Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

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oleblue
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Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by oleblue »

So the day has finally come, I applied for military retirement after 20 years. Final date of Active Duty is 1 July 2022. With the amount of leave I have saved and the Skillbridge program, I am basically done/transitioning to normal life on 1 Jan 2022.

I was shooting for another year but the Air Force had different plans and wanted to move me out of state. I said no since I just bought my house in 2019 where I will be staying and chose to retire instead.

Even though I have planned and saved for this for years, I will tell you that I am excited and nervous at the same time. I came in right out of High School and it's all I've ever known. Looking for some encouragement from others that took the leap with a long career at a young age doesn't have to be military.

I say semi-retiring, I'm still pretty young at 38. Here is what I have planned after the military.

Will be 39 years old next year. The fiancé is 37. She has a 7 year old daughter.

When we get married the end of this year, they'll move in with me in my current house and probably end up renting her home out or possibly selling.
My house will be paid for in Jan 22, all vehicles are reliable and paid for and we would have no other debt together besides her house which, we could rent and cover the mortgage with a surplus or sell. LCOL area in AR. Neither of us are big on extravagant things. I have a nice barndominium on 8 acres and I typically do all my own work on most everything but we do like to travel and be outdoors. I have a boat, side by side, play truck and all the toys. I know some of you frown on that but I've saved and paid for all in cash and we sure do enjoy them.

Net worth is little over 1M with around 900K of that investable assets.

Our expenses together are $42K-45K a year. This is including all bills, insurance, healthcare, childcare, food, $1K month fun money, etc.

The little's college should she decide to go would be covered by the GI Bill.

Our income without pulling anything from my investments will be:
-My military retirement (cola adjusted) $32K
-Disability this is a wildcard and tax free income. I would estimate $10K year but could be $0 or could be as high as $28K
-Rent house (also paid for) $8400
-Her house (if we rent it) estimate $4000 yr excess after mortgage is paid. If we sold, we would invest the $20K estimated surplus.
-My online business $15-20K year conservative
-Other side hustles for both of us (house cleaning, buying/selling/flipping) $10K

The fiancé works full time now, good job with great benefits $42K a year. Within the next couple years after I get out of the military and we see that our plan will work, she would like to quit to spend more time with her daughter and focus more on self employment/side hustles.

What am I missing here? I have ran the numbers in FireCalc and on paper and everything seems a go whether I get extra disability pay or whether she works or not. We would like to travel more after I retire but would use space-A military travel as much as possible. Would like a new camper $35K or so but I can buy/sell/trade up for that eventually.

Any thoughts on the plan or flaws that you can see or things that I haven't thought of?
CoastLawyer2030
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by CoastLawyer2030 »

You're good to go man. Live it up. Thanks for your service.
ThankYouJack
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by ThankYouJack »

Thank you for your service and great job building a portfolio of nearly $1m!

Looks like you're in excellent shape to me. Your pension and online business cover your average expenses and the other income could be used to splurge or on unforeseen expenses when those do come up.

My biggest concern may be the possibility of a divorce. I don't have much experience or knowledge with this but I'm sure it can ruin a lot of early retirement plans.

I would also try not to touch the investment money and just let it grow.
poker27
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by poker27 »

with expenses at $45k, and military retirement at $32k, I dont know why your even considering a side hustle, unless you expect your expenses to greatly increase.
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mhc
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by mhc »

Thank you for your service!

Sounds like you know how to manage money. Just keep life style creep under control and stay married, and you should be good to go.

How are your $900k of investable assets allocated? TSP?
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gwe67
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by gwe67 »

You have many decades to go.

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FootballFan5548
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by FootballFan5548 »

Is there any chance you have another child (or more?). That would raise expenses.

It sounds like you've done a great job saving and have a very solid financial footing. The pension alone covers a ton of what you'll want to spend.

There may be some big vacations on the horizon (honeymoon?!) and others, so there's no need to scrape by forever.

My advice would be keep building out the side hustles, or get another flexible job that might interest you just to keep you busy and make some extra cash for fun. I don't think i'd want to be fully retired by 40, but that's just me... there's tons of options to get low hour employment just to keep you busy and hopefully it's doing something you enjoy.

Congrats on your success and thanks for your service!
mudphudder
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by mudphudder »

Assuming you don't pick up any super expensive habits, I think you get to do whatever you want for the rest of your life. Congrats man.
MoonOrb
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by MoonOrb »

I don't think you're missing anything. You have three major expenses basically covered (health care, housing, kid's education) and generally low expenditures as a result. You have the willingness to work at jobs/side hustles that can supplement or grow income should you ever need it--at least modestly, and depending on how far you wanted to take it, who knows? You have a lot invested already and it sounds like you probably don't need to touch it for a few years if you don't want to.

Congratulations on retiring after so many years of service!
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by marti038 »

Thank you for your service to our country! Very thankful for men and women like you.

I think you're in fine shape, but you have a lot of life left to live. If you're able to keep expenses down and preserve those income sources, you'll be fine. Personally, I'd work longer (probably until the daughter was out of the nest), but I'll readily admit that I'm pretty conservative financially.

Best of luck to you.
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Reamus294
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Reamus294 »

Congrats! Like you said you are young. You have plenty of side hustles so you don’t need to worry about your money running out right now. If you don’t touch that retirement money for another 10+ years with a reasonable asset allocation, you’ll be setting you future self up well too. Those expenses are pretty low so make sure it includes everything, but you did say you are in a LCOL area. Keep paying cash for your toys.

I’d be nervous about not having an 8-5 that early on too, but think of it as an opening for new opportunities. Doesn’t sound like you like to sit idle, so I don’t think that will be an issue. Have fun!
halfnine
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by halfnine »

The thing with early retirement is having something to retire to. With a young child in school this limits what you can do and where you can go for large chunks of the year. However, with this
I have a boat, side by side, play truck and all the toys.
and this
-Other side hustles for both of us (house cleaning, buying/selling/flipping) $10K
I'd say you're good to go.
indexingtimes
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by indexingtimes »

The math seems to add up, but curious -- what do you intend to do all day long, every day, for the next 40-50 years? You gave some indications in your original post, but I'm still not clear what the plan is there.
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Golf maniac »

Financially you should be fine if your income and expense numbers are correct.

A couple of points for you from someone who has been retired 6 years. First, you need to have some type of schedule and something in your life that drives you to get up each day. It used to be work, now what? Second, you will have time on your hands and may want to travel especially when your fiancé retires. Travel can be very expensive and it was something we didn’t budget enough for. Six years in we have really enjoyed our time and I do not regret it for a minute retiring early. Best of luck on your journey and from one veteran to another thank you for your service.
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oleblue
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by oleblue »

Thank you so much for all the replies! It really makes me feel good to hear from others. There are really very very few folks in the military in my career field that I am able to talk to about this stuff without getting the "must be nice!" Most have no idea the work that was put in behind the scenes and have no drive to do anything other than just their job. I am thankful for this forum.

mhc wrote: Wed Aug 04, 2021 9:22 am Thank you for your service!

Sounds like you know how to manage money. Just keep life style creep under control and stay married, and you should be good to go.

How are your $900k of investable assets allocated? TSP?
I have about 60% in TSP Target date 2050 fund and the other 40% split between Roth and standard taxable account in Vanguard Target 2040. Tossing around the idea of rolling the TSP into a traditional IRA at VG and doing Roth Conversions once I get out of active duty and my fiancé stops working and our tax bracket drops.

indexingtimes wrote: Wed Aug 04, 2021 10:12 am The math seems to add up, but curious -- what do you intend to do all day long, every day, for the next 40-50 years? You gave some indications in your original post, but I'm still not clear what the plan is there.
Well on the weekends, I plan to be at the lake or camping or hiking or traveling or spending time with friends and family or riding backroads in my old truck. Just anything to have fun. On a normal weekday I will get up early like I do now, (early for me is 4-5am) work out in the home gym I've built, shower, eat a good breakfast, see if anything needs done with the online business and take care of that, surf the local classifieds and see if there are any deals out there. If so, go pick them up. I usually have a few projects to flip laying around that I'll put some time into and turn a few wrenches. I'll eat lunch with my wife. I'll have a garden where we grow our on food. I'm usually making some type of wine. I'll have some chickens to get eggs from and with 8 acres of land and grass to cut there's always something to do around the house. Thursday nights with the buddys every week. Sit on the porch swing with a glass of my homeade wine to end the day and watch the deer and turkeys go through the back field. Of course I'll be flexible to do whatever I want. If a neighbor needs a tree cut, I'm your man. I love going to garage sales and estate sales to find more deals to sell. I truly believe I'll be so busy I'll wonder how I had time to work. I'm not one to sit still.
Golf maniac wrote: Wed Aug 04, 2021 10:22 am Financially you should be fine if your income and expense numbers are correct.

A couple of points for you from someone who has been retired 6 years. First, you need to have some type of schedule and something in your life that drives you to get up each day. It used to be work, now what? Second, you will have time on your hands and may want to travel especially when your fiancé retires. Travel can be very expensive and it was something we didn’t budget enough for. Six years in we have really enjoyed our time and I do not regret it for a minute retiring early. Best of luck on your journey and from one veteran to another thank you for your service.
Thank you, I will definitely have to tweak my schedule. I have had a lot going on for a lot of years with full time military, full time building a side business and maintaining relationships, friends, family and fun. Lots of 2am mornings and late nights. It will take some getting used to that I don't have to rush rush rush everyday. To be able to slow down (no hurry, no pause) is one of my goals for after retirement from the military. I really hope to be able to use space a travel to do alot of overseas travel. I flew to Germany for a Europe trip and it cost me $215 to get to BWI and $34 to get to Germany.
reln
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by reln »

oleblue wrote: Wed Aug 04, 2021 7:00 am So the day has finally come, I applied for military retirement after 20 years. Final date of Active Duty is 1 July 2022. With the amount of leave I have saved and the Skillbridge program, I am basically done/transitioning to normal life on 1 Jan 2022.

I was shooting for another year but the Air Force had different plans and wanted to move me out of state. I said no since I just bought my house in 2019 where I will be staying and chose to retire instead.

Even though I have planned and saved for this for years, I will tell you that I am excited and nervous at the same time. I came in right out of High School and it's all I've ever known. Looking for some encouragement from others that took the leap with a long career at a young age doesn't have to be military.

I say semi-retiring, I'm still pretty young at 38. Here is what I have planned after the military.

Will be 39 years old next year. The fiancé is 37. She has a 7 year old daughter.

When we get married the end of this year, they'll move in with me in my current house and probably end up renting her home out or possibly selling.
My house will be paid for in Jan 22, all vehicles are reliable and paid for and we would have no other debt together besides her house which, we could rent and cover the mortgage with a surplus or sell. LCOL area in AR. Neither of us are big on extravagant things. I have a nice barndominium on 8 acres and I typically do all my own work on most everything but we do like to travel and be outdoors. I have a boat, side by side, play truck and all the toys. I know some of you frown on that but I've saved and paid for all in cash and we sure do enjoy them.

Net worth is little over 1M with around 900K of that investable assets.

Our expenses together are $42K-45K a year. This is including all bills, insurance, healthcare, childcare, food, $1K month fun money, etc.

The little's college should she decide to go would be covered by the GI Bill.

Our income without pulling anything from my investments will be:
-My military retirement (cola adjusted) $32K
-Disability this is a wildcard and tax free income. I would estimate $10K year but could be $0 or could be as high as $28K
-Rent house (also paid for) $8400
-Her house (if we rent it) estimate $4000 yr excess after mortgage is paid. If we sold, we would invest the $20K estimated surplus.
-My online business $15-20K year conservative
-Other side hustles for both of us (house cleaning, buying/selling/flipping) $10K

The fiancé works full time now, good job with great benefits $42K a year. Within the next couple years after I get out of the military and we see that our plan will work, she would like to quit to spend more time with her daughter and focus more on self employment/side hustles.

What am I missing here? I have ran the numbers in FireCalc and on paper and everything seems a go whether I get extra disability pay or whether she works or not. We would like to travel more after I retire but would use space-A military travel as much as possible. Would like a new camper $35K or so but I can buy/sell/trade up for that eventually.

Any thoughts on the plan or flaws that you can see or things that I haven't thought of?
Thank you for your long service.
island
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by island »

Thank you for your service and congrats on your upcoming retirement, Although no matter how many hobbies, etc, I can't imagine wanting to be retired that young, but everyone is different and nothing set in stone.
I didn't know the GI Bill covered college for the children of veterans. Awesome! Is that only for those who stay in military long enough to earn retirement or available to all vets? Can you fill in some of the details on that? Thanks.
GR8FUL-D
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by GR8FUL-D »

Cheers on your upcoming wedding--here's hoping you have a long & happy life of wedded bliss.

As another poster mentioned, if there's any plan or possibility of future kids, you didn't mention or have plan for that. If that's not a desired outcome, maybe consider getting a vasectomy? Not joking.

It appears that financially you've got all your ducks in a row...as long as you never get divorced. Of course no one wants or expects to get divorced, but realistically it does happen...a lot. So plan for it via a prenup.

If a prenup is not something you want or are willing to do, that's your choice, but there are likely more than a few people on this forum who would strongly advise against someone of your age and net worth getting married without a prenup. Frankly I'm surprised no one has recommended this.
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by lthenderson »

As someone who stopped working at the same age you are planning to, the social aspect of it was the hardest to adapt too. All my friends were through my career and after I left it, I thought it would be as simple as meeting up with them like always on guys night out Thursdays or the weekends. In reality, they work all week and their spouses have other ideas of things that need to be done on the weekends. Then there are kids and sporting events, etc and it becomes very hard to schedule a few hours together. Eventually what little get togethers I had petered out to the point that I get together with my old career friends once a year at best.

I have had a lot of opportunity to make new friends to do things with during the times when everyone else is working but they are nearly two decades my senior and being so young, it took awhile to build confidence and to gain their inner circles. I don't regret stopping work at a young age despite the social aspect that I wasn't planning on. But it did take a lot of adjustment and may not be for everyone.
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by KlangFool »

OP,

Medical insurance.

A) I assumed that you have it via military retiree health benefits.

B) Does it covers your future wife/fiances?

KlangFool
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almostretired1965
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by almostretired1965 »

Congrats and I too think you are good to go. Not sure how feasible it is given where you are and your military specialty, but almost all of my friends who are former military seem to end up working for a contractor and back in defense/intel. (Granted, this is in metro DC where the opportunities are vast.) For them at least, this was more lucrative and a lot less work than side hustles, but your mileage no doubt varies.
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quantAndHold
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by quantAndHold »

Congratulations, and thank you for your service.

Financially, you’re fine. As a life change, though…I live in a Navy/Marine town (San Diego), so I have a bunch of friends who are retired military, in pretty much your situation. What I noticed with them is that nearly all of them go back to work eventually, except they go back on their own terms, doing something that’s more about what they want to do, rather than what they have to do to make ends meet.

What I discovered for myself when I retired in my early 50’s was that for a couple of years, it was amazing to not have the drags on my time and energy, and I really needed to not work, because I was badly burned out (and had some health issues as a result). But after a couple of years, I realized that I needed something outside of my home life to provide a stronger sense of purpose. The things I’ve chosen to do don’t really pay a living wage, but I find what I do rewarding, and have a sense of purpose when I’m going about my day.
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by MoonOrb »

island wrote: Wed Aug 04, 2021 1:49 pm I didn't know the GI Bill covered college for the children of veterans. Awesome! Is that only for those who stay in military long enough to earn retirement or available to all vets? Can you fill in some of the details on that? Thanks.
Post 9/11 GI Bill does this: https://www.va.gov/education/about-gi-b ... post-9-11/
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Maverick3320 »

island wrote: Wed Aug 04, 2021 1:49 pm Thank you for your service and congrats on your upcoming retirement, Although no matter how many hobbies, etc, I can't imagine wanting to be retired that young, but everyone is different and nothing set in stone.
I didn't know the GI Bill covered college for the children of veterans. Awesome! Is that only for those who stay in military long enough to earn retirement or available to all vets? Can you fill in some of the details on that? Thanks.
If the Veteran doesn't use the GI bill it can be passed on to children.
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Fishing50 »

oleblue wrote: Wed Aug 04, 2021 12:15 pm I have about 60% in TSP Target date 2050 fund and the other 40% split between Roth and standard taxable account in Vanguard Target 2040. Tossing around the idea of rolling the TSP into a traditional IRA at VG and doing Roth Conversions once I get out of active duty and my fiancé stops working and our tax bracket drops.
Rollover to VG for Roth conversions is a good idea.
I’d recommend keeping the minimum or a little more in TSP to maintain the opportunity to utilize GFund in the future with a rollover back to TSP.
Learn to track you current year’s taxable income to maximize Roth contributions in the 12% tax bracket. Purchasing turbo tax in November provides a darn good method to estimate the final answer.
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oleblue
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by oleblue »

island wrote: Wed Aug 04, 2021 1:49 pm Thank you for your service and congrats on your upcoming retirement, Although no matter how many hobbies, etc, I can't imagine wanting to be retired that young, but everyone is different and nothing set in stone.
I didn't know the GI Bill covered college for the children of veterans. Awesome! Is that only for those who stay in military long enough to earn retirement or available to all vets? Can you fill in some of the details on that? Thanks.
The Veteran call give all or some of his GI Bill to Wife or Kids. The catch is when you do the transfer you incur a 4 year service commitment so you have to do it early. That ship has sailed for me. The fiancé's ex is also military. The daughter falls under his GI Bill. I hear of a new program looming where vets can use their GI bill to start a business. I may be into that. I don't foresee me using mine for school as I already have my degree and school just doesn't excite me.
lthenderson wrote: Wed Aug 04, 2021 2:05 pm As someone who stopped working at the same age you are planning to, the social aspect of it was the hardest to adapt too. All my friends were through my career and after I left it, I thought it would be as simple as meeting up with them like always on guys night out Thursdays or the weekends. In reality, they work all week and their spouses have other ideas of things that need to be done on the weekends. Then there are kids and sporting events, etc and it becomes very hard to schedule a few hours together. Eventually what little get togethers I had petered out to the point that I get together with my old career friends once a year at best.

I have had a lot of opportunity to make new friends to do things with during the times when everyone else is working but they are nearly two decades my senior and being so young, it took awhile to build confidence and to gain their inner circles. I don't regret stopping work at a young age despite the social aspect that I wasn't planning on. But it did take a lot of adjustment and may not be for everyone.
I can definitely understand that and how most folks my age will still be working and how that will be a challenge. I see that now with some of my friends just on the weekends. I've always kind of been drawn to groups older than me as well so I plan to solidify those relationships more.
KlangFool wrote: Wed Aug 04, 2021 2:07 pm OP,

Medical insurance.

A) I assumed that you have it via military retiree health benefits.

B) Does it covers your future wife/fiances?

KlangFool
Yes, it will cover the family and the stepdaughter for any and all medical minus vision and dental. There are dental plans available for $45 a month but we're still debating on whether it's worth it or not. I'm leaning towards yes.
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Watty
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Watty »

oleblue wrote: Wed Aug 04, 2021 7:00 am .....or things that I haven't thought of?
It looks real good but here are some things to add to your list of things to research;

1) Medical insurance

2) Social Security. That can be tricky for some people with a government pension but I do not know how that impacts people with a military pension. Your Social Security is based on your 35 highest years of inflation adjusted earnings so even a part time job will help you get more Social Security.

3) When it makes sense to do Roth conversions. I would guess that at least by 2023 you may have some space to do some Roth conversion in the 12% federal tax bracket especially if your wife stops working in a few years.

4) What retirement account contributions your wife should make while she is still working. Likewise what retirement account contributions should you make with your side income. If you have money in a taxable account you may be able to use that side income to qualify to put money into Roth accounts.

5) Do you need life insurance or disability insurance? One big question is if your wife will get your pension if you die. I do not know how that works but if not then it might be good for you to have some term life insurance. Ask if you do not know why term insurance is the only type of insurance you should buy. Things like Universal and Whole Life are sold to make the sales person a high commission. Be sure to run your numbers three ways, as a couple and as if one of you survives the other.
oleblue wrote: Wed Aug 04, 2021 7:00 am Net worth is little over 1M with around 900K of that investable assets.
That does not sound right since your real estate equity is part of your net worth. If I read your post right you and your wife will have three properties; hers, the rental, and the barndominium and combined I would think they likely have more than $100K in equity.
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oleblue
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by oleblue »

Watty wrote: Wed Aug 04, 2021 9:23 pm
oleblue wrote: Wed Aug 04, 2021 7:00 am .....or things that I haven't thought of?
It looks real good but here are some things to add to your list of things to research;

1) Medical insurance

2) Social Security. That can be tricky for some people with a government pension but I do not know how that impacts people with a military pension. Your Social Security is based on your 35 highest years of inflation adjusted earnings so even a part time job will help you get more Social Security.

3) When it makes sense to do Roth conversions. I would guess that at least by 2023 you may have some space to do some Roth conversion in the 12% federal tax bracket especially if your wife stops working in a few years.

4) What retirement account contributions your wife should make while she is still working. Likewise what retirement account contributions should you make with your side income. If you have money in a taxable account you may be able to use that side income to qualify to put money into Roth accounts.

5) Do you need life insurance or disability insurance? One big question is if your wife will get your pension if you die. I do not know how that works but if not then it might be good for you to have some term life insurance. Ask if you do not know why term insurance is the only type of insurance you should buy. Things like Universal and Whole Life are sold to make the sales person a high commission. Be sure to run your numbers three ways, as a couple and as if one of you survives the other.
oleblue wrote: Wed Aug 04, 2021 7:00 am Net worth is little over 1M with around 900K of that investable assets.
That does not sound right since your real estate equity is part of your net worth. If I read your post right you and your wife will have three properties; hers, the rental, and the barndominium and combined I would think they likely have more than $100K in equity.
1. My medical insurance will be taken care of with Tricare. I think it's something like $600 a year and a pretty good coverage.

2-3. Good point on the social security, I see no reason why I won't be doing my side gig for the next 15 years at least. On the Roth, I was thinking after the wife stops working would be a good time to convert.

4. She in contributing to a Target Retirement fund in her 401K at work. I typically put money in a SEP IRA most years for the side business to reduce my taxable income.

Your statements here
"What retirement account contributions your wife should make while she is still working. Likewise what retirement account contributions should you make with your side income. If you have money in a taxable account you may be able to use that side income to qualify to put money into Roth accounts."
are provoking some thought, what would be the deciding factor we should be looking at when determining what type of accounts? I assume you mean Roth vs Tax deferred accounts?

Good catch, yes I forgot to add her house in. We are not sure if we will be selling it or renting it yet but still a part of the net worth I understand, so that would make it higher. She still owes on it and we estimate about a $20K surplus after it's paid off if we were to sell in this market.

Still torn on renting it out vs selling. When I bought my place, the property came with two homes, one was being rented out already so I became homeowner and landlord all in one. Luckily she's a very nice elderly lady that has lived there for 13 years.
blueberrypi
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by blueberrypi »

I'd add a mountain bike to the toy collection if you haven't already. Arkansas has great trails I hear, definitely on my bike destination bucket list.
ThankYouJack
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by ThankYouJack »

Watty wrote: Wed Aug 04, 2021 9:23 pm
5) Do you need life insurance or disability insurance? One big question is if your wife will get your pension if you die. I do not know how that works but if not then it might be good for you to have some term life insurance. Ask if you do not know why term insurance is the only type of insurance you should buy. Things like Universal and Whole Life are sold to make the sales person a high commission. Be sure to run your numbers three ways, as a couple and as if one of you survives the other.
I think it's also a good idea to check one's Social Security Survivor Benefits. I know for many, it can be pretty substantial until one's kids reach 16 or 18.
And with the OP's low family expenses and with over $1m in assets, I don't think additional life insurance would be necessary.

GR8FUL-D wrote: Wed Aug 04, 2021 2:01 pm
It appears that financially you've got all your ducks in a row...as long as you never get divorced. Of course no one wants or expects to get divorced, but realistically it does happen...a lot. So plan for it via a prenup.

...
Frankly I'm surprised no one has recommended this.
I too am surprised. I'm always surprised looking up divorce statistics with how high the percentages are.
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Watty
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Watty »

oleblue wrote: Thu Aug 05, 2021 12:27 pm Your statements here
"What retirement account contributions your wife should make while she is still working. Likewise what retirement account contributions should you make with your side income. If you have money in a taxable account you may be able to use that side income to qualify to put money into Roth accounts."
are provoking some thought, what would be the deciding factor we should be looking at when determining what type of accounts? I assume you mean Roth vs Tax deferred accounts?
It could be either or even both types in some situations.

For example while your wife is workings she may have access to a normal 401k or a Roth 401k and when you have income from your side gig you may be able to contribute to solo 401, or solo Roth 401k. There other retirement account options for a self employed person too but I don't know those off the top of my head. You may both also be able to contribute to a stand alone IRA or Roth account too.

Anyway you will likely have accesses to lots of retirement account types.

Where this gets interesting is that if you have a significant amount of money in a taxable account then you can do something like increase your monthly retirement account contributions by $1,000 a month and then use $1,000 a month from the taxable account to pay for your living expenses.

There are lots of strategies that you could use. For example you could contribute just enough to a traditional deductible account to get you down to the 12%(or zero) federal tax bracket then contribute any additional money that you can to a Roth account. You would need to play with the numbers lots of different ways to see what would work for you.

You could also look to see if you might be able to do a mega back door Roth.

https://www.bogleheads.org/wiki/Mega-backdoor_Roth

You mention of your property reminded me of some other things you should put on your list of things to consider;

Should you pay off any mortgages?

Should you refinance any mortgages that you keep to get a lower interest rate?

Should you set up a home equity line of credit just in case you ever need it?

You may find that refinancing or setting up a HELOC would be easier to do before you retire since you could put your income on the loan application.
Wannaretireearly
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Wannaretireearly »

oleblue wrote: Wed Aug 04, 2021 7:00 am So the day has finally come, I applied for military retirement after 20 years. Final date of Active Duty is 1 July 2022. With the amount of leave I have saved and the Skillbridge program, I am basically done/transitioning to normal life on 1 Jan 2022.

I was shooting for another year but the Air Force had different plans and wanted to move me out of state. I said no since I just bought my house in 2019 where I will be staying and chose to retire instead.

Even though I have planned and saved for this for years, I will tell you that I am excited and nervous at the same time. I came in right out of High School and it's all I've ever known. Looking for some encouragement from others that took the leap with a long career at a young age doesn't have to be military.

I say semi-retiring, I'm still pretty young at 38. Here is what I have planned after the military.

Will be 39 years old next year. The fiancé is 37. She has a 7 year old daughter.

When we get married the end of this year, they'll move in with me in my current house and probably end up renting her home out or possibly selling.
My house will be paid for in Jan 22, all vehicles are reliable and paid for and we would have no other debt together besides her house which, we could rent and cover the mortgage with a surplus or sell. LCOL area in AR. Neither of us are big on extravagant things. I have a nice barndominium on 8 acres and I typically do all my own work on most everything but we do like to travel and be outdoors. I have a boat, side by side, play truck and all the toys. I know some of you frown on that but I've saved and paid for all in cash and we sure do enjoy them.

Net worth is little over 1M with around 900K of that investable assets.

Our expenses together are $42K-45K a year. This is including all bills, insurance, healthcare, childcare, food, $1K month fun money, etc.

The little's college should she decide to go would be covered by the GI Bill.

Our income without pulling anything from my investments will be:
-My military retirement (cola adjusted) $32K
-Disability this is a wildcard and tax free income. I would estimate $10K year but could be $0 or could be as high as $28K
-Rent house (also paid for) $8400
-Her house (if we rent it) estimate $4000 yr excess after mortgage is paid. If we sold, we would invest the $20K estimated surplus.
-My online business $15-20K year conservative
-Other side hustles for both of us (house cleaning, buying/selling/flipping) $10K

The fiancé works full time now, good job with great benefits $42K a year. Within the next couple years after I get out of the military and we see that our plan will work, she would like to quit to spend more time with her daughter and focus more on self employment/side hustles.

What am I missing here? I have ran the numbers in FireCalc and on paper and everything seems a go whether I get extra disability pay or whether she works or not. We would like to travel more after I retire but would use space-A military travel as much as possible. Would like a new camper $35K or so but I can buy/sell/trade up for that eventually.

Any thoughts on the plan or flaws that you can see or things that I haven't thought of?
Sounds like a great plan. Congrats, keep us updated.
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
Texanbybirth
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Texanbybirth »

CoastLawyer2030 wrote: Wed Aug 04, 2021 8:25 am You're good to go man. Live it up. Thanks for your service.
+1

God bless you for your service! :beer
“The strong cannot be brave. Only the weak can be brave; and yet again, in practice, only those who can be brave can be trusted, in time of doubt, to be strong.“ - GK Chesterton
SwampDonkey
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by SwampDonkey »

Fantastic work. Good on you for making it to 20 - not very many do (at least as a percentage who initially join).

Your projected daily retirement schedule looks awesome. Enjoy it!
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oleblue
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by oleblue »

Thank you so much for the compliments, sure does make me feel a whole lot better about it.
I'll definitely be opening a HELOC for any big "flips" or items can buy and sell. Trying to slow my mind down is my biggest challenge. I find it hard to sit still. I will definitely be working on that after I retire. I don't want to just sit and be lazy but it is nice to be able to just relax sometimes and reflect on how proud you are of what you've accomplished. I'm sure many of you here struggle with that as well.
Freetime76
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by Freetime76 »

oleblue wrote: Fri Aug 06, 2021 5:30 am Thank you so much for the compliments, sure does make me feel a whole lot better about it.
I'll definitely be opening a HELOC for any big "flips" or items can buy and sell. Trying to slow my mind down is my biggest challenge. I find it hard to sit still. I will definitely be working on that after I retire. I don't want to just sit and be lazy but it is nice to be able to just relax sometimes and reflect on how proud you are of what you've accomplished. I'm sure many of you here struggle with that as well.
Thank you for your service!

Yep, you nailed it. Find something to channel your extra energy (mental/physical) into.
My FIL was in the military over 40 years. The transition was a whole, new adventure all by itself - you can’t just turn off that part of your brain (you have to consciously retrain it yourself). Anyway, he ended up in private employment, very well compensated for his special expertise..and catered to by his employer. If that might be you, an encore career (which I understand you don’t want to do right this instant) might be fun and a new way to serve (if you want).

I’d really suggest slowing down - only paying cash for projects or - if you’re not into the cash crowd, set ultra firm boundaries. Plan for contingencies: what if I get hurt mid-flip? what if we run into major (expensive) issues? will we be able to hold the flip if we need to for an extra year or two/can we afford to dump it? - let’s say either issues with the flip or the market tanks...(Also, it is very very hard to find a good deal on flips in many areas.) After so much planning and dedication, I’d not want a wayward flip (or 2 or 5 - sometimes people get carried away) to put you family’s *home* at risk. Slow. Down, I know, not easy!!

Also, I’ll just add: my FIL is super smart, focused, extremely high energy. He’s fully retired now, and he’s poured himself into the local family, still volunteers at a school, and until covid worked at the school part time. So. What I am saying is, find good things that make you happy and keep yourself busy and feeling useful in a way that is rewarding for you, This will keep you from eyeing the nicer trailer, nicer camper, nicer boat, 2nd 4-wheeler, LEDs for the kid’s Razor...as somebody else said: pay cash for toys.
Please spell out new acronyms. Thank you.
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MillennialFinance19
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by MillennialFinance19 »

Marine Corps veteran here. As far as your VA disability, make sure you take ownership in your own claim. - don't fall for one of these medical companies that you pay for services. Based on what you've described yourself as, you can complete your own claim effectively.

Good luck!
VTI and chill until 57...
surfslacker
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by surfslacker »

oleblue wrote: Wed Aug 04, 2021 12:15 pm

Well on the weekends, I plan to be at the lake or camping or hiking or traveling or spending time with friends and family or riding backroads in my old truck. Just anything to have fun. On a normal weekday I will get up early like I do now, (early for me is 4-5am) work out in the home gym I've built, shower, eat a good breakfast, see if anything needs done with the online business and take care of that, surf the local classifieds and see if there are any deals out there. If so, go pick them up. I usually have a few projects to flip laying around that I'll put some time into and turn a few wrenches. I'll eat lunch with my wife. I'll have a garden where we grow our on food. I'm usually making some type of wine. I'll have some chickens to get eggs from and with 8 acres of land and grass to cut there's always something to do around the house. Thursday nights with the buddys every week. Sit on the porch swing with a glass of my homeade wine to end the day and watch the deer and turkeys go through the back field. Of course I'll be flexible to do whatever I want. If a neighbor needs a tree cut, I'm your man. I love going to garage sales and estate sales to find more deals to sell. I truly believe I'll be so busy I'll wonder how I had time to work. I'm not one to sit still.
That sounds like an absolutely wonderful lifestyle to me. Enjoy it and best of luck! :happy
CheepSkate
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by CheepSkate »

Expenses: let's say -$50k
Military pension: +$32k
4%WR from 900k portfolio: +$36k

Just from these sources alone, I'd expect you to run an $18k surplus each year. Plus, the government pension makes your income a lot safer than a stock/bond portfolio that is subject to market risk. The only reason to fuss with rentals or side gigs would be if you want to donate a lot of money to causes dear to you or leave a fat inheritance. As a fellow traveller, I see the following main risks:

1) Lifestyle inflation:Your previous purchases of toys suggest that you connect ownership of toys with happiness/joy, as most Arkansans do in my experience. This mental connection can be as dangerous as an addiction when you eventually decide you "need" a new truck, new ATV, new boat, bigger house, lots of guns/collectibles, a home theatre, RV, zero-turn mower, tractor, airplane, getaway cabin in the woods, barns/horses, etc. When work is no longer monopolizing your waking hours, you might spend those hours shopping for new sources of dopamine or adrenaline, even as depreciation and maintenance on your existing stuff is costing you five figures a year. Will the 7 y/o be getting a new or newish vehicle nine years from now? Think carefully about your relationship to "stuff" and what all this "stuff" actually does for you. I see way too many people burning through their retirement by running a personal amusement park of manufactured objects, and they're still bored and disgruntled.

2) Obesity/Health: This may sound strange considering your physical and outdoor hobbies, but the end of PT will probably be the end of PT. If your dietary habits stay the same, this equates to rapid weight gain even before we factor in age-related slowing metabolism. I would encourage you to put "muscle over motor" in your recreational choices. Instead of motor boating, go canoeing or swimming. Instead of ATV riding, go mountain biking or hiking. Instead of collecting stuff, lift weights. Etc. Those 300lb dudes driving around in trucks / side-by-sides who can't climb a small hill on their feet? Yea, they didn't see it coming either. Financially, obesity can destroy you; one heart surgery with insurance dispute is all it takes.

3) Losing a Grip on Budgeting: So you're running an $18k surplus before you do any side gigs? Great! Done, right? NOPE. The day you stop budgeting and tracking/controlling expenses is the day your spending starts to climb from $45k to $55k to $65k to $75k... You'll spend some of your new free time shopping for stuff, and so will your new family. More leisure time = more spending. It's nefarious. It sneaks up on you. The key skill for early retirement is saying "NO" to things like restaurant food, RVs, new vehicles, new toys, oversized housing, etc. You wouldn't have gotten where you are without these skills, but the point is you cannot abandon them now that you are "done" or else you might not be "done" thirty years from now.

Also you might enjoy this blog: https://grumpusmaximus.com
Topic Author
oleblue
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by oleblue »

CheepSkate wrote: Fri Aug 06, 2021 11:49 am Expenses: let's say -$50k
Military pension: +$32k
4%WR from 900k portfolio: +$36k

Just from these sources alone, I'd expect you to run an $18k surplus each year. Plus, the government pension makes your income a lot safer than a stock/bond portfolio that is subject to market risk. The only reason to fuss with rentals or side gigs would be if you want to donate a lot of money to causes dear to you or leave a fat inheritance. As a fellow traveller, I see the following main risks:

1) Lifestyle inflation:Your previous purchases of toys suggest that you connect ownership of toys with happiness/joy, as most Arkansans do in my experience. This mental connection can be as dangerous as an addiction when you eventually decide you "need" a new truck, new ATV, new boat, bigger house, lots of guns/collectibles, a home theatre, RV, zero-turn mower, tractor, airplane, getaway cabin in the woods, barns/horses, etc. When work is no longer monopolizing your waking hours, you might spend those hours shopping for new sources of dopamine or adrenaline, even as depreciation and maintenance on your existing stuff is costing you five figures a year. Will the 7 y/o be getting a new or newish vehicle nine years from now? Think carefully about your relationship to "stuff" and what all this "stuff" actually does for you. I see way too many people burning through their retirement by running a personal amusement park of manufactured objects, and they're still bored and disgruntled.

2) Obesity/Health: This may sound strange considering your physical and outdoor hobbies, but the end of PT will probably be the end of PT. If your dietary habits stay the same, this equates to rapid weight gain even before we factor in age-related slowing metabolism. I would encourage you to put "muscle over motor" in your recreational choices. Instead of motor boating, go canoeing or swimming. Instead of ATV riding, go mountain biking or hiking. Instead of collecting stuff, lift weights. Etc. Those 300lb dudes driving around in trucks / side-by-sides who can't climb a small hill on their feet? Yea, they didn't see it coming either. Financially, obesity can destroy you; one heart surgery with insurance dispute is all it takes.

3) Losing a Grip on Budgeting: So you're running an $18k surplus before you do any side gigs? Great! Done, right? NOPE. The day you stop budgeting and tracking/controlling expenses is the day your spending starts to climb from $45k to $55k to $65k to $75k... You'll spend some of your new free time shopping for stuff, and so will your new family. More leisure time = more spending. It's nefarious. It sneaks up on you. The key skill for early retirement is saying "NO" to things like restaurant food, RVs, new vehicles, new toys, oversized housing, etc. You wouldn't have gotten where you are without these skills, but the point is you cannot abandon them now that you are "done" or else you might not be "done" thirty years from now.

Also you might enjoy this blog: https://grumpusmaximus.com
Great points and insight, thank you for that. I will check out that blog. I definitely understand what you mean on blowing through retirement. I've seen many folks do it around here. I'm in the boat of cash for toys and really anything besides my house which will be paid for in Jan of next year. The plan for the youngster's first vehicle is to give (make her work for), the wife's toyota 4 runner. It's a 2016 model and it will be about 15 years old when she starts driving. Part of my morning routine is the gym, I plan to keep that up in retirement.
InMyDreams
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by InMyDreams »

oleblue wrote: Wed Aug 04, 2021 7:00 am
-Her house (if we rent it) estimate $4000 yr excess after mortgage is paid. If we sold, we would invest the $20K estimated surplus.
She can take an exclusion on that gain up to $250k IF (basically) she's lived in it for 2 out of the last 5 years. The rule changes a bit when married, I can't remember the details, but probably just raises the exclusion to $500k. Also, not sure if renting it could make a difference in taking that exclusion. Check with your tax preparer.
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fishnskiguy
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by fishnskiguy »

From one military retiree to another:

Please understand that if you are awarded a VA disability, that tax free disability is deducted from your military retirement pay. The net effect is you get your regular military retirement pay with a portion of it (the VA part) tax free. Nice, but not a huge deal by any means.

I know. I have modest VA disability.

Chris
Trident D-5 SLBM- "When you care enough to send the very best."
nerdymarketer
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Re: Semi-Retiring in Less than 6 months at 39 years old..Thoughts?

Post by nerdymarketer »

Thank you for your service.

I can relate very much to your post. I chose a different career path, but also have kids and blessed to be in a place in my latter 30's where I can quit my day job. I'm also wired to constantly be doing projects... I also enjoy turning wrenches, finding/flipping deals, helping family and neighbors, etc.

Reading your post, I don't think you'll be lazy or bored. Your problem will not be "good use of time vs bad use of time" but rather "good use of time vs a better use of time"... I faced this myself when I took a brief 2 month break from work recently, sort of as a trial run on what life would be like if I quit the day job.

I noticed two things:
1. I wasn't lazy... I was always puttering in some way doing useful things, or working on a project with my kids to teach them something. This was encouraging to me.

2. My ability to value my time was horrible... ie, I would spend just as much time/effort on a project or deal that generated $100 in value as one that generated $1,000. Observing this in myself really scared me. Don't get me wrong, I was having a blast on both projects... but when I think about my desired legacy, it's "even as he was having fun, he made sure he was spending his time impacting the world for the better", not "he had fun fixing things that didn't matter".

I guess what I'm saying is, even though you'll have much more autonomy in your life, as a motivated/creative/hard-working person there will _always_ be way more opportunities than you can pursue... So think critically about where is the alignment of your values/your skills/passions.

That's currently what I'm working through... In the meantime, I've kept doing the W-2 job because it pays so well that until I have more clarity on how I define high impact, I can simply earn my salary knowing that giving it away is guaranteed to have relatively high impact / hour compared to most of the other ways I'd spend my time right now.
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