I have a high-stress job, but I think I'm pretty okay at it despite the stress. (I've been at it for roughly 10 years or so.) I have been exploring the FIRE (Financial Independence, Retire Early) movement for a while, and I'm wondering if my personal finance plan is even do-able. See below.
- I am 35-ish years old. So, ideally, I need enough to make it to social security years i.e., 65. That means 30 years.
- I plan to pay off my entire mortgage and all other debts. I will have approximately $500,000.00 cash, $500,000.00 tax-advantaged retirement funds, and perhaps $200,000.00 in a dividend producing investment portfolio-- hopefully producing at least $2,000.00 cash per month (or $20,000.00 annually).
- After the mortgage is completely paid, I'll be left with probably $500.00 per month in revolving expenses (e.g., HOA dues at $99.00/month, electric, utilities, phone, property taxes, etc.) then maybe budget another $500.00 to $1,000.00 per month for other stuff. So, let's say my anticipated budget would be around $1,500.00 per month for life expenses. I plan to have all debts paid before moving the plan forward (including student loans, car, etc.). I also hope to pay for these expenses using the aforementioned dividend income.
- Moreover, if only use $500.00 in one month, then that should mean that the next month I can 'roll over' and increase my budget to $2,500.00 to stay within the timeframes. Am I thinking about this wrong?
- I might take up a side hustle like Uber or some other part-time gig (i.e, lean fire) just to supplement income. Or, if I have a kid, I may get some type of full-time or part-time job that offers health insurance.
I think of it this way-- if I were to just drain my $500,000.00 cash at a rate of $1,500.00 per month, I can survive for perhaps 27.78 years on just liquid assets alone ($500,000.00 / $1,500.00 = 333.33 months or 27.78 years). I'm not calculating costs like inflation though. Notwithstanding, all the other things like my tax-deferred accounts, my dividend producing income stream and underlying portfolio, and even the equity in the house as a last resort act as a sort of cushion.
So, my questions/concerns, are then as follows:
- Is this even do-able? Is this a sound strategy at all?
- At 65, do I get social security benefits? Will that still be a thing 30 years from today?
- Does the government also provide some sort of cost-effective medical care for seniors?
- Am I missing any possible expenses? I think income tax will be very minimal if I'm not really a high earner.
- Any drawbacks?
- Should I save up more than the $500,000.00 liquid mentioned above?
Thank you everyone for your time in reading this!
EDIT 1: THANK YOU EVERYONE for actually reading this and giving me some tips. I'm very appreciative of your guys' time.
EDIT 2: Some facts that I guess I didn't disclose well enough: (i) I will likely still work but just at a less stress, lower paying job, (ii) I don't know how much I've paid to SSA in taxes, but I pay a lot like maybe 250k to 300k to 350k a year in taxes, and (iii) I am close to the above-mentioned facts, but I may need 2 or 3 years to give myself a little more buffer.
Submitted May 06, 2021 at 08:23PM by theonepiece https://ift.tt/3erwpgm
