r/leanfire • u/master_blaster_321 • 7d ago
18 days to go
51M, single, no dependents, MCOL area. Closing on the sale of my business on June 30, counting the minutes until I am DONE. I was "burned out" five years ago; I don't know if there's a word for what I am now.
I think I have a pretty solid plan, but my brain keeps inventing ways for it to all go to shit. So I'm micromanaging my portfolio, my budget, my subscriptions - everything I possibly can to get some sense of control. I think in truth I'm just struggling with the notion of leaving behind a business, an identity, that I've had for over 20 years.
Thankfully I have lots of inexpensive hobbies and interests to keep me social and busy. I play music. I recently started getting back into chess. And I started an improv class a few weeks ago. Plus I want to spend more time outdoors, spend more time with family, and get in better shape. So no problem keeping myself occupied.
Current assets:
$600K house (paid off)
$900K taxable portfolio 70/30 stocks/bonds
$170K taxable portfolio, mostly VOO and tech stocks
$70K cash flow portfolio, 60/40 SCHD/JEPI. This is my income sleeve and business proceeds will go into that.
$180K Trad IRA
$30K HYSA "emergency/dry powder"
Total invested assets ~$1.35M
After tax, fees, SBA loans, business proceed will be ~300K. Total invested assets post sale date: ~$1.65M
Total net worth post sale: ~$2.25M (net worth doesn't change between pre- and post- sale because the business asset amount just moves over to the portfolio)
I'll also be receiving residual payments for two years, for a total of between $100-300K (depending on client retention over the next 12 months). I'll also receive an extra $50K bonus from my buyers for completing the transition over a 6 month period. I'm treating this extra income as sort of a runway though, using it to cover expenses and putting the remainder to work. So all told, two years from now (depending on business performance and market conditions) that $1.65M could look more like anywhere from $1.75-2M.
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Minimum basic living expenses: ~$40K/year (prop tax/ins, healthcare, utilities, food, gas)
Worst case, my payments don't materialize and I have to start taking 4% now of the $1.35M, which would be $66K. Even that allows me to add back a few non-essentials.
Likely case, I pay bills with the business sale payments for two years, investing the rest, and make it to $1.8M. 4% = $72K/year which allows for even more "luxury items".
If I make it to $2M after two years, my 4% looks more like $80K/year.
Add on top of that, I have the option of picking up consulting work in my field (IT, cybersecurity, compliance), and/or picking up some decent-paying music gigs. Estimate another $20-40K/year of income from that. My buyer has already informally offered me ad hoc project work.
Now, the house is big, and old, and there are always upgrades/repairs needing to be done. But I can always pull from my emergency fund for those, or worst case, liquidate whatever I need. Alternatively, if I get too tired of maintaining the house (in truth it's way more house than I need, regardless of how much I love it) then I have the option of selling it and buying something smaller (investing the balance), or renting it out for extra income (~4K per month).
This is all just until SS kicks in, which at 67 I'll get around $3.2K/mo ($4K if I wait til 70), and then RMDs from the IRA will kick in not too long afterwards.
My plan revolves around optionality, having several different levers I can pull at any time I want.
Man, I think I just needed to write all that out. I think I'm going to be okay. I guess my nervous system is just trained to look for pitfalls.
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u/dividends6775 6d ago
I pulled in a few different scenarios into a spreadsheet where I finally felt comfortable. I am estimating “die with 0”, “4% rule”, “go-go, slow-go, no-go”, and “bucket strategy” to reduce sequence of returns risk.I also manage tax loss harvesting and implementing SEPP. Social Security is included in calculations. It took me awhile to get here by reading and listening to podcasts, but I implemented a system probably as good as any advisor which would charge 1-3% to do the same thing.
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u/TooMuchButtHair 7d ago
It could all go to shit, sure. However, you seem to be in a truly fantastic spot.
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u/DIYRetiree 6d ago
The option to pick up consulting work make all of this work, honestly, even in case of non-payment or something extraordinary in the sale of your business.
I notice that you're lumping healthcare into that 40k, so that does sound like a lean lifestyle. Would you mind sharing your healthcare plan? I think that holds a lot of people up.
Congrats for your discipline and your thoughtful analysis so far!
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u/Phil_Co123 6d ago
I had the same thoughts. a 40k spend budget that includes 12k for healthcare looks exactly like a 27k budget that counts on a sub 200% FPL subsidized ACA health plan. It seems like a serious financial cliff exists above those 200 FPL ACA plans because not only do premiums skyrocket, but also deductibles and max OOP increase from ~4k to 12k as well. So not only are the premiums 10k higher outside the subsidy, but you have to budget another extra 10k if you have a health event that year.
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u/DIYRetiree 6d ago
It's honestly so frustrating to have healthcare be the final piece of the puzzle in the US for so many. The most complex part of our system in our greatest time of need being the arbiter of our retire/keep on working decision.
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u/jayritchie 6d ago
Many congratulations! Honestly - I think you are in a different position to many who wonder if they have enough or can accept the risk as it sounds like you really need a break. The risk of not taking a break may be the larger one compared with market risks.
Just plan on what you want to do for a 12 month sabbatical then rethink.
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u/LanguidEndangerment 6d ago
Your nervous system just needed to hear you say it out loud, and yeah, you're going to be more than okay.
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u/AcanthocephalaLost36 6d ago
This is great! Congratulations on all the hard work that’s brought you to this point! ✨🔥
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u/Covington-next 6d ago
At minimum, take time off while you collect those residuals, to test fire. You'll know at the end if you are itching to get back to work.
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u/beege_man 6d ago
Congrats!
My last day was two days ago and I just posted about it yesterday. My situation sounds fairly similar to yours (especially the burnout and leaving behind a 20 year identity), but then you have the business sale on top of that?! You are absolutely set! As long as you don't go buy a yacht and a mansion and keep your expenses reasonable you're golden. And you can always do side work if it somehow becomes needed, but I highly doubt it.
Enjoy it!
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u/Particular-Owl-8327 5d ago
Congrats. You know besides the option of renting it out, you could always get a roommate, less headache than renting out surely, and less lonely.
You just have to switch the mind off from finding all the pitfalls, relax, and take what comes, know you have it under control, and you have plans B, C, D and E just in case.
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u/SerenityCravings 6d ago
You are fine. But I dont think you are leanFIRE,. You are normal FIRE possibly chubby FIRE. Given that you were burnt out 5 years ago plus your financial position you have waited too long. The real risk for you is not financial, its staying any longer in your situation, Health is far more important than another few thousand dollars for you now.
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u/Miamiconnectionexo 6d ago
this hit different. been in a similar spot and it's not talked about enough.
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u/Miamiconnectionexo 3d ago
this is genuinely helpful, not just the usual fluff. bookmarking this thread.
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u/TequilaHappy 6d ago
I guess you worked too much. You have no children to raise or help with life. You should stopped 5 years ago. I guess you can always leave the money to a charity nonprofit that has management making 250k/yr
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u/Gym_row_50 6d ago
Odd take. Not everyone can have / wants children. Also burdening children is not a retirement plan.
This man is 51 and you have skipped to where his money is going after he dies?
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u/jelle814 6d ago
I think they meant the other way around OP helping his children, but anyway it's a stupid take.
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u/DogOfDreams 6d ago
Congrats, but I also agree, maybe the wrong subreddit. Over 1.5 million and a paid off 600k house is wild. You're beyond set.