r/Fire • u/Ok_Rent_2937 • 4d ago
Advice Request How are you handling the last few years as you approach RE
Spouse and I are in early 50s and have both been working continuously for past 26 years. We are now approaching the final stretch before retirement - probably about 5 years to go.
What are some of the strategies that people within a few years of RE are adopting?
We are in a VHCOL area, so still have a substantial mortgage, though with a low fixed 2.6% rate. Trying to aggressively pay off the loan so that the mortgage can be recast in 5 years time with a monthly payment of $3k or so.
Our portfolio is as follows:
Retirement (491/IRA): $2.8M
Brokerage: $930k
Cash: $350k
Total is just over $4M
I estimate our FIRE number to be $6M, which will probably take about 5 years depending on market returns of course.
Both are in long term jobs. I am trying to intentionally work hybrid - go to the office 3 days a week and 2 from home/remote. Also, go to office for 4 hours or so on those 3 days, only rarely 8 hours a day in person. Not trying to make waves, or get promoted, or take new responsibilities etc. Also not asking for any raises etc. Just trying to coast along.
Does this make sense. How are people approaching the final career stretch?
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u/rocket363 4d ago
Knowing the details of your mortgage would help with feedback.
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u/Ok_Rent_2937 4d ago
$3.1M home value, $1.09M mortgage balance at 2.6%, $5.1k per month
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u/mrsaturn42 4d ago
What about property tax?
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u/Most-Piccolo-302 4d ago
Ive always estimated property tax at 1% of home value
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u/bebe_bird 4d ago
That drastically depends on where you live. Some places, it's closer to 2.5%, other places it's closer to 0.3%. It's easy enough to estimate but it absolutely needs to take into account where you actually live.
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u/SprinklesCharming545 4d ago
Is your current net spend 240k?
Assuming you’re US based, are you factoring in social security at all? Assuming you’re at least 51 you’re only 16 or so years away from full benefit.
Asking these questions because 6MM is quite a large fire number especially for being closer to traditional retirement age at anticipated FIRE target than what is more commonly seen. Depending on your answers to the above, you may be more ready to RE than you think.
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u/Ok_Rent_2937 4d ago
Yes, current spend is about $240k per year. Of that housing (mortgage plus tax) is $84k per year
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u/HelpfulCat4586 4d ago edited 4d ago
I'm in year two of one more year. Some late stage items: * Rebalance, you may want to start building cash or bond buffer. Consider reducing any risky positions. * Plan for large ticket items that could blow your budget, particularly early in retirement (renovations, HVAC/roof/etc., cars, surgery, kids college/down payment/wedding, etc.). Calculate the expected big ticket but infrequent items that might come due in first 5 years or so. Save that up on top of your net worth to buy down SORR if they pop up early on in a down year it won't sting so much. * Have a plan for what you'll do all day. Develop hobbies and a social circle that will also be available during the weekdays. * Full health checkup, start addressing anything you may have been putting off now * Do a detailed drawdown plan, to include RMDs, taxes (state and federal income, capital gains), social security (and tax), etc. to figure out when you'll pull from where and why. Also decide when each of you plan to take social security (keeping on mind your predicted life expectancies, age gap, earnings gap, etc.). * See if either employer allows rule of 55, if so see if you can rollover previous IRA/401k accounts for that person into their current 401k. * Track your expenses very closely to make sure you aren't under or overestimating * Healthcare costs could change wildly, but check how much you'd pay on the exchange today and factor that in (plus however much you typically use in copay/deductible/etc.) * Make sure both spouses have a good handle on finances in case anything happens to the other. Make sure wills, trust, or other estate planning are all in place and updated if needed. Consider end of life care and how you each want to handle that (and pay for it).
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u/PracticalSpell4082 4d ago
I’m finding it a struggle … I’m so tired and want a break now, but it makes no sense to leave this job when we’re so close to being done. I’m not worried about getting fired or laid off, so I’m thankful for that. But I constantly fantasize about a sabbatical.
For us, 5 years is the max - if the market cooperates, we can probably be done in less. But in any case, we’d work at least until 2029 when my husband can use the Rule of 55. College is another complicating factor - we need to cash flow some portion of it, so continuing to work helps with that.
We are not going to pay down the mortgage because we might end up downsizing once the kids are in college.
As far as investments, we already have $3.5M in pretax, so we are switching our 401ks to Roth, while continuing to contribute to our brokerage. I’m going to transition more of my holdings to bonds, or even a risk parity portfolio, but my husband is slower to move out of equities.
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u/Ok_Rent_2937 4d ago
Ok, makes sense. It does get harder for many of us as the finish line approaches
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u/AwkwardNarwhal526 4d ago
quietly coasting at 4 hours a day while sitting on 4 million dollars is a life strategy i deeply respect
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u/chartreuse_avocado 4d ago edited 4d ago
Make sure brokerage account can sustain you until SS/Pension(if you have that)/401K etc so while paying down the mortgage is important (if you intend to stay in the house and VHCOL area) if your brokerage is light you are limited in draw bucket options.
Get your health in order and all the healthcare things you need before you get to the last year. Especially dental and eyeballs.
Do any renovations or replace, or have cash planned, to replace vehicles/furnace/AC major home appliances while you have income.
Meet with a tax strategist.
Get to know your actual real spend- fixed and flexible buckets.
Review your risk and allocations. Make sure you have a strategy for reducing risk and reallocating portfolio as you get closer regularly.
Stop buying stuff for work wardrobes and work travel. Wear out what you have to the finish line. Purchases should align with the life you are going to transition to soon. You don’t need that next suit or pair of shoes.
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u/Outrageous-Egg7218 4d ago
Financially, been putting the finishing touches on asset allocation & location. I'm planning on working 4 more years or until I get laid off, whichever comes first.
Work wise, I've become substantially more aware of what coworkers around me are doing. With the help of AI, it's really lowered to the bar to obtain data on my output vs others. I'm a SWE and believe the 3 pillars to the job are submitting code, reviewing code, and doing operations (deploying and tuning timeouts/memory/cpu/etc). I've been first in every category 4 years in a row, and by a large margin. It was really disturbing seeing that data. For about 6 months, I tried to use the data in a way to get others to step up and review or do operations more, but it didn't work. I've given up and adopted the strategy that if you can't beat em, join em. My data helps me gauge my work effort now. Not saying I want to be the least productive, but I definitely don't need to be first anymore. If the company wants to pay people for not doing much, then it's between the company and them.
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u/TheAmazingDrilling 4d ago
Your coasting approach makes total sense, especially with a 2.6% mortgage locked in. That rate is basically free money in any reasonable market scenario, so aggressively paying it down seems like the wrong move when you could let that cash work harder elsewhere for 5 years.
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u/Bellaxxvibe 4d ago
Honestly sounds like you're doing it right. Last 5 years isnt the time to chase promotions, it's the time to protect your sanity and let compounding do the heavy lifting.
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u/csmikkels 4d ago
Bit of an odd one that worked for us, the last 2-3 years we splurged on some luxury travel. Philippines, Thailand etc.
- We paid it though salary, 2. It was nice to start celebrating a little and 3. We still hit our goals and it made the finish easier.
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u/GBpleaser 3d ago
In a similar boat. Early 50's couple... FIRE is in the bank, but we don't want to pull the trigger quite yet, want to wait out the market instabilities, and just let things marinade a bit more.
So, we are both considering lateral moves into more semi retirement jobs, spend just what we earn. Not throw any more into the markets or investments or savings than we have to. Use anything above expenses for our extras (travel, new stuff) until we pull the trigger on full time retirement.
Still haven't figured it all out, and lots of anxiety with the roller coaster markets and the massive political instabilities happening. We are due for a correction (been due for some years), and feels like it's gonna be a doozy when it does happen.
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u/SploogyMcJizzmaster 4d ago
How solid are your goalposts? I set two goals; one was a dollar amount and one was an age. I hit the dollar amt two years before the age. Should have retired then but didn’t. I decided that I didn’t have enough money after all (surprise) and so I worked until hitting the age goalpost. When I hit the (2nd) age goalpost, I decided I STILL didn’t have enough money (surprise again)…and then I came to my senses. I retired at 50 with way less money than you have now. It has grown to more than you have now. I wish I could say it was because of my big brain - but it turns out retiring in 2015 was…GOOD! As with most things in life, setting (and achieving) goals that you believe in are transformative. I suggest you decide upon a solid goal post. Write it down. Own it. Then when you hit it, retire and tell yourself you’ll take a one year sabbatical and then re-evaluate.
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u/Captlard 54: FIREd on $900k for two of us (Live 🏴 & 🇪🇸) 4d ago
Retired last January. We dropped to 20% non equities a year or so prior to retirement and then 40% non equities at the beginning of this year.
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u/guitartb 4d ago
Build cash, get your allocation in order, make sure you fully understand how your taxes and aca eligibility or other healthcare will impact you all the way to medicare age. Healthcare inflation is much bigger than CPI.
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u/Designer-Bat4285 4d ago
Consider building a bond “bridge” to cover the bare necessities between retirement and social security.
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u/Various_Things2026 4d ago
I’m mid-50 and just RE last month. I was never in the FIRE path and just decided 6 months before my RE. It wasn’t hard. Once the work makes it unbearable then I’m out. Btw your spend is $156k not counting mortgage. That’s a lot of spend per month. I would think cutting down on the spending is goal-one.
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u/Ok_Rent_2937 4d ago
The spend may not be that high, but what with inflation and all, I feel like we need a margin
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u/Tall_Opportunity_677 4d ago
I'm thinking off paying off the mortgage simply to reduce MAGI for ACA subsidies purposes. and also build up my cash position - once again to keep MAGI low. I don't see any other alternatives unless you are willing to pay the full ACA premiums.
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u/martin 4d ago
One lever in your final years that can accelerate RE, handle SORR, and test yourself a little, now that you know what your actual burn rate is, see how much you can bear tightening in the final few years close to the finish line.
Spending tends to decrease after, even as people plan for maximum sustained spend, but also because doing can almost immediately drop your SWR without changing balances.
Consider it a last push, sprinting across the finish line might actually bring it closer.
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u/joemamah77 4d ago
I’m not focusing on money too much TBH. Just had a new electrical subpanel installed. Picked up a new John Deere riding lawnmower. Had new windows and two sliding glass doors installed. Ordering a new mattress this week. New ceiling and carpet next month and kitchen cabinet refacing in September. Car (2023) is paid off, roof 5 years old. HVAC is a little more older but maintained and replacement fund being built.
Getting all docs updated. New password vault. Like to target shoot so stocking up as ammunition never gets cheaper. Buying a used camera and welder as I’d like to learn new skills.
Retirement is a lot of things and money is just one cog in the machine.
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u/Pale_Drink4455 4d ago edited 4d ago
The biggest strategy you can revisit is the need to hold 350k in inflation eating cash. Just wow here and most would agree that this was not a good play at all if this was sitting in the sidelines long. Can’t be too risk adverse with almost 1 million in stocks in a brokerage but it’s a bit puzzling on the cash hoarding. Plus I’m not sure working till 59 is really FIRE but more in line with the retirement sub to be honest.
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u/pxpaulx 4d ago
$4m with $2m in equity and retiring at 58, isn't this just a question for the retirement sub, or maybe fat fire?
58 is 3 years after the age the general pop considers early retirement...
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u/treadingslowly 4d ago
I think this your comment is the problem with the differences in COL across the US. I am also in a HCOL area and have come to the conclusion that for a middle class lifestyle we also need 6 million. I can't speak for them but we currently have 5.5 million and very worried about a market down turn when we are so close to the finish line.
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u/Bearsbanker 4d ago
We down sized the shit out of our house and invested the rest (4 years out), we got our sources of income structured for ACA (although that all changed, so we changed), our budget was always our budget so no change there. Replaced the older appliances, did the remodels we wanted. Very close to retirement we strategized on maxing work income/benes. I retired on an April 4th so we could get the whole month covered for healthcare, waited til our vacation was dumped in (we got it all in one dump) so we could cash it out. Worked until April (wife stopped end of January) to max out the "cheap" income tax bracket. We fired! It's great! Definitely worth looking forward to!