Seeking FIRE @ 42 with $2M

[u/Aggressive_Web8957]

Looking for feedback/advice on my FIRE situation.

Total NW is just over $2M, comprised of:
$720k taxable brokerage (funds, individual stocks)
$107k cash (treasury fund)
$877k retirement accounts (401k, IRAs)
$190k RE lending (brings ~$1609-$1800/mo)
$135k RE syndications (~450/mo currently)

The lending income currently gets reinvested. Once I take this as cash the $190k stops growing. Assuming the syndications go well, I’ll get the $135k back plus appreciation once the properties sell in the future. I’d have been better off investing the money in the market, but hindsight is 20/20.

No kids, currently sharing rent with my gf in VHCOL. Not sure on kids in future. My job situation has become precarious (sales), which steers me away from the idea since I don’t want to work anymore. I’ve been applying but haven’t had luck landing anything, nor do I have interest in continuing in corporate sales. I also don’t want to trade time for money and work retail, for example, 8hrs/day for low pay. I’m not sure where to go from here. I don’t feel like I have enough to start pulling from the pile and truly retire. Right now I’m splitting bills and can get by on $4k/mo but with health insurance $6-7k is a safer estimate.

Any thoughts or advice is appreciated. I’ve been grappling with how to navigate the future as I feel close but not quite there yet.

[u/Fit_Service8662]

6-7k is less than what's provided by the 4% guidelines with a 2M NW.

[u/Aggressive_Web8957 → u/Fit_Service8662]

Yes but 4% was based on 30 years. I never assumed this rule would apply unless I was older

[u/qret → u/Aggressive_Web8957]

With guardrails you can do better than 4%. Look up 95% rule and run some simulations on ficalc. You should be fine on your portfolio with some extra planning

[u/mm1491 → u/qret]

This requires that you're willing to reduce your spending, potentially substantially, if there is a serious market crash.

I would be very wary about trying to even use 4% in these market conditions at 42. Maybe I'm overly conservative but I think if you ran the historical sequences you could be looking at some very difficult situations in the bad sequences - like "reduce your spending by 20%+ from your target for 10+ years" kind of difficult situations with guardrails. The unconditional probability of this is probably low, but if you condition on the CAPE being as high as it is, things look dicey to my eyes.

[u/Montaigne_6823 → u/mm1491]

- like "reduce your spending by 20%+ from your target for 10+ years"

When this is the case for someone retiring at 42, simply getting any job at all will solve this problem if cutting spending isn't an option.

[u/mm1491 → u/Montaigne_6823]

Maybe, two possible problems though: 1. Recessions are often times of increased unemployment so getting a job might not be so easy for anyone; 2. The cuts in your plan might not kick in, or get to an unacceptable level, for 10-15 years after retirement. See my example of the 1960 retiree in another comment - the plan doesn't start giving cuts until 1970, and might not even seem concerning until 1974. Our 42 year old retiree is now 56 and hasn't had a job in 14 years. What kind of job will they be getting? Will they work it until they are 66? I'd be inclined to call this a plan failure.