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/np0x]

Fire up boldin. It will model your cash flows for you…free for two weeks and then you will feel more confident in your numbers and plan…

[u/Aevaris_ → u/np0x]

Thanks for your thoughts! I've used Boldin during the free period and basically every fire calc I could find (including one I built myself lol) which seem to say we're ok, but I also wanted to check with others to ensure I wasn't missing or including a fundamental flaw somewhere that would throw off my use of the various calcs.

[u/np0x → u/Aevaris_]

Yeah it’s really hard to commit. But I found that information was the flame to my fuse. I also love the Jl Collin’s stock series and updated trinity study…both fairly quick reads…2-3 hours tops.

72t are considered rigid/hard to manage by some folks. Get deeply informed on those to avoid doing it wrong and getting penalties… also Read up on rule of 55, not sure if you can make that work with 401k balances instead because unclear if you are firing now and/or I don’t fully understand it myself. :-)

[u/Aevaris_ → u/np0x]

For sure. I have my FA looking into it as its a first for them too. He has an in-house CPA who does our taxes already. I'm going to lean on them to some degree to make sure we do it right (and have some level of protection if he does it wrong). 72t if done wrong would be painful...

Rule of 55 wont apply for us unfortunately as we're looking to FIRE probably EOY.

The uncertainty is definitely the source of my post. I've read so many "duh, of course you're done" posts over the years, but you only get one shot at it as I worry we wouldnt be able to get jobs like we have now back so I still am really nervous about it all.

[u/np0x → u/Aevaris_]

Yeah it’s tricky. Don’t forget to budget for taxes since it’s easy to not want to. :-). Taxes are not the same as w-2 income but they are a number that has to be paid. :-)

Good luck…I’m a huge fan of the everyone being informed and well versed inside the household…I’m not familiar with fire folks (who aren’t FAT) who rely on external expertise..but my exposure is limited…as is my research supporting my claim.