Welcome to the second part of the series where I am trying to identify how much is “enough” to retire early in San Francisco. Two years ago I had determined that my “Enough Number” was $4,000,000. This number always assumed I would leave San Francisco. While
However, this number assumes no scholarship. No work done by student on campus. Is that correct? This is college paid fully by parent? Not saying it's right or wrong, just trying to understand calculation.
This is a really great article. You may start calculating FIRE for other states and cities. That can last you 2-5 years of contents,but you will be helping people get focused and gain years. Thanks for sharing
Thanks for the great article Andre...one thing i feel you're underestimating is travel expenses. As you FIRE, travel seems to be the holy grail people yearn for and desire to undertake. Hitting Europe for a few weeks, going on safari, going to that friends wedding in NYC...anyway, at only $15k/yr it feels constraining. Any thoughts?
The mechanics of how to actually draw down the portfolio in FIRE is a really good topic.
In most cases if you are able to sock away this amount by your early 40's the mix would likely include >50% of assets in a taxable investment account, with the remaining amount across pre-tax and roth. Some portion would simply come from dividends that my index funds spit out (whether i want them to or not) would vary on a year to year potentially depending on what would be the most tax efficient long term.
Thanks for writing this! If I own real estate in San Francisco, how would I adjust your template to account for that? Specifically, I mean that I would eventually sell 1 or both properties to get liquidity. So if I had a family of 3, I wouldn't need to get to $5M in cash/invesments, I would need less cash since I could assume that I could liquidate one or both of my properties, right?
I have 2 properties and the mortgages will be paid off in 2049 and 2051.
Thanks for the article. I just calculated my FIRE number and confirmed it with what I originally anticipated :)
QQ - Does the 3% rule take into consideration the age at which one retires ? For example, will my FIRE number be different if I retire at 40 vs 45 ? How does the rule account for this ?
On your question, the age doesn't matter too much until you get closer to 55. The original 4% rule was based on a traditional 30 year retirement, so for periods longer than that I like being very conservative.
The key thing to remember is what the % is for. It is all about taking away the absolute worst cases. Historically this has tended to be in the first 5-10 years of retirement. If you make it past the first 5-10 years and your portfolio has actually increased in value, you should feel more confident in re-evaluating.
Love this article, thank you for sharing. I'm looking forward to your part 3 where you are going to talk about coast/ barista FIRE :)
Cost of attendance for UC schools is wild. I’d be pushing for Cal Poly I think
She is in kindergarten., so really used UC Berkeley as a placeholder! But the cost is pretty wild. Half of it is room and board!
However, this number assumes no scholarship. No work done by student on campus. Is that correct? This is college paid fully by parent? Not saying it's right or wrong, just trying to understand calculation.
This is a really great article. You may start calculating FIRE for other states and cities. That can last you 2-5 years of contents,but you will be helping people get focused and gain years. Thanks for sharing
$140k (expenses) is a well-paid FT salary for most but a part-time Coast FIRE / gig worker in tech for others. Crazy times.
Thanks for the great article Andre...one thing i feel you're underestimating is travel expenses. As you FIRE, travel seems to be the holy grail people yearn for and desire to undertake. Hitting Europe for a few weeks, going on safari, going to that friends wedding in NYC...anyway, at only $15k/yr it feels constraining. Any thoughts?
What's the best way to think about your number with regards to the composition?
$5,654,000 broken out by liquidity / timeline would be super helpful to wrap my head around how to be preparing now! Thank you so much!
The mechanics of how to actually draw down the portfolio in FIRE is a really good topic.
In most cases if you are able to sock away this amount by your early 40's the mix would likely include >50% of assets in a taxable investment account, with the remaining amount across pre-tax and roth. Some portion would simply come from dividends that my index funds spit out (whether i want them to or not) would vary on a year to year potentially depending on what would be the most tax efficient long term.
Thanks for writing this! If I own real estate in San Francisco, how would I adjust your template to account for that? Specifically, I mean that I would eventually sell 1 or both properties to get liquidity. So if I had a family of 3, I wouldn't need to get to $5M in cash/invesments, I would need less cash since I could assume that I could liquidate one or both of my properties, right?
I have 2 properties and the mortgages will be paid off in 2049 and 2051.
Thanks for the article. I just calculated my FIRE number and confirmed it with what I originally anticipated :)
QQ - Does the 3% rule take into consideration the age at which one retires ? For example, will my FIRE number be different if I retire at 40 vs 45 ? How does the rule account for this ?
Confirmation is a good feeling!
On your question, the age doesn't matter too much until you get closer to 55. The original 4% rule was based on a traditional 30 year retirement, so for periods longer than that I like being very conservative.
The key thing to remember is what the % is for. It is all about taking away the absolute worst cases. Historically this has tended to be in the first 5-10 years of retirement. If you make it past the first 5-10 years and your portfolio has actually increased in value, you should feel more confident in re-evaluating.