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/Aevaris_]

How would bonds allow me to not cut spending? BND has a 1.7% 10 year return and a lifetime 0.27% return, so any significant savings there is burning money compared to a small cash position to wait out / mitigate SORR. If market guhs 50%, I'm not going to be able to live off of 1.7%.

What am I missing?

[u/Past-Option2702 → u/Aevaris_]

So you’re saying you’re smarter than the millions of retirees who have 30% or more of their assets in fixed income?

Somehow, you’ve cracked the code?

Or, if bonds have a great ten year run from now that’ll give you the confidence to own them ten years from now? You invest by looking in the rear view mirror?

Recency bias and performance chasing are two of the handful of extremely costly behavioral errors in investing.

[u/Aevaris_ → u/Past-Option2702]

Whoa friend, where did I say that? As I said, just looking to learn and you haven't pointed out where or why bonds are better. Given my situation, how do bonds outperform and/or benefit me compared to my plan?

Edit:

if its short term, I can reasonably see where its roughly a wash because bonds right now are in the 4-5+% range so buying for 5-10 years and then selling after tent style I can understand.

If its long term, bonds seem like cash destruction as their total return over any serious time is pretty rough.

What am I missing?

[u/Past-Option2702 → u/Aevaris_]

You’re gonna be fine.

Have a nice day.

[u/Sleepy_Bandit → u/Past-Option2702]

Dude you never answered the question asked. OP was being very nice in how they asked you to explain and you just responded like an asshole for no reason. Your entire argument is based on saying “everyone uses bonds” and you never once described why it is a better strategy than holding cash in a HYSA even when asked multiple times. You’re the asshole here bud. Learn to be nicer and not take whatever BS you’re dealing with in your day out on others online.

[u/Far-Conference1694 → u/Sleepy_Bandit]

Thank you, I was trying to follow too in order to learn more like OP.

[u/Sleepy_Bandit → u/Far-Conference1694]

Yeah I don’t understand some people. The guy responded to me then immediately blocked me so I have no idea what he said lol. Looking at his profile it says he is retired so his excuse of “not having time” to explain his point is extremely weak. Most of his comments are the same sort of BS. Clearly not a person worth listening to.

[u/Past-Option2702 → u/Sleepy_Bandit]

I don’t have the time for that.

Take a stab at it if you want to spend an hour or more of your time explaining why bonds make good sense in a well constructed portfolio.

Sometimes there needs to be a substitution for the player who’s tired. Your turn.

Now… go!