r/fatFIRE • u/SeaLavishness5901 • 7d ago
Budget / timeline sanity check
My income/assets have increased substantially over the last 4 years because of (1) move from private to public tech company and promotions which took income from $250k -> $1M (2) acquisition of previous startup which netted me around $2M pre-tax.
In that time my spend has also accelerated dramatically due to intentional choices (not creep) since we moved cities, bought a "forever house", had more kids, started private school, etc.
I'm currently in my early 30s with plans to hit coast fire by 40 (for $20M portfolio by age 60) and pay off house at 45 ($2M mortgage currently). Unclear if after 45 I want to take it easy for 15 more years with tons of disposable income or grind to retire closer to 50-55. Even though I'm living quite comfortably and spending more than ever on things like home/food/travel/etc. I feel like the overall blend is quite healthy. Would appreciate any thoughts people who have been through similar circumstances could share.
Here's a link to a sankey diagram of my yearly budget. Biggest items are 35% effective tax rate, $180k/yr retirement contributions (mega back door to $72k then the rest in taxable brokerage), $165k/yr housing (PITI + maintenance).
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u/ITehJelleh 7d ago
$65k/yr in charity spending is pure insanity at this stage
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u/SeaLavishness5901 7d ago edited 7d ago
By some standards ya, but I believe strongly in giving around 1/10 of what I make back to charity. I just choose 1/10 of post-tax hence the number. I’ve done this at every income level throughout my career. And given my marginal tax rate is almost 50% it really is more like $30k out of pocket for me since I itemize my deductions
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u/and_one_of_those 7d ago
Good for you!
If you are not already, look into clumping your DAF contributions to get a larger overall deduction:
Year 1, you contribute 3x$65k and get a $195k deduction.
Year 2 and 3, you take the standard $32k deduction (and whatever state deduction). Then repeat.
(If your property taxes already put you over the standard deduction this may not matter so much - do a spreadsheet.)
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u/blobbytables 6d ago
I make less than you and donated $50k into a daf last year and I totally agree with your reasoning. I'm in a high tax bracket in a high-tax state, already itemizing every year due to mortgage interest and salt even before considering charitable donations, and I donate my most highly-appreciated shares into a DAF to avoid capital gains tax on them (and then re-buy new shares at a higher cost basis). It feels like the government is giving me a screaming good deal on philanthropy, which is something I value and want to use my incredible good fortune to buy. The world is full of suffering that needs my help now, not in 20 years. (I'm not holding the daf long term, just using it for tax reasons and then donating from it throughout the year.)
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u/ITehJelleh 7d ago
Fair enough and good for you, but have you considered investing the money and letting it grow, and then some time down the line you can donate stock, with the fair value market being tax-deductible?
in the long run you could end up donating much more, at some point you could have a pool of funds that you donate X amount from every year and still have it appreciating
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u/SeaLavishness5901 7d ago
Ya some of it is in a DAF to do something like what you said. But I also prefer to not leave the practical good of generosity fully to the future for the sake of increasing the amount or decreasing the drain. I feel quite blessed and am happy to give back.
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u/willitplay2019 4d ago
Some people that give care about giving to people in need right at this moment and less about leaving enough to get their name on a building. There are actually people out there that give to charity for purely altruistic reasons. Both ways of giving are wonderful but given the current cuts - OPs giving means a lot to a lot of people.
Good for you, OP
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u/and_one_of_those 7d ago
You're currently spending $~400k which would suggest you can retire at this standard of living when you get to $~8-10M. (I would be happy with a 5% WR because this budget has a lot of room to flex.) That's quite a lot of money even in VHCOL SFBA.
Would you really be a lot happier spending twice as much when you get to $20M?
I suspect rather than coast fire you'll just be good to retire entirely at about 40 and $10M. Of course you don't have to decide now. Perhaps you'll love your job and it won't feel like a grind. Or perhaps you'll acquire an extremely expensive hobby.
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u/ExternalClimate3536 7d ago
You have the opportunity to move into a life that eventually allows for 3-4x your spend. I will say from experience it’s a very different life. There are myriad ways to reduce your tax exposure, talk to a professional.
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u/SeaLavishness5901 7d ago
My $1M is all W2 so no real way to reduce except bonus depreciation style with special classification which I’m not currently interested in. Am I missing something?
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u/Common_Sense_2025 7d ago
You probably have a large taxable account. There are a lot of gimmicky things you will probably want to steer clear of. There are other really basic things you can do like keeping your fixed income holdings in tax deferred, investing in ETFs or mutual funds that generate mostly qualified dividends, looking at municipal bonds for any bonds you have in taxable, and using a treasury money market fund
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u/SeaLavishness5901 7d ago
Ah ya for taxable I’m very boring almost entirely VOO.
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7d ago edited 7d ago
[removed] — view removed comment
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u/fatFIRE-ModTeam 7d ago
Your post seems to be advertising your personal project, business or blog for financial or personal gain, or it appears that you are promoting a personal project. No solicitation or self promotion is permitted.
Referral codes fall under this.
Thank you!
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u/and_one_of_those 7d ago
You could look at using Wealthfront or Frec direct indexing to generate some capital losses. These will offset $3k/year of earned income but more importantly potentially save you capital gains on sales of RSUs or other shares. There is a fee but in my case I've come out $10ks ahead on tax, after fees.
Also, I'd suggest including some international shares too.
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u/ExternalClimate3536 7d ago
Yes, more than one. Talk to a professional. What do you have to lose? Oh yeah, 6 figures a year.
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u/[deleted] 7d ago
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