Anyone else FI now but still working for a bit longer?

[SimpleLife]

I hit FI a year or two ago, I don't remember the exact year, but am still working. About 4 years ago I came up with the 10 year plan for me retiring, which was a blend of real estate investments, index funds, dividend stocks and cash (for buffer and investment).

That was when I was 30 and I'm now 34. The machinery is in place, I have a handful of rentals and cash for investing in equities, though I'm still adding buffer. I could retire now, with buffer BUT...The opportunity cost is high leaving a high paying job right now while things are relatively stable and I'm still able to easily find work. I figure just tough it out longer, money is good and I can let emotional scars heal later when I'm drunk at the beach in Flroida.

When I initially came up with the plan, it was to retire in the same place I am now, WA and work longer for more buffer and this way the money has time to work for me and assuming a life expectancy of 80, the money only has to last 40 years (50 if I live to 90, yeah right). I'm now considering geographic arbitrage, cashing out some money from the equity gains here and reinvesting in paid off rentals in Florida, as well as a paid off house. The goal for me is to be able to have enough passive income that I can still save 70-90% of it even in retirement. Technically I meet that definition now with asset appreciation, but I want actual cash flow savings of 70-90% so I can keep buying MORE investments even in retirement.

Cost of living in Florida is much cheaper and there is ton of work a short drive from Tampa in my line of work (IT Software) if I ever decide to want to go back to working at that again. I've been to Florida once long ago and plan on visiting again before pulling the trigger but I loved the weather and slower pace of life. I still plan on working as long as I can stomach it to get more money here and self manage my properties here for now, but this can be an accelerated way to reach my goal of FI with huge buffer. Ideally if I can keep working 6 more years I could have enough investment income to replace my salary! That would be sweet! Plus, by keeping the properties in Seattle I can always move back, avoid the huge transaction costs of selling (128K currently if I sold it all) and keep real estate in an equity growth market for the long term.

Alas, the operative word here is if I keep working. Much like I noticed on FIfighters blog the more money and cash flow you have the less motivated you become at work and the more intolerant of the BS I've become and it shows, lol. Still, not a bad position to be in.

TL;DR: Just wondering if anyone else is in the same boat. FI, able to retire, but working for more buffer, possibly looking at relocating to a LCOL area for FIRE for quality of life and financial reasons.

[Scott 2]

I could probably find a way to stop working now, but I'm pretty happy with my day to day.

At a certain point I started wondering what happens when money isn't my constraint and accumulation isn't the goal. Then what?

Once I decided, I started moving towards that while still working. My accumulation pace slowed a bit, but I'm happy and remain secure, so it doesn't matter.

The bank account is not a high score. It's important to keep that in mind.

[stand@desk]

I was thinking about this same thing recently as well. Who has reached FI in mathematical terms but is continuing to work because the job isn't half bad or there are enough perks to keep them there or the person is hoping for a buyout of some kind. I'd like to think a good chunk of the forum members fit this description. My wife and I are at about 3.39% liquid and 2.5% Total Assets (including retirement assets and pensions) so we are well under the 4.0% FI rule. But my work is very close by (I walk) and we may be growing the family in the next few years and it just doesn't make sense to leave yet or maybe even at all.

I think Many on this board are ERE/FI in the mind but are still willing to keep their day job for a while. That's fine..ERE isn't black and white but many forms of grey. But it's a great internal game of tennis to deal with..and something that probably doesn't travel too far away from one's conscious for too long. Actually leaving my job feels more like a fantasy than actually doing it. I think it would take a lot of balls to actually follow through on it. It would be so much easier to just get downsized or bought-out. Plus the insurance and benefits coverage from the job is an added incentive to stay. Wouldn't like so much to have to pay for those expenses out of pocket even though much of the insurance has gone unused for now.

[GandK]

We are FI in the 5 essential categories of food, shelter, clothing, transportation and utilities. But we are not FI yet in the other categories we need (or just want). So... kind of?

[IlliniDave]

I'm FI at a level that supports my basic contentment with a tolerably small chance of shortfall. My current plan is to work about 3 more years. In part it is margin, in part it is because, frankly, I would prefer to be in a situation where the expected outcome is that I continue to grow wealthier over time while living the lifestyle I want to live. I expect to cross that threshold in late 2017/early 2018, give or take. BY then I'm barely more than a year out from a big bump in retirement benefits from my employer--enough that it will be the highest paid year of my life by at minimum a factor of 2. Hard to pass that up.

At this point I am not working for myself any more. I have legacy goals because I would like to help my kids and grandkids offset some of the financial burden my parent's generation and mine (Boomer/X cusp) have stuck them with.

[Hankaroundtheworld]

Technically speaking I was FI some years ago (do not know exact as it depends on past-ER spending level), but I kept working for a bigger buffer. I had the same feeling as @SimpleLife regarding the Opportunity costs, once you step out your profession, it is not that easy to get in again with a good Salary. So, yeah, you continue to accumulate while you can in an easy way, till you hit a comfortable level and then consider to stop for real (which I do in a couple of weeks).
May be a side-note: this process is typical for a "Salary" man profile, and it is not the Renaissance man style as in @Jacob books. There are some traps, like you continue to sell your valuable life-time for Money, and you miss out expanding your skills and creating a new lifestyle. That was my biggest emotional blocker in continuing the Salary man path, hence I finally decided to stop (end of May) and focus on other aspects of life. Next to this, if you stop earlier and focus on expanding your other skills, you might create multiple (smaller) income streams, which makes you more flexible for the future.
The point is : you only will know the other aspects of life if you stop the Salary-man path. That is what I felt all the way, as long as you continue the "normal" job, you do not easily find that other path nor the energy to try out. By the way, nothing wrong to continue the "normal" job and Salary man path, if that makes you happy.

[almostthere]

I was FI probably four years ago. After I accumulated some more, I stopped
working for a year and a half. I explored other skills, but the road to payment was long.
I took a six month contract in my old job area. I found it interesting to be
back without having to be there. My incentives had changed. I was looking for
appreciation not a promotion. I happened to good at it so the appreciation
followed very easily. My plan now it to work three to four months a year.
I dedicate my other time to learning to stock pick, my real life long interest.

I'll stop altogether again, but not until I have my streams of income really
worked out. When I was not working and I had dividend income to cover costs,
I 'felt' secure. I ended up selling out of one CEF that was providing most of
income, and now I actually don't 'feel' FI anymore even though by percentages,
I live around 2% of my wealth.

The what do you question also really got to me too. I 'felt' unemployed when it came up
and it comes up all the time. Now I can say honestly that I
am a part time consultant and I only work a few months a year. People are much
more amazed by that story than I am early retired story. Odd huh?

All said, I am not sure I was successful not working. It may take me a couple more tries.

PS Everything Hank said above I found to be true too. I do know myself and my deep interests better now than
I could ever known them while working. ONe has no time to dedicate to one's on interests when working.
The man takes it all. After even just a week of working for the man, I feel the drain in my energy level.

[JamesR]

I was born FI, the heavens handed down a seed, the seed grew into a tree, the leaves rained countless wealth, the universe is abundant! Like you all, I work because I am a masochist, pain is love, we gather humiliation, rejection, and abuse into our shrivelling souls in order to reach the pinnacle of a buffered death!

[startbyserving]

I'm somewhat FI but not close to ERE. You're in a good situation, so don't be afraid to use that to your advantage. Want more money, benefits, etc? Work from home?

Just ask...

[steveo73]

I'm not FI but when I am I will quit work. To be fair I will also work a little longer than I need to because I intend to become FI but keep my current excessive house. I do though have FI figures based on downsizing. I'm not yet FI based on downsizing but I think I will be there in 3 years time. I will be FI in 5 years time and then I quit.

[JL13]

What about the reverse? I'm quitting with a 7.5% withdrawal rate.

[slsdly]

I suppose I am FI at a 3.7% SWR; that's after fees, and taxes should be 0ish except foreign withholding taxes. I plan to keep working. I would not want to call it on anything less than 3%, and in an ideal world, 2%. Part of my concern is will there be "lifestyle inflation" in the future? I'm still young at 29, and my present living circumstances could easily change.

Maybe I won't want a roommate anymore. Maybe the government repeals the rent control legislation I am currently benefiting from and I want to buy some real estate. Maybe 100% of capital gains will be taxable instead of 50% (as was originally suggested when introduced; it has been has high as 75% in recent memory) or the Canadian eligible dividend tax credit will continue to dwindle into nothingness. Maybe I will break a leg and can't/don't want to trasp around the neighbourhood for food deals like I do.

In some ways, I completely agree with embracing uncertainty as Tyler9000 said in the portfolio charts thread. It is necessary (probably more on that in my journal soonish). On the other hand, I can get to 2% with a few more years of work. 33-35 is still a good age to call it quits right? I'm not really enjoying my job right now, but then again, it isn't very demanding at the moment (actually the lull is part of why I am unhappy).

[JamesR]

What about the reverse? I'm quitting with a 7.5% withdrawal rate.

Me too probably. I think something like 5-6% SWR is totally valid based picking out an excellent portfolio allocation that does better than 7-8% CAGR on portfoliocharts.com and a greater willingness to deal with down years w/ smaller withdrawals + part-time work or some variation. I agree with MMM's "retire first then get rich" notion, that we're going to still work or produce value on some level anyways even after a super early retirement.

[JL13]

@JamesR

The other day I was reading an article in a trade publication for automotive mechanics, it was about how to appropriately price your shop when you're ready to sell it and retire. There was a sidebar calculation for how much you need to retire, and it used 6% for what you would receive from a "safe investment". I got the impression that businesspeople are using higher withdrawal rates than the 3-4% we're throwing around here.

For corroboration, I think historically 9% has been a typical cap rate for real estate, and I'd imagine other business are similar. 9% minus 3% for inflation = 6%.

[steveo73]

What about the reverse? I'm quitting with a 7.5% withdrawal rate.

Well done. I think that is too high but I'd like to see more of these stories. How do you intend to buffer yourself in this situation ? Do you have a wife and kids ?

[steveo73]

What about the reverse? I'm quitting with a 7.5% withdrawal rate.

Me too probably. I think something like 5-6% SWR is totally valid based picking out an excellent portfolio allocation that does better than 7-8% CAGR on portfoliocharts.com and a greater willingness to deal with down years w/ smaller withdrawals + part-time work or some variation. I agree with MMM's "retire first then get rich" notion, that we're going to still work or produce value on some level anyways even after a super early retirement.

I think 5% is probably fine. It's what I intend to retire on or close to it however I don't believe you can win via choosing an excellent portfolio. I think that could happen but it'll be blind luck.

I think you need some buffer somewhere though. So be willing to go to work doing whatever for some period of time. Be able to downsize your house. Use social security. Get inheritance. Go live somewhere really cheap for a number of years. There are probably a bunch of things you can do.

[JL13]

I think that is too high but I'd like to see more of these stories. How do you intend to buffer yourself in this situation ? Do you have a wife and kids ?

No, no wife or kids, but if I did I would just put them both to work

We can watch my story unfold on my journal. My FIRE date is July 15.

That withdrawal rate is based on current market value and my average cash outflows over the past 4 years. I think my portfolio is undervalued and there's a lot of slack in the expenses. I intend to buffer by all the general ways:

• part time work or entrepreneurial activities
  collect social security in 30 years
  moving to low cost area/countries
  use free time to become more frugal
  general hustling

The difference between a 3% safe withdrawal rate and a 7.5% withdrawal rate for me is only about $5,000 per year. I don't think it will be hard to earn that.

[FBeyer]

... I got the impression that businesspeople are using higher withdrawal rates than the 3-4% we're throwing around here.
...

I get the impression that business people are inherently more optimistic and gung ho than the analytical belt-and-suspenders crowd around here.

[JL13]

@FBeyer
Yeah, and I think it's justified. The ability to spot good business opportunities and the temperament to act on them has a value right? Even if you only get one good opportunity every few years, i'm sure it's enough to capitalize at six figures.

Just like learning to cook saves $250 per month and is worth $75,000 ($250*12/4% = $75,000), I'm sure the ability to make $20,000 roughly every 5 years through having a mind for business is worth $20,000/5/4% = $100,000.

[steveo73]

@JL13 - thanks for that information. I have a wife and 3 kids. I do send my wife to work and I don't intend to support my kids past high school. They can get a room and food but I'm not going to continue paying for laptops/school fees/clothes etc.

I like your approach as well. I think getting to 3% is not really required especially when you mention your buffers.

On a SWR I think 3% might be required if you are aiming for a small asset level. The smaller your assets the less flexibility you would have to handle increased expenses at any point in your retirement phase. If you have some flexibility in relation to going back to work or something like social security though a small total asset level could be fine.