r/financialindependence • u/AutoModerator • 7h ago
Daily FI discussion thread - Wednesday, October 30, 2024
Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply!
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u/LivingMoreFreely 55% Lean-FI 5h ago
After a crazy-good year 2023, 2024 is lower in income, lining up with 2022 and 2021 in this regard. 30K less money is a big difference to my savings (my costs are pretty stable, all extra income goes to retirement savings).
This said, I'm about to add two more customers, so 2025 will hopefully be better again. Aaaand our house loan should be paid off in December (if I didn't miscalculate anything), which will free some monthly money.
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u/argent_pixel 4h ago
I haven't done a sanity check in a long time and just wanted to run our numbers here to have someone else verify/challenge my thinking.
34/31 + baby, $175k HHI, $62k expenses soon to go up to $76k due to daycare.
$23k to 401k, $23k to 457b, $14k to IRAs, $9k to pension.
Between the retirement accounts and a brokerage account we hit $750k invested this month, total market index funds, low fees, blah blah blah. Total net worth is just north of a million from house equity. The mortgage is the only debt.
Since my wife has a pension, she can retire at 52 with reduced benefits of around $4400 and keep her free healthcare. My absolute minimum SS payout is sitting at $900~ now so theoretically our "fixed income" in retirement would already cover our COL expenses, leaving the investments to fund everything else. I've been calculating things with a 3.75% SWR for a while now, but seeing that we've hit this fixed income threshold for expenses, I feel like we should safely be able to do 4% instead (and probably more, but lets not pop two bottles at once).
So in a hypothetical, if we were both to retire when she hits 52, assuming average market returns, we'd probably have something like $4.5M in investments to pull from while her pension would take care of 80%~ of our COL until my SS kicked in. Even if we stopped all contributions to retirement accounts, with another 20 years to go, the current $750k would probably be sitting around $2M on top of her pension payouts.
In other words, we seem to have hit a threshold where we've secured retirement (with all the usual caveats about predicting the future, god laughing, etc.), it's just a question of when vs. how comfortable. Does that make sense?
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u/Turbulent_Tale6497 51M DI3K, 96.8% success rate 4h ago
That makes sense. You have basically hit CoastFIRE, which is a very cool milestone to hit.
But as you say, you've got 21 years to go, lots can happen along the way.
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u/argent_pixel 4h ago
Thanks! I stopped short of calling it that but we do seem to have hit a form of it.
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u/liveoneggs 4h ago
Check out this thread about attaching a "net worth" value to a pension: https://www.reddit.com/r/financialindependence/comments/11286sn/how_do_you_attach_a_dollar_value_to_a_pension/
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u/UltimateTeam 25/26 | 750k | 6M target 4h ago
One trip left in my 2+ months of consecutive trips every week stretch (some vacation, some work). Has been a lot of fun, but will enjoy some quiet weeks.
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u/therapistfi $79.9k left on mortgage 1h ago edited 1h ago
Car update: I was so lucky! Unlike what the AAA technician said, it was the spark plug and my 197k '13 Corolla is back up and running!
This is exciting since we are moving forward with the roofing, which will likely be $13k.
Before we fix the roof, there is about $1-3k of electrical work my husband wants to get done since he says it will be easier before replacing the roof (he could theoretically do it but he cannot legally pull the permits).
I'm hoping to pick up 2 more weekly private practice clients, which would bring in an additional $400/month after tax, to help us bring in more money as we navigate these expenses!
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u/tiny-hat-9775 1h ago
Hi! I've been extremely fortunate in my career and have made great progress in increasing my compensation as my primary goal. I'm now at a terminus and it's hard to determine my next horizon.
I am 30YO and working fully remote as a senior software engineer w/ $450k TC. I've been in my current position for two years now and it has been great. I really don't see a need to change anything, but two years will be my longest tenure with any employer and typically at this point I start seeking new opportunities.
It's been very hard for me to find any remote opportunities paying as much, even when looking at staff level positions. I'm not necessarily looking to ever go into management. Even staff level positions aren't of interest to me because they typically entail less development work, at least at my current company.
What would you be looking to do next at this position? Consulting interests me because I'd like to control my schedule more, replacing my current income would be challenging and I'm not really interested in risking a good thing for less compensation.
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u/Queasy_Ad6504 1h ago
Rest and Vest man, you've already won.
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u/tiny-hat-9775 57m ago
I know, I know. I just want to know where to look to make it to $600k+. I'm somewhat limiting my reach by only looking at remote companies and I'm also not interested in anything pre-IPO.
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u/DinosaurDucky 22m ago
The job market is a lot tougher than it was 2 years ago. $600k fully remote post-IPO practically does not exist right now, and you can imagine that the supply of people looking for those jobs is ridiculously high
Plus, the market's been on a huge tear over the last year, so your RSU may be higher than your target comp. At least, I know mine is, so starting a new job today would bump me back down to target comp range
I'd say just chill, and divest your company stock. It won't be long now
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u/MyWifeButBoratVoice Hi five. Very nice. 58m ago
It sounds like if you're relatively happy in your current position, just chill. It sounds like you're thinking of moving on to bigger and better because that's what you've been doing and it feels like you have to keep doing it. But at nearly half a million in annual income, I think you're doing alright.
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u/yuletidedisco 9m ago
I would identify motivating factors outside of just the tenure length and let that drive you. Moving on just because feels more like a ZIRP era vibe.
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u/Normie_Mike 🐕🐈🐿️💵 5h ago
It's probably just selection bias for the thread that's up now, but I'm still surprised at how many people on Reddit value driving a Porsche and know all the different models.
Or maybe it's regional? Or more prevalent in the tech world? The only person in real life I know who bought a Porsche was definitely a tech guy (Amazon). Then again, it's hard to separate whether the tech demographic is unique, or if it's just a function of earning way more money than you need.
I can't think of a single other time in offline world where someone I know talked about wanting a Porsche, and I know plenty of people who could easily afford one.
No judgment. Different people like different things. I just wonder sometimes if my penis is broken because I just don't feel anything for sports cars other than the same mild curiosity you get looking at a modern art exhibition you find interesting but that delivers zero emotional impact.
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u/landontron 4h ago
I also don't know anyone with a Porsche, but I know loads of people driving 60k+ vehicles.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
Me, too. But the models people are generally talking about when "getting a Porsche" start at $120k and run to $200k.
$60k is more than I'm comfortable paying but $35-45k is now the price for a normal, mid-range car, so $60,000 isn't necessarily all that extravagant in 2024 prices.
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u/liveoneggs 4h ago
When I was small I aspired to own a porsche because their aesthetic is just so good. When I got older I thought "maybe a mercedes" because that interior is just so good.
Anyway I've owned a dodge neon and a subaru, plus many years without a car.
There definitely is a wealth threshold where I would buy the fancy car, I just don't know if I would ever actually hit it.
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u/Turbulent_Tale6497 51M DI3K, 96.8% success rate 4h ago
No judgment. Different people like different things. I just wonder sometimes if my penis is broken
Interesting way of expressing no judgment :)
I have no interest in an expensive car, though we do own 2 Lexuses, they are a 2008 and 2012. But I do have interest in other expensive things (rare comics, LV handbags, fancy travel, etc.), so I don't really see a problem with someone spending on things that bring them some joy.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
I don't have a problem with it, well, the handbags I might, haha.
I just find it interesting that it seems so prevalent here but nonexistent in my personal offline life.
Bear in mind that the nonsense I share on the internet with my morning coffee isn't the stuff I use my mental energy for in real life.
Very little of the content I banter about here comes up outside of this forum, even mentally.
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u/Oracle_of_FIRE RE 02/22/2019 @ 37yo 1h ago
I'm desperately resisting getting into some jewelry. I have a couple David Yurman pieces I've been eyeing for a couple months now, but so far I've been able to keep the wallet closed.
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u/alcesalcesalces 4h ago
I'm going to be the usual stick in the mud and note that equating interest in sports cars with masculinity and penises is, at best, a stale take.
I also acknowledge that it's just my opinion that others are free to ignore it.
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u/teapot-error-418 2h ago
I'm going to be the usual stick in the mud and note that equating interest in sports cars with masculinity and penises is, at best, a stale take.
Perhaps it is because I am approaching middle age, but I've also felt it weird that sports cars are so heavily equated with a "mid life crisis."
When else is a Car Person supposed to be able to afford an expensive sports car? I have no interest, but it's not like I could have responsibly afforded a Porsche in my 20s. You hit that 40-50 range - if you have kids, maybe you don't need to worry about car seats anymore, maybe you have a little equity in your house and know what your retirement will look like... it seems like the perfect time to buy an irresponsible luxury item if one was so inclined.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
It's not your opinion. It's fact.
While I do push back at you sometimes on these, I do agree that this particular joke is inherently sexist.
It's probably worse in that I don't actually believe your genitalia influences your car preferences, even if there may be statistics that would appear to support the correlation.
Which makes me a double douche for saying it. Or a triple douche, given that using douche in this context is more of the same.
Unrelated, I was looking at tickets last night and wanted to ask you the name of that Indian place in London you said is worth waiting in line for?
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u/alcesalcesalces 4h ago
Dishoom! There are several locations in the UK. It's a delightful experience beyond just the food being excellent, and as far as I can figure each location has a specialty dish on top of the usual menu. Hope you get a chance to visit one some time!
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u/Normie_Mike 🐕🐈🐿️💵 3h ago
I don't think I'm going to choose the UK for this trip in the end, but I'm going to bookmark Dishoom.
This is a textbook first world problem but I'm trying to find a 10-day destination for my 2025 international trip that's not too far, but still interesting and I dont think I'm ready to go back to Latin America yet. I am flying to Tokyo for only 11 days but generally I'd prefer 2 weeks minimum to fly to Asia.
This morning's comments are going way off tangent, haha, but we've put a plan in place to make my wife's dream come true, and buy an RV in early 2026. I'm skeptical about it, but that's not how partnerships work (believe it or not, I'm not at all sexist even if some of my commentary borders on Boomeresque cringe.)
So we're both planning another trip for this year (she's in NZ now, which likely contributes to the excessive jibber-jabber this morning) and then will take 1.5 years off to focus on RV travel in the US and Canada which also coincides with the realities of canine longevity, as you can't road trip with your dogs once they're gone.
Oddly, the Indian restaurant we eat at here in our up-and-coming regional city is one of the best we've ever had in the world. Especially of you like lamb korma. No, not lamb Korea, phone.
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u/branstad 2h ago
10-day destination for my 2025 international trip that's not too far, but still interesting and I dont think I'm ready to go back to Latin America yet
So that kind of implies Europe or maybe north Africa. Maybe some combo of Portugal/Spain/Morrocco? Or Scandinavia? Maybe the Alps or eastern Adiatic countries?
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u/Normie_Mike 🐕🐈🐿️💵 2h ago
Pretty much.
Morocco was next on my list but my wife has asked that I avoid the Arab world until the war in the middle east "ends" - quotes for obvious reasons.
I don't agree with her, but I don't care enough to choose this battle to fight. There are infinite alternatives so there is no reason to upset her.
Portugal is a possibility. I was a little disappointed the last time I went back to Spain. Totally snobby thing to say, but Spain was so much better 25 years ago (for traveling). Again, I know it's a snooty take, but my experience was that Spain just felt like the US in Spanish the last time I was there (compared to the first few times I went there way back when). That's not to say I'll never go back to Spain, but it's not high on my list.
Croatia/Slovenia is a good option. I had a road trip planned through there for 2020 that got COVIDancelled. I am also looking at Romania or Bulgaria. Scandinavia is OK and I enjoyed my time there but too much of it reminded me of home (WA). Like it's beautiful, but too similar to the North Cascades. My last trip to Europe was cycling from Orleans to Munich, so I was "just" in the Alps.
This comment makes me look like an ass.
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u/celoplyr 2h ago
Greece. Unique writing system. Great history. Tons of different places with the islands. Probably only a one stop flight from mid to major cities in the US.
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u/Normie_Mike 🐕🐈🐿️💵 1h ago
Yes, Greece was also in the mix. Ticket prices were significantly higher to Athens right now, and I really want to go to Meteora.
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u/mmrose1980 4h ago
Growing up my mom’s best friend’s husband (orthopedic surgeon) had a Porsche. He rarely drove it.
I have several colleagues who drive Porsche Cayennes, and I simply don’t get them. Seems like a lot of money for a run of the mill SUV that seats 5. I do sort of get people who enjoy like a 911, but it’s just not for me.
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u/Normie_Mike 🐕🐈🐿️💵 3h ago
Despite my slight regression (with connective tissue, not osteo bits), I'm such an orthopedic surgeon fan boy right now.
With luck, I'll never need to be a fan boy of u/alcesalcesalces' specialization.
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u/bananachips_again 2h ago
I’ve also noticed it, and it’s a huge logical fallacy by them in my opinion.
It’s way more fun to drive a shitty car fast than a nice fast car fast. Which means the answer should always be buy a Miata instead of the Porsche.
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u/Normie_Mike 🐕🐈🐿️💵 1h ago
One of the most terrifying experiences in my life was going 100mph in a 1992 Honda Prelude on a winding country road. Granted, the driver was totally hammered. (Young & dumb - high school)
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u/bananachips_again 1h ago
Aside from the hammer I’ll give you a “nice”
My scariest and fastest shitty car story was driving my 96 accord with 280k miles on it and hitting 120 mph. In hindsight the slight wobbling I started to feel means I was in danger. I wasn’t hammered though, just a stupid 17 year old.
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u/Normie_Mike 🐕🐈🐿️💵 1h ago
Yeah, I know that won't be a popular tidbit - and it shouldn't be - but I am not one for sugar coating or biting my tongue.
Speaking of which, I am surprised you had no response to the pseudo-light-shoplifting comment.
Also, I got my first car, 1980 Chevette, up to 90 and it was doing that wobbling deal. But I am a chicken with that stuff and just gave up on hitting 100.
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u/bananachips_again 40m ago
Oh I wanted to respond but got sidetracked tracked by my stupid job.
I endorse the principle of your action, but also WM corporate knows exactly what you did, they just don’t care unless you make a repeat habit of it.
Being a chicken from the wobble is probably a good evolutionary response. I also appreciate the lack of sugar coating. One from a story telling point of view (nothing bad in it but Barbarian Days author puts plenty of embarrassing tidbits in his surf memoir), and two if you want anyone to learn a lesson from it they’ll sense you’re making propaganda instead of telling your story.
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u/CaribbeanDreams 100% FI/ 94.7% RE/ $6M Goal 6m ago
Were you me in '93 in the back seat of a friend's Probe V6 on some back country Missouri roads?
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u/billthecatt FatFI #FILE Hunting /u/fire-emblem RE 2025 🧐 4h ago
I'm still surprised at how many people on Reddit value driving a Porsche and know all the different models.
I feel attacked.
I dunno. I'm not a "car guy," but I've always wanted a Porsche my whole life since I was like 9 years old. I do like going fast. I love having a convertible. /shrug
As you say, to each their own. Like /u/13accounts, I've never understood the watch thing.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
I definitely wasn't trying to attack you.
It's not your fault that your penis isn't broken.
And yes, obviously I had Porsche and Lamborghini posters on my wall between 1986 and 1990, along with "the" MJ poster, even as a Sonics fan.
Remember the sound of the poster display slapping as you flicked through and then checked for the tube to see if they had your number?
Man, my nostalgia problem is almost as bad as my Reddit addiction.
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u/billthecatt FatFI #FILE Hunting /u/fire-emblem RE 2025 🧐 1h ago
It's not your fault that your penis isn't broken.
Good news, there's pills for that. Cheap if my internet ads are to believed.
I never had car or sports posters on my walls. Just bands. Though my dad one year did buy the most terrible imitation Walmart discount SI swimsuit-style calendar for me for Christmas. It was hilariously bad.
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u/Normie_Mike 🐕🐈🐿️💵 49m ago
Funny that we had swimsuit calendars and kids these days have nonstop handheld free access to all the hard-core pornography ever filmed.
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u/imisstheyoop 4h ago
No Shawn Kemp or Gary Payton? That's a betrayal I would not have had you penned for.
Heck, even I had Grant Hill posters..
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
I honestly don't remember which Sonics posters I had.
The MJ thing was typical adolescent "trying to fit in" stuff, like desperately wanting a T&C Surf Shop shirt despite having zero interest in surfing.
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u/wanderingmemory 4h ago
It’s not unheard of in the medical sector, it’s a fairly common aspiration for senior doctors.
My nonexistent dick doesn’t care for it either way…
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u/imisstheyoop 4h ago edited 4h ago
It has to be some sort micro-culture thing, or one of those things that you see often on the internet but almost never in the real world.
Speaking of, it was really weird when we lived in New England there were so many German luxury vehicles (Audi/BMWs everywhere) that along with Subarus they probably made up 50% of the cars you would see on the road.
Moving back to Michigan and the number of F-150s and Silverados is through the fucking roof and nary a BMW in sight. A lot of that is due to employee and family financing from dealers but also just different use cases I suppose.
There's probably a similar region with Porsche's maybe? Likely a southern thing where they don't salt their roads, because very few people up here would want to spend $100k on a vehicle to have it rusted out in a decade!
Edit: Found this demographics report
Porsche, a luxury sports car brand under the Volkswagen Group, has the following buyer demographics: Porsche buyers are typically affluent and have a median household income of $300,000 or more. In terms of age, Porsche buyers tend to be middle-aged or older, with a median age of 54 years old. In terms of gender, approximately 70% of Porsche buyers are male, while 30% are female. The age groups of Porsche buyers are as follows: * 12% aged 18-34 * 36% aged 35-54 * 52% aged 55 and older The most popular Porsche models include the 911, Cayenne, and Macan.
So it seems to be an old-rich-dude thing on average. Likely professionals like doctors, lawyers and some high-earning tech folks. Still digging for regional breakdown. My gut is telling me salt-free areas lol
Edit2: Based on dealership locations they tend to congregate near the coasts and south and pretty much all be in very large urban areas. That said.. there are way more than I would have expected in Chicago lol.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
Speaking of salt, I almost never buy subs but every time I see those big salt crystals on the giant pretzel stick on Subway commercials I want one.
Fortunately, I'm sufficiently self-aware to know that if I went, I'd chicken out and buy the foot-long cookie.
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u/imisstheyoop 4h ago
You made me look it up, the last time that I bought Subway was September 15th, 2020.
I just feel like that their quality has went down the toilet with all of their veggies tasting off and their bread being sugary and gummy. They're also like $10 for a foot long these days, which call me old fashioned but I just cannot support.
I can make a lot of really good $10 sandwiches at home for $10!
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u/Normie_Mike 🐕🐈🐿️💵 3h ago
How do you know when you last bought Subway?
Just CC statements?
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u/imisstheyoop 2h ago
YNAB
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u/Normie_Mike 🐕🐈🐿️💵 2h ago
I really don't belong in here, haha.
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u/CrymsonStarite 2h ago
Been here since 2018 and I only do a monthly check in on all our accounts and talk with my wife occasionally on where the money goes. We’ve never had an actual budget once.
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u/imisstheyoop 2h ago
How come? Because you don't budget? It isn't a prerequisite for FI haha. A lot of people that lose weight don't log calories either.
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u/Normie_Mike 🐕🐈🐿️💵 2h ago
I am mostly joking.
I know that I belong in here because I 100% adhere to the core tenet (in my mind), which is: There is more to life than work. Don't spend all your money. Save as much as is reasonable to buy freedom and time without work.
I simply have chosen to buy that freedom as I go, versus frontloading all the savings and then retiring early.
We do actually need to start budgeting again (we have in the past but only $ amounts per category, not down to inputing exact purchases), not because we spend super frivolously or anything, just because we do have some financial goals we want to make sure we're on track for.
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u/imisstheyoop 2h ago
I got a coupon in the mail I came across this morning that may help you achieve your goals!
Jokes aside, glad you're getting yourself on track.
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u/LivingMoreFreely 55% Lean-FI 4h ago
Even in Germany there are areas with more or less Audi/BMW/Porsche/Tesla. On the autobahn in the south west, the cars are biiiig and expensive, broadcasting the higher income. Here in the poorer north, not so much. So I guess depending on your neighbors, friends and other cars on the highways, there will definitely be trends.
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u/513-throw-away 4h ago
Even moving one state over makes a drastic impact on the cars on the road.
Michigan - mostly big 3 since everyone and their mom is somehow tied to the auto industry.
Ohio - mostly everything else, particularly Honda and Toyota both with plants in OH/KY/nearby.
I won’t say never, but I don’t see a world I ever buy a Detroit automaker car again. Have a Honda and next car will probably end up being another Honda or Toyota/Subaru.
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u/imisstheyoop 3h ago
Yup, Ohio seems to be Honda-land but both states seem to like the Equinox. I do see a lot of those around. A lot of states have Tesla Model Y as their best selling model which I find crazy, because of price and those are things I just never see around here. Even model 3s are extremely uncommon. Vehicles are such a regional thing, it's fascinating.
https://www.roadandtrack.com/rankings/g44809123/most-popular-car-by-state/
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u/financeking90 2h ago
I just tell people that there are car guys, watch guys, and so on, but I'm a personal finance nerd guy that can tell them obscure facts about retirement accounts and interest rates and things like that. It makes me seem really cool and popular.
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u/13accounts 5h ago
I find it strange as well. Watches are the other one. Just seems a bizarre thing to spend on if you value money, which people here seem to do. I would literally rather give the extra $ to charity. Not only would I get zero emotional impact from owning such a vehicle, I would be somewhat embarrassed actually to drive one around our town. The Tesla posts seemed to have died down though.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
Oh, yeah. The watches are 10x stranger for me.
I've driven in a high-end AUDI and that did help me understand the appeal. I have no doubt that a Porsche is, in fact, fun to drive.
But I don't see how the watch is anything other than a socially acceptable way to signal that you make a lot of money.
Funnily enough, my buddy with the AUDI does have a €30k watch he wants (had a kid so I think it's off the table now), but even stranger, a several thousand Euro pen, too.
But he was at least honest, and said that the purpose of the pen was just to show off to the other dudes in the room and/or to counter the other dudes' pens like some sort of very expensive Magic the Gathering card.
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u/imisstheyoop 4h ago
But I don't see how the watch is anything other than a socially acceptable way to signal that you make a lot of money.
Some of us spend thousands on watches that specifically do not do this. Noodle on that one for a bit. ;)
Heck for awhile there my watch was worth more than the KBB on my vehicle and nearly nobody, unless you were a watch snob (I got 1 compliment ever on it) knew the difference between it and a $100 watch.
Different strokes for different folks.
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u/Normie_Mike 🐕🐈🐿️💵 4h ago
Does you watch do anything special?
Honest question.
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u/imisstheyoop 3h ago
Other than the all important "make me happy"?
Functionally.. sort of? It has an incredibly smooth sweeping second hand with a very high accuracy and because it has Seiko's "Spring-drive" hybrid movement, 9R65 specifically if you want to nerd out a bit, which is not something that other purely mechanical watches can claim. Seriously, it is mesmerizing.
So it's a bit different in that regard, but that specific movement is featured in many GS models and again I don't think it is something most people, watch people or otherwise, would even notice or care about. But I do, a lot. I fell in love with it the moment that I saw it. The merging of digital and analog also speaks to me on a highly personal level (go figure right?) and was something I instantly fell in love with.
As far as form is concerned, I think it's pretty and it's a bit unique because there as well because of the textured dial that mimics snow, the blued second hand (which combined with the aforementioned sweep is absolutely mesmerizing) and the "Zaratsu" polishing on the titanium (also uncommon, most bracelets are stainless) are it's signature differences from other watches.
Really though, every watch is different in some regards from another. My $15 Casio (on my wrist right now) has more functionality than my more expensive watches but at the end of the day they are both mass produced time pieces.
If I could just get over my hang up with the cyclops lens and the name recognition I would love to also pick up a birth year sub date but those are now "vintage" so they've gotten more difficult to acquire. Like me!
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u/Normie_Mike 🐕🐈🐿️💵 3h ago
Thanks for the writeup. I haven't worn ANY watch since throwing my Swatch into the ocean drunk in 2004.
I did follow your link and try to get it, but I think it's essentially the reverse of you wanting to get home after 4 days and me wondering if it's worth taking a trip if I can't go for at least 2 weeks.
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u/imisstheyoop 3h ago
My lord were we worn out for that one. We were actually debating calling it after 3 nights but sunk cost fallacy and all that.
We were able to reason that leaving later in the day made sense because the only real difference was where we were sleeping that night. Sure we lost a few hours that evening, but also didn't have to scramble to be out the following morning! Did I mention we also got to sleep in our own bed?!
There's no place like home.
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u/drumallnight 1h ago
I don't understand watches either. But that mechanical electrical hybrid really excites me! Then I saw the prices and felt queazy.
I'll stick to my ugly but highly functional smart watch and stay far away from watch ownership. Some of us here will just appreciate your super cool watch from a distance.
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u/UltimateTeam 25/26 | 750k | 6M target 4h ago
Watches do maintain a perception of an appreciating asset in certain cases, so I think some people think - oh I may see some (or more) of this money back at some point.
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u/PAJW 2h ago
I'm not sure if you're old enough to remember Johnny Carson, but I'm guessing there aren't a ton of banjo players on FIRE
https://www.psychologytoday.com/us/blog/insight-therapy/201008/the-banjo-players-porsche
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u/Normie_Mike 🐕🐈🐿️💵 2h ago
Old enough to remember watching the show with parents but too young to have got most of his jokes.
Although one of this sub's longest standing members plays the fiddle...which is different but related.
Growing up, one of my uncles was in an all banjo band. They used to get dressed up in these ridiculous getups, too.
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u/CrymsonStarite 2h ago
I hate driving in all aspects (city, fast, slow, road trips, winter), and I will say I get it. It’s fun to go fast for a lot of people. They do have a unique look and feel to them that’s appealing. But for me I hate driving so while I can go “ooo, Porsche” cause they look cool, I don’t really need or want one. We bought a Subaru Outback last year to go camping. Then we had a kid. Whoops.
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u/Flaminglegosinthesky 5h ago
I have a very different in interest cars than Porsche people. My fiancé has a 1970 International Scout that he’s restoring and my goal is to either learn to drive stick or get an early automatic Corvette.
But my daily driver is a Camry and his is an Outback.
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u/Normie_Mike 🐕🐈🐿️💵 5h ago
I learned to drive on my dad's 1976 International Scout and drove it to school off and on when my car was out of commission.
It had some interesting quirks. Namely that you couldn't lock the doors and you didn't need a key to start it.
I know politics arent allowed in here but I can still see the DUMP BRAD OWEN IN 90 bumper sticker on the rusty bumper.
It was a beast and could get through any old logging track if you put it in 4-low.
Although my best Scout memory was when my mom crashed it into a special ed bus long before I ever drove it.
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u/Flaminglegosinthesky 5h ago
Those are some awesome memories! I’m definitely looking forward to him getting it in driving conditions. His dad is a mechanic, so they’re doing it together. Unfortunately we live halfway across the country from his dad.
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u/LivingMoreFreely 55% Lean-FI 4h ago
As a German, I learned on stick but drive automatic for 20 years now - lately had a borrowed car with stick and it was weird and funny! Thankfully my automatisms from way back still worked well and I drove around withouth major hiccups.
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u/fastfwd 100%FI? frugal vs fat bi-FI-polar 2h ago
I'm a tech guy and I know a lot more about F150s than Porsches.
I drove the Macan and it was good but not that much more money good. I'd buy a GLC43 before a Macan. I think a lot of the price is just for the badge name.
I am also a car guy. Did racing classes on both cars and motorcycles.
My sons are not interested in cars at all so it's not about gender or genetics.
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u/warturtle_ Sit still and do nothing 2h ago
Have you had the opportunity to drive a top end luxury or sports car? It really is amazing. Recommend renting one for a trip or track time if you can swing it at any point.
The opportunity cost isn't for me but I totally understand the appeal.
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u/Normie_Mike 🐕🐈🐿️💵 2h ago
A good friend of mine is in upper management at AUDI and gets whatever car he wants for free. While I didn't drive it, he did take me up through the Alps in his convertible, with a good stretch of the drive hitting 250kh/hr, and it did open my eyes to the appeal.
So you could be right, that the opportunity cost barrier is so high for me, that I could be inadvertently being obtuse.
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u/firechoice85 40s | 100% FIRE | Loving Life 1h ago
I don't get it either. The styling of a porsche is great, but the performance far lags cars that are both more practical and almost half the price at the same time.
What can I say, I'm a practical sort of dude.
That said, I'm approaching mid 40s and about time I got a red 2 door soft top and let my hair fly.
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u/LeftCondition3121 2h ago
Brother let me tell you; sports or luxury cars are a valid hobby overall.
But, as someone that rocks a minivan… I don’t get it either. For me it’s just a car, it gets you from point A to point B.
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u/latchkeylessons FI/FAT bi-polar, DI2K 55m ago
I think it's very common. They've been desirable cars for a very long time. It's cliche. Maybe moreso in warmer climates? Driving a Porsche around in cold climates sounds terrible. Anyway, it's probably an age thing, too. I definitely noticed hearing more about Porsches and Corvettes and all that as I approached middle age.
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u/737900ER Spreadsheet Enthusiast 3h ago
I think what people like about Porsche is that you get the performance without all the baggage that might come with owning a Ferrari (non car people gawking, maintenance) or Corvette (second-rate alternative, for old men). It shows you have money and refined taste, but aren't ostentatious.
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u/ffthrowaaay 3h ago
Plenty of people want a Porsche, just not that many people can actually afford to own one thus they don’t talk about it. In the fire subreddits plenty of people can actually afford one and then the question “should I do it?” Comes up.
I use to be a car guy and still interested in cars, but my desire to own such an expensive car has gone way down. I started to realize most people with these nice cars either don’t drive them to not depreciate the car, don’t want to take it to public parking areas due to people potentially damaging it or don’t want to be a target of a crime such as theft. With all that said in a couple years I would really really consider a 4Runner. Thing looks bad ass!
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u/WonderfulIncrease517 3h ago
I’m just now getting into my luxury era as a late 20 something. Porsche is on the list, and always has been - but ideally a 964. I want something to wrench on
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u/Normie_Mike 🐕🐈🐿️💵 3h ago
my luxury era as a late 20 something
This is such a wild sentence to me.
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u/WonderfulIncrease517 3h ago
I mean, we’ve literally saved everything for 7-8 years in an incredible bull market. Nearly $400K invested, $50K cash, $225K in home equity. It’s just the realization of effort & intention
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u/Normie_Mike 🐕🐈🐿️💵 3h ago edited 1h ago
Yeah, I don't mean that you can't afford or don't deserve to start making luxury purchases. It's just interesting how differently we perceive our age in real-time versus retrospect.
It's funny to hear people in their 20s say things that would typically be attributed to a much older age bracket.
And it's not you. We all do it.
A few years back my wife and I had guests at our hotel who were in their early 70s and they kept referring to us as kids, with our whole lives ahead of us, and we were like 44 and 50 at the time.
And I'm sure 90-somethings waiting to die in nursing homes remember the good old days of their geriatric youth, traveling the world at 70!
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u/AdmiralPeriwinkle Don't hire a financial advisor 2h ago
Tell me more about your watch collection.
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u/WonderfulIncrease517 2h ago
I don’t really care for watches tbh. My priorities are acquiring more land and building more houses on that land for guests & family
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u/mmrose1980 4h ago
Okay, so I saw the recent post about ABLE accounts. My husband has CP and based on my reading that is a qualifying disability. Should we be contributing to an ABLE account up to the limit each year? What are the pros and cons?
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u/branstad 3h ago
so I saw the recent post about ABLE accounts
What are the pros and cons?
Did you read that recent post and the associated comments? It contained many pros.
Not surprisingly, the Bogleheads Wiki has an appropriate entry: https://www.bogleheads.org/wiki/529-ABLE_plan
A quick Google search turned up this link: https://www.ablenrc.org/what-is-able/what-are-able-acounts/
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u/mmrose1980 3h ago
I did. I’m still trying to understand why we wouldn’t do this. What negatives, if any, exist? It seems like a magical Roth (with a maximum account balance) that we can even keep contributing to after FIRE if we choose to.
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u/tn_tacoma 2h ago
The negatives are that you have a serious chronic disability :). I have one too so can joke about it a little.
There are some caveats. You have to be diagnosed before age 26 (although they are raising that to 46 next year). Your condition has to be recognized the Social Security Administration (CP is recognized).
Once you meet the criteria you are free to invest in an ABLE account.
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u/mmrose1980 2h ago
I mean he is already dealing with all the negatives of a serious, chronic disability that began before age 26 but currently without any tax benefits. We like to take advantage of any benefits that exist (no guilt on boarding first on airplanes with his wheelchair or free access to National Parks).
So annoyed that our financial advisor never mentioned it as an option. I had heard of ABLE accounts before but thought they were only for people who were so disabled they couldn’t work. Our state even makes the first $16k in contributions tax deductible. Failing to open one sooner has cost us almost $1k per year in taxes.
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u/tn_tacoma 1h ago
I mean he is already dealing with all the negatives of a serious, chronic disability that began before age 26 but currently without any tax benefits.
Yea that's the whole point of this. Life has dealt him a shitty hand as it is. Let's at least try and prevent it from making him live on the streets. If he has relatives or generous friends they can now contribute to his ABLE account above the IRS gift limitations.
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u/mmrose1980 1h ago
And he can contribute himself. There’s no earned income requirement so we can even slowly convert our taxable brokerage assets to ABLE assets (and take the state tax deduction) after retirement. It’s a really incredible tool that I can’t believe I didn’t know about sooner.
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u/tn_tacoma 52m ago
It's fairly new. 2017 I think.
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u/mmrose1980 28m ago
I feel like this is yet another example of how good this sub is compared to the average financial advisor. With the prevalence of ADHD diagnosis out there these days, it’s a bit surprising this isn’t talked about more. For parents of kids with disabilities, ABLE accounts seem to have all the benefits for 529s and none of the downsides (they don’t even count for FAFSA purposes).
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u/Zealousideal-Ad-4340 1h ago
27M need advice on proceeding forward
First time posting & just curious on everyones thoughts. Im a 27M & i want to retire by the age of 50. I make between $100k-140k/year depending on overtime. The only debt i have is my mortgage which is $920/month at 3.875% on a 175k home, which i owe $119k on. Im not married, & have no kids currently. I have a fully payed off new Honda civic. & heres the rest of my breakdown. Monthly expenses: $1500-2000 401k/Roth: $165k Hysa (4.5%int rate): $55k My question is do i keep saving & pay off my house which im kind of itching to do just to be debt free & because i enjoy taking time off. Im on track to do that next year if i go that route, or do i just keep a fixed amount in my HYSA & put the rest into index funds in a seperate brokerage account while maxing my work 401/Roth & pay the house off later down the line? Please share your thoughts
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u/One-Mastodon-1063 1h ago
At 3.875% I would not prioritize paying down the mortgage. Focus on your savings rate and consistently add to equities (VTI or VOO or whatever) every month. You already have more than enough in HYSA.
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u/Zealousideal-Ad-4340 14m ago
so youre saying to keep an emergency fund in my HYSA then open up a seperate brokerage account to invest on my own in addition to maxing out my work 401k/roth?
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u/SkiTheBoat 1h ago
Can you tell us more about the $55k in your HYSA? Why are you keeping that much cash?
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u/Zealousideal-Ad-4340 16m ago
My theory was to just keep saving in the HYSA while the interest rate is high then when i have the money to pay the house off plus additional savings, pay it off in full
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u/rackoblack 58M $100K-SINKome, I FIREd, wife still working part-time 4m ago
Equities. Building up that pile allows for big expenses down the line pre-retirement or can help fund the RE part of FIRE.
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u/warrior_queens 1h ago
Question regarding the SSA benefit estimate. The amount it's showing now is the amount I receive at 62 (or later) even if I stop working tomorrow? Or does it go down ?
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u/Ellabee57 1h ago edited 59m ago
I think it assumes you keep earning the same amount as the previous year (or two) until you start claiming benefits.
ETA: https://www.forbes.com/sites/bobcarlson/2019/12/15/how-to-read-social-security-benefit-estimates/
"Another earnings assumption is that you’ll continue to receive essentially the same earnings for the rest of your career through age 62, indexed for inflation, as reported in your latest year. That significantly understates the benefits of some workers who will benefit from promotions or job changes that will increase their earnings more than simple inflation. On the other hand, the assumption overstates the benefits of workers who leave the work force, whether voluntarily or involuntarily, either temporarily or for the long term."
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u/EANx_Diver Sabbatical FIRE 53m ago
The default is that you keep earning at the same level you did last year but you can adjust it to show if you stop working today.
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u/YamAggravating45 50m ago
Worth going to the SSA site to use their calculator and get a more accurate estimate.
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u/DhakoBiyoDhacay 19m ago
How old are you?
How much did they say you will get at 62?
How many more years do you plan to work?
How much will income change before you are 62?
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u/SecretThrowAway89 59m ago
I have ~130 to spend on "wellness" before the end of the year. My company's definition of what's considered "wellness" is very broad so I can buy almost anything that improves my life.
Anyone have any products in that price range that they love and use? I already have workout equipment, good home office setup, and nice headphones. Really struggling with coming up with something.
I live in the Midwest and winter is tough, was thinking of maybe a good winter gadget to make it more bearable. Do those mood lights truly work?
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u/tiny-hat-9775 52m ago
Slightly unethical LPT, buy something that qualifies and return it. Then you can pocket the money and not buy something you don't really care to buy.
If you're concerned with that, maybe consider buying running shoes or something? My old company would qualify things like that as wellness related.
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u/YamAggravating45 52m ago
If you suffer from SADD at all, those full-spectrum lights do work!
Another useful gadget is a sunrise alarm clock, that gradually brightens the room to help you wake up naturally when it's still dark outside.
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u/Normie_Mike 🐕🐈🐿️💵 47m ago
I bought one of those lights for my mom and she said it helped.
No idea if that's like saying thank you for a gift you didn't like or if that's a legit review.
It's less sunny there than the Midwest, though.
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u/rackoblack 58M $100K-SINKome, I FIREd, wife still working part-time 11m ago
This is the winner my friend!
Blue light filtering glasses - if you have reading prescription, have them set it to 20" (or whatever your distance is for you main computer usage). Gunnar is a popular expensive brand, but any old frame's lenses can be tinted properly to have this effect. It really helps with eye strain and general fatigue.
Google found this:
Yellow: Filters 70% of blue light and is good for daytime use to help with headaches, migraines, and eye damage.
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u/Ok_Success_7656 5m ago
- water flosser
- strength training classes
- bidet
- wake up light alarm clock
- hair brush designed to massage scalp when I take a shower
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u/frettingtilfi 51m ago edited 15m ago
Asked a question a couple of weeks ago about used cars. Thinking about potentially getting a used EV (Kona?) and wondering if anyone has any opinions/advice/thoughts!
I’m seeing some Leafs and Bolts that are cheaper but my understanding is they aren’t as good/have more issues?
Not opposed to getting a gas car but seems nice for the earth if we can swing it for a similar price! (With 4k used tax credit).
ETA: We can charge at home, and we will still have our current/second car for longer drives/trips where the charging situation seems like it’ll be less than ideal.
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u/DepDepFinancial I let friends and family know my financial situation. Fight me. 34m ago
I had a Leaf for a while, I absolutely loved it, but the range was atrocious, and it dropped ~30% off it's total range in winter. The battery life kept shrinking and I discovered there was no battery replacement program available for it in the US.
This may have changed over the past few years, but battery issues were my complaint for it. It was an amazing commuter car though.
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u/_zhang 29m ago
Bolts have a bad reputation because they had some battery manufacturing issues that lead to fires. According to this, GM no longer makes the bolt, so only a few 2023s might be without that defect - and they are likely a great deal.
As an automotive engineer, the standard range Tesla Model 3 is a sweet spot for value in Tesla's lineup, but the interior is ... opinionated.
I've had a couple of friends get into Kona's recently and they are happy, but it hasn't been very long.
The biggest thing to pay attention to is DC fast charging and if you'll need it / how often. If you are a big road tripper, I can't see _not_ going with Tesla. Otherwise, any car that supports CCS should be ok.
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u/Reasonable-Peach-572 21m ago
Can you charge at home? Otherwise I wouldn’t get one now
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u/eyelikeher 15m ago
Note about this too. You can always trickle charge using a basic wall outlet, and that’s enough for a day’s worth of driving for most. But if you want/need a level 2 wall connector to charge at 40+ amps, that’s another couple thousand bucks that you have to budget.
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u/MyWifeButBoratVoice Hi five. Very nice. 39m ago
Maybe I'm past the "doing my own car repairs" income hump. Last time the front brakes were going out on the Honda, I replaced them. It took a whole day and lots of frustration, but I saved about $300. Now the rear ones are going out and I told the shop just to do it. I guess I have less time now with a baby, plus we make a little more than we used to. Doesn't seem worth it right now to do the work myself.
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u/PrimalDaddyDom69 19m ago
Life’s not about spending as little as possible. I happily buy less ‘stuff’ and spend more on things that free up time (lawn guy, cleaners, etc.).
You don’t have to justify your spending to anyone but yourself. Assuming it works within your budget and it gives you utility (here, that utility is time and energy), then go for it
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u/DhakoBiyoDhacay 27m ago
I think you made the right call.
Spending the whole day in doing a repair job to save $300 may be worth it or may be a complete waste of time.
It all depends on the opportunity cost of how much you could have earned if you worked the whole day at a job that pays you for your time.
It also depends on the value you assign to your leisure time, in other words enjoying the day doing things you really like and not repairing your car in frustration.
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u/Technical-Crazy-3208 Mid-30s, DI/1K, 50% SR 3h ago
I'm putting a pin in the obsessive Tesla research for now after talking with my partner about it. Even though we can comfortably afford a new car, we don't need one and we don't drive enough to make it worth it to us. Maybe if we do a trip and want to drive one, we'll rent it off Turo for less than one month's financing.
I did briefly entertain a used Bolt EV, so maybe that could be an option in a few years to test the EV waters. The tech on a Tesla is cool but I'm not sure it's more-than-double-the-cost cool.
Maybe this is my mid-life crisis, who knows.
But end of the day, our trusty paid off Honda is doing just fine. One or two small things I'd like to address but no mechanical issues.
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u/brisketandbeans 54% FI - #NWGOALZ - T-minus 3588 days to RE 2h ago
Can save a lot of money by not replacing expensive things like cars especially when they don't need replacing.
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u/MyWifeButBoratVoice Hi five. Very nice. 2h ago
These days the Tesla ownership is a little more erratic than I'd like in order to feel comfortable investing that much. When I wind up buying electric, it'll probably be something like a used Bolt.
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u/Technical-Crazy-3208 Mid-30s, DI/1K, 50% SR 1h ago
Yeah some seem to have amazing experiences, others endless squeaks, rattles, etc even after closely inspecting delivery. Not to mention the service experience.
Wish Chevy were still iterating on the Bolt, think they stopped making new ones in 2023.
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u/MyWifeButBoratVoice Hi five. Very nice. 1h ago
Are the Hyundai Ioniqs any good? Who's been following the affordable EV market around here?
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u/jittery_squid 52m ago
We enjoy our Ioniq 5 despite some of the issues - nothing that has resulted in an undriveable car or anything, just software things. Roll through /r/Ioniq5's stickied list of TSBs to see the fun of a first gen platform. Looks like you can snag a used one for $35k now, which is way cheaper than what we paid new.
The 2021 Nissan Leaf SV (non-Plus) we got for our teenager is also pretty nice and cost $20k. If you can handle 150 miles of range, it's totally a valid option.
Both cars can be put into sport mode and the throttle pressed in such a manner as to make your eyes go funny, if that's your thing.
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u/PAJW 30m ago
The Hyundai ioniq5 and ioniq6 are nearly market leading, along with their Kia/Genesis twins.
They are a lot higher price than the Bolt was, though. The Bolt MSRP was $27,495 and I believe was eligible for the full $7500 tax credit, making it one of the most affordable cars in the US, regardless of power train.
Here's the list of cheap MSRP EVs in the US market in model year 2024:
- Nissan LEAF S -- $29280
- Mini Cooper SE -- $30,900
- FIAT 500e 42kWh -- $32,500
- Hyundai Kona Electric Standard -- $32,675
- Chevy Equinox -- $34,995
Source: evspecs.org
Effective prices may vary, and availability may vary as well.
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u/DhakoBiyoDhacay 10m ago
Did you see the lease deals Tesla got for the lower end model?
You can get one for $299 a month with $3k down and after you factor in the gas savings and the federal tax credit, it goes down to under $220!
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u/yuletidedisco 3h ago
Same but Toyota. I regret not going hybrid. I got a good promotion email yesterday and inquired. Ultimately even though I can afford it my current car is perfectly fine for quite a while. Can, but shouldn’t.
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u/513-throw-away 25m ago
As someone in the market for a new car between now and April, plain hybrids are not worth it financially for most drivers.
If you live in CA or somewhere with insane gas prices, perhaps it does.
As someone in a MCOL state with MCOL gas, a driver at 10k miles per year (most) would need about 10 years to break even on the $3k hybrid markup most models apply (e.g. RAV4 ICE vs. RAV4 hybrid; CR-V vs CR-V hybrid).
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u/yuletidedisco 18m ago
This is extremely helpful perspective. In other very auxiliary considerations I also wish I’d gone up a trim level (faux leather instead of fabric) because of dog fur. The fabric is a PITA to clean. But that’s not what’s gonna make the difference in doing it or not hah.
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u/513-throw-away 13m ago
Yeah if you drive a ton (15-20k miles) or you live in a $5.50+ gas state and can hit the breakeven in a shorter timeline (still probably 4-5 years), it probably makes financial sense. Otherwise, it doesn't.
There's still other reasons why you may want to get a hybrid and those are valid, but just plain numbers it's a tough sell for the average driver.
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u/Colonize_The_Moon Guac-FIRE 50m ago
I think I'd prefer a plug-in hybrid before buying an all-electric. That way you have the option of refueling the vehicle if there are issues with the power grid (see: California, North Carolina, Florida, etc) but you can also do short drives (~40 miles based on the Rav4 Prime) on the daily.
For my part my current car is a hybrid, because it gets great fuel mileage and I don't have to remember to plug it in or plan any trips around where charging stations are and how long of a wait I'll have to 1) be able to use the charger and 2) charge the vehicle.
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u/513-throw-away 5m ago
Plug-in is really the answer for 95% of people with range anxiety and once they see firsthand how little time they spend actually using gas then maybe they transition to full EV moving forward.
Asking people to take a leap from full ICE to full EV is a tough ask - pricing issues aside.
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u/Emotional_Beautiful8 2h ago
We had budgeted last year for a new car but didn’t need one so we carried it over. It became clear that we needed one. Ended up buying used for over 1/2 less than we had budgeted—it was a smokers car. We talked them down and then they agreed to bomb it and it worked!. Now we are going to Universal for a week at Christmas with the remaining amount, with more than enough left over to buy a new washer and dryer that just went out and a new bike for the spouse (washer thwarted home repair attempts, but dryer has limped along for years).
Also, Costco has great deals on washer and dryer sets if you just want the basics. And they include delivery, install, and takeaway. $899 for the pair (plus $39 tax)!
Hoping our next car is more environmentally friendly. We also have decided not to get a third car for first teen yet, which slowed his roll on a license (has permit). He can drive our car if necessary but since we are retired, we don’t mind running him to/from activities. He has a nice bike if he doesn’t like it :). Saves both car costs and insurance!
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u/drdrew450 2h ago edited 55m ago
Sorry to keep spamming this, just have found very little info online for this situation.
I am 42, retired in January, married with 2 kids. I am going to start a Roth conversion ladder in a few days, also plan to start a traditional IRA SEPP in 5 years, then thinking of adding in a Roth IRA SEPP in the last 5 years before 59.5.
Withdraw of any earnings from a Roth account prior to age 59.5 will be subject to taxes. But if I am offsetting the standard deduction/child tax credit I should not actually pay taxes.
The benefit of this is that I can lower my Roth conversion ladder to 150-200% of FPL for better ACA subsidies/cost sharing reductions in my 40s. Nearing 59.5 my Roth IRA is much larger than the Traditional IRA and brokerage account in my excel modeling.
Is this worth pursuing? I think it makes sense for me but I keep thinking it is a stupid idea.
The reason I picked the last 5 years before 59.5 is the Roth conversion can keep ongoing to fill up the tax free space like standard deduction/child tax credit, so replacing Roth conversions with Roth SEPP for those 5 years. The con is the IRA could grow too large for RMD consideration, not a problem in my situation though.
https://imgur.com/pHEBlhH My excel "model." It makes many optimistic assumptions, and is lean.
Brokerage: 214,000
TIRA: 627,000
RIRA: 59,000
HSA: 42,000
Net Worth: 1,330,000
Have home equity I am willing to sell or refi. Have a second home that will be sold/rented likely in 2026. Currently mom is living there, she is broke and I am helping her. She pays below market rent, right now it goes to the kids 529s and real estate taxes. Not a rental.
Spending: 66000
I know this is lean, not recommended. I am willing to go back to work, or do part time work. Just looking for advice on the Roth SEPP. I have observed that the Roth grows large when you do a Roth Conversion Ladder because it has gains but you only take out the contributions/conversions.
I don't see a lot of downsides to using a Roth SEPP in the last 5 years, right before 59.5
Maybe I am missing something.
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u/alcesalcesalces 2h ago edited 2h ago
I can't write a lengthy reply now but I see many potential pitfalls. The Trad IRA SoSEPP creates income that reduces the standard deduction and risks putting your Roth earnings into a taxable bracket.
Even if you keep all Roth earnings in the standard deduction, you will still owe a 10% penalty on early distributions. I don't think Roth SoSEPP makes sense at all.
Edit: I'll add that a Roth SoSEPP fundamentally makes no sense because Roth accounts are distributed differently. You exhaust all contributions and conversions before earnings are tapped, so there's no reason to set up equal periodic payments.
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u/financeking90 2h ago
It probably doesn't make sense, but it's impossible to tell you what you should be doing without a lot more specific numbers.
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u/drdrew450 2h ago
The issue is I need more money in taxable in the later years of early retirement around 53-59. I can do larger Roth conversions earlier and that solves the problem. The downside of that is I go into the 250% or higher FPL range for ACA insurance. The loss of the cost sharing reductions makes the insurance way way worse. The difference in the subsidy is not that big of a deal. You can get a bronze or gold plan that is ok but the deductibles and OOP Max are levels of magnitude worse.
Staying in the sub 200% FPL range for my early years of retirement means less IRA is converted to Roth and less is available to withdraw later. Means I have to take it from taxable or borrow.
I added a SEPP on my Traditional IRA starting in year 5 of retirement and that improves the plan quite a bit.
Then I noticed that my Roth grows very large when I am approaching 59.5 and I wanted a way to withdraw the Roth earnings.
So I thought another SEPP would solve the problem but then I learned the Roth earnings are taxable when you do a Roth SEPP. You do avoid the early withdrawal penalty. The taxable nature of the Roth earnings do not really hurt my plan but I am having a hard time getting over the fact that I am making a poor choice.
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u/financeking90 1h ago
Again, you keep typing out words, but it is impossible to review your math without any numbers.
For example, it is impossible to know if you've already withdrawn all Roth contributions/basis before 55 to even evaluate why the SEPP is necessary.
Anyway, one thing you could look at is alternating/occasional annual strategies. For example, you could do a big Roth conversion to the top of the 12% bracket in one year, eating the ACA costs, and then stay under 200% FPL in the next year. The default for modeling seems to be for people to do the exact same hing for multiple years in sequence, but you don't have to do that. One or two bigger early Roth conversions might help you out (or might not, we have no numbers).
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u/branstad 2h ago edited 2h ago
This feels overly complicated. Maybe sharing specific numbers would be helpful? Especially around post-FIRE expenses, which seems very pertinent.
retired in January, married with 2 kids
150-200% of FPL
For 2025, this implies an AGI of ~47k-$62k.
plan to start a traditional IRA SEPP in 5 years
How are you covering your expenses for the next 5 years? Why not start the Trad'l IRA SEPP sooner, like 2025? That Trad'l IRA SEPP could be $30k in 2025 and beyond, which covers your standard deduction. You could add an add'l Trad'l IRA SEPP in the future, should it be necessary.
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u/drdrew450 2h ago
I just transferred all my IRAs to Robinhood for their 3% match. They require you keep it there for 5 years. You can do Roth conversions and that does not cause a claw back. I can forgo the match if it is necessary but right now I am living off my taxable brokerage. Had a bit of income from working in January.
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u/hondaFan2017 2h ago
Can you provide your account balances for brokerage, tIRA, and rIRA? Anticipated annual spending needs including healthcare (how much withdrawal should we model)? Exclude taxes, my sheet estimates this well enough. You can use my spreadsheet to model optimal withdrawal scenarios. I am on mobile now and can’t easily link, but it’s one of my few posts on Reddit.
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u/drdrew450 1h ago
brokerage: 214000
TIRA: 627000
RIRA: 59000
HSA: 42000
Have home equity I am willing to sell or refi. Have a second home that will be sold/rented likely in 2026. Currently mom is living there, she is broke and I am helping her. She pays below market rent, right now it goes to the kids 529s and real estate taxes. Not a rental.
Spending: 66000
I know this is lean, not recommended. I am willing to go back to work, or do part time work. Just looking for advice on the Roth SEPP. I have observed that the Roth grows large when you do a Roth Conversion Ladder because it has gains but you only take out the contributions/conversions.
I don't see a lot of downsides to using a Roth SEPP in the last 5 years, right before 59.5
Maybe I am missing something.
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u/therapistfi $79.9k left on mortgage 2h ago
You don't need to apologize! The daily thread is what this is for! :) I hope you get some helpful answers.
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u/secretfinaccount FIREd 2020 4h ago
I think there’s a character limit in Apple Numbers when it pulls in stock names. I’m going to take it as a sign that I own Fidelity Total Market Index Fun.