Ginger’s financial independence (FI) number is $2 million, but she doesn’t want to fully retire early. Once she hits ‘coast’ FI, she wants to 1) buy her time back with outsourcing, 2) take a mini-retirement, and 3) buy a vacation home. Does it make sense for her to divert retirement contributions to these goals, or should she aim to save $2M?
Wilson plans to have a two percent withdrawal rate in retirement. Given this low rate, should he go all-in on stocks? Or should he split up his retirement funds and invest one half conservatively and the other half aggressively?
Jennifer has a low-stress doggie-daycare, but she needs a bigger space to scale up. How the heck can she find a property to suit her needs in Austin, TX?
My friend and former financial planner Joe Saul-Sehy joins me to answer another round of listener questions.
(If you have questions on business, money, trade-offs, financial independence strategies, travel, or investing, leave them here and we’ll answer them in a future episode.)
Ginger asks (at 2:19 minutes):
If you want financial independence (FI) without retiring early (RE), does your FI number matter?
Our FI goal is $2M, but given that I’d go crazy without the structure of a job, I don’t want to fully retire early. Is that $2M figure still worth aiming for?
Here’s what I’m thinking: we’ll use the power of compound interest to prefund our retirement accounts and our child’s education. Our retirement account balance is $190,000, with $100,000 in taxable brokerage accounts. We’ve also saved $15,000 for our unborn child’s college expenses.
We’re 33. By my estimates, we’ll reach coast FIRE in the next year or two – we’re $60,000 away. At this point, we won’t need to save more to fund traditional retirement. The money we saved will continue to compound.
We could reduce our savings in stocks (about 50 percent of our income), and instead:
- Buy back our time by hiring a cleaning service,
- Save a year’s worth of expenses for a one-year mini-retirement, where we travel and homeschool our kids with experiential learning,
- Take advantage of hybrid work-from-home policies and purchase a vacation home that we work out of for one month per year and subsidize via Airbnb,
- Have more freedom to accept lower paying jobs if they’re more rewarding or give better hours or flexibility.
I don’t see why I should continue to save toward FIRE if I don’t want to retire early. Am I missing something, or does this sound like a reasonable plan?
Wilson asks (at 24:58 minutes):
I plan to retire with a two percent withdrawal rate. Given this low withdrawal rate, should I invest 100 percent in stocks once I retire? If the market drops, I’ll only have to increase my withdrawal to three percent, or at worst, four percent, in a given year.
My other plan is to divide my money in half. One half will go in a traditional 60/40 portfolio; I’d withdraw four percent of this for living expenses. The other half will go to my heirs, and I’ll take an aggressive approach there.
What are your thoughts?
Jennifer asks (at 43:30 minutes):
I have a low-stress doggie daycare in a small, 800 sq. ft. rental house. I’d like to scale this operation: I’ve been totally booked for several months for years. I’ve tried finding a bigger location (or even multiple locations), but I’m in Austin, TX, and it’s nearly impossible to find anything affordable.
Should I look at duplexes? Would wholesalers have the types of properties that I need? How can I scale this business in a way that doesn’t cost several million dollars?
Resources Mentioned:
- Fuel for the F.I.R.E.: Updating the 4% rule for early retirees | Vanguard Research PDF
- How Much Can I Spend in Retirement? – With Dr. Wade Pfau | Podcast episode
- Startups for the Rest of Us | Podcast
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