why I focus on a diversified portfolio of long-term dividend paying stocks and ETFs. O is a a great example of a company that survived both black swan events and still raised their dividends, SPHD has also been a decent ETF and NUSI seems promising but is less battle tested.
 
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Apple fanboy

macrumors Westmere
Feb 21, 2012
43,779
35,272
Behind the Lens, UK
If you have an interest rate under 3-4% you might be better off putting the extra money into something that pays dividends such as NUSI or SPHD should be easy to beat. I stopped focusing on paying so much towards my mortgage as its value increased and inflation is starting to take off at a higher rate than the interest rate.
My brain doesn’t work that way. When we inherited some money years ago. 90% of it went on the mortgage. I’d rather live debt free than chase some extra dollar. I remember interest rates being 15%.
 
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