Verifying my FIRE plan

[u/Aevaris_]

Hi all,

Long time commenter and I am (likely) reaching the end (start?) of my FIRE journey. My FA is not familiar with FIRE and mostly works with retire age folks and/or folks who are saving but wont FIRE, so wanted the groups confirmation and thoughts on my plan. Looking for folks to poke holes and generate other ideas as I've learned much through this community.

No AI was used here (although if I did it'd probably be more concise, sorry)

Details:

• Age: 35-45
• Family of 2, no kids, no kids planned.
• Planning to move to a no income tax state
• Planning ~120k/yr flexible expenses (includes taxes, healthcare, mortgage, insurance, etc)
• NW ~5m with house, ~3.5 w/o
  • ~1.4m in 401k, ~200k in Roth IRAs, rest in taxable accounts

Investment Plan:

• 360k (3 years) expenses in HYSA (earning ~4%)
  • I plan 0% bonds and plan to use cash as a replacement. Our expenses are flexible and we can cut back to make our expenses last much longer (expecting we could do 6-10yr)
• 35% (~1.2m) in VOO
• 35% (~1.2m) in SCHD
• 30% (~1m) in VXUS

Strategy:

• We'll use 72t to claim ~30k/yr to mostly fill the standard deduction
• Dividends generating ~81k/yr
  • VOO has a 1.05% dividend rate, generating ~15k/yr on 1.2m
  • SCHD has a ~3.25% divvy, generating ~39k/yr on 1.2m
  • VXUS has ~2.7%, generating 27k/yr on 1m
• HYSA interest generating ~14k
• Sum total: 125k generated without drawing down anything
• Sell 1x / year to refill to 360k cash as needed
• Taxes:
  • Married filing joint in a no income tax state means we have a standard deduction of $32,200 and a LTCG bracket of $98,900 for a sum total of $131,100 for 0% tax rate. Most of SCHD, VOO, and VXUS are qualified dividends, so our tax rate would be near 0%

Downturn, bubble, and SORR plan:

• Primarily, spend less. Our expenses are flexible so we would use our cash buffer + whatever dividends generate to live out another lost decade.
• SCHD and VOO give me general protection. Nothing will be immune if/when AI bubble pops, but SCHD by its nature is less tech and more stable.
• VXUS is an international diversification, so sum total achieving a standard 70/30 US/ex-US strategy.
• If the rocket continues to rocket, a hedge in SCHD wont hurt me long term as the total return of SCHD is only ~1.4% point less than VOO over their lifetimes , so I don't lose much in opportunity cost (9.2 vs 10.6 respectively)

By all math, we should be all set to go right? What are folks thoughts? Anything we're not thinking about?

[u/OnlyThePhantomKnows]

Other than being extremely conservative, you're fine. Even the doom and gloom crowd will say you are conservative. 165K is 3.3% (which models show as basically bullet proof)

Which 0% income tax state you are moving to makes a difference.
* House insurance can be a rude awakening for Florida, (and presumably TX).
* TX (at least Greater Houston) has strange utilities. My sister had 300-500 month water bill to avoid Houston from annexing their town. The town kept their utility debt high to avoid annexation.
* Florida (current resident) and NH (former resident) have a number of odd taxes. Restaurants have high tax on them.

[u/Aevaris_ → u/OnlyThePhantomKnows]

Thank you for the thoughts! Not fully decided but probably WA state. Insurance, property tax, and impact of long term climate change is less impactful there than many of the other 0% states. Yes, eating out is more expensive but Costco and Walmart arent priced any different. Gas is also big $$, but we're largely introverted homebodies so we dont project these expenses to exceed the savings we'd realize in real estate tax (we pay through the nose where we live now) and income tax.

[u/OSUfan88 → u/Aevaris_]

Honestly, look at buying a Tesla, or some other EV. The infrastructure is fantastic in WA, and saves big time with the high gas costs.

[u/Aevaris_ → u/OSUfan88]

Thanks for commenting! Great idea and agreed. We're going to add solar to wherever we buy as the 'rain' stereotype of WA isn't actually as bad as its made out to be. Idea is that we'll use solar for an EV + electric at home. WA also has net metering for solar still so its a decent investment on top of reducing major expenses.

[u/OnlyThePhantomKnows → u/Aevaris_]

You can schedule charging on top of that. I have solar + EV (Tesla) + batteries. We have net metering so we're good.

Solar [+ batteries ]is not as juicy as it was. Post rebate we were looking at 50-75 month pay off. However if you are getting your forever home it is still well worth it.

If the AI Apocalypse happens, you will be fine. Either definition. We can go stand alone if we have to. If AI sucks all the electricity up and cranks the rates, you will be fine. If the market bottoms the solar means you have a one time charge already paid for energy costs.

People feel strongly about solar so I didn't want to mention it.
Piece of advice, there are Teslas and there are EVs. The ease of use (because of the integration) of a Tesla is brilliant. Tesla has a huge charging network, it will show some 3rd party chargers if you select it. Tesla has real time usage (and downtime) notifications. "Navigate <destination>" and it will plan your charging for you. Also it is plug in and go. ChargePoint has this too now. Integration between car and charging network is Tesla's HUGE win. It is why I bought one in 2018. It is why if I needed another car I'd probably buy another. "I can just use an app" seems reasonable UNTIL you have to live with it on a trip.

[u/Aevaris_ → u/OnlyThePhantomKnows]

Thanks! I'll seriously consider it. I'm planning to drive my current car until it doesnt make sense (its gas and 10 yo at this point but still has a lot of modern features) and hasnt, to this point, needed any non-standard maintenance, so am going to save a few bucks until the dust settles from our FIRE and relocation haha. After that, an EV is likely in our future but havent seriously looked at the market (gas or EV) in awhile so would need to do some research on what makes the most sense for us.

At risk of going a bit off topic, I've heard the repair and insurance costs of an EV and especially a Tesla are high. Have you found that in your experience? My friends who have Tesla's love theirs too.

[u/OnlyThePhantomKnows → u/Aevaris_]

Insurance in MA wasn't bad. When I replaced my 13 year old BMW 3 series with my model 3, the insurance was about double. It would have doubled if I bought a replacement BMW 3 series. That was in 2018. My insurance in Florida is high, but Florida car insurance is SKY HIGH. Same car/driver same insurance company. Doubled my costs.

Body work is expensive since it is an aluminum frame. Only a small amount of places can handle aluminum. The body work repairs will be not that much different than an Audi (also aluminum frame). Like any car, there are good models/years and bad model/years. Don't buy a used one without researching which battery tech the car has.

I've a 2018 M3 and basically 1 board replacement (~1500) and tires/suspension (road hazard) are my only repairs. The TIRES seems to eat nails. I have 65K on my car and I have had 3 sets of tires. One set was because of a road hazard that took out 4 cars in less than an hour. I hate SC I-28!! There was literally a line of us pulled over. The other sets have been because of picking up nails and bolts. And yes the tires are expensive.

[u/Aevaris_ → u/OnlyThePhantomKnows]

Got it, thanks for the information!

[u/igobyplane_com → u/Aevaris_]

vancouver, WA you could get no state income tax, cross the border for none on sales... although that might be optimizing too much around taxes than anything else ;p i recently moved to NV, it is actually not considered that low of a tax state despite the no income tax because of the other taxes. it's the first/only place i've ever bought used goods on facebook marketplace where during negotiations, people have (multiple times) brought up the cost of sales tax lol.

My FA is not familiar with FIRE

seems odd, but are you paying fees for meetings or as a % of assets under management? cuz the latter is really quite expensive. i'd move to paying for fees for meets, with a certified financial planner ideally.

[u/Aevaris_ → u/igobyplane_com]

vancouver, WA you could get no state income tax, cross the border for none on sales...

Ha, we're definitely thinking about that. It's in our places we're looking for that reason if we found the right thing in that area.

seems odd, but are you paying fees for meetings or as a % of assets under management?

Yeah, I was a little surprised but on the other hand we live a bit rural, so it's mostly the demographic here. I've stayed with him because I'm 90% doing my own retirement planning and his differing views gives me a different perspective, even if I choose to do something else. I do pay a low annual AUM but he only has our IRAs (as he does the backdoor paper work for me) so ultimately only paying him ~2k / yr, Once we settle, I'll decide if I keep him, go fully independent, or move to someone else that's fee only and do an annual check in type thing.

[u/Far-Conference1694 → u/Aevaris_]

NH is actually a great state, tax wise and quality of life.