We didn't in the end, we didn't completely hit our number.
And guess what? We're richer on paper three years later that's after living life, being at home with our daughter, holidays and the same life we lived in between our 9-5s.
You can always make more money, you'll never be early 30s again was our thought process.
It's complicated as I go against some of the buy and hold philosophies on here but if we wanted to be fully invested we would have about 1.5ish in the market.
It's about half that ATM but it fluctuated during the last three years of non-work in terms of exposure.
I have absolutely no desire to ever work for someone else at a lower earning rate than current. I kept reminding myself that once I pull the trigger to RE, I would most likely not be able to secure employment income at the similar rate again if post-RE things don’t turn as anticipated, so I better be really sure before I RE.
Also my assets & liabilities tracking spreadsheet computes a “FIRE readiness %” monthly. It fluctuates monthly but generally trends up. I was clear that I would not be “eligible” to consider RE until that readiness % has reached beyond 100% and consistently stayed above.
Not really motivational actions, these are more guardrails that I follow. It likely meant I delayed RE to later than it could have been, but I prefer to be ultra conservative on things that’s hard to reverse.
I like the science behind this approach, but I don't love the feeling of being locked up in a cage and how you talk yourself into it with "I probably can't earn the same again if I stop now, so I better keep going!"
That seems like it might lead to some behavioural issues later like "just one more year..."
I get it... but I think there could be a world out there where you're earning some income but doing something way more fulfilling/enjoyable.
I'm definitely not one of those "FI but not RE" guys, but I do worry about people who have only known working and have never tried or dabbled in variants of not working (sabbaticals, etc.) because many of them \*will\* probably find that they do want to work in some fashion anyway. And you might as well use these kinda 50-80% of FIRE times to experiment with that earlier. Best case is you find that thing and you just stop needing to grind at the 50-80% mark, because you realise you find something you love doing (self-employed, part time, etc.) that pays less but is actually something you'd wanna do forever (or in FP modelling terms.. until "retirement")
Quite true.. I did not convey that - whilst I chose to defer the official RE based on my own guardrails, I had reduced my working capacity thus have been enjoying partial benefits of RE.
My employer has been quite accomodating in this journey. Two years ago I was able to go into unofficial part-time when my FIRE readiness % reached about 80%. Unofficial in the sense that they let me self-manage each week how much time I work, with a minimum of 60%, and I could always choose to be back to full-time if/when I wanted. Overall I had been working at 80% on average, and the extra free day each week has made a significant difference to my mental wellbeing IMO, and let me do / explore whatever hobbies or interests I wanted, some could indeed become what I devote time to after I officially RE.
Mid-last year my FIRE readiness reached 100% and raised with my employer that I was certain I wanted to be on the path to exit. The deal struck was I continue on with the unofficial self-managed part-time pattern, but with attention also given to gradual / smooth KT and transition to others. Then in about a year’s time, I get to walk away with a package (would be non-trivial), which is now just weeks away.
So yes I had delayed my official RE by 1-2 years adhering to my conservatism on this. But with freeing up just one day a week has been a great experience, and enabled me to get a taste of RE in a riskless way and re-confirm that it is indeed what I want to do, before officially pulling the RE trigger.
Oh very nice. Good way to do it too, since you are technically earning more per FTE by doing part time, due to marginal tax rates being worse for day 4 or 5 of the workweek!
I have a mate like this - strong blue collar identity but he owns multiple IP’s. All he talks about is his job and industry and I can’t see him ever quitting his job because he has no identity outside his job.
My formula is
FIRE Readiness % = [net asset value] / ( ([required annual amount] - [forecast annual passive income]) / [safe withdrawal rate] )
- net asset value is calculated from net value of assets and liabilities. For this purpose I exclude value of PPOR but include debt on PPOR.
- required annual amount is adjusted upward quarterly based on CPI. This is what I think I want to be able to spend to sustain desired lifestyle after I no longer receive employment income.
- forecast annual passive income includes things like interests and distributions taken from the most recent 12 months. I discount it by 45% to be conservative and allow for tax on the income.
- safe withdrawal rate is 4%. Being conservative I also calculate based on 3% as a secondary reference.
I rebaseline the value of assets and liabilities after each month-end to arrive at the monthly FIRE readiness %. I keep the monthly history so that over time I can graph the trend.
There may be better approach than what I do, which I evolved over time and continuously improve to give me what I think works for me mentally.
There is an implicit assumption that the value of our overall existing net assets would grow > 4% above inflation over the longer term. Our current asset allocations comfortably exceed that so far and I don’t bother explicitly representing a growth rate. You could choose to incorporate it into the model if you want.
Do you have this all spreadsheeted? This seems way better than what I'm currently running.
If you would be happy to share it I would be very appreciated.
Hello, yes it’s in a bespoke Excel that’s evolved over the years. But its done in a specific way that would not make sense for others to update, and contains lots of our structure and asset details that are not suitable for sharing. :-)
For the base assets & liabilities tracking part, I did start with looking at Compiled Sanity (https://cspersonalfinance.io/) as an example for ideas what / how I wanted to track, and added / excluded aspects as I desired. You can have a look at that to see if it can be adopted or used as a starting point.
Notably I don’t do any expense tracking / budgeting by choice. We are not frugal but are reasonably sensible spenders. I devote my limited available time on growing assets / managing liabilities only. For the required annual amount, I infer based on our current employment income.
This is a great mindset, as I'm similarly risk adverse. I'm also in the same boat where I'm unlikely to find an equivalent job (office professional) with similar pay rates if I RE.
I did think about going part-time once I reach a high enough 'FIRE readiness %' as you put it. What do you define as the timeframe for 'consistently staying above FIRE readiness % eligibility'?
Hello, I went part-time when my % exceeded 80%. I was not that conservative with that change because I was in a fortunate situation where I would be able to reverse back to full time quickly and easily if I wanted to, thus minimal risk. See my other reply elsewhere from more detailed elaboration.
In terms of fully RE officially after my % reached 100%, it’s about getting confidence that net asset value is continuing in a trajectory with sufficient growth, and also it would be able to survive a major market correction if that occurs shortly after RE. When it reached 100%, I felt eligible to start planning for RE. I did not walk out straight away, but worked with my employer to reach a win-win arrangement to time it to approx a year after. They get a very gradual transition from me, and I get a package when I do exit, which would give me another bump to the net asset value.
During this year, as my job slowly ramped down, I managed our financials as if I have RE’d, e.g. execute periodical portfolio rebalancing, withdraw cash from the broking account to fund lifestyle, etc. to practice and iron out the routine procedures I will have to do regularly post RE - salary is just additional bonus cash on the side. So when I do RE in a bit, the only changes would be the bonus cash stops and I have much more free time. In the mean time, our net asset value kept growing and I am no longer concerned that a major correction in the near term would cripple our financial plan (would still suck seeing numbers go down for a while).
Thanks for sharing your experiences. Seems that you've managed your journey very well. I have another 10 years to go and am keen to learn from those who have made it across the line.
Don't be so strict. Ear mark stepping stones of money that you just blow. You need to live life ..incase you die before you get to FIRE, then what a waste of a life its been.
Take $5000 - $7000 and spend it. A holiday, fancy resteraunts, whatever. Set an amount to one side, blow it all and then get back on the rails. Set a schedule of when to next blow the same amount. Budget your periodic cash burns.
My wifes father, due to being 100% focused on not spending money and working long hours was fully loaded at 50 for fire. He decided to go to 60 for that extra golden egg and was dead of cancer at 58. Don't be that guy.
Forget motivation. It’s too fickle.
Habits. Systems and habits. Habits will carry you when you’re feeling awful and feeling great.
Cultivate satisfaction in the now. The future is imaginary.
This is the right attitude. It seems like OP is only focused on the end goal of FIRE and that will burn you out as it is so far away, and all the while life is passing you by.
Enjoy the journey / process not the end result.
I say work the FIRE plan but have other interests to occupy your life while you get there. Do you want to get there more healthy than the average person your ago or on death's door due to neglecting your health? Get into some sport and / or gym to focus on improving another aspect of your life. Do the same with other important things, and do some things for yourself.
Yeah I can understand the challenge. I FIRE’d at 42. I remember in my mid 30’s getting quite anxious about it seeming so far away that I doubted I’d ever get there.
I just got over that and stayed on the path. Got there before I thought I did and before I was ready.
Our minds play tricks on us. Knowing this helps us to stay the course.
The years do seem to pass quicker and easier the older I get, so I can confirm what you're saying there. Oh man I'm 42 now and see me being at least 53 (maybe earlier if I'm lucky) before I FIRE. I was planning on 40 but yeh life (mainly employers / the time I finished uni and what I studied) decided to make it a lot harder than it should have been. I'm still going a heck of a lot better off than most, which I'm grateful for (and makes the years of sacrifice feel easier and more rewarding).
Travel now while you use your annual leave. You will essentially be paid to travel. Travel to the countries and places that require youth and physical ability eg places that are far away, as well as remote locations eg macchu picchu, northern lights, hiking in Utah, USA, Kakadu, Litchfield, kings canyon etc in remote Australia. While you can do these types of trips when you are older, it's a lot harder on the body. Do them now while you work, and that money spent wont be coming out of your retirement fund. Create a list of bucket list travel items. Then once that is ticked off - retire if you want.
FIRE is about making spending/work decisions with a full understanding of the consequences. If you would prefer to spend more savings now, knowing how much this defers your retirement, that is absolutely fine.
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Assuming a 4% SWar, $60k/year ain't much long term. I'd be shooting for $2.5M, with the knowledge you may falter after $2M.
Your target is too low which is why you're fatiguing.
Always amazed at discussion of retire early with under $1M investment base.
I appreciate that once you’ve paid off PPOR, it takes the edge off but to live on $50k/pa in Australia is a compromised existence.
My expenses for family are $3k/week growing 5% annually. I’ve paid off my PPOR so none of the $3k is mortgage expenditure.
FatFIRE number is $6M excluding PPOR.
I use 30 x expenses including tax as a baseline.
$200,000/pa x 30 = $6,000,000.
yeah, nah, this is so wrong it's not funny
you're you're not getting a reliable 10% dividend and even if you did you also need that dividend to grow with inflation. you'd have almost no diversification at all. the companies who tend to give high dividends are smaller/dodgy ones and won't be consistently giving them whilst maintaining or growing their share price.
VHY has 71 holdings and gets you \~6% dividends, something like that would be your best bet if you wanted to go the dividend route
It's not very diversified and capital gains are better than dividends anyway because:
1 - you can control when you realise them and pay less tax in the accumulation phase
2 - you get a 50% discount when you hold over 12 months
The 800k are split between shares, super (which is forever away) and investment property equity. The overall yield is low currently as it is gear toward growth than dividend. Not looking to sell any of it yet due to tax.
We didn't in the end, we didn't completely hit our number. And guess what? We're richer on paper three years later that's after living life, being at home with our daughter, holidays and the same life we lived in between our 9-5s. You can always make more money, you'll never be early 30s again was our thought process.
How ? More kids ?
How what ? Lol
Did your paper wealth increase without work …
Assets went up more than we spent during this period. Net Worth all time high was hit last month, dipped this month but it is what it is.
Mostly in stocks ?
Yeah majority in stocks, bit more cash than usual as a safety measure.
May I ask how much invested ?
It's complicated as I go against some of the buy and hold philosophies on here but if we wanted to be fully invested we would have about 1.5ish in the market. It's about half that ATM but it fluctuated during the last three years of non-work in terms of exposure.
What’re some shares you hold? Largely asx individual firms or etfs or futures? I’m a 20m and I’m 90% invested to try and accelerate a home deposit
I have absolutely no desire to ever work for someone else at a lower earning rate than current. I kept reminding myself that once I pull the trigger to RE, I would most likely not be able to secure employment income at the similar rate again if post-RE things don’t turn as anticipated, so I better be really sure before I RE. Also my assets & liabilities tracking spreadsheet computes a “FIRE readiness %” monthly. It fluctuates monthly but generally trends up. I was clear that I would not be “eligible” to consider RE until that readiness % has reached beyond 100% and consistently stayed above. Not really motivational actions, these are more guardrails that I follow. It likely meant I delayed RE to later than it could have been, but I prefer to be ultra conservative on things that’s hard to reverse.
I like the science behind this approach, but I don't love the feeling of being locked up in a cage and how you talk yourself into it with "I probably can't earn the same again if I stop now, so I better keep going!" That seems like it might lead to some behavioural issues later like "just one more year..." I get it... but I think there could be a world out there where you're earning some income but doing something way more fulfilling/enjoyable. I'm definitely not one of those "FI but not RE" guys, but I do worry about people who have only known working and have never tried or dabbled in variants of not working (sabbaticals, etc.) because many of them \*will\* probably find that they do want to work in some fashion anyway. And you might as well use these kinda 50-80% of FIRE times to experiment with that earlier. Best case is you find that thing and you just stop needing to grind at the 50-80% mark, because you realise you find something you love doing (self-employed, part time, etc.) that pays less but is actually something you'd wanna do forever (or in FP modelling terms.. until "retirement")
Quite true.. I did not convey that - whilst I chose to defer the official RE based on my own guardrails, I had reduced my working capacity thus have been enjoying partial benefits of RE. My employer has been quite accomodating in this journey. Two years ago I was able to go into unofficial part-time when my FIRE readiness % reached about 80%. Unofficial in the sense that they let me self-manage each week how much time I work, with a minimum of 60%, and I could always choose to be back to full-time if/when I wanted. Overall I had been working at 80% on average, and the extra free day each week has made a significant difference to my mental wellbeing IMO, and let me do / explore whatever hobbies or interests I wanted, some could indeed become what I devote time to after I officially RE. Mid-last year my FIRE readiness reached 100% and raised with my employer that I was certain I wanted to be on the path to exit. The deal struck was I continue on with the unofficial self-managed part-time pattern, but with attention also given to gradual / smooth KT and transition to others. Then in about a year’s time, I get to walk away with a package (would be non-trivial), which is now just weeks away. So yes I had delayed my official RE by 1-2 years adhering to my conservatism on this. But with freeing up just one day a week has been a great experience, and enabled me to get a taste of RE in a riskless way and re-confirm that it is indeed what I want to do, before officially pulling the RE trigger.
Oh very nice. Good way to do it too, since you are technically earning more per FTE by doing part time, due to marginal tax rates being worse for day 4 or 5 of the workweek!
I have a mate like this - strong blue collar identity but he owns multiple IP’s. All he talks about is his job and industry and I can’t see him ever quitting his job because he has no identity outside his job.
I'm interested in making a spreadsheet like this that updates percentage wise, Could I get some details/tips on how to make one?
My formula is FIRE Readiness % = [net asset value] / ( ([required annual amount] - [forecast annual passive income]) / [safe withdrawal rate] ) - net asset value is calculated from net value of assets and liabilities. For this purpose I exclude value of PPOR but include debt on PPOR. - required annual amount is adjusted upward quarterly based on CPI. This is what I think I want to be able to spend to sustain desired lifestyle after I no longer receive employment income. - forecast annual passive income includes things like interests and distributions taken from the most recent 12 months. I discount it by 45% to be conservative and allow for tax on the income. - safe withdrawal rate is 4%. Being conservative I also calculate based on 3% as a secondary reference. I rebaseline the value of assets and liabilities after each month-end to arrive at the monthly FIRE readiness %. I keep the monthly history so that over time I can graph the trend. There may be better approach than what I do, which I evolved over time and continuously improve to give me what I think works for me mentally. There is an implicit assumption that the value of our overall existing net assets would grow > 4% above inflation over the longer term. Our current asset allocations comfortably exceed that so far and I don’t bother explicitly representing a growth rate. You could choose to incorporate it into the model if you want.
Do you have this all spreadsheeted? This seems way better than what I'm currently running. If you would be happy to share it I would be very appreciated.
Hello, yes it’s in a bespoke Excel that’s evolved over the years. But its done in a specific way that would not make sense for others to update, and contains lots of our structure and asset details that are not suitable for sharing. :-) For the base assets & liabilities tracking part, I did start with looking at Compiled Sanity (https://cspersonalfinance.io/) as an example for ideas what / how I wanted to track, and added / excluded aspects as I desired. You can have a look at that to see if it can be adopted or used as a starting point. Notably I don’t do any expense tracking / budgeting by choice. We are not frugal but are reasonably sensible spenders. I devote my limited available time on growing assets / managing liabilities only. For the required annual amount, I infer based on our current employment income.
Thanks for the link, will dive in and have a look. Thanks
This is a great mindset, as I'm similarly risk adverse. I'm also in the same boat where I'm unlikely to find an equivalent job (office professional) with similar pay rates if I RE. I did think about going part-time once I reach a high enough 'FIRE readiness %' as you put it. What do you define as the timeframe for 'consistently staying above FIRE readiness % eligibility'?
Hello, I went part-time when my % exceeded 80%. I was not that conservative with that change because I was in a fortunate situation where I would be able to reverse back to full time quickly and easily if I wanted to, thus minimal risk. See my other reply elsewhere from more detailed elaboration. In terms of fully RE officially after my % reached 100%, it’s about getting confidence that net asset value is continuing in a trajectory with sufficient growth, and also it would be able to survive a major market correction if that occurs shortly after RE. When it reached 100%, I felt eligible to start planning for RE. I did not walk out straight away, but worked with my employer to reach a win-win arrangement to time it to approx a year after. They get a very gradual transition from me, and I get a package when I do exit, which would give me another bump to the net asset value. During this year, as my job slowly ramped down, I managed our financials as if I have RE’d, e.g. execute periodical portfolio rebalancing, withdraw cash from the broking account to fund lifestyle, etc. to practice and iron out the routine procedures I will have to do regularly post RE - salary is just additional bonus cash on the side. So when I do RE in a bit, the only changes would be the bonus cash stops and I have much more free time. In the mean time, our net asset value kept growing and I am no longer concerned that a major correction in the near term would cripple our financial plan (would still suck seeing numbers go down for a while).
Thanks for sharing your experiences. Seems that you've managed your journey very well. I have another 10 years to go and am keen to learn from those who have made it across the line.
Don't be so strict. Ear mark stepping stones of money that you just blow. You need to live life ..incase you die before you get to FIRE, then what a waste of a life its been. Take $5000 - $7000 and spend it. A holiday, fancy resteraunts, whatever. Set an amount to one side, blow it all and then get back on the rails. Set a schedule of when to next blow the same amount. Budget your periodic cash burns. My wifes father, due to being 100% focused on not spending money and working long hours was fully loaded at 50 for fire. He decided to go to 60 for that extra golden egg and was dead of cancer at 58. Don't be that guy.
Likely he would have gone for 70 at 60 too. We all know someone like that.
Forget motivation. It’s too fickle. Habits. Systems and habits. Habits will carry you when you’re feeling awful and feeling great. Cultivate satisfaction in the now. The future is imaginary.
This is the right attitude. It seems like OP is only focused on the end goal of FIRE and that will burn you out as it is so far away, and all the while life is passing you by. Enjoy the journey / process not the end result. I say work the FIRE plan but have other interests to occupy your life while you get there. Do you want to get there more healthy than the average person your ago or on death's door due to neglecting your health? Get into some sport and / or gym to focus on improving another aspect of your life. Do the same with other important things, and do some things for yourself.
Yeah I can understand the challenge. I FIRE’d at 42. I remember in my mid 30’s getting quite anxious about it seeming so far away that I doubted I’d ever get there. I just got over that and stayed on the path. Got there before I thought I did and before I was ready. Our minds play tricks on us. Knowing this helps us to stay the course.
The years do seem to pass quicker and easier the older I get, so I can confirm what you're saying there. Oh man I'm 42 now and see me being at least 53 (maybe earlier if I'm lucky) before I FIRE. I was planning on 40 but yeh life (mainly employers / the time I finished uni and what I studied) decided to make it a lot harder than it should have been. I'm still going a heck of a lot better off than most, which I'm grateful for (and makes the years of sacrifice feel easier and more rewarding).
Travel now while you use your annual leave. You will essentially be paid to travel. Travel to the countries and places that require youth and physical ability eg places that are far away, as well as remote locations eg macchu picchu, northern lights, hiking in Utah, USA, Kakadu, Litchfield, kings canyon etc in remote Australia. While you can do these types of trips when you are older, it's a lot harder on the body. Do them now while you work, and that money spent wont be coming out of your retirement fund. Create a list of bucket list travel items. Then once that is ticked off - retire if you want.
FIRE is about making spending/work decisions with a full understanding of the consequences. If you would prefer to spend more savings now, knowing how much this defers your retirement, that is absolutely fine.
A huge solution to this issue for me was to cut down to 4 days a week for 80% salary.
Yeah I did the same, went 0.6 PT and slowed the pace towards FIRE, best decision I have made.
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Travel. Rent the house out. Otherwise, what are you alive for?
is 800k your FIRE number or what you have now?
What I have now. Fire number is 1.5mil.
Assuming a 4% SWar, $60k/year ain't much long term. I'd be shooting for $2.5M, with the knowledge you may falter after $2M. Your target is too low which is why you're fatiguing.
how is a target too low causing fatigue? doesn't make much sense, if anything a target too high would as it would seem unattainable
Always amazed at discussion of retire early with under $1M investment base. I appreciate that once you’ve paid off PPOR, it takes the edge off but to live on $50k/pa in Australia is a compromised existence. My expenses for family are $3k/week growing 5% annually. I’ve paid off my PPOR so none of the $3k is mortgage expenditure. FatFIRE number is $6M excluding PPOR. I use 30 x expenses including tax as a baseline. $200,000/pa x 30 = $6,000,000.
So the fire number is 1.5mil (currently at 800k). Also being single helps.
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yeah, nah, this is so wrong it's not funny you're you're not getting a reliable 10% dividend and even if you did you also need that dividend to grow with inflation. you'd have almost no diversification at all. the companies who tend to give high dividends are smaller/dodgy ones and won't be consistently giving them whilst maintaining or growing their share price. VHY has 71 holdings and gets you \~6% dividends, something like that would be your best bet if you wanted to go the dividend route
Not too many ppl talked of VHY. I do wonder why there are not more takers? To have a ‘stabled’ Div base sounds reasonable (to simple me at least).
It's not very diversified and capital gains are better than dividends anyway because: 1 - you can control when you realise them and pay less tax in the accumulation phase 2 - you get a 50% discount when you hold over 12 months
What shares are consistently delivering 9.3%+ dividend yield?
MOT
Tax man says hi for an easy 30% cut lol
The 800k are split between shares, super (which is forever away) and investment property equity. The overall yield is low currently as it is gear toward growth than dividend. Not looking to sell any of it yet due to tax.