Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
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Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
One Year Later Updated Numbers in Red; Summary
1. Retirement Assets Increased from $186,000 to $312,000
2. Jobs/Income still the same
3. Spent a little more in 2021 than expected
4. Curious what my "enough" is to go down to part time
Summary: I am looking to semi-retire in about 4-5 years, at which point my wife and I will work part time until we are either financially independent or don't feel like it anymore. I personally believe I will probably work for awhile, but I just want to make sure my logic is sound.
Demographic Information
Age: Both 33 34
Kids: one 2 year old and another on the way (plan is just for 2) Happy and healthy girl arrived in August
Location: Northeast Ohio Same
Taxes: Married Filing Jointly Same
Current Jobs
Me: City Law Department; $66k/year with $16k "self-directed" pension on top (this is more like a 401k than a "pension") Same
Me: Solo Law Practice; $60k/year Same
Wife: part-time speech therapist; $40k/year Same
Current Holdings
Cash 2022 Total = $105,000
Checking: $7,000 $22,000
Savings: $100,000 (waiting to drop a chunk on student loans) $26,000
Business Checking: $19,000 $57,000
Investments
Total 401ks: $100,000 (100% SP500) 2022 = $157,000
Total Roths: $34,000 (100% SP500) 2022 = $65,000 (already did 2022 contribution)
Deferred Comp: $21,000 (100% SP500) 2022 = $49,000; doing $1700/pay until it maxes in late May
OPERS: $17,000 (100% SP500) $24,000
HSA: $14,000 (not currently invested) $17,000; now invested in 100% SP500
Total Retirement Assets: $186,000 2022 = $312,000
Assets
Home: $340,000 2022 = $355,000
Cars: paid off Toyota Camry and Toyota Rav4 Same
Debt
Student Loans: $104,000 at 6.1% interest (currently frozen with no interest and no payments until September 30, 2021; will pay off at this time) Same
Mortgage: $267,000 at 3.625% interest (going to retire here) $239,000 @ 2.85%; Refinanced
Cars: Paid Off Same
Credit Cards: Paid every month Same
Monthly Expenses
Mortgage: $1,700/month
Household (Utilities/Groceries/etc.): $1,500/month
Childcare: $500/month
Other: $1,250/month
2022 Total Expenses were approximately $81,000. Did some house projects that cost some money. Hoping to get back down to $65,000/year
(This is not MMM so I'm not looking for a significant critique on my budget)
Annual Contributions Next 4 Years Trying to do the same in 2022
Me: $16,000 to OPERS every year
Me: $19,500 to Deferred Comp every year (this is a 457)
Me: $19,500 to Solo 401k as employee
Me: $9,000 to Solo 401k as employer
Wife: $12,000 to 401k
Total: $76,000 tax deferred per year
Leftover: taxable brokerage or Roth
General Plan Still sticking to this, but might quit sooner
Phase One (age 33-37): I have a good thing going with both the City and Solo jobs, but I eventually want to watch my kids grow up and be a big part of their lives when they will actually remember me. So, I plan to keep grinding here doing both jobs, and contributing these big retirement savings, until my OPERS (pension) fully vests (in 4 years).
By my math (assuming 7% growth), at the end of this, I will have $541,000 in pre-tax retirement assets, $42,000 in Roth (minimum), and a decent amount in either the Roth or taxable brokerage account.
Note that the Deferred Comp is a 457, which means I can pull from it penalty free once I leave City employment. It's a nice and different bucket to have.
Phase Two (Age 38-50): Next, I'd just like to pull back quite a bit. This means leaving the City job and just working on my solo practice part time. Our expenses are about $60,000/year (and that includes $10-15,000 of discretionary/vacation), so I don't need to make much to live comfortably.
Keep in mind my practice right now is probably 10-15 hours a week, and it makes $60,000 profit/year. I can easily keep that going indefinitely. I would use any excess cash to pay down the mortgage by the time I'm 50.
The goal, of course, is to not have to pull anything from retirement accounts, but there's a huge buffer there to do so.
Phase Three (Age 50+): At this point I'd believe the snowball we created in Phase One would mean we'd be well into FI, but it's hard for me to predict what we will want to do. I generally like my practice and my wife likes being a speech therapist. I'm not going to pretend to know what I'm going to want to do in 15 years.
But, the point of all this is that I've created a massive nest egg relatively early on that can let me coast.
Questions
1. Are there any big picture holes in this plan? I know it would be unusual to step back in prime-earning years, but I don't really see any point in massive wealth accumulation. We live in an extremely LCOL area. Our house is 3,200 square feet, we drive nice paid off Toyotas, etc. We are not being misers here.
The thought of pulling back and golfing all the time; spending time with my kids; coaching sports, etc.; is far more appealing to me than work, work, work.
2. Do you think this plan provides a better "hedge" than FIRE? My big hesitation with FIRE is that it gets you out of the workforce and creates a huge resume gap. With my plan, I'm keeping my "knife sharp" as they say. My resume will have "Solo Practice -- 2018 to 20XX" no matter what.
3. How should I adjust my portfolio for each phase? Right now I'm young and thus in 100% equities, but I feel like I should probably pull that back just a little bit while I'm working.
Thanks in advance.
1. Retirement Assets Increased from $186,000 to $312,000
2. Jobs/Income still the same
3. Spent a little more in 2021 than expected
4. Curious what my "enough" is to go down to part time
Summary: I am looking to semi-retire in about 4-5 years, at which point my wife and I will work part time until we are either financially independent or don't feel like it anymore. I personally believe I will probably work for awhile, but I just want to make sure my logic is sound.
Demographic Information
Age: Both 33 34
Kids: one 2 year old and another on the way (plan is just for 2) Happy and healthy girl arrived in August
Location: Northeast Ohio Same
Taxes: Married Filing Jointly Same
Current Jobs
Me: City Law Department; $66k/year with $16k "self-directed" pension on top (this is more like a 401k than a "pension") Same
Me: Solo Law Practice; $60k/year Same
Wife: part-time speech therapist; $40k/year Same
Current Holdings
Cash 2022 Total = $105,000
Checking: $7,000 $22,000
Savings: $100,000 (waiting to drop a chunk on student loans) $26,000
Business Checking: $19,000 $57,000
Investments
Total 401ks: $100,000 (100% SP500) 2022 = $157,000
Total Roths: $34,000 (100% SP500) 2022 = $65,000 (already did 2022 contribution)
Deferred Comp: $21,000 (100% SP500) 2022 = $49,000; doing $1700/pay until it maxes in late May
OPERS: $17,000 (100% SP500) $24,000
HSA: $14,000 (not currently invested) $17,000; now invested in 100% SP500
Total Retirement Assets: $186,000 2022 = $312,000
Assets
Home: $340,000 2022 = $355,000
Cars: paid off Toyota Camry and Toyota Rav4 Same
Debt
Student Loans: $104,000 at 6.1% interest (currently frozen with no interest and no payments until September 30, 2021; will pay off at this time) Same
Mortgage: $267,000 at 3.625% interest (going to retire here) $239,000 @ 2.85%; Refinanced
Cars: Paid Off Same
Credit Cards: Paid every month Same
Monthly Expenses
Mortgage: $1,700/month
Household (Utilities/Groceries/etc.): $1,500/month
Childcare: $500/month
Other: $1,250/month
2022 Total Expenses were approximately $81,000. Did some house projects that cost some money. Hoping to get back down to $65,000/year
(This is not MMM so I'm not looking for a significant critique on my budget)
Annual Contributions Next 4 Years Trying to do the same in 2022
Me: $16,000 to OPERS every year
Me: $19,500 to Deferred Comp every year (this is a 457)
Me: $19,500 to Solo 401k as employee
Me: $9,000 to Solo 401k as employer
Wife: $12,000 to 401k
Total: $76,000 tax deferred per year
Leftover: taxable brokerage or Roth
General Plan Still sticking to this, but might quit sooner
Phase One (age 33-37): I have a good thing going with both the City and Solo jobs, but I eventually want to watch my kids grow up and be a big part of their lives when they will actually remember me. So, I plan to keep grinding here doing both jobs, and contributing these big retirement savings, until my OPERS (pension) fully vests (in 4 years).
By my math (assuming 7% growth), at the end of this, I will have $541,000 in pre-tax retirement assets, $42,000 in Roth (minimum), and a decent amount in either the Roth or taxable brokerage account.
Note that the Deferred Comp is a 457, which means I can pull from it penalty free once I leave City employment. It's a nice and different bucket to have.
Phase Two (Age 38-50): Next, I'd just like to pull back quite a bit. This means leaving the City job and just working on my solo practice part time. Our expenses are about $60,000/year (and that includes $10-15,000 of discretionary/vacation), so I don't need to make much to live comfortably.
Keep in mind my practice right now is probably 10-15 hours a week, and it makes $60,000 profit/year. I can easily keep that going indefinitely. I would use any excess cash to pay down the mortgage by the time I'm 50.
The goal, of course, is to not have to pull anything from retirement accounts, but there's a huge buffer there to do so.
Phase Three (Age 50+): At this point I'd believe the snowball we created in Phase One would mean we'd be well into FI, but it's hard for me to predict what we will want to do. I generally like my practice and my wife likes being a speech therapist. I'm not going to pretend to know what I'm going to want to do in 15 years.
But, the point of all this is that I've created a massive nest egg relatively early on that can let me coast.
Questions
1. Are there any big picture holes in this plan? I know it would be unusual to step back in prime-earning years, but I don't really see any point in massive wealth accumulation. We live in an extremely LCOL area. Our house is 3,200 square feet, we drive nice paid off Toyotas, etc. We are not being misers here.
The thought of pulling back and golfing all the time; spending time with my kids; coaching sports, etc.; is far more appealing to me than work, work, work.
2. Do you think this plan provides a better "hedge" than FIRE? My big hesitation with FIRE is that it gets you out of the workforce and creates a huge resume gap. With my plan, I'm keeping my "knife sharp" as they say. My resume will have "Solo Practice -- 2018 to 20XX" no matter what.
3. How should I adjust my portfolio for each phase? Right now I'm young and thus in 100% equities, but I feel like I should probably pull that back just a little bit while I'm working.
Thanks in advance.
Last edited by CoastLawyer2030 on Tue Jan 18, 2022 12:34 pm, edited 2 times in total.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Seems reasonable, in my opinion, to pull back if you can continue to earn those sums doing part-time work. Three points: 1. Look into refinancing your mortgage to cut 1% or more off the rate. This only increases your cushion in early retirement. 2. I don't see any consideration of 529's or funding college. How do you plan to address that. 3. I assume you have cheap city-provided healthcare currently. You should figure out your plan (and the price!) of healthcare through your wife or another option.
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.mw1739 wrote: ↑Fri Jan 22, 2021 9:40 am Seems reasonable, in my opinion, to pull back if you can continue to earn those sums doing part-time work. Three points: 1. Look into refinancing your mortgage to cut 1% or more off the rate. This only increases your cushion in early retirement. 2. I don't see any consideration of 529's or funding college. How do you plan to address that. 3. I assume you have cheap city-provided healthcare currently. You should figure out your plan (and the price!) of healthcare through your wife or another option.
College will come through a taxable brokerage or something. My in-laws gave each kid $50,000 for college and we plan on doing something similar.
Healthcare is the biggest semi-retirement concern but the ACA plans don’t seem terrible ($800/month or so). I will either find myself playing games with subsidies or just trying to earn to cover healthcare.
- retired@50
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
- geerhardusvos
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
You all are doing great! I personally would refi and pay off the house before I would start career coasting. Once that mortgage is gone, your living expenses are really low, which is great. Then go part time. Heck, one of you could quit your jobs at that point. So maybe split your contributions to retirement and paying off the mortgage 70/30? 50/50? Only you can decide. Continuing to max out retirement accounts and blasting the mortgage with what would have gone in your taxable brokerage might be a good balance.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 8:31 am Summary: I am looking to semi-retire in about 4-5 years, at which point my wife and I will work part time until we are either financially independent or don't feel like it anymore. I personally believe I will probably work for awhile, but I just want to make sure my logic is sound.
I’m the same age and I am almost 100% equities, so not unreasonable. Maybe you go to 90/10 in your 40s.
Everything else looks good, you’re well on your way! Good for you for having the desire to spend time with your kids, that time is more limited and significant than many realize. Cheers.
VTSAX and chill
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Closing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Full disclosure: not a FIRE person here
You have a negative net worth, modest income, and you are talking about cutting back in four years? And you are banking on controlling your spending, "knowing" your next few decades of income (?), and your guaranteed investment returns over future decades?
I'm sure you can make the math work on paper but there is no strong reason to think it will.
And picking an asset allocation to make this work is just silly, imo. Vis-a-vis Monte Carlo simulations (the semi-silly basis for all this), who here has modeled what disease they will die from and has taken tangible steps to reduce that likelihood?
You have a negative net worth, modest income, and you are talking about cutting back in four years? And you are banking on controlling your spending, "knowing" your next few decades of income (?), and your guaranteed investment returns over future decades?
I'm sure you can make the math work on paper but there is no strong reason to think it will.
And picking an asset allocation to make this work is just silly, imo. Vis-a-vis Monte Carlo simulations (the semi-silly basis for all this), who here has modeled what disease they will die from and has taken tangible steps to reduce that likelihood?
Wait 'til I get my money right | Then you can't tell me nothing, right?
- retired@50
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Maybe if you figure out the payback period of refinancing you'll feel better about it. If you were to save $100 per month on the mortgage payment, then, after 38 months, you'd be "paid back". Beyond 38 months, it's free money, which we've already established is something you like.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 10:28 amClosing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
- anon_investor
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
How much of those closings costs are escrow + prepaids? Those are things you would have to pay even if you did not refinance. Not sure if the $3.8k includes those. Have you checked out the Refinance Mega Thread? I know rates have gone up slightly since end of 2020, but you should still be able to find something close to no cost (excluding prepaids/escrow) at a lower rate than you have now. Where have you looked? That is literally free money.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 10:28 amClosing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
To give you a point of reference, I went of counsel with my law firm at age 53, then part time, very part-time, and no time. That was eight years ago. Spouse of 38 years now and all three kids on their own and independent.
I didn’t drill down on your numbers, and hopefully others will continue to help you with that. I’m only posting to give you a shout out of encouragement. I applaud you looking at the big picture of your vision for your life and the life of your family.
Good luck.
I didn’t drill down on your numbers, and hopefully others will continue to help you with that. I’m only posting to give you a shout out of encouragement. I applaud you looking at the big picture of your vision for your life and the life of your family.
Good luck.
- seeingeyestrike
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Check out LenderFi. I read about them here in the Refinance Mega Thread and used them for my own refinance last summer. Using a random zip code in Ohio and making some assumptions about your home value and credit score resulted in a 30 year quote for a rate of 3% that would cover all closing costs. Note that does not include taxes and insurance, but you'd get refunded that back from your current escrow account, so that still should make you even.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 10:28 amClosing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
- CyclingDuo
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Allow me to be a bit of the contrarian here...CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 8:31 am Me: City Law Department; $66k/year with $16k "self-directed" pension on top (this is more like a 401k than a "pension")
Me: Solo Law Practice; $60k/year
Wife: part-time speech therapist; $40k/year
Current Holdings
Checking: $7,000
Savings: $100,000 (waiting to drop a chunk on student loans)
Business Checking: $19,000
Total 401ks: $100,000 (100% SP500)
Total Roths: $34,000 (100% SP500)
Deferred Comp: $21,000 (100% SP500)
OPERS: $17,000 (100% SP500)
HSA: $14,000 (not currently invested)
$312,000
Debt
Student Loans: $104,000 at 6.1% interest
Mortgage: $267,000 at 3.625% interest
-$371,000
Obviously, we need the amount of home equity you have built up to this point, but just looking at the green minus the red, this snapshot jumps out at me in terms of how far you have yet to go before phasing into a semi-retired household, life of golf and hanging with the kids...
+$312,000
-$371,000
-$59,000
Your contributions alone - not counting any potential returns - will be $304,000.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 8:31 am Annual Contributions Next 4 Years
Me: $16,000 to OPERS every year
Me: $19,500 to Deferred Comp every year (this is a 457)
Me: $19,500 to Solo 401k as employee
Me: $9,000 to Solo 401k as employer
Wife: $12,000 to 401k
Total: $76,000 tax deferred per year
Leftover: taxable brokerage or Roth
Keeping in mind that in your version of semi-retired, the dual income household between you and your spouse will still be around $100K in today's dollars. That's hardly part-time work income for the majority of our country in terms of the level of income as it will still allow you to contribute and accumulate during that phase, albeit at a lower rate then the 4 years leading up to it. Obviously, time will tell and you have the leeway of flexibility to extend your current working income if it is so dictated at the time. I am curious why no mention of saving for college educations? Having been there and done that, I'd personally want at least $200-250K set aside for each child.
It is nice to be thinking so far ahead, but life has a funny way of throwing things at us. Your current thinking and plans may be altered on your own accord, or by a myriad of factors between now and then. Again, you have plenty of time and flexibility to adjust if need be in either direction. I wouldn't worry about adjusting investments in this phase, or your second phase since you will still be accumulating and not living off of the portfolio due to your dual income household still covering all of your bills. Your third phase is going to include having to cover at least 15 years of health insurance, plus you've got college educations to fund. I didn't see that in your plans above.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 8:31 amGeneral Plan
Phase One (age 33-37): I have a good thing going with both the City and Solo jobs, but I eventually want to watch my kids grow up and be a big part of their lives when they will actually remember me. So, I plan to keep grinding here doing both jobs, and contributing these big retirement savings, until my OPERS (pension) fully vests (in 4 years).
By my math (assuming 7% growth), at the end of this, I will have $541,000 in pre-tax retirement assets, $42,000 in Roth (minimum), and a decent amount in either the Roth or taxable brokerage account.
Note that the Deferred Comp is a 457, which means I can pull from it penalty free once I leave City employment. It's a nice and different bucket to have.
Phase Two (Age 38-50): Next, I'd just like to pull back quite a bit. This means leaving the City job and just working on my solo practice part time. Our expenses are about $60,000/year (and that includes $10-15,000 of discretionary/vacation), so I don't need to make much to live comfortably.
Keep in mind my practice right now is probably 10-15 hours a week, and it makes $60,000 profit/year. I can easily keep that going indefinitely. I would use any excess cash to pay down the mortgage by the time I'm 50.
The goal, of course, is to not have to pull anything from retirement accounts, but there's a huge buffer there to do so.
Phase Three (Age 50+): At this point I'd believe the snowball we created in Phase One would mean we'd be well into FI, but it's hard for me to predict what we will want to do. I generally like my practice and my wife likes being a speech therapist. I'm not going to pretend to know what I'm going to want to do in 15 years.
But, the point of all this is that I've created a massive nest egg relatively early on that can let me coast.
Questions
1. Are there any big picture holes in this plan? I know it would be unusual to step back in prime-earning years, but I don't really see any point in massive wealth accumulation. We live in an extremely LCOL area. Our house is 3,200 square feet, we drive nice paid off Toyotas, etc. We are not being misers here.
The thought of pulling back and golfing all the time; spending time with my kids; coaching sports, etc.; is far more appealing to me than work, work, work.
2. Do you think this plan provides a better "hedge" than FIRE? My big hesitation with FIRE is that it gets you out of the workforce and creates a huge resume gap. With my plan, I'm keeping my "knife sharp" as they say. My resume will have "Solo Practice -- 2018 to 20XX" no matter what.
3. How should I adjust my portfolio for each phase? Right now I'm young and thus in 100% equities, but I feel like I should probably pull that back just a little bit while I'm working.
It's nice to dream of golfing all the time, spending endless hours with the kids, coaching sports, etc... . Hey, guess what? Many of us who did work full time coached Little League, AAU sports, spent endless hours with our kids every evening and weekend, managed to play a round of golf every week (even took the kids and taught them how to play), etc... . Imagine that? You can. You really can do it all. And save for retirement. And save for their educations. And enjoy the journey with your family along the way. And your kids will remember you.
CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel |
"Pick a bushel, save a peck!" - Grandpa
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Pandemic Bangs wrote: ↑Fri Jan 22, 2021 10:29 am Full disclosure: not a FIRE person here
You have a negative net worth, modest income, and you are talking about cutting back in four years? And you are banking on controlling your spending, "knowing" your next few decades of income (?), and your guaranteed investment returns over future decades?
I'm sure you can make the math work on paper but there is no strong reason to think it will.
And picking an asset allocation to make this work is just silly, imo. Vis-a-vis Monte Carlo simulations (the semi-silly basis for all this), who here has modeled what disease they will die from and has taken tangible steps to reduce that likelihood?
I have updated my post to reflect our home value, which is $340,000. We certainly do not have a negative net worth. I calculate our net worth to be $281,000. I would not be posting this thread if we were that far in the hole, haha.
Certainly, these criticisms are why I posted, so I'm not trying to sit here and defend myself. But I am far more terrified of being the dad at the office all the time than running out of money. The reason I took the City job is party because my practice was starting to completely overwhelm me. I was making great money doing everything on my own terms, but it wasn't worth it.
Perhaps it's because things have just broken well for me in my young career, but I view my earning potential as a faucet, something I can turn on and off. I have a good reputation in my small town. I get referred and decline work all the time.
I cannot possibly forecast the decades ahead, which is why my plan is more flexible than my post indicates. If the market is terrible in 4-5 years I will probably keep working. Maybe I'll go to 30 hours at the City. If I get an amazing job offer to work remotely for a big firm, who knows.
Lastly, regarding college, I have no intent to pay my kid's entire education. I graduated with $157,000 in student loans and it's probably the number one reason I have my financial life together. Our plan is to give each kid a decent sum ($75,000) and let them figure out the rest. If we are inordinately wealthy, we will just pay off their loans when they graduate.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
To jump on this, I am currently refinancing to go from 2.99% to 2.649%. Closing costs are about the same as yours, which I will roll into the loan. My savings on payment is only around 50$/mnth but when I compare the amortization table I will save another $70/mnth in interest compared to my current loan which I have only had 6 months. So the payback on the costs is fairly quick.anon_investor wrote: ↑Fri Jan 22, 2021 10:37 amHow much of those closings costs are escrow + prepaids? Those are things you would have to pay even if you did not refinance. Not sure if the $3.8k includes those. Have you checked out the Refinance Mega Thread? I know rates have gone up slightly since end of 2020, but you should still be able to find something close to no cost (excluding prepaids/escrow) at a lower rate than you have now. Where have you looked? That is literally free money.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 10:28 amClosing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I love the plan, but I’m biased- it’s the path I took! I’m in Phase 3.
I won’t get into the numbers (you’ll figure those out along the way), but here’s some answers to your 3 questions:
1. No big picture holes. As for the issue of prime-earning years, it worked to our advantage. We’ve earned as much or more working part-time as earlier in our careers.
2. Yes, your plan provides a better "hedge" than FIRE. Flexibility is huge - both on the expense side but also on the income side. Part-time work is a huge advantage.
3. We simply followed a traditional glide path, increasing the percentage in bonds as we aged (mostly in line with what Vanguard recommended).
I won’t get into the numbers (you’ll figure those out along the way), but here’s some answers to your 3 questions:
1. No big picture holes. As for the issue of prime-earning years, it worked to our advantage. We’ve earned as much or more working part-time as earlier in our careers.
2. Yes, your plan provides a better "hedge" than FIRE. Flexibility is huge - both on the expense side but also on the income side. Part-time work is a huge advantage.
3. We simply followed a traditional glide path, increasing the percentage in bonds as we aged (mostly in line with what Vanguard recommended).
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Thanks all for the kick up the ass regarding the refinance. I am looking into LenderFI for a rate and getting my SoFi application back on track.
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Some questions related to you city job.
Outside of 'pension' does your retirement offer retiree healthcare? As in.... if you work X years, will you be covered by some sort fo ahealthcare retirement plan at 55 or 60? Anything to offload having to buy ACA at some point?
That's probably the best retirement perk my state job offers.
Retiree healthcare if I go early at 58.
If something like that is offered... that would help you evaluate things dow the line.
Or -> if you switch from a city to state job and your state offers that sort of a perk - they might count the city job time too. Might be worth checking out for you.
Outside of 'pension' does your retirement offer retiree healthcare? As in.... if you work X years, will you be covered by some sort fo ahealthcare retirement plan at 55 or 60? Anything to offload having to buy ACA at some point?
That's probably the best retirement perk my state job offers.
Retiree healthcare if I go early at 58.
If something like that is offered... that would help you evaluate things dow the line.
Or -> if you switch from a city to state job and your state offers that sort of a perk - they might count the city job time too. Might be worth checking out for you.
Get rich or die tryin'
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
You can also try better dot com. They were really quick with offering a rate and everything is online so you don't have to deal with 'people' ha.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 12:28 pm Thanks all for the kick up the ass regarding the refinance. I am looking into LenderFI for a rate and getting my SoFi application back on track.
Their plus is that they display all the rates you and you can pick one that you like - with point or credits.
So for example, if there is a rate that's lower than yours and it's 0 points or maybe even credits ... why not....
Get rich or die tryin'
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
My city job offers paid healthcare in retirement, but you have to work here for...33 years. That number has gone up in the past and a lot of people here eventually think that will be 35 years.dziuniek wrote: ↑Fri Jan 22, 2021 12:37 pm Some questions related to you city job.
Outside of 'pension' does your retirement offer retiree healthcare? As in.... if you work X years, will you be covered by some sort fo ahealthcare retirement plan at 55 or 60? Anything to offload having to buy ACA at some point?
That's probably the best retirement perk my state job offers.
Retiree healthcare if I go early at 58.
If something like that is offered... that would help you evaluate things dow the line.
Or -> if you switch from a city to state job and your state offers that sort of a perk - they might count the city job time too. Might be worth checking out for you.
I started here when I was 32, so that would take me all the way to 65 or 67. I'm not sure I want to stick around that long for a variety of reasons, including the political winds that always seem to be blowing.
ETA: Also, in choosing between my solo practice and the city, I pick my solo practice for a variety of reasons. Obviously the flexibility and independence are great, but most importantly, it is permanent job security. A new administration could come in and fire half the law department, and I'd be gone. So that is why I keep the solo practice churning, even with a decent income at the city.
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Wow. LenderFI's rates are great.seeingeyestrike wrote: ↑Fri Jan 22, 2021 10:54 amCheck out LenderFi. I read about them here in the Refinance Mega Thread and used them for my own refinance last summer. Using a random zip code in Ohio and making some assumptions about your home value and credit score resulted in a 30 year quote for a rate of 3% that would cover all closing costs. Note that does not include taxes and insurance, but you'd get refunded that back from your current escrow account, so that still should make you even.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 10:28 amClosing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
2.625% with closing costs of $3,000
2.75% with closing costs of $1,100
2.875% with zero closing costs
Call me crazy but I actually lean towards the 2.875%? Great rate with nothing out of pocket. Interest amount is largely infinitesimal over the long term, especially since I do not intend to keep the mortgage for 30 years.
Thoughts?
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I'd budget more for college.
I paid for my college at a private Northeast engineering college myself from savings, co-op and part time jobs. I already had an associates degree and 3 years of working, so I wasn't the typical snot nose teenager going in. Even then, I did run out of money, thus the co-op. But that was in the mid 80's when my co-op salary was $10 an hour and college cost $8k a year.
Fast forward, my son just graduated from that same college. Excellent engineering school. I realized that no kid can pay their way through with a $75k a year price tag. Perhaps you don't value education as much as I do, but my feeling is that if the kid can do the work at the more rigorous school and does it, I'm going to make it happen from the funding side. I set aside $1,000,000 to get my 2 kids through college. Imagine how happy I am that I didn't have to spend it all.
On another topic.....what is it that you plan to do when you stop working? I mean....if you're a competitive cyclist, been there and know the time constraints of training. Or something else. I have to think there's a driving reason to want to free up time that's now filled with working.
I paid for my college at a private Northeast engineering college myself from savings, co-op and part time jobs. I already had an associates degree and 3 years of working, so I wasn't the typical snot nose teenager going in. Even then, I did run out of money, thus the co-op. But that was in the mid 80's when my co-op salary was $10 an hour and college cost $8k a year.
Fast forward, my son just graduated from that same college. Excellent engineering school. I realized that no kid can pay their way through with a $75k a year price tag. Perhaps you don't value education as much as I do, but my feeling is that if the kid can do the work at the more rigorous school and does it, I'm going to make it happen from the funding side. I set aside $1,000,000 to get my 2 kids through college. Imagine how happy I am that I didn't have to spend it all.
On another topic.....what is it that you plan to do when you stop working? I mean....if you're a competitive cyclist, been there and know the time constraints of training. Or something else. I have to think there's a driving reason to want to free up time that's now filled with working.
Bogle: Smart Beta is stupid
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Your focus on education and your alma mater is great. I was a third generation alum from Ohio State. So my kids will go to a state school, and if they want to go to a private school they can pay for it themselves.Jack FFR1846 wrote: ↑Fri Jan 22, 2021 1:18 pm I'd budget more for college.
I paid for my college at a private Northeast engineering college myself from savings, co-op and part time jobs. I already had an associates degree and 3 years of working, so I wasn't the typical snot nose teenager going in. Even then, I did run out of money, thus the co-op. But that was in the mid 80's when my co-op salary was $10 an hour and college cost $8k a year.
Fast forward, my son just graduated from that same college. Excellent engineering school. I realized that no kid can pay their way through with a $75k a year price tag. Perhaps you don't value education as much as I do, but my feeling is that if the kid can do the work at the more rigorous school and does it, I'm going to make it happen from the funding side. I set aside $1,000,000 to get my 2 kids through college. Imagine how happy I am that I didn't have to spend it all.
On another topic.....what is it that you plan to do when you stop working? I mean....if you're a competitive cyclist, been there and know the time constraints of training. Or something else. I have to think there's a driving reason to want to free up time that's now filled with working.
My plan would be to read, golf, do more things with the church, coach sports, write a few blogs, garden, all sorts of things.
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
So I would consider you actually with greater than 100% stocks if you consider mortgage as a negative bond. Given 3 income streams that is reasonable, 2 for you and one for wife. Only you know the stability of your solo practice income as to whether 100% or more stocks make sense when you cut out government job. But there is probably at least some extra risk.
In terms of your coast fire modeling, just no on the 7%. I still think your numbers can work with you solo practice only. But you want conservative estimates not aggressive ones. It is easier to have a stock market that overperformed than underperformed fir decades for you to adjust your workload.
In terms of your coast fire modeling, just no on the 7%. I still think your numbers can work with you solo practice only. But you want conservative estimates not aggressive ones. It is easier to have a stock market that overperformed than underperformed fir decades for you to adjust your workload.
G.E. Box "All models are wrong, but some are useful."
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
This.MotoTrojan wrote: ↑Fri Jan 22, 2021 12:34 pm Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I have some little kids. I find just putting 40hrs only in is an effort. Constantly having to defend against creeping workloads.
I'm able to do it.
I think people start missing out on life when they travel for work frequently, work 50-70hr/wk, long commutes, etc
If you can avoid that, you're ahead of most.
I do wish I could work like 35 or even 30hrs a week, but not really part of engineering culture at megacorp to do part time. My sister works part time as a lawyer for the state, but then is an author with the other part-time.
If you're looking for affirmation of your plan, go to mr money mustache forum. Most on here wouldn't rubber stamp early retirement without 4million in investable assets
I'm able to do it.
I think people start missing out on life when they travel for work frequently, work 50-70hr/wk, long commutes, etc
If you can avoid that, you're ahead of most.
I do wish I could work like 35 or even 30hrs a week, but not really part of engineering culture at megacorp to do part time. My sister works part time as a lawyer for the state, but then is an author with the other part-time.
If you're looking for affirmation of your plan, go to mr money mustache forum. Most on here wouldn't rubber stamp early retirement without 4million in investable assets
Never look back unless you are planning to go that way
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Since three people have posted this, can you guys expand on why 4%? I understand being conservative about returns, but 4% reads to me like “the market can’t keep this up.”Dottie57 wrote: ↑Fri Jan 22, 2021 1:47 pmThis.MotoTrojan wrote: ↑Fri Jan 22, 2021 12:34 pm Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Just curious. Thanks.
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I actually left MMM for here. That place has turned incredibly toxic. People are super political and mean there.Cycle wrote: ↑Fri Jan 22, 2021 1:52 pm I have some little kids. I find just putting 40hrs only in is an effort. Constantly having to defend against creeping workloads.
I'm able to do it.
I think people start missing out on life when they travel for work frequently, work 50-70hr/wk, long commutes, etc
If you can avoid that, you're ahead of most.
I do wish I could work like 35 or even 30hrs a week, but not really part of engineering culture at megacorp to do part time. My sister works part time as a lawyer for the state, but then is an author with the other part-time.
If you're looking for affirmation of your plan, go to mr money mustache forum. Most on here wouldn't rubber stamp early retirement without 4million in investable assets
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Because many Analysts are predicting the lower returns for the next decade. Plus, I think it is much better to use conservative rates when planning for such a long period of semi retirement/retirement.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 2:02 pmSince three people have posted this, can you guys expand on why 4%? I understand being conservative about returns, but 4% reads to me like “the market can’t keep this up.”Dottie57 wrote: ↑Fri Jan 22, 2021 1:47 pmThis.MotoTrojan wrote: ↑Fri Jan 22, 2021 12:34 pm Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Just curious. Thanks.
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I lean towards "hope for the best, plan for the worst" or if not worst then at least not rosy. If returns are high, great, I can deal with more money, but if returns are low at least my plans are not dashed.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 2:02 pmSince three people have posted this, can you guys expand on why 4%? I understand being conservative about returns, but 4% reads to me like “the market can’t keep this up.”Dottie57 wrote: ↑Fri Jan 22, 2021 1:47 pmThis.MotoTrojan wrote: ↑Fri Jan 22, 2021 12:34 pm Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Just curious. Thanks.
I would personally want more in the pot before moving to phase 2, especially if phase 2 greatly reduces your savings potential.
"Yeah, well, you know, that's just like, uh, your opinion, man." - J. Lebowski
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Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I did a refi with LenderFi last year. They are legit. The rate they actually gave me was about 0.25% less than what was listed on their website at the time. It is definitely worth it to contact them. I did end up going with the zero closing costs option.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 12:56 pmWow. LenderFI's rates are great.seeingeyestrike wrote: ↑Fri Jan 22, 2021 10:54 amCheck out LenderFi. I read about them here in the Refinance Mega Thread and used them for my own refinance last summer. Using a random zip code in Ohio and making some assumptions about your home value and credit score resulted in a 30 year quote for a rate of 3% that would cover all closing costs. Note that does not include taxes and insurance, but you'd get refunded that back from your current escrow account, so that still should make you even.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 10:28 amClosing costs are like $3,800 and I hate the idea of it. I know it’s irrational. Maybe I should just get over the hump.retired@50 wrote: ↑Fri Jan 22, 2021 10:11 am3.0875% is still an improvement over what you currently have. This is sort of like cash, sitting at your feet, but you're not willing to pick it up...???CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 9:47 am
I’ve looked into refinancing. I’m in Ohio. Best rate I can get without buying points is 3.0875. I just can’t get myself to buy points. I like cash too much. Maybe I should reconsider.
Regards,
2.625% with closing costs of $3,000
2.75% with closing costs of $1,100
2.875% with zero closing costs
Call me crazy but I actually lean towards the 2.875%? Great rate with nothing out of pocket. Interest amount is largely infinitesimal over the long term, especially since I do not intend to keep the mortgage for 30 years.
Thoughts?
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Well, you're planning around today's dollars, so if you're expecting 7% real return, then you are expecting 9-10% nominal return. Not to say that is impossible. After all that's roughly the historical average of the US stock market. But even if we believe that average will continue (edit to add: most pepole here tend to be on the pessimistic side though), that still means you sitll have a 50/50 chance of underperforming that. It's just something to consider. The higher you make your expected return, the higher chance that your plan will fail. A better way to model might be to use 1%, 2%, 3%, 4%, 5%, 6%, 7% real and see how each scenario changes your plan, just so you can see a spectrum of possiblities.CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 2:02 pmSince three people have posted this, can you guys expand on why 4%? I understand being conservative about returns, but 4% reads to me like “the market can’t keep this up.”Dottie57 wrote: ↑Fri Jan 22, 2021 1:47 pmThis.MotoTrojan wrote: ↑Fri Jan 22, 2021 12:34 pm Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Just curious. Thanks.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Generally i think this will work... and it's great that you're already doing solo legal work as that removes a big unknown from the equation (e.g. "i hope to get some consulting work but 've never actually done it"). In addition, you can always choose to increase/decrease your legal work once you're in phase 2. Once that's your only gig you'll probably find you're getting more requests for work than you want to do!
If you haven't already, check out Mr. Money Mustache's website. Lots of good ideas for your plan too.
If you haven't already, check out Mr. Money Mustache's website. Lots of good ideas for your plan too.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
ICYMI:
CoastLawyer2030 wrote: ↑Fri Jan 22, 2021 2:03 pm I actually left MMM for here. That place has turned incredibly toxic. People are super political and mean there.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
So I have updated my original post.
Basically one year later now. The only blemish from last year is that we spent $81,000, which far exceeds my projections. I spent $7,000 updating landscaping and did a couple other projects. Also, per Mint, we spent $8,000 (!!!) at restaurants. Crazy. Need to reign that in this year.
Onto the good stuff, retirement assets have increased significantly (and beyond my projections) from $186,000 to $312,000. I came close to maxing out everything as planned.
Deferred Comp, which is a 457 Plan that is available without penalty as soon as I leave government employment (subject to income tax), is already almost $50,000. I am maxing it out at $1,708.33 per pay and it will take 12 pays to max out. Hopefully it is at $75,000 by the summer.
My absolute minimum in staying at the City for another 1.5 years, and do this same accelerated Deferred Comp contribution next year. Hopefully the market does not crash and then that means I have $100,000 in immediately accessible cash.
At that point it will be a hard call as to what to do. My employee contributions on my OPERS would be 100% vested, and the employer contributions would be 60% vested after three years; making the entire thing about 84% vested (by my calculations). That pot is still rather small so we are talking thousands of dollars, so nothing really to sway my decision at that point.
The City job is a mixed bag. Most days are easy but (a) it's extremely turbulent due to politics and (b) I get very frustrated by the lack of client control. On that latter note, in private practice, I just fire the client if we don't see eye to eye. In a law department you just have to kiss the mayor's ass even when they are being an idiot and ignoring your advice. It can be very frustrating. But it is 80% extremely easy.
The bottom line is that I am basically just doing the Bogleheads thing -- saving as much as I humanly can in low cost index funds; worrying more about net worth than month to month; etc.
The only real issue that constantly gives me pause is when there is "enough" to move to Phase 2 of my plan. The Deferred Comp account is an interesting wrinkle in this regard. My only real thought is not how long I want to work here, but how many years I want to contribute to this awesome account. To me, it could provide a lifelong hedge against emergencies/events of life.
Basically one year later now. The only blemish from last year is that we spent $81,000, which far exceeds my projections. I spent $7,000 updating landscaping and did a couple other projects. Also, per Mint, we spent $8,000 (!!!) at restaurants. Crazy. Need to reign that in this year.
Onto the good stuff, retirement assets have increased significantly (and beyond my projections) from $186,000 to $312,000. I came close to maxing out everything as planned.
Deferred Comp, which is a 457 Plan that is available without penalty as soon as I leave government employment (subject to income tax), is already almost $50,000. I am maxing it out at $1,708.33 per pay and it will take 12 pays to max out. Hopefully it is at $75,000 by the summer.
My absolute minimum in staying at the City for another 1.5 years, and do this same accelerated Deferred Comp contribution next year. Hopefully the market does not crash and then that means I have $100,000 in immediately accessible cash.
At that point it will be a hard call as to what to do. My employee contributions on my OPERS would be 100% vested, and the employer contributions would be 60% vested after three years; making the entire thing about 84% vested (by my calculations). That pot is still rather small so we are talking thousands of dollars, so nothing really to sway my decision at that point.
The City job is a mixed bag. Most days are easy but (a) it's extremely turbulent due to politics and (b) I get very frustrated by the lack of client control. On that latter note, in private practice, I just fire the client if we don't see eye to eye. In a law department you just have to kiss the mayor's ass even when they are being an idiot and ignoring your advice. It can be very frustrating. But it is 80% extremely easy.
The bottom line is that I am basically just doing the Bogleheads thing -- saving as much as I humanly can in low cost index funds; worrying more about net worth than month to month; etc.
The only real issue that constantly gives me pause is when there is "enough" to move to Phase 2 of my plan. The Deferred Comp account is an interesting wrinkle in this regard. My only real thought is not how long I want to work here, but how many years I want to contribute to this awesome account. To me, it could provide a lifelong hedge against emergencies/events of life.
Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Why not just dump the City job and bill more with solo practice?CoastLawyer2030 wrote: ↑Tue Jan 18, 2022 12:55 pm So I have updated my original post.
Basically one year later now. The only blemish from last year is that we spent $81,000, which far exceeds my projections. I spent $7,000 updating landscaping and did a couple other projects. Also, per Mint, we spent $8,000 (!!!) at restaurants. Crazy. Need to reign that in this year.
Onto the good stuff, retirement assets have increased significantly (and beyond my projections) from $186,000 to $312,000. I came close to maxing out everything as planned.
Deferred Comp, which is a 457 Plan that is available without penalty as soon as I leave government employment (subject to income tax), is already almost $50,000. I am maxing it out at $1,708.33 per pay and it will take 12 pays to max out. Hopefully it is at $75,000 by the summer.
My absolute minimum in staying at the City for another 1.5 years, and do this same accelerated Deferred Comp contribution next year. Hopefully the market does not crash and then that means I have $100,000 in immediately accessible cash.
At that point it will be a hard call as to what to do. My employee contributions on my OPERS would be 100% vested, and the employer contributions would be 60% vested after three years; making the entire thing about 84% vested (by my calculations). That pot is still rather small so we are talking thousands of dollars, so nothing really to sway my decision at that point.
The City job is a mixed bag. Most days are easy but (a) it's extremely turbulent due to politics and (b) I get very frustrated by the lack of client control. On that latter note, in private practice, I just fire the client if we don't see eye to eye. In a law department you just have to kiss the mayor's ass even when they are being an idiot and ignoring your advice. It can be very frustrating. But it is 80% extremely easy.
The bottom line is that I am basically just doing the Bogleheads thing -- saving as much as I humanly can in low cost index funds; worrying more about net worth than month to month; etc.
The only real issue that constantly gives me pause is when there is "enough" to move to Phase 2 of my plan. The Deferred Comp account is an interesting wrinkle in this regard. My only real thought is not how long I want to work here, but how many years I want to contribute to this awesome account. To me, it could provide a lifelong hedge against emergencies/events of life.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I mean, the whole point of this thread/my update is when to transition to Phase Two, which means dumping the government job and doing my solo practice exclusively. I could ramp the solo practice back up but that is a huge grind and hustle. My thing right now is to stay at the government job that I don't need to hustle like that at my private practice, which makes it infinitely more enjoyable.
The reason I am holding onto the government job for just a bit more (which I view as a small sacrifice) is (a) excellent healthcare, (b) I want to stay here 3-4 years as a nice resume line if a better paying government job ever opens up, and (c) most importantly, the 457 Deferred Comp account is an excellent hedge that you cannot get without government employment. Just staying here 1.5 more years will probably leave me with an account of $100,000 that is immediately accessible without penalty. I just don't think that can be beat.
Perhaps this is stupid, but that's the point of this thread; so if you disagree with my logic, I'm all ears.
Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
It’s not unheard of for private employers to offer in-house counsel deferred comp. plans. Now they’re not backed by the government per se, but plenty of companies are solid enough to utilize. I have a large sum built up in my employer’s deferred comp. plan. But your tax level on the margin at your household income level is probably not all that much, especially in a state like OH. I’m not sure I’d focus much on. How good are the investment options? Are they high fees? If so, that could swamp out the benefits of paying the taxes later.CoastLawyer2030 wrote: ↑Tue Jan 18, 2022 1:08 pmI mean, the whole point of this thread/my update is when to transition to Phase Two, which means dumping the government job and doing my solo practice exclusively. I could ramp the solo practice back up but that is a huge grind and hustle. My thing right now is to stay at the government job that I don't need to hustle like that at my private practice, which makes it infinitely more enjoyable.
The reason I am holding onto the government job for just a bit more (which I view as a small sacrifice) is (a) excellent healthcare, (b) I want to stay here 3-4 years as a nice resume line if a better paying government job ever opens up, and (c) most importantly, the 457 Deferred Comp account is an excellent hedge that you cannot get without government employment. Just staying here 1.5 more years will probably leave me with an account of $100,000 that is immediately accessible without penalty. I just don't think that can be beat.
Perhaps this is stupid, but that's the point of this thread; so if you disagree with my logic, I'm all ears.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I think that is an extremely rare benefit offered by private employers in my relatively rural area.Firemenot wrote: ↑Tue Jan 18, 2022 1:13 pmIt’s not unheard of for private employers to offer in-house counsel deferred comp. plans. Now they’re not backed by the government per se, but plenty of companies are solid enough to utilize. I have a large sum built up in my employer’s deferred comp. plan. But your tax level on the margin at your household income level is probably not all that much, especially in a state like OH. I’m not sure I’d focus much on. How good are the investment options? Are they high fees? If so, that could swamp out the benefits of paying the taxes later.
I don't want the deferred comp train to drive the entire bus, but from my perspective it is a unique benefit that can lay a really secure "backup" fund for literal decades.
Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I saw this detailed analysis today by a Boglehead member discussing the pros and cons of 457 plans. https://www.whitecoatinvestor.com/457-retirement-plan/CoastLawyer2030 wrote: ↑Tue Jan 18, 2022 5:00 pmI think that is an extremely rare benefit offered by private employers in my relatively rural area.Firemenot wrote: ↑Tue Jan 18, 2022 1:13 pmIt’s not unheard of for private employers to offer in-house counsel deferred comp. plans. Now they’re not backed by the government per se, but plenty of companies are solid enough to utilize. I have a large sum built up in my employer’s deferred comp. plan. But your tax level on the margin at your household income level is probably not all that much, especially in a state like OH. I’m not sure I’d focus much on. How good are the investment options? Are they high fees? If so, that could swamp out the benefits of paying the taxes later.
I don't want the deferred comp train to drive the entire bus, but from my perspective it is a unique benefit that can lay a really secure "backup" fund for literal decades.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Staying the 1.5 years seems like a no brainer.. then if your numbers aren't where you wanna be, dial up the private practice a bit. I bet you'd still be happier than dealing with city politics.
Frankly I think the main thing you have going for you is your career choice and ability to flex that up and down if required. It is hard for your plan to "fail" in the traditional sense simply because you can just "go make more money."
If I had that kind of job 10 years ago (when I was late 30s) - I'd have done it in a heart beat too, even without a "bogleheads approved" nest egg.
Frankly I think the main thing you have going for you is your career choice and ability to flex that up and down if required. It is hard for your plan to "fail" in the traditional sense simply because you can just "go make more money."
If I had that kind of job 10 years ago (when I was late 30s) - I'd have done it in a heart beat too, even without a "bogleheads approved" nest egg.
Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
As long as the mayor and the city council are only being an annoyance and not an active hindrance or causing any ethical dilemmas, I see no reason why not to coast with the city job as long as you can stand it. Then dial up or down the amount of side work based on the amount of family time you would like. With the reputation you are building at this city, you could also dial down to a smaller city, special district, or other jurisdiction that needs legal help but not a full timer's worth, or sign on of counsel with one of the municipal law firms to only do specialty jobs and not work full time in practice.
I don't think you'll get a 401(a) at many private sector firms. Having 457 and 401(k) is a powerful way to save a lot of money tax deferred. As your kids get older the ability to shield yourself from taxes and keep qualifying for credits is useful.
I don't think you'll get a 401(a) at many private sector firms. Having 457 and 401(k) is a powerful way to save a lot of money tax deferred. As your kids get older the ability to shield yourself from taxes and keep qualifying for credits is useful.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
The bolded is the constant fight I have in my head, and it's why I don't want to stay at the City forever.fortunefavored wrote: ↑Tue Jan 18, 2022 7:06 pmFrankly I think the main thing you have going for you is your career choice and ability to flex that up and down if required. It is hard for your plan to "fail" in the traditional sense simply because you can just "go make more money."
If I had that kind of job 10 years ago (when I was late 30s) - I'd have done it in a heart beat too, even without a "bogleheads approved" nest egg.
I have received criticism on here before, but the biggest thing I dislike about the City is the 8-4 mindset, and the need for approval to get time away. The rigid schedule is probably normal to some, but I was a solo practitioner for three years before I came here, and was previously able to make my entire schedule.
Sometimes I wonder whether I should flip roles -- go down to part time at the City, still be eligible for deferred comp, and then ramp up the private practice.
Last edited by CoastLawyer2030 on Wed Jan 19, 2022 7:29 am, edited 1 time in total.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
This is also my thinking. I could become a law director at a small nearby town, which would be an extremely part time gig for reasonable pay (probably $30-40k) that would be a nice base to work from.calwatch wrote: ↑Tue Jan 18, 2022 8:25 pm As long as the mayor and the city council are only being an annoyance and not an active hindrance or causing any ethical dilemmas, I see no reason why not to coast with the city job as long as you can stand it. Then dial up or down the amount of side work based on the amount of family time you would like. With the reputation you are building at this city, you could also dial down to a smaller city, special district, or other jurisdiction that needs legal help but not a full timer's worth, or sign on of counsel with one of the municipal law firms to only do specialty jobs and not work full time in practice.
I don't think you'll get a 401(a) at many private sector firms. Having 457 and 401(k) is a powerful way to save a lot of money tax deferred. As your kids get older the ability to shield yourself from taxes and keep qualifying for credits is useful.
Alternatively, as I just posted, if I stay here awhile, I might have leverage to negotiate going down to part time. I could then still have access to deferred comp but only be here 20 hours per week. Pay would not be great but that's a nice base to work from.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I think people have given you some good feedback in regards to the potential numbers. You are likely planning for a best case scenerio with the 7% - and that may happen, may not. When you get to the point of phase 2 - you can make your own decision. You still have a negative net worth - so you have some time still.
Overall I agree with the idea- I hope to do the same - but the semi-retire (actually more like part-time work at my current job) would be more around age 45, with full retirement around 60. I have the type of job where I can slowly cut back on hours (1 FTE to 0.8 FTE to 0.5 FTE, etc), then I can always increase as people leave.
Semi-retire allows you to go back if things change. Paying for college is a personal choice. I paid my entire way (120k for 8 years of private school) - my wife had hers paid for. I think it is good to set your kids up for success and providing for them. We will pay for our kids school - at least for the flagship public university, and if we have more and can afford private, we are all for it (between the two of us we have 4 degrees from private schools-so we can't be hypocrites)
I wish you luck, you just have to keep re-doing the numbers as life changes - but set yourself up to be able to go back to work if needed. Plus remember, as you work less, you will spend more.
Overall I agree with the idea- I hope to do the same - but the semi-retire (actually more like part-time work at my current job) would be more around age 45, with full retirement around 60. I have the type of job where I can slowly cut back on hours (1 FTE to 0.8 FTE to 0.5 FTE, etc), then I can always increase as people leave.
Semi-retire allows you to go back if things change. Paying for college is a personal choice. I paid my entire way (120k for 8 years of private school) - my wife had hers paid for. I think it is good to set your kids up for success and providing for them. We will pay for our kids school - at least for the flagship public university, and if we have more and can afford private, we are all for it (between the two of us we have 4 degrees from private schools-so we can't be hypocrites)
I wish you luck, you just have to keep re-doing the numbers as life changes - but set yourself up to be able to go back to work if needed. Plus remember, as you work less, you will spend more.
Re: Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
Vanguard's perspective: https://personal.vanguard.com/pdf/ISGVE ... online.pdfCoastLawyer2030 wrote: ↑Fri Jan 22, 2021 2:02 pmSince three people have posted this, can you guys expand on why 4%? I understand being conservative about returns, but 4% reads to me like “the market can’t keep this up.”Dottie57 wrote: ↑Fri Jan 22, 2021 1:47 pmThis.MotoTrojan wrote: ↑Fri Jan 22, 2021 12:34 pm Assume 4% real return on equities and 0% on bonds and see how your plan looks. 7% is not a sound value to plan for.
Just curious. Thanks.
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Re: Update One Year Later -- Criticize My Grind (26-37) --> Semi-Retire (37-50) --> Retire (50+)Plan
I screwed up my OP but not including my home value. My net worth is currently approximately $410,000.dred pirate wrote: ↑Wed Jan 19, 2022 8:03 am I think people have given you some good feedback in regards to the potential numbers. You are likely planning for a best case scenerio with the 7% - and that may happen, may not. When you get to the point of phase 2 - you can make your own decision. You still have a negative net worth - so you have some time still.
Overall I agree with the idea- I hope to do the same - but the semi-retire (actually more like part-time work at my current job) would be more around age 45, with full retirement around 60. I have the type of job where I can slowly cut back on hours (1 FTE to 0.8 FTE to 0.5 FTE, etc), then I can always increase as people leave.
Semi-retire allows you to go back if things change. Paying for college is a personal choice. I paid my entire way (120k for 8 years of private school) - my wife had hers paid for. I think it is good to set your kids up for success and providing for them. We will pay for our kids school - at least for the flagship public university, and if we have more and can afford private, we are all for it (between the two of us we have 4 degrees from private schools-so we can't be hypocrites)
I wish you luck, you just have to keep re-doing the numbers as life changes - but set yourself up to be able to go back to work if needed. Plus remember, as you work less, you will spend more.
The saving for college debate is something we have had a lot conversation about. My wife’s family basically provided $50-60k per kid and let them take care of the rest. I think that was a nice platform to build on while also providing for some personal responsibility. I think we are going to try and achieve that within the 529 space, but we are prioritizing ourselves for now.