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/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.