I start every year by revisiting my financial mission statement, adjusting my personal long-term FIRE goals, and setting new annual financial goals (see 2023).
I love how clearly you've laid out your reflections on past and future goals here. I want to nail down a FIRE mission statement at last for myself as well.
My votes on which upcoming posts I personally most want to see:
1. The Impact of Kids on FIRE
2. Personal Inflation Rate: Tracking Avocado Prices
3. Getting Unstuck from the Boring Middle on the Journey to FIRE
4. Life and Umbrella Insurance for FAANG
5. What You Should Know About Sequence of Return Risk
I really think going deeper into the impact of kids on FIRE would be helpful and could help people prioritize. I always struggle with how to account for my kids college savings at my age (52) where I am close to Coast FI.
Yeah, I hear you on that. I plan to partially fund college via a 529 which gives some separation. Still there is always an extra effort needed to account/not-account for it.
I tend to have my own spreadsheets which explicitly track my "FIRE Accounts" which excludes checking, emergency funds, un-diversified RSUs, and 529 accounts. I use this as my basis for building out my withdraw rate calculations.
Well written, Andre. Though I was hoping that you'll end up with a revised Mission Statement after all. I agree that your "Enough Number" is too low if you want to live in the Bay Area.
Looking forward to reading your views on:
*HSA: Health Savings Accounts for FIRE - There's only once that I opted for the HDHP+HSA option and that year we needed to go to the ER twice and get a bunch of tests only to realize that it ended up costing me more than it saved. Do factor that risk into your calculations and your article.
*Simplifying and Consolidating Your Financial Life - I too started on that journey last year. Simplifying by selling individual stocks and buying index funds, and consolidating accounts. I figured that over-consolidation would be risky (in case one of my accounts is locked out etc.) so I'm choosing to keep at least 2-3 of each of the checking, savings, individual brokerage, retirement, and credit card accounts.
*Life and Umbrella Insurance for FAANG - Reviewed and doubled coverage on both last year. Would love to know your views on it.
Suggestion: Would love to know your thoughts on Target Date Funds. Perhaps you can include it in your "Simplifying and Consolidating Your Financial Life" post or write a dedicated one. While I'm perfectly fine with the 3-fund asset allocation strategy and optimize asset location for taxes, I don't think my spouse can handle it. So I'm recommending a TDF2060 Index Fund for her. Thoughts?
I promise you that nobody wanted this post to end with a finished mission statement more than me! I finally had to call it and accept that I needed a bit more time to reflect.
Always appreciate your thoughts on the ideas too! Let's rapid fire.
HSA: You know there will be a worst case scenario break even analysis. On top of that the mental pain of paying out of pocket.
Simplification: After years of credit card churning and bank account bonus chasing... I have a ridiculous amount of strange daisy chained accounts. On banks. I think having a local bank you can walk to, a consistently fast online bank, and then a high yield account (that is consistently in the top 4 of rates). I don't need more than that and even then it is probably too many.
On TDF: I think for 95% of people they are fine. Optimizing for location is further optimization for those who want to squeeze everything. I do think overtime, a simple 3 fund portfolio with simple location instructions can be achieved. But it does get complicated and again, marginal increases in tax savings that might not be worth the head ache for some.
Hi, I am planning to FIRE in early 2025. Looking at your posts post layoff, I couldn’t find anything about what you did with your 401k (pre and post tax). Can you pls share any recommendations on how to handle those?
To answer your question. I kept my pre-tax funds within my 401k to make it easier for me to do future back door roth IRAs. If you don't plan on working at all, this might be less of a concern. I have a post on backdoor roth iras that go into detail on why to do this here: https://andrenader.substack.com/p/backdoor-roth-step-by-step-walkthrough (also depends on fees, funds available, ect) . My after-tax funds are rolled into my Roth IRA.
thank you! I am curious about your strategy with your pre-tax 401k for future back door contributions. My husband has an old Traditional IRA and a Roth IRA from a previous job. Now, he has a pre-tax 401k from the current employer (same employer but he boomeranged after few years in other companies) and is doing megaback door this year. Would this trigger the pro-rata rule even though this is a different account from the IRAs? Thanks
If you don’t mind me asking, how do you manage to out $13k in your Roth IRA annually, given that the contribution limit is $7000 for 2024 (and $6500 for 2023)?
Am I missing an obvious way to increase my Roth IRA contributions ? Or are you simply considering yours + partners as a total ?
I love how clearly you've laid out your reflections on past and future goals here. I want to nail down a FIRE mission statement at last for myself as well.
My votes on which upcoming posts I personally most want to see:
1. The Impact of Kids on FIRE
2. Personal Inflation Rate: Tracking Avocado Prices
3. Getting Unstuck from the Boring Middle on the Journey to FIRE
4. Life and Umbrella Insurance for FAANG
5. What You Should Know About Sequence of Return Risk
I really think going deeper into the impact of kids on FIRE would be helpful and could help people prioritize. I always struggle with how to account for my kids college savings at my age (52) where I am close to Coast FI.
Yeah, I hear you on that. I plan to partially fund college via a 529 which gives some separation. Still there is always an extra effort needed to account/not-account for it.
I tend to have my own spreadsheets which explicitly track my "FIRE Accounts" which excludes checking, emergency funds, un-diversified RSUs, and 529 accounts. I use this as my basis for building out my withdraw rate calculations.
I listen to the audio, it gives a lot more personality. Hearing the action item "do more laundry" I imagined this was actually an audiobook.
Great to hear! I'll try to include them on more narrative driven posts like these.
It's actually really helpful for editing too. I caught a lot of issues when I physically tried reading through everything the first few times.
Well written, Andre. Though I was hoping that you'll end up with a revised Mission Statement after all. I agree that your "Enough Number" is too low if you want to live in the Bay Area.
Looking forward to reading your views on:
*HSA: Health Savings Accounts for FIRE - There's only once that I opted for the HDHP+HSA option and that year we needed to go to the ER twice and get a bunch of tests only to realize that it ended up costing me more than it saved. Do factor that risk into your calculations and your article.
*Simplifying and Consolidating Your Financial Life - I too started on that journey last year. Simplifying by selling individual stocks and buying index funds, and consolidating accounts. I figured that over-consolidation would be risky (in case one of my accounts is locked out etc.) so I'm choosing to keep at least 2-3 of each of the checking, savings, individual brokerage, retirement, and credit card accounts.
*Life and Umbrella Insurance for FAANG - Reviewed and doubled coverage on both last year. Would love to know your views on it.
Suggestion: Would love to know your thoughts on Target Date Funds. Perhaps you can include it in your "Simplifying and Consolidating Your Financial Life" post or write a dedicated one. While I'm perfectly fine with the 3-fund asset allocation strategy and optimize asset location for taxes, I don't think my spouse can handle it. So I'm recommending a TDF2060 Index Fund for her. Thoughts?
I promise you that nobody wanted this post to end with a finished mission statement more than me! I finally had to call it and accept that I needed a bit more time to reflect.
Always appreciate your thoughts on the ideas too! Let's rapid fire.
HSA: You know there will be a worst case scenario break even analysis. On top of that the mental pain of paying out of pocket.
Simplification: After years of credit card churning and bank account bonus chasing... I have a ridiculous amount of strange daisy chained accounts. On banks. I think having a local bank you can walk to, a consistently fast online bank, and then a high yield account (that is consistently in the top 4 of rates). I don't need more than that and even then it is probably too many.
On TDF: I think for 95% of people they are fine. Optimizing for location is further optimization for those who want to squeeze everything. I do think overtime, a simple 3 fund portfolio with simple location instructions can be achieved. But it does get complicated and again, marginal increases in tax savings that might not be worth the head ache for some.
Hi, I am planning to FIRE in early 2025. Looking at your posts post layoff, I couldn’t find anything about what you did with your 401k (pre and post tax). Can you pls share any recommendations on how to handle those?
First off, congrats!
To answer your question. I kept my pre-tax funds within my 401k to make it easier for me to do future back door roth IRAs. If you don't plan on working at all, this might be less of a concern. I have a post on backdoor roth iras that go into detail on why to do this here: https://andrenader.substack.com/p/backdoor-roth-step-by-step-walkthrough (also depends on fees, funds available, ect) . My after-tax funds are rolled into my Roth IRA.
thank you! I am curious about your strategy with your pre-tax 401k for future back door contributions. My husband has an old Traditional IRA and a Roth IRA from a previous job. Now, he has a pre-tax 401k from the current employer (same employer but he boomeranged after few years in other companies) and is doing megaback door this year. Would this trigger the pro-rata rule even though this is a different account from the IRAs? Thanks
Mega back door is different. If he also wanted to do the back door Roth he could roll his traditional ira into his workplace 401k.
Which 529 Savings Plan did you choose? Do have a breakdown of why you chose the Plan that you did that you can share?
I went with California’s scholar share. Had lots of good low fee options. Nevada and New York are both good choices as well. Just keep an eye on fees.
Thanks Andre - which Investment portfolio did you use / do you recommend with CA scholar share?
I have all mine in scholar share, allocated 70% US, 20% International, 10% Bonds. (My kid is 6)
Thanks Andre, how do you achieve that split - is it utilizing the Index Passive: Bond Port., Index Intl. Equity Port and and Index US Equity Port.?
* https://www.scholarshare529.com/investment/risk-based
or
Active: Active Intl. Equity Port. and Large Cap Resp. Equity Port.?
I believe I manually selected the investment % for each within the Passive Risk-Based Portfolios.
Although the age based portfolios are generally good options too.
I do have few questions, how do I set up time for 1:1 chat
Hey Nikhil! Check the email you received from Substack when you became a paid subscriber. It should include a special link to book time.
If you don’t mind me asking, how do you manage to out $13k in your Roth IRA annually, given that the contribution limit is $7000 for 2024 (and $6500 for 2023)?
Am I missing an obvious way to increase my Roth IRA contributions ? Or are you simply considering yours + partners as a total ?
The values include my partner! $6,500x2 = $13k