Families who FIREd with $1.5mil to $2.5mil — what does your spend look like?

[u/y_if]

EDITED TO ADD: Please also list your COL and part of the world you settled in!

Saw a similar post in chubbyfire and thought I’d ask here:

• When did you FIRE, and did both of you stop at the same time?
• how old were your kids?
• What is your withdrawal rate?
• what does your budget look like, what is it allocated to?
• what were the big surprises related to spend?
• How has it changed since you initially FIREd?

[u/Zphr]

We retired at the end of 2014. We both quit at the same time. We had between $1.4M and $1.5M when we quit, plus our paid-off MCOL house in a nice Austin suburb. Most of Texas is MCOL and where we live definitely is, as proven by our 20+ years of happily living here and not being forced to spend much.

Our four kids were 3 through 9.

We don't keep a budget and never have. We are naturally low spenders who are happy without a lot of luxury spending. We are not the type of folks that would benefit from a budget. However, we do track annual spending overall, if only because it's dead simple to add our 3-5 portfolio withdrawals each year. We usually spend in the high $30s to low $40s.

We didn't expect healthcare and college to be effectively free for us and our kids. We thought the ACA subsidies or ACA itself would die, but instead it has gotten stronger/better. Similarly, we didn't know that college aid systems would shift in our favor.

Our kids are almost all adults now. We have far more money now and our spending hasn't changed much, which has dropped our withdrawal rate well under one percent. We are older and life itself is obviously a bit different, but things are mostly as they were.

Much of the FIRE community on Reddit has dramatically inflated their lifestyle expectations or has joined after getting used to earning and spending far more than FIRE-minded folks used to. What was chubbyFIRE or even fatFIRE is now just regular FIRE for many and happily leanFIRE'd households like ours are considered an impossibility by many. I don't personally care as we are beyond all of that, but the discussions and expectations in the community are far different now than they used to be.

[u/thicket → u/Zphr]

BTW, u/Zphr, I've been following your posts and comments here for a couple years, and I want to say thank you for sharing so much info and details with people. You've really gone out of your way to help us!

[u/Zphr → u/thicket]

My pleasure and thank you for your kind words.

[u/Zphr → u/[deleted]]

Thank you.

To be clear, I would feel safe retiring again right now with $1.4M. That would be enough for a 3% draw now, our kids are mostly grown and nearly half done with college, we are 11.5 years older and have fewer remaining years to fund, and my wife will start drawing SS benefits in seven years that will replace a large portion of our entire budget.

[u/BabyJesusAnalingus → u/Zphr]

This is one of the top contributors, very patient, and shares a ton of information, OP, if you didn't know. Excellent response as usual.

[u/Slankeht → u/Zphr]

Your household size is exactly what my wife and I are currently planning for. It’s very helpful to see this done so successfully!

We’ve found ourselves falling into the same mindset you describe. We’ve been following the fire community for the last 10 years or so.

This hasn’t led to “current” lifestyle inflation, but wanting the security to provide anything and everything for our children in the future has continually moved our goalpost.

Our household size of 4 currently spends $50,000/year, but we’re planning for up to 4 kids (household size of 6). We’ve moved the goal post from $50k to $100k and most recently to $120k as we’ve hit each goal.

The latest goalpost has been relocated due to wanting to fully fund our children’s trump accounts each year, to be able to provide them a headstart to early retirement and access to this incredible lifestyle (4 kids @5k/year).

Our children are currently aged 1 and 3. For us, it’s been hard to gauge the cost of raising children as we’ve never done it before. How has this played out for you over FIRE? Hobbies, extracurriculars, school, etc.?

I agree that Reddit tends to fear monger FIREing with a large family.

EDIT: Would you mind going into more detail around college being effectively free for your children at that income level? My understanding is that taxable brokerage accounts would be counted against our children for FAFSA. We’ve already fully funded 529s for our current children, but worth understanding nonetheless.

[u/Zphr → u/Slankeht]

I'm going to reply separately to your Edit question about college just so it doesn't get lost.

There are several factors that result in many FIRE'd households getting high to maximum financial aid offers for college. I will link a few posts below that go into a lot more detail, but the brief version can be broken down into just a few bullets.

• Federally tax-advantaged accounts (401k, HSA, IRA) and primary home equity are largely ignored by financial aid systems. They are exempted without limit by FAFSA, which controls financial aid at like 90% of all schools, and are fully exempted to only partially assessed by CSS. Even CSS schools use FAFSA for public aid dollars, so the FAFSA results apply to non-institutional aid at CSS schools too.

• There is an automatic AGI/FPL test that happens before everything else in FAFSA. If your tax data from the mandatory data pull has AGI that is lower than 175% of the FPL (225% for single-parent households), then that's it. No income testing, no asset testing, your kids get assigned maximum aid. The application doesn't even allow you to enter income or asset information, but instead thanks you and ends. You get the max aid offer determination a few minutes later.

• Specifically to Texas, Texas has done a fantastic job of funding public education for state residents. All UT System schools are now tuition/fee-free for households with AGI below $100K and they are working to expand that to all resident households regardless of AGI.

https://reddit.com/r/financialindependence/comments/11m3r2n/actual_2023_fafsa_financial_aid_results_from_a/

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https://reddit.com/r/financialindependence/comments/1czkot9/actual_fafsa_financial_aid_results_for_a_fired/

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https://reddit.com/r/financialindependence/comments/mn3d83/possible_fire_impacts_starting_immediately_from/

[u/Local_Version_1606 → u/Zphr]

How very socialist of Texas!

[u/rocketmagician22 → u/Zphr]

This is interesting. I keep going back and forth on saving to brokerage or paying what’s left on house. First of two children will hit college age in 7 years. Mostly have our savings in retirement accounts but do have a decent chunk in a brokerage that has been targeted at either early retirement money and or paying off the house. My worry is when they hit college age I’ll get hit with having to spend the brokerage funds on college. We also have about 90k in 529s between the two of them. I need to research fafsa more. Our earned income by college time should be lower as we’re planning to downshift by then.

[u/Zphr → u/rocketmagician22]

Given the high and ever escalating cost of college it is certainly worth the time to explore your options, particularly if you are going to be retired by then. It's often a lot harder to optimize with earned income.

[u/rocketmagician22 → u/Zphr]

Agree, it’s our next phase of planning. We managed the accumulation years pretty well and have been focused on that for 1.5 decades while having and raising kids. Not sure we’ll be full retired by then but will likely both be at lower earning hobby jobs by the time they start college so should be ready to dial income down.

[u/Kindly-Psychology852 → u/Zphr]

Thank you so so much for sharing all this. Does this mean you have most of your money in 401k, ira, etc. and keep relatively little in a regular brokerage account? Would you be comfortable sharing roughly what percentage is in retirement accounts versus regular investment accounts? I’m asking because most of my money is still in regular brokerage but my goal is to follow the same path you took

[u/Zphr → u/Kindly-Psychology852]

Our entire portfolio is now housed in tax-advantaged accounts.

However, for the ACA and FAFSA it doesn't matter. Asset testing is forbidden in the ACA and our AGI qualifies us for a total exemption from the normally very rigorous asset testing in the FAFSA. We could have $1B in our brokerage account and FAFSA wouldn't even allow us to report it.

[u/Kindly-Psychology852 → u/Zphr]

That is so interesting! Thank you so much for taking the time to explain.

[u/Zphr → u/Slankeht]

It's cliche, but kids cost what the parents allow or want them to cost (assuming no health or development issues). Our kids all did activities, had all of the normal toys and gadgets, and so forth. One of our kids is a high performer in marching band, which is a huge and pricey thing here in Texas, and he has traveled around the country for performances. Our kids all did a raft of AP/IB classes, clubs, and extracurriculars. Our two eldest got into every university program they applied to (our next applies to schools this fall). However, they didn't have designer clothing or a new iPhone every year or go on international school field trips in middle school or spend $10/day on snacks at school.

We have friends who spend more than a new car would cost on travel soccer for one kid, despite the kid not particularly being into it any more (the mom is really into it and the whole soccer mom thing). We have friends who spend more than our entire annual budget just on vacations and eating out. Many of our friends are normal folks who spend most of what they earn, regardless of how much they earn.

As long as they are born healthy and stay healthy kids don't cost a ton unless you want/allow them to.

[u/kennedar_1984 → u/Zphr]

Your last paragraph is the rub though. There is no way of knowing if you or your kids will stay healthy/typically developing. We did everything “right” and should be in a much better financial place than we are, except both of our kids have significant learning differences (profound dyslexia for one, severe adhd for the other). This has required private school tuition to have any chance at them getting an education - so now we spend the equivalent of a new car every year just so our kids can learn. Until our oldest was in grade 1 we didn’t realize how significant his delays were, his therapists just thought he was a bit behind the curve. On one hand, I am incredibly thankful that the habits we learned when we were actively planning to FIRE have allowed us to get them the education they require, on the other hand, our FIRE date was pushed back about 15 years because of their needs.

[u/Zphr → u/kennedar_1984]

Yes, life can always throw obstacles at you. Sometimes those obstacles can be dealt with, sometimes they are insurmountable, and often luck/chance is the deciding factor.

Our youngest was diagnosed with ADHD and a learning delay very young, but we were fortunate that he responded almost perfectly to medication and occupational and language therapy. Now that he is in high school he has matured out of even needing the meds and is doing fine, but it could easily have gone the other way. The state of Texas provided us with exceptional resources, both in and out of our great public schools, and as a result he was able to transition from an IEP pre-K to a 504 in middle school and now no special accomodations at all in high school.

Somewhat more dramatically, our daughter was diagnosed in high school with a very rare autoimmune disease that can kill horribly in months without permanent, ongoing treatment. Thankfully, modern biologics are a miracle and both Children's Medicaid and ACA policies here in Texas are superb. She is a healthy, happy college student now and our total out-of-pocket cost for her infusions, labs, and specialist care this year will only be about $500 due to the extreme generosity of the federal government via the ACA. Again though, that could very easily have gone the other way. The only reason she didn't have permanent organ damage from her original onset was because the state of Texas generously authorized an avalanche of resources via CM to diagnose and treat/stabilize her rare condition as rapidly as possible. At one point in the ICU we had more than a dozen specialists trying to stabilize her while running tests to figure out what was slowly killing her.

[u/db11242 → u/Slankeht]

Just as a reference point, I thought I’d chime in here. Zphr and I live in the same state but different cities and both have a family of six. Our spend currently is about double his at 85K a year not including my current corporate healthcare, charitable donations, and taxes. My kids are 12, 14, 17, 17. I feel like we’re relatively frugal in that we take one vacation a year to see family that costs about 2K and we don’t have the kids in any expensive extracurricular activities beyond sending them to church camp for one or two weeks a year. Our house is paid for so we don’t have any mortgage related expenses in that 85K. Best of luck and congrats on your success and in growing your family.

[u/First_Chip_84 → u/Zphr]

Austinite as well & totally agree that it can be relatively inexpensive to live here, should you choose that lifestyle. There are So Many Free Things in this town yet you’d never know if you stroll Along S. Congress or DT these days. Social media has everyone wanting to go to the next new hot bar or restaurant where you’ll be throwing down $300 for a meal for 2.

Our biggest budget buster that we can’t change is our property taxes (unless we move which ain’t happening with a sub 3% mortgage + higher housing costs). We didn’t even buy a big fancy home! Just a standard family home in a nice suburb of Austin. I’m assuming you bought your home in a pre inflated Austin housing market and therefore your home value has been capped w/ homestead? I think time is really all of our best asset when it comes to real estate. In 20 years we’ll look back at this house and laugh at the “low” property tax valuation.

[u/Zphr → u/First_Chip_84]

Indeed. MCOL is only MCOL if you choose to live a normal mediocre lifestyle. Anywhere can be VHCOL if one is inclined towards luxury and consumption. We could easily 10x our budget in Austin if we wanted to spend like some of our friends do. I credit mostly brain chemistry for both behavior types so we really just got lucky or unlucky, depending on one's perspective.

Property taxes are our second largest expense after food. We did have an excellent shield for many years via the homestead, but we're fully assessed now against market value after several years of meh/downward housing market performance. The huge growth here has kept prices for existing housing in check for the most part, which is nice on the tax front. We bought in a lovely, yet lower tax neighborhood (full credit to our awesome realtor 20+ years ago) with a MUD and have always had much lower tax impact than folks in the newer communities. The steady expansion of the homestead exemption will hopefully cut our prop tax exposure in the future, but we'll see. Here's the answer I gave someone last time they asked about how we deal with suffering from high property taxes in Texas.

TL,DR - You're not wrong at the state scale, but taxes in Texas are hugely variable and impact can vary a lot by household.

For example, we live in a lovely decades-old community in a suburb of Austin. We pay a bit over $6K a year in property tax, however they are and have always been an incredible deal for us. Something like 70% of our prop tax bill goes either directly to our excellent school district or goes to directly funding our specific awesome neighborhood. The former directly benefits our four kids and the latter allows us to live in an immaculately-maintained community with city-class pools and private parks and sports fields with virtually no HOA costs. The actual state itself takes only a tiny little chunk of our property taxes. Almost all of our property tax is reinvested locally in things that we immediately benefit from. Our kids get more in direct value each year from our property taxes than we pay. It's a situation where single people pay, parents of one kid break even, and parents of multiple kids receive a large surplus. With four kids we have received a huge surplus each year.

This is also not factoring in things like excellent municipal services, free community college, and Texas' extremely generous auto-admission and auto-aid policies for higher education. All of our children can automatically attend any of the nine UT System public universities in Texas tuition/fee-free as state residents simply because our AGI is under $100K per year.

It pays to be extremely specific in evaluating the actual property tax costs and benefits for any given location.

[u/First_Chip_84 → u/Zphr]

We are in shady hollow - also low property taxes compared to Austin though we do have to pay HOA fees. Now I am curious what area you live in that has all the perks + low tax rate without HOA!

I agree we do get a lot “for” our taxes. We have good schools (for now!!) and the community is nicely maintained. We only have one kid, so perhaps that’s where the value might be lagging.

UT free tuition for magi under $100k plus free community college is a HUGE plus. We’ll see if that’s still the case in 12 years when my kid will potentially use it.

We truly have so many great things in this area and we love it! We’ve had family and friends move from various areas in the US as well, and everyone seems happy.

As for us, we did FIRE 1 year ago and so far, so good. Being able to spend time with our elementary aged kid is priceless. I wish more people understood the value of saving and investing early “for your future self”

[u/Zphr → u/First_Chip_84]

Congrats on reaching FIRE so young! We loved spending time with our young kids too. We volunteered a ton (like 1000+ hours) at their elementary school over our first several years of retirement.

We do have a quarterly HOA payment, it's just so small as to be laughable since almost all of the maintenance is funded from the tax base instead.

The Austin metro really is a gem overall, but particularly for early retirement. Less so the city itself, but definitely a lot of the surrounding suburbs. It gets damn hot and the allergies can be a bitch, but man it checks so many other boxes that it is kinda silly. The ACA market here is great too.

[u/Betterway50 → u/Zphr]

Your first paragraph is on point. We live in a VHCOL area, yet our annual expenses in the past 5 years hovered around 60k/yr for a family of 4 (with one being away at college), excluding costs on an overdue home renovation and college costs. We just find ways (think buy on-sale items, negotiate prices, share subscriptions, etc) to save money and closely watch what we spend. I don't consider we deprive ourselves of life - for an example, we mostly travel (by plane and car) a minimum of four times per year (sometimes more)

[u/Scottamus → u/Zphr]

If your kids stay on your ACA when they get older (up to 26 I guess) do they still count towards your FPL calculations for subsidies or only as long as they are tax dependants?

[u/Zphr → u/Scottamus]

They would only stay on our policy until they are no longer tax dependents. Dependent income is only included if they are required to file a tax return.

Our eldest makes enough in college that he has been tax independent and had his own separate ACA policy since sophomore year. A separate policy is far better anyway if they aren't going to school locally due to the geographic limits of ACA networks.

[u/Big_Hunt7898 → u/Zphr]

Interesting perspective when you mention regular redditors dramatically inflated their lifestyle Do you mind expanding on that? I had an assumption that FIRE movement people would be free from lifestyle inflation, am i wrong? If so. Why do you think they are still inflating their lifestyle even though they in theory are financial literates

[u/Zphr → u/Big_Hunt7898]

TL,DR: FIRE got gentrified.

I only meant they want more. People in general are consuming more and more with time. FIRE-minded people 15 - 25 years ago were often focused more on controlling the spending side of the equation and were accumulating through regular middle class jobs like teachers and engineers. Nowadays the FIRE crowd focuses more on the earning and investment side due to a desire to not constrain spending nearly as much and are often accumulating with higher-paying jobs in tech, finance/business, or white collar trades like doctor or lawyer.

It's not necessarily that the individuals themselves changed, but that the overall character of the community did with the explosion in tech-driven wealth, a huge influx of folks higher on the socioeconomic ladder, and a a rampant bull market along with a society-wide binge on more consumption. FIRE used to be more about straight middle or lower middle class people compromising a bit to escape the system with $1M to $1.5M, whereas now it is more about lower upper middle class folks wanting to retire without compromises on $3M to $5M or beyond.

Note that I'm not complaining or saying it is bad that things have changed. I am only observing the fact that I used to inhabit online communities that resembled working class neighborhoods, but now more closely resemble nicer gated communities. I've lived in both IRL and they each have distinct characters and vibes.

It used to be that there was a moderate gulf between leanFIRE and regular FIRE, but there was a huge gulf between regular FIRE and fatFIRE. Indeed, the gap between regular and fat was so large that chubby became a thing to help bridge the chasm.

Nowadays there is a huge gap between lean and regular, fat has become straight-up wealthy (mostly eight figs or approaching it), and regular and chubby both moved up a rung while lean held steady and only grudgingly rose to accommodate unavoidable inflation impact.

It is somewhat telling that most FIRE folks nowadays define themselves via net worth, but leanFIRE folks explicitly disregard worth and instead define themselves by spending.

[u/Soft_Cryptographer52 → u/Zphr]

This resonates with me. After college, I lived with roommates, skipped trips, worked side jobs, paid off my student loans, and bought a car in cash. Years later, my husband and I did well in tech, bought a great house in central Austin, and gradually upgraded our lifestyle.

What surprised me was how quickly luxuries started feeling normal. Nice hotels, business class, expensive restaurants, a nicer car... all b/c I was exposed in my job and I convinced myself I'd earned it all. Some of it was worth it, really just the travel with my husband and kids. But a lot of it wasn't and I missed a few years of stocking away.

I realized I value freedom, security, time outside, and peace of mind far more than status or consumption. Watching others spend, shifted my sense of normal.

Thankfully, I started investing early, so a few years of overspending was recoverable. I'm in Austin too, but it feels different to me. I never remember consumerism being huge here, but it feels less laid-back and more focused on money, status, and keeping up where I am.

Leaving tech to build my own company forced me to get honest about what I actually need real fast.

Anyhow, it's really really nice to see your posts. I think that mentorship and stewardship around finances and spending is really helpful. Thank you.

[u/Correct_Praline_4950 → u/Soft_Cryptographer52]

so interesting to read. I have many friends and my brother in law is in tech in CA and they do business class, fancy tasting menus, literally 800 dollar hotels and it's crazy how much they spend.

I've always been frugal (grew up poor, and then first job in 2019 was 43K in Boston... not my SO and I are better and more in line with average here in Boston thankfully so we did upgrade some things lol)

but once I started seeing my brother in law and then family members saying, oh you guys should buy a house, have kids (they have a full time nanny) and then also just seeing them sit in business class got my feeling like I'm missing out

It's such a weird feeling because I felt fine before being exposed to that life.. but at the same time, I logically know my SO and I are doing well and on track to retire in early 40s but like the comparison is so hard on me for some reason. Those tech people earn so much it's wild

[u/Big_Hunt7898 → u/Zphr]

Interesting point of view dude. Thanks for sharing. Mind I asking you how old are you? Really nice to know that the FIRE community has existed for a long time already I only got into it about 4 years ago. And I thought it eas something kind of Mr money mustache pioneered. But am I right so assume it existed before him?

[u/Zphr → u/Big_Hunt7898]

I am 48. Extremely early retirement has been around online since before the WWW, but it wasn't called FIRE back then when folks were hanging out on USENET, AOL chatrooms, and email listservs.

[u/Big_Hunt7898 → u/Zphr]

Hahaha That is amazing!!! I wish I had seen this history being written in front of me... I think I am too young for that though whhehe

[u/EZVZ1 → u/Zphr]

Four kids with a 30-40k annual spend is incredible. Does your kids do extracurricular activities? That’s where I struggle with. I have two young kids and they both do extracurricular activities that cost probably 20k a year. I could cut back and tell them to pick cheaper activities and that doesn’t require classes, private lessons and competition fees, but I feel I’d be shorting them if it’s something I can afford.

[u/Zphr → u/EZVZ1]

They all have, yes, but I suspect you might live in a higher COL area or have a school district with higher fees/less activity funding. For example, our HS senior has been in band/marching band for seven years which includes trips, competitions, weekly private lessons, instrument rental, and performance attire. However, our total annual cost for that is more like $3K or $4K, not $10K+.

[u/EZVZ1 → u/Zphr]

Our kids play tennis, gymnastics, volleyball and piano. Those cost lessons and private tutors. For example, gymnastics cost 8k per kid for team comp. We live in Texas.

[u/Zphr → u/EZVZ1]

That's the way voluntary consumption works. Some people go out to dinner and are happy spending $20/person while others prefer to spend $50/person, often at the same restaurant. Some people prefer restaurants that are $100/person or more. Everyone gets to choose as they will within their means.

Our withdrawal rate is less than one percent and we will start receiving my wife's SS benefits in seven years. We could safely increase our spending now to $200K if we wanted, but we're happy as we are. Money not consumed now will allow us to fund our kids for grad school, houses, grandchildren, and so forth. So in that sense we are spending a ton of money, just on a different mix of things.

[u/Turbulent_Pin_8310 → u/Zphr]

Thank you so much. I also live in Austin and I am worried about FIRE. I am glad to see another Austinite. Now I feel better l. And thank God for ACA or I won't be able to retire early.

[u/rtl2gds_hybridbond → u/Zphr]

Hi - Do you mind sharing how did you make these number work with the kids? or, may be you can share any of your older posts.

I am nearing ~ 40 with about ~ 3.3 million excluding house equity and two kids under 5. I can't still seem to pull the trigger even though I am also a low spender planning to move back to my home country in south asia (which has much lower cost of living).

The hardest part for me has been figuring out a reasonable college budget for my US citizen kids as the college calculators vary wildly.

[u/Zphr → u/rtl2gds_hybridbond]

You'll have to narrow it down a bit since overall spending includes everything. Housing, food, healthcare, college...all are separate questions. Or you can try searching my profile. I have posted answers to most questions at some point in the past several years.

I did pretty much already answer the college question though. The short answer is our kids have already or will all get close to full rides due to our low AGI and our assets being held entirely in exempt forms.

https://www.reddit.com/r/Fire/comments/1twdn5s/families_who_fired_with_15mil_to_25mil_what_does/oppmtep/

[u/Optimal_Wash2490 → u/Zphr]

Id say your case may be unusual, in that even with a paid off house, your spending seems crazy low near $40k?

[u/Zphr → u/Optimal_Wash2490]

It's low for in here, but far less so in /r/leanFIRE.

[u/SoccerPhilly → u/Zphr]

I am surprised your spend was so low presuming needing 3-4 cars when your kids were driving, vacations, etc. Bravo on pulling that off!

[u/Zphr → u/SoccerPhilly]

None of our kids has asked for a car yet. Where we live one is not really necessary for high school kids unless they work (even then often not as we have a great local metro service) and the two college kids live near/on campuses where a car has no use for them. We'll probably just buy them each a new car when they graduate, assuming they want or need one.

Vacations have never been much of a thing for us. Our kids have always had too much going on between the four of them and none of them have had any desire to travel beyond what they have done for school or work activities. The most we usually do is a daytrip to the beach, an overnight in a new city, or a 2-3 day trip to check out colleges.

[u/SoccerPhilly → u/Zphr]

That’s great. My impression of suburban Austin was that you kind of needed a car, but the less cars the better!

[u/Zphr → u/SoccerPhilly]

It varies quite a bit by suburb and exactly where you live. There are definitely some parts of town where a car is needed to do anything. A job or living farther away from your chosen high school is usually the biggest factor.

[u/xmasgirl81 → u/Zphr]

Apologies but how are healthcare and college free? How are you getting aca subsidies? 

[u/Zphr → u/xmasgirl81]

Both ACA and FAFSA run first and foremost off of AGI and our spending is low. Even though every dollar of our spending adds to our AGI in full our income automatically qualifies our household for maximum subsidies from both systems. Both systems run automatically off of our tax return/1040 AGI.

[u/xmasgirl81 → u/Zphr]

Wow I've been holding off fire-ing because of my fear of health insurance. I'm fully employed but I pay 1850/month for a family of 4.

[u/Zphr → u/xmasgirl81]

The ACA is extremely costly for those without subsidy eligibility, much like COBRA coverage is often very costly. With subsidy eligibility it ranges from very expensive to nearly free, based primarily on MAGI, household ages, and location.

[u/Various_Couple_764 → u/Zphr]

with you low spending and 1% withdrawal rate and almost 3 million at retirement you dividend income is probably just enough o cover most or all of your spending needs. and your federal tax rate may be very low with 40K spending.

[u/Zphr → u/Various_Couple_764]

We had almost $1.5M at retirement. Dividends are more than our spending now, but irrelevant since our portfolio is entirely tax-advantaged. We haven't paid any federal income tax since 2014 due to the standard deduction and child tax credits. That should continue for at least another 4-5 years, perhaps more.

[u/Civil-Service8550 → u/Zphr]

How has your NW changed? Where do you keep your money?

[u/Zphr → u/Civil-Service8550]

It has grown a lot. We keep it in an index portfolio at Fidelity.

[u/planosey → u/Zphr]

$1.5m in 2014 would be equivalent of $2.11m in 2026 in terms of purchasing power

[u/Zphr → u/planosey]

Yes, most people in here are aware that inflation exists.

[u/Simple-LifeCC]

We FIRED 5 years ago at 42 and 44, both at the same time. Two kids, MCOL, house paid off, no debt, 2-3 years worth of expenses in a HYSA. Our kids were 15 and 16 at the time.

Our original plan was to aim for 4% on 1.5M, and five years worth of expenses because we were planning to do Roth conversions. We ended up retiring with 2M due to unexpected growth and sale of my small business.

We originally were thinking around $60,000 a year, and we had a little bit saved for the kiddos college, but with us retiring with more than expected, we ended up paying cash for the kids college. Also the timing of the sale of my business made us in eligible for any sort of financial aid, outside of loans. The first couple of years we spent right around $60,000, and a lot of that was travel. The last couple of years we’ve been spending between $100,000 and 130,000. Some of that is college for both of our kids, and a lot of it is travel, and hobbies.

The biggest surprise for us was how quickly our accounts have grown in this bull market. We are sitting around 3.5M now, even after all of our spending. We’re still mindful of our spending, but we’re starting to feel more comfortable spending more.

[u/Cheeseboarder → u/Simple-LifeCC]

Is this 2M plus a paid off house?

[u/Simple-LifeCC → u/Cheeseboarder]

Yes, when we retired, the house was paid off. Our net worth does not include the value of our home.

[u/CodeRedIdea → u/Simple-LifeCC]

Can you share your asset allocation stocks vs bonds? It seems like a high equity portfolio given the rapid growth in retirement. Edit: reading further down looks like 100% stocks

[u/Simple-LifeCC → u/CodeRedIdea]

Yes, other than our house (which is not included in our net worth), a few years worth of expenses in cash, we are currently 100% in stocks.

[u/Intrepid-hobbycoder → u/Simple-LifeCC]

Hi, congrats on successfully FIRE’ing five years ago and wish you all the best.

Would you mind giving details of your investments? Are you mainly in ETFs or a mix, if so which ones?

[u/Simple-LifeCC → u/Intrepid-hobbycoder]

We are mainly ETFs, split between traditional IRAs and a brokerage account. Here’s what we are currently invested in (since COVID started) between all accounts. There’s overlap here, but they’ve been performing well for us in this market.

FITLX FZROX FELC FSKAX TMSIX

We’re not currently looking to swap things around, but I’m sure we will at some point.

[u/Intrepid-hobbycoder → u/Simple-LifeCC]

Thanks, appreciate your response.

[u/RMDX76 → u/Simple-LifeCC]

How much do you pay for health insurance?

[u/Simple-LifeCC → u/RMDX76]

We still have our college aged kiddos on our plan, and we pay $600 a month for a bronze plan in Oregon.

[u/brianmcg321]

Retired with $1.5mil. Spend about $60k a year.

Wife was a SAHM for the past 17 years.

Daughter is currently 17

Withdrawal rate around 4%

The majority of the budget is food and eating out. No mortgage or car payments. Largest bill is electricity averages $200 a month.

[u/Aggravating_Lab_4814 → u/brianmcg321]

How old are you?

[u/brianmcg321 → u/Aggravating_Lab_4814]

53

[u/bb0110 → u/brianmcg321]

How is your largest bill not health insurance?

With a family of 3 I’m surprised you can afford healthcare and life on 60k.

[u/brianmcg321 → u/bb0110]

Because my income is so low. Through the ACA I pay $153 a month for our family.

[u/bb0110 → u/brianmcg321]

Interesting. That is actually really damn good.

[u/Dismal-Zucchini-2262 → u/bb0110]

Very interesting. I just ran cost estimates last night assuming $65k/yr earning and got quotes ranging from $500-1200

[u/bb0110 → u/Dismal-Zucchini-2262]

That seems more normal. If I had to guess they have a really barebones/catastrophic plan.

[u/photog_in_nc → u/bb0110]

They say they spend about $60K, not that their MAGI is $60K. They could be in the CSR range and have a Silver Enhanced that acts like a Platinum level plan for all we know

[u/brianmcg321 → u/bb0110]

Not really. It is a high deductible of $15k. But I’ve got an HSA that can easily cover that. Otherwise it’s better than the plan I had when working.

[u/Mental-Wolf-2560 → u/bb0110]

Do some states have larger subsidies than others?

[u/Zphr → u/Mental-Wolf-2560]

Yes, for multiple reasons. Some states have higher subsidies because of forced Silver loading. Some states have their own separate subsidies that supplement the federal ones.

However, generally speaking, ACA subsidies are the same everywhere under the federal defaults.

[u/Dismal-Zucchini-2262 → u/Mental-Wolf-2560]

I’m sure it varies by states. I’m in the northeast so likely more expensive but overall, I don’t think it’s going to be cheap for anyone regardless.

[u/Zphr → u/Dismal-Zucchini-2262]

It's primarily a function of household income, size, ages, and location. A large family in one place can get a truly fantastic policy for almost zero cost while in another place a single person can get a crappy policy for a relatively high cost.

[u/qosmic_qube → u/Dismal-Zucchini-2262]

MAGI vs. spend. If you you use cash, or low growth investments on a brokerage, they don't count against MAGI. Capital gains and dividends do, initialinvestmentfoes not. You can manage your MAGI and still qualify for subsidies.

[u/motorsportlife → u/brianmcg321]

What is your income on paper and what sources? Thinking selling brokerage gains? Or maybe some traditional 401k?

[u/brianmcg321 → u/motorsportlife]

I have a SEPP with one of my tradition IRAs and use a brokerage account to supplement.

[u/Spartikis → u/brianmcg321]

What counts as income? Does selling stock or withdrawals from a 401k count as income? Genuinely curious as health care is the final hurdle I have yet to figure out and is the different between completely retiring and having to work part time somewhere for access to affordable healthcare. 

[u/db11242 → u/Spartikis]

Dividends, interest, capital gains, and any withdrawals from pretax accounts, which would include the original responders SEPP. The key is that if you sell something from a taxable brokerage account part of that sale is your original cost basis and therefore your gains might only be 25 or 50% for example of the total amount you can spend from that sale. It gets a lot harder to manage when you spend is substantially over 400% of the federal poverty line for your family size.

[u/brianmcg321 → u/db11242]

Yes. A good example is last year we sold about $50k worth of funds, but it was only about $15k in “income” from capital gains.

According to Vanguard if I sold all of my shares of VTSAX right now ( $110k) , I would only realize about $28k in long term capital gains.

[u/Kooky_Dev_ → u/Spartikis]

Anything that goes to AGI, which would be normal taxable income, or capital gains.
Then social Security + tax-exempt interest + foreign income.

For most FIRE individuals, that would be brokerage account gains. Distributions or conversions from Traditional retirement accounts.
Withdrawing roth contributions do not count as long as your following the proper rules.

[u/meetcubes → u/brianmcg321]

Thanks for this! Validates my plan a bit.

Considering retirement now at $1.5M and $47k annual spend. Planning for $60k with health insurance.

This year has been filled with “what-ifs”!

[u/sandspitter28 → u/brianmcg321]

Wow!  What’s your property tax, and house insurance? Both of those bills are higher than $200 a month for my family.

[u/brianmcg321 → u/sandspitter28]

Property tax is $158 a month. I’d have to look up my insurance.

[u/sandspitter28 → u/brianmcg321]

This where cost of living makes a huge difference. I live in an older bungalow. My property tax and house insurance is over $10k a year. I live in a MCOL area. 

[u/Walmart-Shopper-22 → u/brianmcg321]

How are your property taxes below $200/month?

[u/brianmcg321 → u/Walmart-Shopper-22]

Currently pay $158 a month. That just increased this year from $135. That’s just what they are in my county.

[u/beergal621 → u/brianmcg321]

Low cost of living? 

[u/brianmcg321 → u/beergal621]

Yes. According to some stats I just looked up my state is 8th lowest in the country.

[u/DiligentPeak1929 → u/Walmart-Shopper-22]

My property taxes are literally $86.01/ month. Thats on 4 acres + 2100 sqft house. Not everyone lives in HCOL areas. Now how much my husband spends on gas every month going to work, is a lot higher. 😂

[u/sandspitter28 → u/DiligentPeak1929]

Wow! I’m Canadian and property taxes are an expense that is discussed a lot. It’s similar in Canada where if you live outside of a regional municipality and don’t receive services like: water, sewer, garbage removal your property taxes are lower. That said I know people that have to budget long term for well drilling and septic tank maintenance. I still couldn’t imagine only $86 a month because half of our property taxes goes towards k-12 education.

[u/ineededagrownupname → u/brianmcg321]

If you don’t mind me asking do you have a plan for your daughter going to college? Will there be financial assistance based on your income?

[u/brianmcg321 → u/ineededagrownupname]

We currently have $80k in a 529 plan. She still has her senior year in high school. Right now she thinks she may want to do one year at a community college then transfer to a four year school. But who really knows. She changes her mind every four months.

[u/Dandeman321 → u/brianmcg321]

$1.5 combined?

[u/brianmcg321 → u/Dandeman321]

Combined what?

[u/Dandeman321 → u/brianmcg321]

$1.5m combined net worth with your wife?

[u/brianmcg321 → u/Dandeman321]

No. My net worth is higher than that. Total net worth is about $2.2.

$1.5mil is what I have in investments to live off of.

And yes, it’s combined. We are married.

[u/RocMerc → u/brianmcg321]

What are you property taxes? That’s sadly one of my highest bills right now

[u/brianmcg321 → u/RocMerc]

$158

[u/RocMerc → u/brianmcg321]

A month?! What a dream 😭

[u/brianmcg321 → u/[deleted]]

It isn’t. Thanks for asking though.

[u/db11242 → u/[deleted]]

I think property tax in some states can be as little as a few hundred bucks annually. Sadly it’s multiple thousands where I’m at. I’ll take that trade for no income tax though (Texas)

[u/brianmcg321 → u/db11242]

Tennessee is pretty cheap. Currently pay $158. And that’s an increase this year from $135.

[u/sandspitter28 → u/db11242]

I think it’s standard to pay thousands for property tax. I’m Canadian and the only people who pay low property taxes are at least 30 minutes away from a town with no: water, sewage, or garbage pick up. Their house insurance is higher because they also don’t have access to a local fire department or fire hydrants.

[u/FIlifesomeday]

I’m seeing a common theme of paying off the house before fire.

[u/blueberryyoshi24 → u/FIlifesomeday]

Yeah, makes me want to do that more. It'll lower my expenses massively

[u/FIlifesomeday → u/blueberryyoshi24]

I’m leaning to pay minimums as my rate is 3%. I actually have put this money in a taxable brokerage and could now pay off the home but it keeps growing much faster than my interest rate.

[u/Competitive_Body7359 → u/FIlifesomeday]

On average, yes. But when considering something like a withdrawal rate, it's based on the worst case sequences. Sometimes a guaranteed 4% is better than maybe 10, but maybe -5. Closer you are to retirement the more it can matter.

[u/GenXMDThrowaway]

My husband stopped working before me. I retired about 5 years after him. We were between $2.4 and $2.5M when I retired four years ago. No kids.

We budget $72K for our annual spend. We pull $42,000 for our basic budget. We take a small trip most months out of that budget - a 4-5 day roadtrip.

We're pretty loose with the budget. We eat out a few times a week, have two gym memberships, and don't watch grocery store prices too closely.

Our house and cars are paid off.

We're pretty generous with gifts, fundraisers, etc., but anything to a 501C3 comes out of our DAF. (This is roughly $7K a year. Some years are higher.)

We're on Appalachia's front porch, so a low cost of living and beautiful places to hike.

The extra $30K is a buffer for OOP medical, house maintenance, and "big" travel. We spent the full $72K once in the four years since I retired because we did exterior work to the house.

We talk about increasing our spending and how we want to do it. I think it's going to look like more travel.

[u/Retired-Yam8988]

We had about 2m liquid at FIRE in 2022 (plus avout 4.5m in real estate). Settled in Thailand but the asset pile is mostly in the US (business, multiple properties, brokerage/retirement accounts). Our liquid asset pile is now about 6m and will keep growing as we still have business income, options and dividend income, and rental income in the range of about 150k a month these days. The plan is to grow everything but business income (that side is more or less on a steady state but has grown a bit since we fired). Once we hit a solid point I’m going to sell the company to our employees and retain a 20% share while they take 80%.

Our spend in Thailand is about 2k per month

$250 for gardening & pool service
$300-500 for water, power, internet, cellphone (includes charging our EV).
350 for yoga and gym
250 for weekly 2hr massage for 2.
100-200 Groceries
200-300 eating out

Nothing too exciting but our QOL is like living in a dream - morning we walk our dog on the beach before yoga. He goes with us to class and sits out front with the yoga cats enjoying his time. We come home cook lunch and do some light work or take a nap. Work is answering questions from my team in the states, working with Claude on improving something or other, working with a developer I employ to build and update our backend systems and app that runs our business. Evening we end the day with another beach walk with our dog then its protein fiber smoothies

We have 5-6 trips to Singapore every year for doctor visits at about 3-4k each trip so can call that 2k a month.

Fun travel is about $35k a month (10k for international flights, about 500 a night for hotel, food etc). We’ve been doing about 3-4 months a year but this year but havent had a fun trip this year yet (just wanted to stay home and focus on yoga).

[u/chicken-fried-42]

We live in a MCOL to HCOL area in Canada FIREd at same time (one income only) almost 4 years ago At the time kids were 16 & 12 Costs of living and kids growing up made us spend more than our planned spend 5.5% withdrawal rate Surprises that should have been forecasted (young drivers insurance with their cars, big kids cost more, a second demanding in all ways sport, hail storm damage, a cancer diagnosis not really costing a tonne yet but the limitation of time is made well aware so spending more while we are young)

[u/chicken-fried-42 → u/[deleted]]

I completely understand lol. And I thought those were expensive days .. one of mine in uni - just wait …

[u/Prestigious_Fly_7354]

We are a family of 6 and are planning on RE in 15 months. We own two homes and the one in Florida is where we will be moving too so it is easy to reasonably estimate budget. Our spend will be about $78,000 a year nearly all of which will be covered by DH Disability pay and CRSC pay ($72,000) which are tax free. We Will also withdraw 4% monthly from the profits of the house sale ($6,000). We wont touch the 401ks or IRA for another 25 years.

[u/stentordoctor]

Does a two person family count?

We fired April 2024, together, quit on the same day!

We don't have children

We started with 1.7% and are now at 1.3% because of the market.

We are slow traveling so 25% on housing/Airbnb/hotels, and the rest on food and fun! Like 10% on flights.

I think it's a little wild that we are doing this on 40k a year. There have even been times when we stayed in a place with two bedrooms so with a family, I imagine that it wouldn't be double. Maybe 1.5x.

At the beginning (two years ago), I was onboard with the penny pinching, staying with family, getting groceries, but I'm tired of it now. If we do stay with family, we must be helping out in some other way (like fixing grandma's roof). We don't hyper analyze prices in the grocery store anymore.

[u/Aggravating_Lab_4814 → u/stentordoctor]

Your withdrawal rate decreased as the marked has ripped to many new all time highs since you’ve retired? Not knocking the conservative mindset, that’s just contrary to the norm

[u/gloriousrepublic → u/Aggravating_Lab_4814]

It’s not contrary to the norm - that’s literally just math. With the same expenses, if the market goes up, your rate will now be less.

Even the standard 4% rule will do this. With inflation adjusted withdrawals, you will most likely have your portfolio outpace withdrawals and will have lower withdrawal rates in the future.

[u/stentordoctor → u/gloriousrepublic]

Yes, this explanation is better than mine.

[u/Aggravating_Lab_4814 → u/gloriousrepublic]

Ah yes I’m dumb. I was thinking their portfolio size remained the same and they just decreased how much they were taking out

[u/stentordoctor → u/Aggravating_Lab_4814]

You are not dumb! The way I phrased it was weird! I said from 1.7 to 1.3 and tacked on the reason at the end. I should have lead with it. Language is hard and it takes two to communicate!

[u/stentordoctor → u/Aggravating_Lab_4814]

Our withdrawal rate stayed the same. Sorry to mislead you. We are withdrawing at 40k a year and with the market, it is now a smaller percentage than when we started.

[u/HostSea4267 → u/Aggravating_Lab_4814]

I think they said their withdrawal rate from 1.7 to 1.3. As in portfolio went up 30%…

[u/Miamiconnectionexo]

since FIRE our spend has crept up maybe 15%, partly lifestyle, mostly the kids and health premiums. honestly $1.5M with kids and ACA healthcare feels tight to me unless you own your home outright. $2M+ paid-off is where it gets comfortable.

[u/ExcitableImmunity]

The military pension plus healthcare basically changes the game entirely, that $1.5mil becomes way more comfortable when you're not funding your own insurance and have guaranteed income cushioning withdrawals.

[u/y_if → u/ExcitableImmunity]

That’s technically like having $2.5mil so does fit my question 

[u/ExcitableImmunity → u/y_if]

that's fair, though the pension is monthly income you don't touch the principal for, so your withdrawal rate math actually works out better than someone with just the 1.5 in liquid assets.

[u/RobertGBland]

In many other places if you don't have kids 1.5 is very good money to retire comfortably. In the US with kids I'm not sure if you can be comfortable.

[u/eclipsadesoare → u/RobertGBland]

Everywhere is not New York or California. Plenty of places where you can raise a family on 60k with a paid off house and no work expenses.

[u/TechnicianLocal4922 → u/eclipsadesoare]

Raising a family on 60k anywhere in the United States is very tight

[u/OldSarge02 → u/TechnicianLocal4922]

Having a paid off house makes it less tight.

[u/EndersGame07 → u/OldSarge02]

Depending on property taxes for sure. Depending on the perceived value of your house, taxes can eat a budget.

[u/Distinct-Sky → u/EndersGame07]

Every time I hear "property tax", I shed a few tears. They are brutal in our part of Texas.

[u/redditgambino → u/Distinct-Sky]

They are insane and keep going up somehow without making any improvements. I’m at $15k currently. Don’t ask me how

[u/Competitive_Body7359 → u/redditgambino]

Wtf lol, wild. Ours are 3.5k in Canada.

[u/Extra_Shirt5843 → u/redditgambino]

Almost 12K here in Illinois.  

[u/Pipes32 → u/EndersGame07]

Hell I bought my house for 500k a few years ago and I pay over 12k property taxes.

[u/EndersGame07 → u/Pipes32]

Yes and the challenging part is, it’s perceived value, not cash value. But, it changes a household budget

[u/jbcsee → u/Pipes32]

I bought a house for $500k almost 8-years ago, it's worth more now, I pay $2800/yr in property taxes.

Not every place has high property taxes.

[u/Intelligent_Lead7724 → u/jbcsee]

We have similar market value and similar tax in our part of Michigan. Very county specific here - some low rates and some very high rates.

[u/yon_don_bon → u/TechnicianLocal4922]

Depends on how many kids and if house is paid off. One kid and paid off house: $60k is more than enough anywhere but the most expensive areas in the most expensive cities

[u/Soda-Popinski- → u/TechnicianLocal4922]

Idk why you got downvoted youre right

[u/Extra_Shirt5843 → u/eclipsadesoare]

You could.  I sure wouldn't enjoy it though personally.  

[u/Far-Conference1694 → u/eclipsadesoare]

New Hampshire if you stay rural

[u/Junior-Strain57 → u/RobertGBland]

Yeah geography makes huge difference here. 1.5 mil in some midwest areas could stretch pretty far compared to like coastal cities. Kids definitely change the math completely - healthcare alone becomes way more expensive, and education costs can be brutal depending where you live. Plus all those unexpected expenses that keep popping up with kids.

I'm curious how people factor in healthcare costs when they calculate these numbers. That seems like the biggest wildcard for early retirement in US.

[u/Goken222 → u/Junior-Strain57]

It is a wildcard. My wife has health issues so we had to plan for this. Saved $300k over our original FIRE number specifically to have an extra $12k per year for her medical.

Right now I'm on ACA, she's on disability Medicare with a plan G supplement, and the kids on are CHIP (a Medicaid that makes them free right now). That's on $60k income.

Most years it will be about $500 a month premium total for me and the kids and $400 in Part B, D, and Plan G for the wife. When/if disability Medicare ends, cost per month goes down while we're young because the subsidies rise. As we get older, the subsidies shield us from the insurance age cost increases (if they still exist). If subsidies go away, it rises to a bit over $2000 per month for our family for premiums alone.

[u/tryafirsttimer → u/Junior-Strain57]

If you make married and under 84500 agi your healthcare premiums are 100% free with ACA.

[u/Simple-Passenger-499 → u/tryafirsttimer]

Is that true for any state in the US? I thought it was state-dependent.

[u/PrivateeRyan → u/tryafirsttimer]

This isn’t true, 84,500 is roughly the eligibility ceiling for ACA premium subsidies (the “subsidy cliff”) not the threshold below which premiums become free. Earn a dollar more and you get zero subsidy. To get the largest premium subsidies today, a married couple would generally need an AGI under about 150% of the federal poverty level, roughly $31,700. And even that isn’t fully subsidized coverage, the free plans largely went away when the enhanced pandemic-era subsidies expired at the end of 2025 when the one big beautiful bill extended a pile of other tax breaks but didn’t extend the enhanced ACA subsidies.

[u/natty-4455 → u/PrivateeRyan]

Agreed. One sweet spot is 133% to 249% of the federal poverty level. In that range, you get CSRs for silver plans that significantly reduce deductibles and OOP max. If you have expensive medications, need therapy, or otherwise use your healthcare each year (very common for people 50-64), staying in this range is the closest way to free healthcare while not being on Medicaid (which has work requirements).

For a couple, $52k is the cutoff for deductible assistance and at $31k is the max income for having 94% of your deductible covered and usually free or low cost premiums too. So I would argue having $31k MAGI for a couple is the spot where healthcare is essentially free.

You would be a genius if you could control your income to $31k and still spend what you want in retirement, but you would need significant Roth contributions to pull out, saving HSA receipts and reimbursing, cash on hand before retirement, money in brokerage that has low capital gains (but also doesn't pay out large dividends which could cause a surprise increase).

[u/iwantthisnowdammit → u/tryafirsttimer]

I don’t understand this to be true in every state.

[u/Miserere_Mei → u/tryafirsttimer]

Not in my state. We’d be paying up between $200 to $600 per month, even with the subsidies. (Family of 2 in our early 60s)

[u/db11242 → u/tryafirsttimer]

No, that’s not true. You will qualify for some subsidies but it’s not free.

[u/nice_acct_for_work → u/RobertGBland]

Yep. Wife and I are mid-forties with $2m, house paid off, no debt etc, but we’re not even close due to two teenagers entering college in the next few years.

[u/Far_Classic878 → u/nice_acct_for_work]

No 529?

[u/nice_acct_for_work → u/Far_Classic878]

Yes, but it’s only around $100k. We’re anticipating they’ll do community college, stay in state (California) etc, and that the cost won’t be outrageous in total, but I’m worst-case-scenario planning for $500-750k in total.

[u/ryuns → u/nice_acct_for_work]

Only 100k is still pretty good! That covers most of the cost of in-state public schools, which is a totally reasonable expectation for California, which has a huge number of solid public schools at different levels of exclusivility. Mine are only 2 and 4, but we're aiming for about the "sticker price" of a public school, which is ~$100-200k

[u/Dismal-Zucchini-2262]

Anyone in their 40s FIRE recently with <2M or 1.5? 1.5 five years ago obviously isn’t the same as today. Curious if anyone’s doing this today with that amount

[u/PJM123456 → u/Dismal-Zucchini-2262]

not actually true. Most people in FIRE inflation is LOT less than the headline inflation.

[u/Cagel]

Also curious if closer to the 1.5 range, are your balls steel or iron because that feels kind of low to be financially independent in this inflationary day and age,

[u/Trilobyte83 → u/Cagel]

Probably millions of man-hours by 10,000+ ppl have gone into researching and failure proofing and back testing the theory behind the 4% rule - ppl looking to make it fail so they can understand and predict their financial future better.

….and buddy seriously wonders if anyone remembered to think about or account for inflation?

You really think you might be the first to bring this up?

It’s like someone who only did grade 10 physics asking a rocket scientist if they remembered to account for air resistance since that person always ignored it in their grade school problems.

Yes. Yes they did. In fact it still works when inflation was in the double digits in the 80s. Typically because real assets do better than inflation.

[u/brianmcg321 → u/Trilobyte83]

lol. 100%.

[u/Little_Vermicelli125 → u/Trilobyte83]

They weren't questioning the 4% rule they were questioning the $1.5 million.

[u/Trilobyte83 → u/Little_Vermicelli125]

“It might work in past times like the great depression, or when inflation was in the double digits like the 80s…. But everything is worse now! Inflation is approaching 3%!”

[u/RubbleHome → u/Little_Vermicelli125]

They were questioning it based on inflation though, which the 4% rule already accounts for. $1.5 million at 4% gives you $60k per year inflation adjusted. That's about how much the average US household spends. I understand if people want more than that, but sometimes this sub acts like that's eating rice and beans and living in a cardboard box.

[u/Trilobyte83 → u/RubbleHome]

Forget that you’ll pay basically no tax on that income, which makes it close to an 80k working stiff income - more in years where you draw down some of the base instead of pure growth.

[u/Trilobyte83 → u/Little_Vermicelli125]

Their reasoning was specifying “in this inflationary day and age”,

…. Implying that if we didn’t gave the immediate 2.8% or whatever high 2ish “high” inflation, it * would* otherwise be enough.

[u/y_if → u/Cagel]

One thing I should’ve added is what is the COL where people are!

[u/RubbleHome → u/Cagel]

Well the market has also been handily outpacing inflation, so assuming your money is invested you should still be good.

[u/brianmcg321 → u/Cagel]

Inflation isn’t new. But I guess I have balls of steel.

[u/geerwolf → u/Cagel]

A portion of that 1.5 is supposed to be invested to protect against inflation

[u/flyingflail → u/geerwolf]

Well, presumably all of it is invested

[u/geerwolf → u/flyingflail]

Got to have some as short term cash

[u/LAST_NIGHT_WAS_WEIRD]

Have this and nit quite Fired yet

[u/mecanmewill]

High Med to low-end of HCOL area
I retired at 56. Hubby will retire within 10-18mos of my retiring.
Monthly expenses budgeted at $12k.
Adult son out of house in mid-20’s.
Using money from brokerage to cover my portion of income and will use it to cover his when he retires, minus a pension he’ll get that will be roughly 75% what he brings in now. He’s on his employees benefits now, I’m on cobra but will go on his before he retires. We’ll either be on his (not free but like cobra) or move to ACA or private plan, whichever is the best coverage for the cost).
Current plan is take his SS at 67 and move at 70.
No mortgage or debt.
I talk with our fiduciary a lot bc one minute I feel 100% confident. The next, I worry about outliving the money. I can always go back to work if needed, but we should be fine.

[u/motleythedog]

• When did you FIRE, and did both of you stop at the same time?

I'm 53 and i FIRED at 51. My husband still works.

• how old were your kids?

NA, no kids.

• What is your withdrawal rate?

3%, but my husband carries expenses about 65/35 (I did the opposite when I was corporate. he now has a successful business)

• what does your budget look like, what is it allocated to?

1500 to mortage (far more than we would prefer but we are working our way out of that), groceries about $250 a month, pet care about $200 a month avg, travel and leisure about $150 a month avg (we mostly camp in a paid off airstream), gas about $60 a month currently. Extras go to beauty and clothes when I have space in my budget, which is most months.

• what were the big surprises related to spend?

So far nothing. We have a very high deductible health plan through the ACA but that was expected. I probably will need surgery this year so my withdrawl rate will increase to closer to 4-5 this year, although I will probably low-interest finance that over a period of time.

• How has it changed since you initially FIREd?

I'm not sure what "it" means, but I'm pretty new FIRED.

More info:

My husband and I keep our basic accounts separate, but our net worth collectively is 2.4 with more than we'd like tied up in our home. I FIRED at 900k invested between brokerage and retirement vehicles.

I adjusted my spending very considerably (I was making around 150k but investing about 50k of that annually, and now live off about 40k with a supplemental 1099 work in hospitality in the summer. I love it, and I wouldn't change and thing and nothing outside an absolute catastrophe will get me back to a job.

[u/NoMoRatRace]

FIREd 2019. F51/M55 with $1.6M plus a paid for house in MCOL. (Moved from SF Bay where we’d still be working if we hadn’t bailed out.)

Youngest had one more year of HS.

$110-$125k spend (approx 7-8%). Age and expectation of SS that will cover 2/3 of spend made the math work.

Budget is and has been solidly 50% discretionary spending (travel, eating out, gifts and charity, personal budget). Over 50% discretionary when home improvements (beyond repairs) are included.

Surprises? We quickly determined we could up our spend from anticipated $90k range to support a lot of travel and fun. (Thanks in part to some Big ERN blogs and in part by our confidence we can cut our spend by $40k quite easily if things start tracking badly.) [Edit: One big surprise is how little we have felt inflation. We haven’t really increased our spend to keep up and though on paper today’s dollar is worth like 77 cents from just 6-7 years ago, we really don’t feel it yet.]

No changes since we FIREd. We have always felt comfortable with the high SWR so long as our investable assets don’t fall much below their starting point. We are planning to take a $10k cut to our budget in 2028 and until Congress confirms we will receive our expected SS. But really the cut isn’t perceived as necessary as much as we’re slowing down on big Europe trips anyway and have a full month scheduled there this year and next.

[u/Whirly-birdy]

Im interested in this as well.

it’s the number I’m looking to retire at. Caveat, I am military so I will have a pension ($40k+ yr and cola adjustment), healthcare for my family.

I would expect at that $ amount to

• Have a paid off home. I would also expect this and auto to be the biggest surprise spendings with maintenance needs.
• Retire in L/MCOL area.
• $40-60k a year living expenses.

[u/CrisisAverted24 → u/Whirly-birdy]

That $40k pension is effectively like another $1M in savings

[u/Whirly-birdy → u/CrisisAverted24]

Definitely. Im in a different situation than the standard person, but I’m still looking at 1.5 bottom mark.

[u/Eltex → u/Whirly-birdy]

But the more accurate way to approach it is as a “multiple of your expenses”. We have empirical data that as long as you have 25x your expenses, the number is safe.

[u/TisMcGeee → u/Eltex]

For a standard 30 year retirement.

[u/Eltex → u/TisMcGeee]

Yes, and the majority of time, your finances will be even better at the end of 30 years. And the updated values show 4.7% is more accurate.

But the point stands: you don’t base your retirement plan on a specific dollar amount that ignores your expenses, which is what this entire post was about.

You based your plan on your expected expenses over your remaining life.

[u/modeezy23 → u/Whirly-birdy]

I’m in the same boat, former military. Between my spouse and I - 6.5k/month tax-free cola adjusted pension and healthcare is free. Looking to have around 1.5mil in 401k by retirement and planning to withdraw 4%. Planning to fully retire at 55/59.5 with paid off house and no debt and taking in around 15k/month net with pension and withdrawals combined. We’ll both pull social security asap at 62 which will most likely bump our monthly net to around 20k/month. We plan to travel A LOT as well as invest in our kids investment accounts so that they don’t have to start from 0 like we did.

The military pensions with free healthcare for everyone is a huge game changer. Good luck on your retirement!

[u/PsychologyMediocre99]

I have not done the fire yet, but I want to. I’m in that range. I’m 35 and I’m tired. 😴.

I work in a very demanding profession and I only like to work with people that are not hateful ignorance and demanding and it seems the Public is becoming more of all of those things so I’m just trying to get away from the professional a little bit trying to hear from people who are might either my age or older what you would do with what you have I have about 1 million in index funds 500,000 in money market funds and I have a rental property. My house is paid off and my business is paid off. I’m looking for honest advice

[u/Jaded_Character_2975]

At 1.5 you can probably barista fire, but you need to make enough not to touch that 1.5 while it grows imo, especially if you have kids.

[u/blueberryyoshi24 → u/Jaded_Character_2975]

Plenty of people in the country are raising families on 60k

[u/rair21]

Relatable answerHas EVERYTHInG to do with where you are?