I discovered this sub-reddit 12 years ago, to realize that I have been working towards FIRE pretty much since college graduation. 10 years ago I checked in here with $300K NW, and a few more times since. Recently crossed the $3M mark.
What changed:
- First 5 years: Hands-on. Spreadsheets, optimizing tax vehicles, tracking everything. Super frugal, maybe a bit overboard.
- Middle 5 years: Still frugal, squeezing miles and credit card bonuses. But allowed myself some expensive hobbies like skiing. Income growth outpaced spending significantly.
- Last 5 years: Autopilot. No budget, don't track savings rate. Habits are ingrained enough that I don't feel like I need to, and I'm happy with my level of consumption (nothing indulgent, just relaxed about spending).
What helped:
- Started my career in 2008 and saved aggressively during the bear market.
- Took concentrated risk holding on to the employer stock instead of following the correct and financially rational advice of immediately diversifying. That gamble returned more than 10x over 10 years.
Current stats:
- NW: $3.3M (1/3 tax-advantaged, 2/3 taxable), mostly in total market + growth index funds, plus employer stock from past jobs. About $50K in cash earning some minimal interest.
- Current salary: £220-240K (~£130K take-home after UK tax).
- Spending: Roughly £80K/year (£30K rent, about as much on day-to-day, +£10-20K travel)
- Upcoming: +£20K/year childcare costs
The question: Am I right thinking that FIRE seems to be on the horizon, but not for another couple years:
- Expenses likely rising with more free time
- Childcare hitting soon
- London COL (hard to consider relocation given how livable this city is overall)
- Almost certainly some tax liability to withdraw that $130K (current £80K spending + £20K in childcare) annually that isn't factored into the SWR.
I never thought about this last mile before, so now I'm slightly confused how to actually calculate the date for FIRE.
16 years to FI. Can't pinpoint when to RE.
byu/seattlefier infinancialindependence
Posted by seattlefier
2 Comments
Can really relate to that last 5 years comment. Guess that means i’m doing well and getting close.
Is it just me or does it seem like you already hit FI?
$3.3M = ~£2.5M * 4% = £100K which is your budget of £80K spending + £20K in childcare.
Expenses rising in free-time. That’s for you to judge. Some people it actually goes the other way. I think I could pay less in retirement, having time to cook more meals at home, consolidating to 1 car, traveling off-peak times now that you can, etc.
Childcare you pretty much already have baked in with the 20k in your budget. It’s also temporary for the years until they get to elementary school. There’s kids costs as they get older, but nothing compared to monthly daycare in my area. Also… if you are FI you could just keep them home. (This is all from a US point of view).
London COL is already in your budget I assume… so it could only get better moving to a lower COL area. Right?
In the US the tax liability is pretty advantageous for FI. If you have $0 income and all your assets are in stocks you’ve owned over a year, you can get pretty close to 0%. For example, long term capital gains tax for married filing jointly is 0% up to $96,700. Not sure how it is in the UK.
I think if anything you could work an extra year or two to build up a big cash reserve that gives you a ton of flexibility. For example, lets say you save 200k cash. That covers all the childcare and extra free time expenses you could dream of.
I am guessing that if you run your numbers through historical market return scenarios (e.g. ficalc) or Monte-Carlo (e.g. boldin), you’ll see a very high success chance, likely >90%, meaning you are FI. Moving to a lower COL area would help even more, or allow for much better housing conditions with kids.