An update and a ramble.

10 months ago: https://www.reddit.com/r/financialindependence/comments/1nkm9a1/update_from_one_year_ago_1375m/ 1 year and 10 months ago: https://www.reddit.com/r/financialindependence/comments/1fhs0pb/1m/

I (early 40s/f/software engineer) thought i'd do an early update given I have a lot of changes going on. First is i'm getting divorced - which will make my finances easier as I was planning to work longer for my spouse. Divorce won't affect anything financially.

And second is I got laid off recently. My company is giving me 77k gross for severance and health/dental/vision the rest of the year. I'll be missing a 25% of my income due to the fact they won't give me my RSUs.

Current financial state with severance included in the cash.

After-tax brokerage $1,168,490

401k $351,270

Roth IRA $54,517

HSA $35,737

Invested total $1,610,014

Cash (HYSA + severance) $127,889

Net worth $1,737,903

~81% stocks / ~19% bonds.

I guess I'm not including cash here as its not part of the portfolio? Is that correct thing to do? I've been using ficalc and not including cash in the portfolio numbers.

Before getting laid off my salary was $201k/year plus RSUs vesting every year adding 50-80k or more a year depending on stock prices which were usually shit.

I currently live in a high cost area (DMV). I unfortunately renewed the lease for a year when my spouse moved out (one month before layoff) because I didn't have time to move which increase my yearly costs by about $12k. Plus I just did way more spending on post breakup stuff to make myself feed good. So I went from spending maybe $50k/year married to probably close to $70k im assuming by end of this year. However I can bring that cost down. I also have a major surgery coming up (got laid off after FMLA but lawyer tells me probably not worth going after them since I applied for FMLA a few days before layoff).

Feel like I have a lot of new freedom, but I was hoping to hit 2m invested. I feel like what I have is not quite enough to live in a US city where I don't need a car and live comfortably. Or its risky anyway. However the thought of doing tech interviews is making me depressed. Also don't want to work a low wage job. I've thought of moving abroad (Taiwan, Spain?), because I prefer the European lifestyle (just got back from Madrid and loved it), have thought of staying, have thought of finding new work, have thought of continuing in tech. I also think it'd be nice to have extra money in case my family needs it, though there isnt really isnt anyone in my family that would need money. Maybe niece and nephew in the far off future. I really just want to not work and get back into playing guitar, cooking fancy things, letting my curiosity wild. Nothing luxurious.

I could easily live in Taiwan at a low cost. I already am covered with NHS, have bank accounts, cellphone etc., but had wanted to do that with a partner and not alone. Still considering it, though. I have friends and family there.

I'm grateful to be in a position where this layoff is inconvenient but not panic inducing. At the same time I have a lot of processing and thinking to do. I'm excited for the future, but anxious with the "dizziness of freedom".

I have been thinking about the notion of just how little time we have in this world. In this sub we talk a lot about numbers and the mechanics of FIRE. I believe there are other critical dimensions we do not usually touch such the non financial strategies, tactics, principles or even its philosophical aspects.

Given enough time, everyone is eventually dead. Research suggests, the average lifespan is about 4000 weeks. If you are 40 years old, you many think you have plenty of time but that's only just over 2000 weeks left. Can you fit all your dreams, desires, aspirations, goals, hopes and achievements in this time? Are just 40 more birthdays, enough to see all the places you had hoped and to do all the things that you truly wanted to do? Nonetheless, that's the time we have and how we choose to spend it is of paramount importance.

FI/RE is a philosophy that encourages us to seek that true essence in brain glow and to try and reach it in as short a period as feasibly possible without getting too distracted. And... Yes it can be done while remaining true to your values and having fun! One question I see a lot around here is people who ask about how one might overcome the one more year syndrome. Others ask how you might be able to live without social media and consumerism.

I think once you truly think about how precious your one and only life is, and just how finite your time on this beautiful planet may be... You may come to the conclusion you have no choice but to pull the trigger as soon as you get to your FIRE goal and no later than that. It also becomes natural to embrace the joy of missing out rather than the fear thereof and seeking only those things that authentically matter to you. FIREd or not, perhaps realizing how unique and lucky every single one of us is to be alive may bring us closer to a sense of gratitude and peace, even if one might be having a bad day or dreading yet another up coming Monday...

I've used no AI in this post. These are just my thoughts and I'd love to hear your perspective.

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How important is working non-stop?

From the time when I was young kid, I remembered that I already started doing part-time jobs in retail, sales etc. and earning like $7, then slowly as I grew up, switching part-time jobs and earning slightly more, like $10+.

I studied in university and after finishing my exams, before I even received my results, I was already confirmed and employed by a firm. I have been working non-stop since, never taken a break, never quitted.

I started investing in stocks since I was in University (with my savings from part-time jobs) and after I started working full-time, I also deposited some lump sums into my brokerage and invested more.

Today, I feel that I'm in a very financially comfortable position, ample amount of savings and investments, and I am able buy a house as a single if I liquidate all my investments. Of course, I don't liquidate now because I want to grow my investment portfolio even larger and eventually have passive income paying off my mortgage in the future.

I realize that working non-stop allows your money to have the "compounding" effect and this creates a gap that gets larger over time compared to people that took a very long time to find a job after graduation, or got laid off or resigned and took a long break.

I keep wanting to have this argument in the comments but I think it's better to just have it here so I can point back to it. Here goes:

You shouldn't worry about RMDs specifically. You should worry about how to achieve your goals in the most efficient manner, and tax-efficiency is obviously a part of that, but "minimizing RMDs" does not itself make sense as a goal.

Worrying about RMDs is like worrying about your Check Engine light. Nobody says "you should take of your engine, otherwise you'll get the Check Engine light." The point of taking care of your engine is to keep it running smoothly so your car doesn't break down. That goal wouldn't become any less important if your Check Engine light went away.

RMDs are essentially the same. Saying "you have to think about RMDs" makes no more sense than saying "you have to worry about your Check Engine light."

If you want to argue with me, here's my challenge.

First, tell me if you care more about "taxes paid" or about "after tax income". It should be trivially obvious that the latter is what matters. Nobody sane would turn down an unexpected bonus at work just because they'd lose a chunk of it to taxes. But I think a lot of people lose sight of this when it comes to RMDs.

Second, tell me how your plans would change if RMDs went away. Imagine if they were repealed, effective immediately, and you had good reason to believe they weren't coming back. How would this change your retirement plan?

Third, tell me why your new plan is better for your finances than the RMD-influenced plan you have now.

In the vast majority of cases, you will find that the best plan with RMDs is also the best plan without RMDs.

Without RMDs ... you should still be doing early Roth conversions to keep your taxable income more or less consistent throughout your life. Without RMDs .. you should still be thinking about paying taxes in your lifetime to prevent handing a tax bomb to your spouse or heirs.

RMDs, at worst, are nudging you to do the right thing you should be doing anyway. If you're worrying about RMDs specifically, you probably haven't thought through your goals and plans in the first place.

Everywhere I have read/heard that one is supposed to use taxable brokerage accounts first and then use tax deferred accounts like 401k next, and Roth last (if you have it).

I certainly understand why Roth should be used last, but have a question about the other 2.

In our case (early 50s), we have been maxing out our 401ks for past 15+ years, and consequently have $2.8M in tax deferred accounts.

About 9 years ago, I decided to systematically start building up a brokerage account and an emergency fund. As of now, we have $1.3M in these - of that $950k is in brokerage and $350k in cash/CD (I know this is a rather large emergency fund, but it gives peace of mind and earns 3.5% interest).

The brokerage account is great to use as a bridge if we lose our jobs at any time before getting to age 62 (social security retirement age), but if we can hang on to our jobs till then and keep saving, my estimate is that we will reach about $5-6M in tax deferred and $2-2.5M in brokerage plus cash.

Now everyone says having $5-6M in tax deferred around 62 will result in a big RMD problem at 75. Hence, what if we exclusively draw from the tax deferred accounts (like 4-5% per year) in the first decade of retirement and leave the taxable brokerage accounts alone to keep growing and compounding?

This is counter to the standard advice, but will solve the RMD issue for us at least without having to implement fancy Roth conversions.

What do y’all think??

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I sold my house in Missouri in August 2022 and moved to Arizona. Instead of buying another house right away, I put a portion of the proceeds into an income portfolio.

I started with around $250k and later increased it to $350k.

The reason was pretty simple. My son will be heading off to college after Labor Day 2028, and after that my wife and I are planning to relocate to Chicago. The idea is to use Chicago as a base and travel internationally for maybe 30 weeks a year.

So buying another house in Arizona never made much sense to me. I wanted maximum optionality. I did not want to tie up a big chunk of money in another illiquid asset right before our lives change again.

The income portfolio is now worth about $335k. It has also paid out about $102k in withdrawals since inception.

So the math looks roughly like this:

• Initial investment: $350k
• Current balance: $335k (-4.3% over 46 months)
• Cash withdrawn: $102k
• Total value including withdrawals: $437k
• Total gain including withdrawals: $87k
• Total return since Aug 2022: 25%

Current annual income is around $37.5k, or about $3,125/month. That works out to about 11.6% on my invested principal.

My current annual housing cost in Arizona is about $36k:

• Rent (1,700 sf single-family home): $30,000
• Trash/water/sewer: $1,541
• Internet: $1,217
• Gas: $469
• Electric: $2,629
• Renter’s insurance: $95
• Total: $35,951

So at the current distribution rate, the portfolio basically covers my rent, utilities, internet, and renter’s insurance.

The portfolio is not exotic, but it is definitely not VOO and chill either. It includes things like BDC income, preferreds, multi-sector credit, senior loans, infrastructure, equity CEFs, and some option-income ETFs.

Here are the tickers: PBDC, BIT, PFFA, QQQI, RVT, SPYI, BTCI, ADX, SRLN, UTF. Apparently I cannot post a picture of the portfolio but each fund has an assigned target weight.

This is not a recommendation. There is obviously risk here. Distributions can be cut. NAV can erode. Credit can get ugly. Option-income funds can underperform in the wrong market. Taxes matter too.

But my goal was not to beat the S&P 500.

The goal was to take part of my former home equity and turn it into cash flow, while keeping the money liquid until the move in 2028.

Owning a house has advantages. I get that. Stability, control, appreciation potential, no landlord.

But for this phase of life, renting plus keeping the capital liquid makes more sense for us.

So far, this has worked pretty much as intended. The house equity that used to be locked inside a property now helps pay for the place we live, and I still have flexibility when the next phase starts in 2028.

Note on the broader income engine:

This is only one sleeve. Across the household, I currently have about $1M in this general income-engine strategy. The housing sleeve above is about $350k of principal and was intended to offset rent/utilities. My wife also has a separate income sleeve that generates roughly $5k/month, which helped make it possible for her to retire early. I think of these as separate buckets with separate jobs, not one magic portfolio.

One bucket replaced employment income.

One bucket turned former home equity into housing cash flow.

The common theme is matching capital to a specific household objective, while keeping more liquidity and flexibility than I would have had by buying another house.

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In the last year, I moved from a 2000 sqft home to 1100 sqft apartment to 700 sqft apartment for a family of 6. Is that normal to pursue FI? I’m in a hcol area.

I sold my 2000 sqft home and only chose to rent an apartment instead.

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bought a duplex a few years ago thinking it would help me reach FI faster. extra income. tax benefits. all that

but honestly the stress is not worth it. tenants texting me at 10pm about a clogged toilet. finding someone to fix the AC on a sunday. worrying about vacancies. its like having a second full time job that pays minimum wage

i did the math and my returns arent even that great. after repairs and vacancies and my time i might as well have put the money in index funds

but i keep thinking about the potential future income. what if property values keep going up. what if i just need better tenants

anyone else here sold a rental for peace of mind. did you regret it or was it worth it