Just came across this because of the Intel scare link…
Everybody is different.
You either never recover or re-born as a much stronger person.
Don’t use his experience as the solution to all kids.
FIRE?
I don’t think a landlord can fit this criteria. To be retired 100%, you need to get away from any responsibility. You don’t need to worry about the stock market or a PM or a tenant calling you in the middle of your vacation. You just need to worry about being pampered and enjoy life 100% without worrying about running out of $.
1- Retire tax free. Can you do that?
2- Eliminate double taxation on your social security check. Any income beyond the limits will do so, and if you own bunch of properties, your income will raise your false expectations that you will be 0 bracket.
3- Being free of legal responsibilities, that is, no lawsuits based on owning properties, or checking the stock market for any pending or future RE market crash that is going to cut your networth X%, or the insane position of becoming a stock market trader and renouncing to your retiree life.
4- Move to an area where your money is going to be cashed at a double pace than any part of CA or the US.
If you can do that, good! If not, keep dreaming!
Me? If I can’t achieve that, I will use the right to die, I mean, to commit suicide. 
I was not under the impression that FIRE allowed you to divest yourself of all responsibility for your investments. I thought that was DEATH.
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Seems that people have different ideas on “retirement” or “early retirement”. Financial independence can be agreed upon a little easily.
The numbers we have is 200k passive income with a mortgaged primary home, 100k for a mortgage free primary home.
Anyone disagrees on these numbers?
Your number needs to adjust for number of dependents in your household and their ages.
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Assuming 4 people household and assuming your financial independence needs to hold with 2 kids from 0 to 18.
Just make a guess on the high end so that it covers most common cases. It’s not worth it to make it complicated. You need room for some flexibility
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200k for 4 with mortgage doesn’t give you a lot of margin for safety.
Let’s say you bought a house for 1.3m with mortgage 1m. Loan payment alone is 60k a year. Property tax 20k. Budget in other stuff like maintenance, insurance etc and we are closing in on 100k. Just for the house.
With a 200k income how much is left after tax?
Primary residence paid off with low property tax (house bought before 2000), and $200k after tax passive income. That should do it.
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my mouth is watering with all this discussion. i should go make me some moon.
You need to allow for inflation… especially heath care costs
My buddy has Medicare… Part B costs $700/m it is means tested.
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You can pay off your mortgage, but you can’t control the property tax and your purchase time.
200k faces the following challenges based on discussions so far
- Primary home mortgage (removable)
- Primary home property tax
- Federal income tax on 200k
- State income tax on 200k
- Ok to assume no social security tax and Medicare tax for passive income? It could be from net rental income, dividend income, bond interest
- Inflation. I feel that inflation can be offset if your passive income is from rental property and dividend. Bond is a dangerous class.
- Health insurance cost.
Out of these factors, tax is the biggest threat. But if you use leveraged rental property, taxable income might be much less than 200k.
Health insurance is another big threat. But since everyone needs to buy health insurance, it’s unlikely to become much more expensive. US median household income is 50k, it’s hard to imagine health insurance premium goes up from 24k to 50k. I think healthcare cost may peak soon, a bipartisan solution is possible for healthcare
So better pay off your primary home. Budget for property tax and healthcare cost.
Even with 1M mortgage, I think a family of 4 can live comfortably with 250 to 300K a year. 200K is doable but kind of tight.
So shoot for 250K passive income, whether by business, rentals, or dividend. Actually a mix of all 3 is best.
Business income is rarely passive.
But I think very few people would really stop working on things after FIRE. FIRE allows you to not work, but you can choose to work a no stress job, or choose to start or continue a no stress business.
Maybe FIRE means it’s time to start a business. More likely, most people reach FIRE from rental properties or businesses. Dividend FIRE would require a much higher networth
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Healthcare at 24k is already at a crisis. Keeps going up at 8% a year doubles every ten years. Stupid politicians get free healthcare. They don’t care. This will destroy the whole economy at its present rate… Cost controls, rationing and single payer are the only solutions. Even Medicare is in big trouble
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The larger problem is Fed Income tax. At $200K, if you still have to pay Fed and State, you’re left with 40%ish rate. = $120K after taxes. That said, I think you should still be able to live easily as two people (thinking older FIRE) on $120K. If you’ve got kids in college, everything goes out the window until they’re out,
but at least it’s temporary.
But the healthcare really is the issue.
Keep in mind that healthcare is partly lifestyle. If you want to keep your healthcare down, there are things you can do. But it’s a mindset–no soda, eating healthy, getting out to exercise. Life is still a game of Russian roulette, but diabetes is a large portion of what’s taking over our health care costs, and it is generally a lifestyle disease.
Federal tax rate has reduced. State income tax is a bigger problem than people think. California does not allow many deductions, its tax rate is probably flatter. The dollar amount of state and federal income tax is pretty close.
If one buys health insurance, it shouldn’t matter whether he has chronic health problems. Other healthy people will subsidize the unhealthy people which is the purpose of insurance.
The biggest issue for diabetes is that people can not work too hard once they have diabetes
I thought there were maximums that the insurance would pay. Is that incorrect? Like if you have cancer, there would be a maximum yearly amount that the insurance company pays. Or is the problem simply that the copays and medications add up?
Fed tax rate reduced for now… Long term, it could go back up. Still at $200K income, unless its exempt from fed or state tax, the numbers have to be significantly adjusted to account for it.
So is $200K pre-tax or post-tax. And what vehicles are there for avoiding each of the taxes?
I’m just getting started on reading bogleheads, so maybe by the end of the year I’ll know all of this stuff.
Group employer health plans used to a long time ago have say lifetime maximums, say 1M. I believe now a days there are no limits anymore.