u/Wooden-Broccoli-913

Looking for referrals to banks with interest only refi programs. BMO/Chase/Wells/Citi. Anyone have recent experience?

Thanks

What r/unpopularopinions for FIRE do you hold?

Here are mine:

1. The SWR is higher than 4%. The Trinity study ended in 1995 and since then the stock market has been structurally higher by 1% CAGR. If these last 30 years were baked into the original study, the 95% SWR would have been higher than 4%

2. Another reason why SWR is higher than 4%: now that we have TIPS, the massive inflation of the 1960s and 1970s would not have been a FIRE killer (those are the 5% failure sequences). Those sequence of returns cannot recur now.

3. For high earners Social Security should be a part of your FIRE plan. Hitting the second bend point is attainable by early 40s for a long time high earner and that entitles them to $45k at age 70. That’s $90k for a dual high earner couple who FIREs in their early 40s. For people who think SS will be means-tested in the future, that shouldn’t really concern high earners - if your FIRE plan works out, you won’t need the SS, and if it doesn’t, well you won’t have enough means and so you’ll get SS!

4. In HCOL it is legitimate to include home equity into your FIRE portfolio amount because it is likely that you can rent the same house that you own for the same or less than the carrying cost of owning. Home equity also exhibits the volatility and return characteristics of bonds. This works better if the home equity is a small portion of your FIRE portfolio so that you don’t have to “withdraw” from it in the short term.

5. Your income tax during FIRE will almost certainly be much much lower than you expect. I will be living on $240k a year during FIRE and I will be paying 0% Federal income tax as long as my taxable account is still around.

6. California FIREes don’t need to save much for college because CA state schools offer need-based aid with FAFSA income below a certain amount without looking at your assets at all.

Any I missed?

Approaching FIRE next year. Six months ago I had $4M liquid, 10% of which I had in cash/fixed income. Then, seeing the run up in AI hardware, I just couldn’t help myself but buy into a few single stocks (SNDK, WDC, ARM, STX) with $200k of my cash. Those are now close to $800k (total portfolio just hit $5M). Selling it all and returning to cash would incur a ton of taxes. Instead, I am thinking about just keeping the positions and mentally accounting for it as “cash”…. Even if it crashed -75% I’d still be where I started. In the meantime I would hodl until the lots hit LTCG status and then liquidate up to the 0% tax bracket each year of FIRE.

Good idea, bad idea, or terrible idea?

Speaking purely theoretically.

If average long run market returns are 10%, then doesn’t every year we experience 15-20% returns increase the historical 4% SWR? After all it means that there are more historical years to work with, and those years’ returns are baked into the simulations, right?

Doesn’t this mean that if the Trinity study was done today, we’d have a 5% SWR result or higher? (I am aware that Bengen put out his 4.7% revision but that was with more asset types, not more years of US stocks)

Edit: Didn’t the original Bengen study show that the 4.2% had a 95% success rate? I guess that’s what I’m referring to, the 95%. Sure, the failure cases still exist, but wouldn’t they become less than 5% now? Maybe 3%? 1%?

In which case, if you were happy with the original 95% and 4.2%, wouldn’t you also be just as happy now with 95% and 5% (if that is what it is now)?

Having just hit another $M milestone I find myself wavering on my plan. Wondering what the community thinks.

Age 40 & 40 with two elementary school kids in the Bay Area. $5M portfolio + $2.1M house - $1.2M mortgage. Total post-FIRE expenses (including taxes and healthcare) of $230k. My wife just retired but I am still working to the tune of $750k TC in tech. Hate the work.

My plan has always been to transition to a totally different (more personally rewarding) field for a few years before then working part time on my own terms for the foreseeable future. It would pay much less ($80-100k full time plus benefits) so I would start drawing down my portfolio, barista style.

My thought was to pull the trigger this time next year, hopefully with the portfolio closer to $6M. Well as luck would have it, some casual conversations with my kids’ school parents led to a job offer in my new field (for $90k), so the path is officially open to me. Man do I hate my tech job and the offer to leave is in hand, do I just jump in with both feet now?

I graduated college in 2008, only hit the SS max wage in 2014 ($117k) and have only earned the max wage for the subsequent 12 years. If I retired today at age 40 I would be entitled to $45k in SS at age 70. Times two people (spouse has similar earning history) is $90k in income at age 70, that’s basically all of our non-discretionary spend.

1. Reduce portfolio risk as you approach a pre-defined FIRE number and age. Standard glide path

approach.

Pros: More certainty in hitting FIRE at a specific age
Cons: Takes longer.

2. Stay aggressively invested all the way until you hit your number, but run the risk of having the rug pulled out from under you at the last minute.

Pros: Get there faster
Cons: Not only the rug pulling, but also the risk of getting greedy and blowing past your number without pulling the trigger

Family of four in San Francisco, I priced out the local ACA HMO plan, and with an optimized AGI of $107k my annual premiums would be $4k and max out of pocket of $14k.

On the other hand, paying for COBRA on my low deductible corporate plan would be $36k per year with minimal out of pocket, and the tax deduction (on 7.5%+ of AGI) brings the effective cost down to $28k.

Seems like a no brainer to pay $10k extra for much better coverage and no need to switch our existing doctors? Can keep COBRA for 36 months here in California.

Anybody else who has FIREd maxed out their COBRA as a bridge in early retirement?