Source
r/financialindependence•
Finapoo

There are many paths to FIRE

I enjoy reading updates from folks that have previously FIRE'd. I'm struck by the variety of paths, annual spend targets/budgets, what folks do with their newfound free time, and the mental challenges that go along with it.

Hopefully my story will add to the variety found here, and some will find it interesting or even inspiring.

My wife and I FIRE'd just over two years ago and are in our early 50s. We achieved our version of FIRE mostly with only my modest income from a military/government career and simple low-cost mutual fund investing starting in our late 20s when I was a young enlisted with four kids. Investments really took off when I retired from the military at 26 years as an officer, and transitioned into government service. During this time kids were mostly grown and we were essentially drawing two full salaries and investing 6 figures a year.

My wife spent most of her time raising our kids, though she did work a bit in high schools when our children attended. More to keep an eye on them and have a good relationship with the school/teachers, but she did bring in a modest salary as well that we fully invested. Kids are all grown and self-sufficient at this point. Everything we have, we earned on our own.

Our net worth is right around $2M and we have an annual budget/spend currently at $140k. I hold about $100k in cash (yeah I know) and about $800k in IRAs and TSPs (military 401k). Our primary home is paid off and if you are to believe Zillow, worth about $900k. We commit $2k a month to a second home so I would say our annual spend is closer to $120k. Our second home is rented and valued at $400k with $140k of equity and a 3.1% mortgage. We have two cars that are paid off and no other bills other than the ones that will never go away - Property, car and medical/dental insurance, taxes, utilities, food, gas, internet, cable tv, car/home maintenance, and HOA. I'm not a compulsive budget tracker, but I do keep track generally, and estimate we pay about $4k a month in those bills.

Travel is a big part of our version, and we budget $24k a year - We target two good at least 2-week vacations and another 2-3 smaller (week longish). As an example, this year we've been on a 11 day Caribbean cruise, a week in Miami/Orlando, and a week in Hawaii. We still have planned a 10 day Alaskan cruise and an 8 day European River cruise staying after in Europe for a spell. We are more frugal than luxury when we travel, but do like to splurge sometimes.

We don't specifically budget for home upgrades, but my wife and I are both handy and enjoy working on our home and others. We probably have spent on average about $15k a year on 'projects' – Pavers/firepit, closets, etc.…

Our income comes mostly from a 26-year military pension and another 6+ years working for the government. My pension is $60k a year and I receive another $18k from the VA for some bumps and bruises I collected along the way. Those are both cost of living adjusted for the rest of my life. The rest comes from rental income - $24k, TSP - $18k ($16k after early withdrawal penalty), and about $20k from very flexible working - Like working whenever I want flexible. Right now I do about 6-8 days a month. Because of my military retirement, we are fortunate that our medical insurance requirements are far less than most.

Some might be wondering why I'm taking money out and paying early withdrawal penalties even while I'm sitting on cash and spent less than my yearly budget. Well, if I'm being honest, I actually think we should be pulling more out even with penalty, and spending more. Fortunately, or unfortunately (depending on how you look at it), a life of living relatively frugal has made it somewhat difficult to spend to our targets! We have stable income streams with more coming in the future - At 59.5, the plan is to start to pull even more aggressively from TSP accounts with the intent to deplete - them by the time I'm 67 - which I anticipate will be $40k or so a year. At 62 I start drawing another modest deferred government pension of about $7-10k per year (depends how long I keep working in the P/T position I am in), and this too will be COLA. At 67 both my wife and I will start drawing SS that is projected to be around $50k a year. At some point here in the next 5-10 years I'll sell our second home and have another few hundred thousand to figure out how to spend. And with modest market predictions (i.e. 7-8%), our IRAs will be worth over a million when we are 67. The equity in our home is our main 'emergency' account, and my kids are well on their way to be successful on their own so other than splitting up this when we eventually pass, the goal will be to spend as much as we can of everything else.

Are we content? I'd say most of the time, but particularly when we are traveling. At home I'm seemingly very busy either working on various home projects - We have elderly parents and get over multiple times a week to visit and help. We work out a few times a week, play or watch sports and go to events relatively often. Though we have friends that we meet at the bar weekly and have neighborhood wine get togethers, if I'm being completely honest, I'd like a bit more social interaction beyond family - Working on this. Sometimes we both struggle (me probably a bit more so), as I know I can make pretty great money and improve any organization I am a part of. Sometimes I feel a bit less for not being more traditionally productive in society.

I guess in general, I'm so damn grateful that I can spend time with family and friends whenever I want. Whether it’s running over to my moms and do yardwork with her, going out to lunch with my daughter at the drop of a hat, helping my father-in-law build a shed, or going visit my kids anytime I want no matter where they are - I mean the flexibility to do what you want whenever you want is something pretty tough to give up once you have achieved it and has so far always won out when I get that offer out of left field to go back to full time work.

Some might say we have a pretty rich life - I'm one of those. Others might say we settled and could have more - My mom is one of those. Others will say that $140k a year isn't nearly enough to support the lifestyle they want - Some of my friends have this sentiment. For my wife and I, we are still figuring it all out, but enjoying where it seems to be going.

Posted Apr 26, 2022, 5:16 PM UTC

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johnny_fives_555•

If I'm reading this correctly half+ your 140k comes from military benefits. That 78k a year using a 4% withdraw rate is equivalent to 2 million dollars.

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viperdriver35•

That also doesn’t include the healthcare benefits. Military retirement benefits can be enormous.

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johnny_fives_555•

Eh. I'm in the healthcare/insurance industry and tricare can be hit or miss especially with newer biologics. Sure it'll be cheaper then ACA, but there are certainly restrictions when it comes to branded medication.

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Oakroscoe•

I have family members who have tri care and were ecstatic to be able to get Medicare when they were 65, so take that for what you will.

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Dinosaur_Wrangler•

If you need what the average 20-40 something (or their kids) tend to need, Tricare is unbeatable. It helps that the new “out of network” at an “in network” provider fad is prohibited, although I think that is either illegal this year or next for everyone in the US.

Basically, it’s an early 90s HMO in the 2020s. It’s a huge part of what’s kept me playing reservist after separating from the active component.

With that being said, I would not still be in the reserves if I were a white collar employee, so you take the good with the bad.

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johnny_fives_555•

IDK when you bought your rental home but be mindful your taxable income can change once your 27.5 years are up on depreciation. That's something I'm personally having to plan for as I'm not paying any taxes currently on my rentals due to depreciation BUT by the time I retire or close to it, my taxes owed per year will be shooting up.

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FinapooOP•

Thanks - I’ll definitely be talking to a tax specialist before I sell. I made a few pretty big mistakes in this regard over the years! Bought it about three years ago. Rent is well over the mortgage.

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johnny_fives_555•

You're in your 50s. By the time you've 100% depreciated your asset you may be taking a dirt nap, you probably don't have to worry about that lol. However selling the property can have huge tax liabilities. As depreciation recapture, although capped at 25%, is taxed as income. That's easily a tax bill of 100k+ in a couple of decades.

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AccidentalFIRE•

Don't forget the clock resets for all major cap ex on the property, so if you are holding it for a long enough period the rolling depreciation on each expenditure prevents it from ending all at once like that.

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johnny_fives_555•

You should really accelerate major cap ex instead eg accelerate the roof replacement or appliances.

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sunnyminutes•

"I think this is illegal next year" - interesting - Do you have a source?

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johnny_fives_555•

"I think this is illegal next year" - interesting - Do you have a source?

Not sure who you're quoting here, but it's not me. I never said anything was illegal. Maybe you're responding to the wrong person?

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FinapooOP•

Some will argue that it’s even more as military benefits increase based upon cost of living every year. And, money from the VA isn’t taxed

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squatch9324•

But remember these benefits are not free. Some cost dollars... some cost memories and heartache as well as eternal pain. We were promised "free" medical and dental for life at retirement when I entered... that was taken away.

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FinapooOP•

Agree - Missed a whole lot of birthdays and important events. But for my money, I'd do it all over again in a heartbeat.

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squatch9324•

I do not regret my now nearly 40 years of service... but if I could do it over with the knowledge I have now and how it impacted my kidz after my wife left us... Id have planted drugs and weapons in her car! (i kid, i kid).... laffs

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Bikesandkittens•

You still didn’t mention why you are choosing to pull TSP money out and be penalized vs doing a Roth ladder. It doesn’t make sense to me and I’m in nearly an identical situation as far as that goes. Would love to hear your reasoning. We are going to do A Roth ladder and shelter more money from RMDs to leave the kids more money.

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FinapooOP•

My kids are all doing well, and we are prioritizing spending while we are young, rather than accumulation to leave to them. Additionally, we have a bit of a bucket system where we use different bank accounts for different purposes, and though it looks like I keep a lot of cash (I do) it’s spread across accounts tagged for travel, bills, parents, projects, CDs, and I bonds - So I guess calling it all cash is a bit misleading. The TSP money goes directly into the travel account.
I could put more in my Roths, but my strategy is to pull from taxable income accounts with the intent to deplete before I draw SS. In my mind this will allow me to minimize later in life taxes by drawing down Roth IRAs then. In the end, not the most financially efficient, and definitely some contradictions - I.e. pull from TSP with early withdrawal then put $10k a year in I bonds. But for us there is as much managing our relationship with money as anything else.

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FinancialCommittee•

I think the idea is that you could do a Roth IRA ladder (https://www.choosefi.com/how-and-why-to-set-up-a-roth-ira-conversion-ladder/) or a rule 72(t) from your Roth money, with the result that you could do everything you are already doing, except you'd avoid the early withdrawal penalties.

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FinancialCommittee•

So for the Roth ladder, you take the money you will want 5 years from now and you convert it from traditional into Roth. May only help you with the money you'd be withdrawing from age 58 to 59.5, but still avoiding the penalty on all that money. You pay the income taxes (as you would any way), but now you'll avoid the early withdrawal penalty when you access that money in 5 years. Then next year you do the same thing.

For the rule 72(t), you start immediately but must make sure you follow all the rules really closely until you're 59.5, but that's really not that long for you in exchange for avoiding the penalty. You could roll money over from the TSP to a traditional IRA, if need be.

Another thing to consider is the rule of 55. If your part time job has a 401k, 403b, TSP,, etc. (or if you have self-employment, a self-employed retirement account), then you could roll money over the from your TSP/Traditional IRA/other sources into the employer plan and withdraw it penalty free if you're working while age 55. Note the rub is that the exception to the penalty is only for money in the plan for the employer you are currently working for (including money rolled over from other plans), not for withdrawals from retirement plans from past employers.

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citykid2640•

Appreciate your post, it’s beaming with maturity which is always nice to see.

Also sounds like you have a fairly active retirement which is great. Love the balance in the statements you’ve laid out.

Questions for you:

Do you live near kids/grandkids and how often do you see them?

I know they often say, despite what one thinks, if you didn’t make time for it before, you won’t make time for it in retirement. Have you found that to be true?

Do you ever struggle with have too much time with your spouse?

Appreciate the wisdom!!!

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FinapooOP•

Live near one with grand daughter - See her weekly. All three others are serving and on average we see them 2-3 times a year. Less if they are deployed, more if not.

I’m not sure about the whole time before/after, but I am surprised at how busy I seem to be.

Yes, have a great marriage but do struggle with the amount of time we are together now. We see a therapist about once a month that ‘reminds’ the both of us to really listen, accept that it’s ok to get frustrated with each other, and not take each other for granted.

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asdgrhm•

Thank you for sharing, that was a great summary!

We FIREd this year and I’m also surprised how busy we are. I thought vacations would become somewhat meaningless without work to escape, but I find myself looking forward to them far more now just to get a break from housework, errands, social and family obligations or self-imposed self-improvement projects / hobbies. It’s so silly, right? It’s a great problem to have, but everybody thinks you’ll be bored in retirement and I can’t keep up!

I worry about the marriage stuff too. I remember when Mr Money Mustache announced his divorce and their marriage seemed rock solid. That made me nervous for sure. That’s really smart to invest in some counseling.

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FinapooOP•

It is silly - My wife’s view of travel echoes yours. She tends to tie a part of her worth to how well the house is presented, so despite my best efforts to convince her that no one really cares, she often talks about the mental escape travel gives her.

I think the biggest thing counseling does for us is it reminds us that our marriage is worth the work!

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citykid2640•

Awesome. Great to hear! Good on you

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GarnetRedTintCoat•

Super happy for you. Seems that you’ve built the near-perfect life for yourself - and one that, frankly, would be very appealing to me, as well. Congratulations…!

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FinapooOP•

Thank you! Like I said, we are figuring it out as we go!

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daisyvoo•

Thank you for this post almost want to cry, It’s nice to hear you had four kids and worked this out starting in it late twenties. I’m 26 right now and freaking out, probably never going to have kids and my wife is mentally Ill and unable to work. Im in 5k of debt and wake up retired every day but this post gave me hope.

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FinapooOP•

Welcome - I’m glad it gave you some hope!

For what it’s worth, when my wife and started investing it was $50 a month and it seemed like all the money in the world back then.

There was a time when I was right there with you. Four kids, single income because day care was more than my wife could make, and very little other than the basics. We were on WIC and our church was giving us grocery coupons.

The simple formula for us was to prioritize family experiences and sports over material things, work harder than everyone else around me, no eating out, and increase investments by 50% of every salary increase.

Keep at it, good things come if you keep working hard!

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asdgrhm•

Hug, friend. We’re routing for you

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SolomonGrumpy•

Pension + Real Estate + Stock

And good medical.

Yeah, man ... That's the holy grail.

The only thing missing is you telling us you bought gold at the 10 year low as a hedge vs inflation.

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joerover22•

Is your name finnapoo like your fix n’ to take a poo?

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FinapooOP•

Haha - Not exactly, more a bit of a combination of a few personal things.

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overachievingovaries•

Sounds good! If you are enjoying travel think outside the box! If you get bored, go open an orphanage in Mongolia or somewhere, and do something challenging and interesting, but for the good of mankind maybe. Sounds like you have the skills! Maybe do some slower interesting, long term travel, like trekking the Himalayas, or maybe visit the Amazon. 50 is still very young, and it is good to use your good health now for enriching endeavors. Just a suggestion if you get bored and are wanting to use your talents.

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NearSightedGiraffe•

Just wanted to say congratulations! You have set up a very similar life to what my wife and I (currently late 20s) hope to achieve- FIRE around 50, do some annual travel, enjoy hobbies, and keep up with family. It sounds like you are living the dream!

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FinapooOP•

I like to think so! Good luck - Time is on your side!

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say59230M, 20% FI Progress•

Guessing you retired as an O3 or O4?

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FinapooOP•

You'd be right - O4

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say59230M, 20% FI Progress•

I knew it! I hedged my bet with the possible O3 because you had other government work too, but it definitely sounded like O4. I've talked a little with my parents about their retirement situation. My dad also retired as an O4, so the numbers lined up pretty close. Unfortunately civilian life wasn't quite as good to him as it seems it was to you, but knowing he had that pension helped a lot during the lean times. They are going much better now though, and Dad is looking at leaving his civilian job here in the next few years. He will be in his early 60s.

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Dreamtime_1990•

Amazing work. I enjoyed reading your story, it is nice to know that a slow and steady process works and is achievable for FIRE.

I understand a large portion of what you’re living off is a military pension - will this continue if you pass before your wife? Will she still have adequate to live off on her own?

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FinapooOP•

No, but I do pay into a survivor benefit so she will get a small monthly amount should something happen to me. Even without that, she will have two homes, one paid off, and a pretty good chunk in IRAs. We think she would be fine in any case.

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nulkies•

Thanks so much for your post! It's great to hear someone who had gone through a more "realistic" FIRE journey. Reading about FIRE journeys on all the different subs can get mentally exhausting because they are full of young people who are looking to quickly get out of the rat race. I totally understand this but it breeds a lot of unrealistic or unhealthy optimization to realize a goal ASAP. I believe your story is a more healthy, balanced, and realistic approach to FIRE.

Some can realize an expedited FIRE with an outlandish double salary and modest spend but that is a small portion of the population. Those voices get the most attention because it appeals to the large population of young people on reddit but also breeds anxiety and feeling of inadequacy. I know there are plenty of times I read those stories and that's how I feel. It also breeds extreme frugality or over analyzing which I believe for most people is unhealthy. Living below your means and having a good plan is obviously good but FIRE does tend to become a competition on who can do those best.

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FinapooOP•

I’m glad I could add to the variety of stories in this sub!

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EdgeCityRed•

That's almost exactly my husband's pension + disability (he wasn't an officer, but he's 100% disabled, so the disability amount > pension.)

He would obviously rather not be disabled. We were leanFIRE people before that came through and did fine.

We're not touching TSP/Roths yet, but we also don't travel as much (we are burned OUT from travel in the military; we were both in, overseas for most of it, and traveled like fiends) or have as many assets/property as OP. We still have enough to pay extra on our mortgage, do home projects, buy whatever we like within reason, etc.

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FinapooOP•

My thanks to the both of you for serving our country.

We spent a bit of time overseas as well and it did the opposite for us. My wife at me I have been to 50+ countries (I’ve been to near 70) and are continually struck with how much more there is to see and experience!

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MrMonopolysBrokeSonMid 20s | HCOL | 15%FI•

Thanks for the detailed post! As a military man, I'm curious about the role physical health has played in your FIRE plans.

One of people's biggest motivations for FIRE is to enjoy retirement while they're still young enough to do the things that interest them. My father is about your age (and FIRE due to gov't pension) and I'll wager that you, like him, are in good shape due to your career. But his retirement dream is to be a farmer, and he's learning that things aren't as easy as when he was a teenage farmhand. I can tell it's been a frustrating adjustment for him.

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FinapooOP•

Physical health has played a huge part! Fortunately we are both active and relatively healthy. But we always consider that nothing is promised including our health. This is a reoccurring discussion between my wife and I on how much more to spend now vs how much for the future unknowns. I know the numbers and know we will be OK in all but the most unexpected situations. But a lifetime of being frugal puts some challenges on increasing our spend, particularly for my wife even though we know we can. It’s that dang ‘what if’ thinking that gets you!

I can also appreciate what your dad is feeling. Most home projects are simply manual labor. A day or two laying pavers is much much different when your 50. We also still play volleyball and softball together and it takes a lot of Ice and Ibuprofen to get me through these days. Still, wouldn’t change it!

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[deleted]•

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[deleted]•

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maxim360•

Some considered to be… unnatural.

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[deleted]•

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0
uNst0p4B1E•

Financial

Independence

Retire

Early

4
xsimporter•

How can anyone have a healthy retirement if you don’t have a pension? Looks like cereal and water for me - even with 2M in funds, not including your home, and a 4% withdrawal rate, at retirement, who knows what inflation be in 20 years!

-7
Call_Me_Daddy_95•

Lol dude clearly you have spending issues if you think $2M and $140k/year with a paid off house isn’t enough to live on. Sure inflation may go up, but equities do too. Just like real estate. If someone right now in their 50s with $140k/year of passive income and more to come with pensions and SS can’t retire, then we all are doomed.

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xsimporter•

Lol. I don’t have that. It was hypothetical

I was saying that if you don’t have a pension, even if you have 2M, that’s only 80k a year.
And that’s IF you can get to 2M! We all need to chill. Send the downvotes.

1†
RocktownLeather31M | 32% FI | DI1K•

You act like $80k is nothing. I spend $60k with kids, have a mortgage. $2M is plenty of money for loooots of people.

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howdyfriday•

you need to read Roger's blog. He is our messiah and has all the answers

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anishpatel131•

This right here is why taxpayers get shafted. We’re on the hook for the rest of this guys life plus 20k a year for “bumps and bruises”. There is so much fraud and waste in the pension and disability system you wouldn’t believe. Plus you cover his healthcare expenses. All so he can afford multiple houses and 25k of vacations a year. In 10 years he’ll be getting 130k plus per year. As a tax paying citizen this kind of stuff isn’t right.

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flyerforever•

I can certainly understand and even partially agree with you, some vets...not all, but maybe more than a few may game the VA system and get more disability than they probably should. But the benefit is there because it is needed; there are far more homeless vets on the streets (per capita) than any other sub group and many are there because they actually needed but never took the benefit. Unless you have been through what they have been through (and even if you have), it might be best to just appreciate the fact that your tax dollars went towards paying vets who put their life on the line so you had the freedom to earn enough money to pay the taxes you pay?

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anishpatel131•

Strange how you can travel so much and talk about how fit and healthy you are yet you are collecting what amounts to disability payments for “injuries” even when your health insurance is covered. Totally can’t be one of those exaggerated tales military members are known to spin up in the never ending quest to extract more money from Uncle Sam

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