Few questions for FIREd folks

[realmajor101]

Would appreciate if Financially Independent Retired Early folks here could answer the following questions:

• At what age did you FIRE?
• What is the life expectancy you planned for?
• Your retirement fund was what multiple of the estimated average annual expense (in present value non-inflation-adjusted terms at the time) when you FIREd?
• How much did you provision for old age healthcare and assisted living support?
• If you own a house, where does it fit in your plan for twilight years? Do you intend to avail reverse mortgage income from it, or sell it and move into a retirement home, or just live in it till your EOL and bequeath the property to legal heir(s)?
• What is the baseline post-tax real rate of return requirement from your retirement portfolio to sustain FIRE (those comfortable with negative rate should clarify their inflation benchmark in FD terms, e.g. X basis points above FD rate or Y times FD rate, etc.)? Accordingly, what is your target asset allocation?
• If you now work on hobbies or projects which don't involve serious monetary compensation, how do you deal with people asking what you do for a living without letting them have any hint or ideas about your net worth?
• What are some avoidable mistakes (if any) you made in the pre-FIRE phase and things you wish had known before you FIREd?

Edit (bonus questions on public request):

• What was your primary occupation / source of income before you retired?

 

[steelernation]

@realmajor101 r/FIREIndia is a subreddit you could join.

My dad retired at 40 (he is 68 now). Not sure if the answers hold value to you but sharing just in case (we discuss FIRE quite a bit):

• Fired at 42
• Planning for 85
• Retirement fund - about 50 times yearly expenses (currently it is about 68 times)
• Not sure - will ask him
• Own house - plan to live in it forever. Used to be NRI but moved to India
• Don't think he calculates this. Asset allocation is 35:65 Equity:debt right now. I should clarify that when he retired interest rates were very high. He also had the benefit of NRI deposits in the 90s which offered great rates.
• Doesn't give a damn and asks relatives to mind their own business
• Made some mistakes - bought a poor life insurance policy, invested heavily in stocks in Harshad mehta scam period out of greed despite not understanding markets at the time, spent too much money in timeshare (Club Med) that we never used and was impossible to get out of

 

[realmajor101]

@steelernation

r/FIREIndia is a subreddit you could join

It's on my radar but, unfortunately, isn't quite active. Will consider posting there separately.

Retirement fund - about 50 times monthly expenses

Okay, so around 4 years' worth expenses. Did he have any secondary income source / side project going on or planned for at the time? If no, what was his initial target asset allocation?

How has being a part of his FIREd life moulded your own approach towards FIRE? What are some aspects you intend to handle differently or in an even better way?

 

[realmajor101]

@steelernation

Oops sorry I meant 50 times annual expenses!

Yeah, suspected that! That's why wanted to probe a bit to confirm.

I'm more open to equities but as luck has it, I have the same ratio due to some real estate bungling I did!

What is the proportion of real estate in your asset allocation?

One thing I missed...

Doesn't give a damn and asks relatives to mind their own business

Many times, people (not the usual relatives) are genuinely curious about what you do and they don't ask this out of any deliberate malice. How he responded in such cases?

 

[steelernation]

@realmajor101 Real estate used to be almost 40% but I reversed the transaction this year (did not take possession) and put that entire money in debt, so have a very high debt component right now.

Regarding people - my dad works for an NGO a few days a month (no salary) so he just tells them he works part time in that NGO.

 

[realmajor101]

@steelernation

Regarding people - my dad works for an NGO a few days a month (no salary) so he just tells them he works part time in that NGO.

This is just... perfect!

BTW with that 65-75% savings rate, how far along are you in your own march towards FIRE? Is your spouse onboard with the idea?

 

[nikkolai]

@steelernation 50 times yearly expenses seem too high when he was looking for only 43 years of income - was he looking at returns below inflation?

 

[sammie2019]

@nikkolai Sometimes you overshoot, either because of time or luck factor in investments.

 

[gail76]

@nikkolai That's 2% withdrawal rate which is reasonable in Indian context with 7% average inflation rate. Remember that corpus should also include capital expenditure like new buys and maintenance.

 

[jojoz]

@steelernation we should be innovative with these names! why not use sanskrit.

 

[sullivan10]

@realmajor101 Add an additional question from me please - what was you primary occupation/source of income before you retired?

 

[realmajor101]

@sullivan10 Done.

Note for others: Please reply here if you have additional questions you want included in the original post and leave top-level comments section for answers. Or post your queries as reply to FIREd users who actually respond to this thread.

 

[gunderson500]

@realmajor101 If you don't mind, I have opted to selectively answer some of your questions.

• 45
• -
• -
• Nil
• All options are on the table
• (a) - (b) no target AA- I follow a bucket strategy
• By being low-profile and reserved
• Can't think of any
• -

 

[steelernation]

@gunderson500 Can you share the duration of each of your bucket periods?

 

[gunderson500]

@steelernation What I follow is not a textbook bucket strategy: I keep tactical flexibility on the number of buckets and the amount allocated. Currently I have 2 buckets:

Bucket 1: Expenses

 

[realmajor101]

@gunderson500 Fair enough, no compulsion. Feel free to share whatever you are actually comfortable with revealing.

Nil

Okay, how many months' worth emergency (medical and healthcare included) fund do you maintain and where (cash, bank, MF, etc.)?

I follow a bucket strategy

The usual 3 buckets? How often do you re-balance buckets and has the introduction of LTCG tax necessitated any tweaks in your strategy?

By being low-profile and reserved

And how do you answer to "what do you do for a living"?

 

[gunderson500]

@realmajor101

how many months' worth emergency (medical and healthcare included) fund do you maintain and where (cash, bank, MF, etc.)?

I don't separately maintain an emergency fund.

The usual 3 buckets?

Currently, 2 buckets. No set frequency for rebalancing- as and when I feel appropriate. I'm not losing sleep over LTCG tax: time will tell but off-hand I don't foresee much of a need to tweak my strategy.

how do you answer to "what do you do for a living"?

I have perfected the art of dodging that question

 

[realmajor101]

@gunderson500

Currently, 2 buckets

Your long-term bucket is what multiple of the short-term bucket at present? Also, what was this ratio back when you FIREd?

I have perfected the art of dodging that question

IMO just mentioning something about consultancy or freelancing, preferably "online", is enough to satisfy >95% people without requiring any further effort. It's the remaining 5% whose persistence and curiosity demands perfecting the art of dodging that question. So, what's your magic trick for them?!

 

[gunderson500]

@realmajor101

Your long-term bucket is what multiple of the short-term bucket at present? Also, what was this ratio back when you FIREd?

With the greatest of respect, I am uncomfortable divulging that information.

So, what's your magic trick for them?!

Words cannot do justice to my performance

 

[realmajor101]

@gunderson500 Hey, that's cool. Thanks for your time and patience, may your FIRE keep burning bright!