How are you all saving for college?

The NYT (https://www.nytimes.com/2024/04/05/your-money/paying-for-college/100k-college-cost-vanderbilt.html) just ran a story about how the annual cost of attendance at some schools is reaching $100K per year. Vanderbilt was the college discussed in the article but the same story applies for basically all elite private universities. If you take that $100K figure and project out for inflation (4%, which is average for private schools over the last 20 years) then the average cost of attending a four-year private university will be about $850K for a child born today. That's a ton of money and if you have to pay it for more than one kid then it really hurts.

Before anyone says, get merit scholarships or go to a different school. Those solutions don’t work for what I want. The elite private schools(I.e, ivies and the 20-30 other “best” schools) don’t give out merit scholarships. Public schools and other schools aren’t an adequate solution because I am trying to plan such that my finances don’t become a problem for my child (i.e. my kid can go wherever without money being a restraining factor).

How are you all saving? I already have a healthy 529 plan that will more than cover the cost of an average private school but it will not be anywhere near $850K. I make very good money and would be on track to retire in far less than 18 years but if you add in college costs then I would have to work many more years.

I assume children of high-income parents will also receive no financial aid.

Is the solution here just that 1% income parents can never retire early?

Use this thread to discuss anything you don't feel warrants a full blown post

New to FIRE. Have read a lot of posts from enthusiasts who still have significant mortgages. That surprises me. I get the whole “it’s cheap $ argument” when you’ve locked in 3-4% fixed. But isn’t FIRE about eliminating debt (in addition to saving)? Also, in the absence of a pension, what are folks’ thoughts on using reverse mortgages to mimic a pension?

I’m nearly there, close enough to feel nervous and have second thoughts on my timing. I’ll probably reach $7M by the time I give notice in the next year or so. But for now, I feel like there are several big expenditures that I should deal with while I’m still earning. My salary will allow these expenditures, and I guess my post-retirement draw could too, but in my mind I need to be prudent and deal with these things first before calling it quits.

• New roof - $15K? (3 layers of shingles, last one >25 yrs ago)

• Landscaping - $15K-$20K? (repointing stone pool deck, plus several trees down/nearly down around property)

• Upgrade to the entertainment system - $20K? (amplifiers, speakers, TV)

• Oddly, paying off my mortgage is not on my list (~$180K, very low interest, so I feel ok carrying that one)

• Financial prep is pretty much in place (Roth conversions, cash reserve), so I don’t expect major expenditures here

What big ticket items or projects are on your list before you feel you can stop working?

We are aiming for the lower end of Chubby (2.5MM excluding 1million paid off house). We are on track, but FIRE may not happen till 58 or 60, depending on savings/market.

In the last few years, income has increased radically. For many years, we were just frugal. With a salary that has been exploding, we have been spending a lot more. We used to do 8k trips every other year. Now we are doing 17k-20k trips a year. We have three kids, and we aim to buy ethical, fair trade as often as possible. This means we pay a premium for lots of things.

I got lazy in the last two years with watching our spending. But we need to pull things back. My records show we spent $194k last year! We only saved $53460. Sadly, this does include company match. This does include college savings, but it's small. Maybe 15k last year. We are thinking of spending $120k a year in retirement. The kids are expensive, and we are remodeling a house. We are spending 40k this month on siding, for instance.

So, how do we pull things back? Do I literally go back to tracking every single spend and acting as if we have no money?

Posted in /financialindependenceretireearly but got too much shit for “insane spending” so though I might get better feedback here.

38F Married to 44M 2 kids- 4 and 2 YO VHCOL area

4.8 Net Worth 1.4 MM brokerage - non retirement invested mostly in index funds 1.2 MM retirement (800k 457b, 260 Roth IRA, 200 IRA, 40k 401k) 100k in HYS HSAs worth 40k Primary home worth 2.4MM, (1.8 MM debt, .6 MM equity) Rental Property worth 1.3MM (.3 MM debt, 1MM equity) 300k in 529 across 2 kids Rest is invested across ibonds, some cash, some crypto (minor) Two cars - 1 is paid off, owe 32k on the other to in-laws, interest free, paying 566 monthly (yes, we are super lucky to get this support hubby wanted expensive truck, I said no, in laws came to his rescue 🙃)

Earnings: (All post tax) Without my income we bring in 22k Husband currently brings in 13k/ month (occasionally more with bonuses) will earn 10k pension for life when he retires at 50 1.6k/month in rental profits (yes profit, excluding costs) 2.8k/month in gifts/ month ( yes, wealthy parents) Assuming 4.8k/ month on 4% withdrawal rate on the 1.2MM pre tax investment

I earn 14k/month but want to take a sabbatical and temp FIRE for a couple years. Potentially doing easy work part time or trying to build a main st business.

Expenses: (If I’m not working, so reduced childcare $) Approximately 22k/month if we’re not watching spend, probably can get it down to 19k if we budget more and still live comfortably. The 22k a month includes 11.5k mortgage and property taxes/ month and includes Health insurance if I’m not working.

Super burned out with work and want to take 2 years off to spend time with kids and try to find ways to generate income that could pay dividends (write a book, buy a brick and mortar business, blog etc…)

May return to tech work after but if something else pans out ( brick & mortar, writing blogs/ books/ teaching) might not go back.

Thoughts? Can I swing it?

I am curious to what from folks who have or are thinking of retiring in another country other than USA. The idea sounds nice on paper and especially after returning from a vacation but is the grass really greener and also does it help financially?

We are my chubby yet, but returned from a vacation in Portugal (Algarve region) and really like it there. I know that the golden visa is not longer an option but it got me thinking.

I worked hard to get a USA citizenship and passport and really don’t want to give it away and I still think USA is a great country to live in and it’s a privilege for those of us who get live here. But I also romanticize the idea of having an EU passport which gives more flexibility not only to me but to our kids as well.

I want to hear if there are others who have successfully relocated and if so what was your expectation and how did it actually turn out. Or if there is a better way to enjoy it both, where you just take long vacations and still have USA as a home base.

I am not sure if I am even asking the right questions

Thoughts?

I’m currently considering selling one of two properties, but I’m not sure which one. I don’t necessarily want to be a landlord anymore since there are no reliable property management companies in the area, but I also don’t want to make a decision that could negatively affect my retirement.

Property A is duplex in a highly trafficked tourism zone (but no Airbnb’s on the street yet) worth $600k and has a $200k mortgage at 1.9% and generates $3100/mo. (Not factoring $1050/mo mortgage) could generate a lot more income as STR (most likely $6k+/mo gross on the low end), but I’m not sure if I want the potential headaches that could follow. Requires some cash to update one of the units and reduce maintenance costs/headaches (update electrical/plumbing).

Property B is an unobstructed ocean view oceanfront condo in a desirable tourism zone with no mortgage, is worth $600k and generates $3400/mo. STR not allowed. Freshly renovated, needs nothing. Starting to see oddities when it comes to building insurance which is not super concerning, but something to consider.

I’m considering selling one to have less exposure to RE. I’m caught up on A because the mortgage rate is so low. I think if there was not a loan on it, I’d have already sold it.

I’m also not so sure if exiting RE is a good idea considering having both rented allows me to borrow money more easily.

Any ideas or opinions?

Topic

Edit: Asking those who are FIREd and stayed in SFBA. Have you fared better or worse than you planned (especially given the inflation)?

Hi. My financial broker manages roughly $5 mm dollars for us. Money dispersed in stocks, bonds, structured notes etc. We touch base quarterly where he will provide investment options and suggestions. Overall satisfy with his services, but feels his advisory fee of 1.15% is a bit high. What do you think? How much are you paying in fees? Thanks.

During Covid I took advantage of some of the changes in the tax code and refiled 5 years of returns. My estimate refund was $300k. Over the next few years I accumulated 1.9mm in additional carry forward losses.

However I still have not seen the refund, and my CPA says there’s nothing I can do but wait - the IRS is backed up with millions of returns.

Is this true? Anything I can do to speed up the refund process? Please help!

I had my annual expenses down pat. Finally sat down to see what my capital gains taxes and health insurance costs would be. Dang. FIRE number keeps moving up…

51,wife and a kid, zero debts or mortgages, home is on wife name while I have my parents house on my name, a prestigious countryside home at 10 minutes driving from beaches and a town. We are selling my family business and that will net us 3.5M Euro. My personal yearly expenses including some occasional splurges and family vacations run at 40k euro per year. With my actual paycheck and lifestyle I’m able to save 5k euro per year. Would you keep a side job or should I just put the money to work ? Wife would love to keep working for a while at her seasonal job anyway. I have been working in the family business since I was 16 years old, I’m seriously exhausted..

No need to share anything more....just the number and where you are from (high level of course...like San Fran or Dallas, etc.)

36M married to a SAHM with 1 kid. 3.3M NW (2.5M liquid, 0.8M house equity). HHI this year will be 1.2M because of AMZN stock appreciation (300K base, 900K RSUs). Typical year is more like 800K HHI.

Of our 2.5M liquid, 1.1M is in AMZN stock sitting in a brokerage account. The rest is in typical boglehead 3 index fund allocation (900k after tax/400K tax advantaged). The AMZN allocation is only going to grow in 2024 with the expected RSU vesting.

I know all the theory around diversification, risk concentration between employment loss and savings in a single stock and so on. But man, it’s just so hard to be completely rational here given the outsized return on big tech. I guess I’m asking y’all (especially the FAANG folks who are also drinking the koolaid) on who else is irrationally overexposed in a single stock?

Make me feel better about my gamble that there’s other like minded people out there :)

Hi all, new to this group. I posted this in RichPeoplePF & a few suggested I pose this Q here:

When is it socially acceptable to retire with kids?

My wife (31-F) and I (32-M):

• $2.1MM NW
• $830K house (paid off)
• 2 used Cars (we are not car people)
• No kids
• We are not into fancy things (a few nice vacations a year, not into clothes/cars/status symbols)

Income last year was $570K. Should be around the same this year ($560-580K).

Currently, we Max out 401K, Backdoor Roth IRA, HSAs - and save $200-$225K a year after tax into Brokerage accounts, invested in indexed mutual funds* (*updated for clarity)

Using our financial model, at 6% IRR - we will have $5MM at Age 43 in non-retirement assets, excluding our house.

Since we don’t have kids yet (we aim to have 2 kids in the next 2-3 years) - we often talk about when it is acceptable/financially ok to retire?

Sure, we can work until 55 and have $15MM - but what price do you pay on time?

How do you retire early (maybe in 10-13 years at Age 42-45?), yet also install a strong work ethic/savings mentality to kids, if they don’t see their parents working?

(I know this is parenting meets finance - but curious if other people have the same dilemma, “if I retire really early with kids - they will not see the incentive to work hard themselves”)

——————————————————————————

EDIT for those asking: $200K after tax saving was a rough estimate. Last year it was closer to $225K, shaping up to be similar this year.

Used $200K after tax savings assumption as go-forward for future NW projections (liquid, 401K, Roth)

We hired a financial planner to develop a financial plan for us. We met a few times, and everything was great. But today, she told us that the financial plan was a PDF of screenshots from RightCapital.
To me, that feels like a tool, and our financial plan would be more of a roadmap. Is that typical? I don't know if my expectations are out of line. What does a financial plan typically look like these days?

I had it all worked out. This was to be my last year. But of course, there were certain assumptions built in along the way.

Kid got into his dream school. So my budgeted $60k per year will really be $100k per year starting in September.

The increase right that the start of FIRE is like a SOR hit and really changes the model.

I guess I will work one more year.

38M with wife and 3 kids under 10. I have been maxing my Roth 401k for years because my tax rate was relatively low versus what I expect to make in the future given my industry. I recently got a raise and make 300k. Currently $2M net assets excluding primary home equity. I plan to FIRE with $8M around age 50. Should I be going back to regular 401k now and saving the rest in taxable account?

Leaving corporate in a few weeks. Want to give my supportive boss a nice farewell Giftcard from their favorite coffee joint. Boss has done so much to help me reach my financial goal and make my last corporate experience a good one so want to get ideas and suggestions. Boss drinks a ton of coffee - addicted to it so I know they will make good use of it.

1. What’s the right amount to show my appreciation?
2. Ideas for something meaningful like:

Started on 1/30 - $131 too low? Leaving 04/20 - $420 too much? Other ideas to make amount meaningful?

I set up a traditional IRA this year to accept funds to complete a backdoor roth for 2023. I understand I must file Form 8606 for this purpose. I earn too much for a regular Roth.

I spoke to someone at TD Ameritrade who told me that I pick the year, put the money in the IRA and then request that it be converted to my Roth, also with TD Ameritrade. I understand the limit for 2023 is $7,500 for me since I am over 50.

My accountant is telling me that he believes I needed to complete both transactions by December 2023. It's my understanding that he is incorrect and this worries me quite a bit if true. I intend to file my taxes for 2023 with the deposit to the traditional IRA. Do I also need to indicate that it was moved to the Roth on my 2023 taxes? Or can I report that move in 2024 for 2023. After this is complete, I'll immediately do this again for 2024 for $8000 so I'm not in two different years.

Does all of this sound correct?

I am 47, wife 45, live in HCOL area with dual income almost equal, recently going through painful process with job and will be quitting or PIPed soon. Two kids one in middle and another in high school going to college soon.

NW: 7.5M

3.2 M in Taxable with 65% US,, 15% foreign, 5% cash, 10% Bond 5% REIT

2.1 M in Tax advantaged - 65% US 20% foreign 5% REIT and 10% Bonds

1.2M in equity rental that breaks even or gives approx. 4K income after discounting mortgage (90K left ) and maintenance costs

Other Properties that is useless for funding retirement

1. Primary home - 600k mortgage at 2.75% mortgage, 1.0M equity left
2. 300K worth of stuff in home country not easy to repatriate, only useful if I move back (likely in my 80s for cheaper Long term care)

College

529- 250K saved in my529 (65% -35% Stock to Bond) for first kid 85 to 15 for the 2nd)

Salary:

300K+250K (me+ spouse pretax)

Expenses: 140K (approx based on last 2-3 years from credit card bills, it use to be much less precovid)

Initial plan was to retire after 6 years when the 2nd kid goes to college, so that we can free up our time to travel and decide to move to LCOL based on kids location, but this setback in the workplace is making me stressed and want to quit right now, want to save and give away 1-2 million each incase they do bad in life, they seem ok but not sure what holds for future)

No motivation to search for job in this tech market, too old to get into any new venture, what should I do, take a break or look passively or call it quits while wife works, I can be of help with kids college search etc.. My initial goal was to quity after 10M in liquid assets including rental to be safe.

Detailed Breakdown on Annual expense:
- 60K House Mortgage, Insurance, Property Tax, Utilities, regular maintenance including cleaning/yard work
-12K groceries(Costco+walmart) + occasional office lunch/school lunch/starbucks)
- 9K Transportation ( one old car fully paid one new ev on cheap lease + gas expenses+ insurance
- 12K Misc expenses (Costco/amazon/ target clothes house hold items)
-12K Kids education, classes, EC, Tutoring, Piano, etc
-15K Vacation ( one week of summer, max one week in winter or international once in 2 or 3 years, $200/night hotels, $350/night airbnb, onlu economy ticket -use miles if possible for hotel or air, rent mini small suv or full size car)
- 9K Dining, gym, hobbies and personal care (Ski pass, wife's occasional spa, planet fitness, onlin yoga classes, movies/theater/haircut)
- 6K Health care (co-pays for HSA + orthodontist tax for kids from FSA )
-5K - Other expenses including charity, umbrella, life insurance etc

**Edit fixed some typos and since many folks asked how do you manage within 140K added expense detail, we are frugal but live a decent lif, tell me what i can do better both savings/expenses

A little about me (and mrs.):

Both 52, want to retire at 55. No kids. Income is roughly 160K wages for me, 100K for spouse, and 40K going into a small pension that will roll to an IRA when I pull the pin. We're stuffing about 120K of our income into retirement assets and taxable account/yr. Our annual expenses excluding income tax are in the 70-90K/yr range depending on which year you take a snapshot of.

Current assets: 1.1M 401Ks, 900K IRA, 400K pension (will roll to IRA) 150K Roths, 100K HSAs, 600K taxable. (3.2m total) Projecting using modest estimates retiring with $4.2m in three years.

We own our home outright in cold midwest, $500K approx. We also own waterfront ocean access property in a southern state outright that we desire to build a snowbird house on and live there at least 6mo/yr to get away from the cold.

I'm trying to figure out how to get the house down south built. Doing it now is kind of out of the question, I really want to be on site when it happens. I can't do that in my current job. That means after retirement (or switch to 3 days/week remote only after 55). Can I afford a 3500-4000/mo mortgage payment? Should I even pull a mortgage or build for cash? Am I silly for wanting two homes?

We also like to travel but are always budget conscious. We take an annual vacation for about 10K where we go somewhere warm. Probably increase that travel a bit once we retire.

Anyway, am I on track? Anything I should be doing different?

38yo. Through a series of fortunate investments (mostly NVDA), I am staring at a million in my IRA with uncertainty on how to proceed next. No debt. Have a solid job making ~$200k, but really would like to retire in my forties. I’ve been looking at tax efficiency waterfalls, roth conversions, etc. But from the numbers I’m seeing, I think i’d have more in 5-10 years by just investing it in some ETF or something conservative where it is now in the traditional IRA. I’m partial to tech so I was going to park some of it in MSFT. Also thinking about BRKB. I do not want someone else handling my money, however I do feel like I need a good tax lawyer at this point.

Open to some perspectives/suggestions…

Edit: I have moved out of NVDA at the moment. Money is just sitting in a money market right now…

TL;DR: It appears that paying off your mortgage and subtracting the mortgage payments from your expenses can dramatically increase FIRE success rate which feels counter intuitive. The post is somewhat detailed and technical but hopefully worth the effort. I'm hoping people can help me understand why this works or if I made a mistake somewhere.

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Let's say for example that I have a mortgage that has a monthly payment of $4831 on an outstanding balance of $900k @ 5% for 30 years (mortgage calc) and I have an investment portfolio of $3M, not including the equity of the house. Note that the $4831 doesn't include insurance or property taxes.

I compared two FIRE scenarios: one in which I pay off the mortgage with my investments/portfolio and one in which I keep paying it as I was all along.

• FIRE w/Mortgage: Keep paying the mortgage, include $4831 monthly mortgage payment in the expenses for an annual expense of $58k. Starting portfolio is $3M.
• Payoff Mortgage: Pay off the mortgage right away, do not include $4831 monthly mortgage payment in the expenses but subtract $900k from the FI/starting portfolio value so it's now $2.1M.

I used ficalc.app to compare these two scenarios and I get the following success rates:

• FIRE w/Mortgage: Success Rate = 78.6% (link) - annual expenses between 130k and 150k. An extra non-inflation adjusted "income" of ~$58k after 30 years to account for end of mortgage payments.
• Payoff Mortgage: Success Rate = 96.9% (link) - annual expenses between 72k and 150k (72k because I don't need to spend $58k/year on mortgage).

This is a pretty huge difference in success rates and I'm not sure how to explain or think about it. I would expect that paying off the house early is a bad idea because the average SP500 return 7% and the mortgage in this example is 5%... but I suspect this has something to do with either mitigating sequence of return risk or I screwed up some assumption / facts somewhere.

I’m a few years away from semi retirement. Current NW is $5M mostly in cash/brokerage/401k and investment properties. I work in big tech and am adding about +$500k per year and want to get to $7-$8M. At this point , I will semi retire and potentially start a non-prof or so more impact work.

The issue is that as I get close to leaving , I have less and less tolerance for the corp BS. I feel like I am trading my sanity for $. I am thinking of going part time (60%-80%) which would allow me to continue saving but at a lower rate. This would free up 1-2 days allowing me to spend time with family , work towards personal projects or just chill. This will likely add a few more years in corp America but likely be more tolerable.

I’m wondering if anyone has experienced doing this and would be willing to share.

Edit/update - my company offers a part time option. So this is not a question of “how do I get part time options” but rather, for those that have done it, how was the experience/outcome

What are the retirement account/fund options once all income earners leave employers? HSA and Solo 401K - Anything else? Thanks!

Mid 30’s, still working and annual spending now <4% of our non-equity NW. In terms of how we got here? I got lucky at a startup, neither of our salaries are crazy high. $220k household income in HCOL area.

Since neither of us are retiring anytime soon and we’ve crossed the 4% milestone, I’ve already stopped saving. (I don’t count paying our mortgage as savings).

My current plan is to see what happens in next few years without more saving. If we cross the 3.5% mark while still working. I’ll feel free to increase spending such that we don’t spend <3.5% of our NW per year. Once we stop working, I’ll transition to only spending 3.5% of our NW @ retirement date or another proper SWR technique.

I like to true up my retirement planning spreadsheet on a quarterly basis and compare it to my Edward Jones goal tracker. Was pleased to see the $4MM net worth mark was crossed. Returns in Q1 were solid, land and home values ticked up nicely, we moved into austerity for the build so the checking account is up, but had some expenses related to travel for my mother-in-law's funeral.

One thing I have focused on is the risk of building a house and carrying a mortgage into retirement. To allay that worry I created a "pseudo net worth" calculation that carries forward current balances multiplied by a 5% gain estimate through to the time we expect to move into the new house (June 2025), and the calculation also accounts for the expected value of the new home at move-in, the loss of net worth when we sell the current house to pay down the mortgage, and finally accounting for money that has already moved off our balance sheet to the builders.

The paradox is that even though we are taking the risk of building the house for a cost 50% higher than what I thought my highest comfortable all-in amount would be when we put earnest money down on the lot in February 2022, net worth increases substantially even as liquidity drops by $230K (first-money in required by the construction loan terms). It continues to be my belief that building the house is rational and not building the house would be a risk-averse mistake.

The final sanity check was to set the assumption of future retirement savings to zero for both myself and my wife. Under that assumption we run out of liquidity when I am 95 and she is 98, but we would still have the house that would be valued near $3MM, more than enough to liquidate for care if we are still around. Because our plan is to move out of the house at her age 85 and downsize to be nearer the children for our final years, we would have a liquidity event 10-15 years before that point in time, so plenty of option value.

Let's see how the rest of 2024 goes, the markets are not going to be smooth and the build will have some surprises.

Use this thread to discuss anything you don't feel warrants a full blown post