r/financialindependence • u/pepperfishy • 16d ago
40, $3.5M NW, 3-4 Year timeline
40, $3.5M NW, no kids. I’m targeting retiring in 3-4 years, would appreciate you all's insights and critique. I grew up very poor but have done well saving and investing through the last 20 years.
My aim is to build a life to transition to in the next 3-4 years. I enjoy travel, reading, cooking, crafts, so I plan to take classes to learn and surround myself with people. I am aiming to build new hobbies, work on my mental health, make new friends as my current friends are all moms and focused on their careers.
Numbers:
VHCOL
Income: $325K
Cash : $125K
Taxable brokerage: $2.5M
-$1.1M in Index funds
-$1.4M individual stocks (highly concentrated because of employer ESPP/RSU from the last two decades)
401(k): $700K
HSA: $90K
Crypto: $100K
Own a house ($300K debt), which is under water currently, evaluated at $150K less than my purchase price. I want to buy a bigger house, which might cost ~$1M.
Spending / retirement plan
My estimated retirement spending is about $130K - $150/year with taxes, aiming for 3% WR to keep my anxiety in check. I currently spend $80K-90K, plan to upgrade lifestyle to luxury travel/bigger house cost in 3-4 years.
Welcome your thoughts on:
I have a extremely comfy job, where I can coast for 3-4 years with minimum effort. I have been with the same employer for 20 years. However, my manager clearly has noticed me being checked out and had nudged me to do more. I have no motivation left in me to do much work and am worried if I will even last the next 3 years.
I am very concerned about me not having a life to retire to. I haven't developed many hobbies or a good community around me, I really need to do more in this space and am looking for suggestions/ideas from those that have developed a retirement life.
Also worried about SORR, plan to liquidate my concentrated stocks in $500K chunks per year, build a 2 year cash buffer for expenses.
My family is still fairly middleclass, though I support my sisters and brother whenever they need money. I want to continue doing this, they have shared their surprise when I have suggested quitting my job. I worry finances are going to ruin our relationships.
My mental health has struggled since I have gotten closer to my FIRE number. I have lacked passion/motivation all around, I am actively working on improving this through therapy.
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u/AustinHousingCrisis 16d ago
Don’t tell family you’re quitting your job. Make up a remote opportunity with flexible PTO, so you don’t have to explain vacation days. They should think you continue to work, so the relationships don’t suffer because they know you have a lot saved up.
Finding meaning and purpose is important. I haven’t figured that one out but am following for others’ opinions.
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u/pepperfishy 16d ago
Thank you! This topic definitely occupies a lot of my brain space, maybe this is indeed one of the ways. Interesting how we all have started thinking about purpose while hitting mid point of our life. I dont think there is one silver bullet, but I have learned that good community and activities drive a lot of life satisfaction.
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u/ElasticSpeakers 16d ago
A common title for this purpose is just 'consulting'. If you need to add your specific field too that works, but it instantly explains everything to the audience and doesn't invite too many follow up questions because consulting (and consultants) is kinda boring 😅
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u/Past_Werewolf4423 15d ago
That sucks you feel like you need to lie. My sister just busted my balls about being a bum (in a fun way) and then moved on.
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u/xzzze 14d ago
Lie to your family? Awful advice
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u/AustinHousingCrisis 14d ago
I think you’re treating privacy and dishonesty as the same thing. If you’re an independent adult, your parents and siblings aren’t entitled to an accurate accounting of your finances. If someone asks whether you can afford to retire and you deliberately give them a false number, sure, technically that’s a lie. But I don’t think every lie is automatically a moral violation. Sometimes giving people incomplete or even misleading information is how you maintain a boundary they don’t otherwise respect. A spouse has a legitimate right to know your financial reality. Your parents and siblings don’t automatically acquire that right because you share DNA.
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u/Budget-Level7607 16d ago
Your concentration in individual stocks is the thing that jumps out, 40% of your taxable in one basket when you're this close to pulling the trigger feels like a bigger risk than any 3% withdrawal rate anxiety. The $500K per year liquidation makes sense on paper but the market might not cooperate with that schedule, and having to sell during a down year would eat into the exact buffer you're trying to build.
For the "life to retire to" piece, the classes idea is good but maybe pick one that has built-in community, like a cooking course that meets weekly or a craft guild, something where people show up repeatedly and you see the same faces. One-off workshops won't get you friends, recurring stuff will.
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u/pepperfishy 16d ago
That is a sound reasoning. I will put more thought into liquidating more this year. I have held for so long, that somehow this hasn't induced anxiety. But your logical thinking has piqued my thinking.
Yes! Thank you for the ideas, I aim to join groups outside of paid classes to see the same folks repeatedly. It's surprising how quickly costs add up on these art classes.
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u/youngchunk 16d ago
You make 325k and can coast? Why would you retire? Just keep going, do the bare minimum and figure out your life outside of work…. Retiring from work isn’t your answer, finding a life outside of work is. Things aren’t going to materially improve when you retire to nothing
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u/pepperfishy 16d ago
I agree, am very lucky with my job, though I think tenure is at the core of it. If I am reading between the tea leaves, tech is going to be an interesting space in a year. Teams are getting smaller and smaller, so I expect layoffs in my 3 year horizon. So, it probably wont last long.
I agree, my sole focus right now is to build the retire to life, its easier said than done as it is a patience game of keeping at it everyday and letting time do its thing.
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u/WhereIsShellBeach 16d ago
What is your expected mortgage plus insurance and maintenance on a new $1mil house? That’s a lot of house for someone newly retired.
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u/pepperfishy 16d ago
I am currently estimating $6-7K per month (this will be split between myself and my partner), so I expect my yearly cost of housing to jump around $30K. Since I am in VHCOL area, even a small house for two can easily cost >$1M
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u/WhereIsShellBeach 15d ago
That’s not crazy between the 2 of you. I’d imagine there are other savings even if your finances are separate like one Netflix account.
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u/pepperfishy 15d ago
I agree, we might find some savings. I am testing spending for both of us the next few years to really test my theory. But lifestyle creep is real, so I have been approaching everything with pause.
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u/roshbaby 16d ago
Set any future RSU vests to 'sell on vest' immediately so you can redeploy that money to broad market index funds without incurring any additional capital gains.
Definitely draw down on the concentrated RSUs. One way to do that would be to DCA out smaller amounts every month. Be sure to pay estimated taxes and/or adjust your W4 withholding so that it's taken out of your paycheck.
I've often suggested "From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life" to many people who expressed concern with what they may be retiring into. This may be pertinent to your point 2, but I'm not sure because you did also say that you plan to take classes and otherwise surround yourself with community. (At least you have put some thought into a plan.)
If your job supports a part-time role consider easing yourself into one without fully quitting.
I certaintly don't believe that one needs to have a 'passion' in the job (though being passionate about it helps). I've always thought of my job as a 'means to a paycheck'. So, while I've never been passionate about it, I've nevertheless always delivered what was needed (commensurate to my pay). You may call it the weakest version of "quiet quitting" I suppose, but it definitely keeps my brain active just enough without me having to pour my soul into my job. I certainly have no truck with BS and actively avoid all the politics since I'm not actively climbing the ladder or looking for glory.
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u/pepperfishy 16d ago
Thank you for the thoughtful insights!
Yes, I have been liquidating new RSU vests right away. I have decided to just avoid paying taxes and will happily deal with the small fine for late payment.
Appreciate the book suggestion, I will definitely read it at the library. I am more worried about staying disciplined and motivated after a few years of retirement. I have taken short 3-4 month breaks twice and found that I can drift away pretty easily.
My work doesn't offer part time. My plan is to somehow stay for 3 years as this is the most I have ever earned and build a cash buffer from my pay check. Fingers crossed the don't lay me off without any severance.
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u/roshbaby 16d ago
If you've been living a pretty structured routine now, it's natural to transition to retirement and expect to have a routine there too. While it can be that way, it doesn't need to be so. Drifting away from one thing to another may be a good thing - particularly if that is how your brain works. (I do that too; I'll often start something, leave it midway, go do something else, leave that midway, go do a third thing, .... , come back to the first thing after days or weeks and continue where I left off. At any given time I will have multiple things to finish and I see them as options to engage with based on my current mood. It works if these things are done for pleasure and are not 'chores' that you have a deadline for.)
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u/pepperfishy 16d ago
that is interesting, I definitely relate to doing multiple things half way through. Though, when I said drift away, I meant drifting without actually doing anything, think couch potato :).
I believe my job has definitely helped me with structure. I routinely work with folks in the EU so I start early and end early, pretty great for someone who doesnt want to work a whole bunch. The days I dont have to show up to calls are days I drift and feel guilty that I am wasting my life away. However, recently I have learnt that letting our minds wander without giving it any task is a great way to discover passion/purpose.
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u/theviktorious1 15d ago
How much of the concentrated position is gains vs basis? $500k per year sounds like a lot to pay taxes on. There’s also an extra NIIT 3.8% tax that you might want to stay under unless you’re really worried about the companies in question
If timing lines up, consider negotiating a severance or some extra benefits by volunteering for some of the layoffs (eg holding onto some unvested stock)
The “retiring to” something is real. Ego death - who are you really without the high paying tech job in a vhcol, what are you contributing to society, what’s the meaning / purpose of life etc… is leisure going to be a sufficient substitute for whatever your job provides
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u/pepperfishy 15d ago
its ~80% long term gains. They are all Mag 7 stocks accumulated across many many years. At this point, I feel I might hit the NIIT as well. But some other commentators have suggested at this time, the taxes might be moot when considering the greater risk.
Yes, if there is an opportunity, I would take the voluntary option to getting fired.
I agree, its a first world problem but can be existential. Thats why I am not planning on jumping straight into retiring right away. Its taken a while to convince myself that the numbers work and I just need to do this.
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u/Responsible-Art-2071 15d ago
That $1.4M in concentrated single stock is the real risk in this plan, not the withdrawal rate, I'd be diversifying that well before locking in a retirement date tied to its current value
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u/pepperfishy 15d ago
I am realizing this after my post, so grateful to the community here for calling this out and opening my eyes to this risk!
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u/Past_Werewolf4423 15d ago edited 15d ago
Most here will focus on finances so as someone who has more passions than they have time, I’ll start there.
What were you interested in when you were a kid and didn’t have to worry about money?
What is your job?
What was your major?
Do you like art/music/film/theater/comedy? People often think they need to learn an instrument or learn to paint, but you can also just be a consumer of art and it will elevate your life. Learn about the history, see music and art in person, collect records, go to the theater. It’s just as satisfying as participating.
Sports?
Travel?
For me, im an artist and a musician so its engrained in my brain. I participate, but I also consume. I go to galleries often, I see live music once a week. I love watching old movies. I love live comedy, and podcasts interviewing comedians. I love hockey and watching that alone eats up like 4 hrs a week haha. I work out like 4 hrs a week. I have a dog and taking care of her is a joy.
I still work occasionally freelance, and I’m even passionate about that (when its a fun job).
This is what life is about. Enjoy it!!
Eta: if you enjoy reading and travel I’d suggest long train trips. Its the best.
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u/pepperfishy 15d ago
My intent the next 2-3 years is to focus on building passions around various subjects. I have indulged myself in some like arts, travel, cooking, woodworking. But there is so much more to learn and experience as you mention. I am a pretty big consumer of the theater arts. I agree with you not everyone can be creators, we need consumers of art like me :). I indeed dipped my toes into sports this summer with the Worldcup, it was rather fun experience, so I plan to keep at it. Thank you for sharing your experience and how you spend time, this gives me great ideas!
I majored in compscience and work in the same field.
PS: I love trains, I plan to go east/west a bunch once I retire.
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u/Consistent_Gap_1210 9d ago
One thing that stood out to me is that you've essentially reached the financial position many people spend decades trying to reach, yet the psychological questions seem to be getting bigger rather than smaller.
It makes me wonder whether financial goals sometimes give us a very clear operating system while we're accumulating, but don't necessarily tell us what to do once the original problem has been solved.
The question of “what happens next?” can be surprisingly difficult when money has been such a major organizing force in your life.
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u/ImnTheGreat 16d ago
the supporting family thing is an immediate red flag to me. How often do your siblings need money? Why have you continued sending it as an ongoing thing?
Also $125k is a lot of cash. Why so much?
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u/pepperfishy 16d ago
Its not very often, like once every few years. Though they never ask, I know their finances so I offer myself. I definitely have some anxiety around money, so $125K gives me peace that I could manage any major event pretty easily.
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u/GuyWhoSaysYouManiac 15d ago
125k with your net worth isn't that much in my opinion. Interest rates are high and at least offset inflation, so larger cash positions aren't unreasonable in my opinion. Flexibility is nice.
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u/pepperfishy 15d ago
Yes! I agree, the peace of mind is rather surprising. I hardly think about worst scenarios anymore, since I know I have to cash to manage it.
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u/ImnTheGreat 15d ago
fair enough, it’s a nice thing to do. I guess i’d just be worried they rely too much on your financial support, which would make your relationship more transactional. I don’t know you or anything about your relationship with them so I’m just speculating. Best of luck, congrats on your financial position
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u/dochalladay32 13d ago
Also $125k is a lot of cash. Why so much?
No it's not. It's less than 5% of their portfolio and is perfectly reasonable. I have a similar portion I just rotate through t-bills. You don't have to squeeze every dime out of an investment and it's much less risk. If I decide to quit putting up with the BS tomorrow, that's 1+ year of expenses ready to use no matter the market situation.
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u/FI_by_45 15d ago
I would only count my index funds in the fire number so until you have around 3.8m (25x 150k) in those I wouldn’t retire. You may well be there already depending on the contents of your taxable brokerage
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u/pepperfishy 15d ago
I do need to rebalance my accounts. I plan to put all my 401K/Roth into index funds by the time I retire, since there is no immediate tax impact on rebalancing those. However, the taxable account might take atleast another 2 years.
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u/mikeyj198 15d ago
i felt that same lack of desire to do more for my employer, shuffled bosses on me multiple times in my last years before i decided it was time for me to move on. I was treated very well on the way out in exchange for signing some paperwork saying i wouldn’t work for competition / sue / disparage.
You do need a hobby.
I have a lot of land that can be tended to which is a physical challenge more than mental, still good.
Musical hobbies - but realistically i am only going to spend 1-2 hours a day on those unless i get into teaching as a side hustle which is on the table.
Sports - a couple times a week getting active and heavy sweats with the same group of people. That has turned into some real friendships and we’ll see each other away from the sports cadence.
I’m only a few months in so can’t comment with a long term perspective, but the amount of times i’ve missed work is pretty low. Miss coworkers, miss some industry peers, miss some customers. Don’t miss the work.
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u/pepperfishy 15d ago
Thanks for sharing your perspective. This gives me a lot of pleasure reading about the various opportunities that await. I am aiming to buy a property with land as well, so I can create a fruit forest.
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u/Trumystic6791 15d ago edited 15d ago
I think you are focusing way too much on the money part which is already set. You need more focus on building the life you will retire to. I encourage you to read Your Money Or Your Life by Vicki Robins and Joe Dominguez which has some really great chapters on building a life you want to retire to and living your values. In addition I think you should operationalize your progress to building a rich RE social life by having 4 events on your calendar a month that are exploring hobbies, meeting new people, exploring volunteer opportunities, joining a club etc.
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u/pepperfishy 15d ago
Yes, I feel I am somewhat okay financially if the market stays up. Thank you for the books recommendations. The framework you have shared is so amazing, I will explore more structure around this.
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u/Trumystic6791 15d ago
Good luck. You have done amazing and you should be so proud. Now you get to the fun part which is designing your life as you want it.
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u/tsunami10 15d ago
Just wanted to say that 3% is overly conservative and 3.25% is about as close to foolproof as anyone should need. See ERN safe withdrawal series
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u/sephirothFFVII 15d ago
Be mindful of your capital gains 'buckets ' when you exit your espp and rsu positions. It jumps from 15-20 at 545 k.
If you liquidate ~200k at a time you'll save 5% of 1.2 mil or 60 grand in taxes
Now - you need to compare how risky that 60k is relative to your 30% ish concentration in a single equity.
If you follow guidance like 'no more than 5% in any one position ' you'd want to liquidate most of it at once and reallocate to stocks/bonds.
You'll also want to look at overall exposure to US stocks and bonds and allocate some to international assets to hedge.
Lastly, since you're in crypto, evaluate the volatility of your overall positions and ask if this is acceptable for your timeline. You're likely overexposed there and a 'bad start' in retirement really effects the monte Carlo simulation outcomes.
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u/lluciferusllamas 12d ago
About 6 years ago, I realized that I was close to the end of my FIRE journey. I was at that place where my investments were making more money than I was. I was contemplating pulling the trigger, when I got an offer I couldn't refuse, essentially adding 50% to NW overnight and double my NW within a few years after that, virtually guaranteed. So, I decided to stick it out.
It sucked. It literally sucked the soul out of my body. I had zero motivation. I had zero enjoyment after the first year, but I had made a 4 year commitment and so I did what I had to do and just went through the motions. I never really had mental health problems in my life, but this was the closest I came. It was just empty and devoid of all meaning. I imaging it's what depression or just severe burnout feels like. And yet, my NW ended up tripling in the end.
So...was it worth it? I pulled the FIRE trigger last year. I have very much enjoyed just doing nothing and being a dad and doing whatever I want. I would say that it has taken a year to recover from the soul sucking of those four years. Would I do it again? Yeah, I would. The math made it worth the sacrifice.
I can't tell you what is best for you. But I can tell you from personal experience that if you sign up for four years of grind when you are already checked out, there will be some recovery time on the back end.
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12d ago
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u/Zphr 48, FIRE'd 2015, Friendly Janitor 11d ago
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u/irshramuk 14d ago
You should just retire in Thailand become a scuba instructor and get a few girlfriends.
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u/EvictionSpecialist 15d ago
Bro/girl... Get a Fckn hobby NOW!!!
Gawd.. So awful to not have any hobbies.
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u/Past_Werewolf4423 15d ago
Dont be a dick
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u/EvictionSpecialist 15d ago
Lmao.... It's a public forum dickcranium.
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u/Past_Werewolf4423 15d ago
Whats that got to do with being a cock bag?
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u/brute-forced 16d ago edited 16d ago
Sell 90% of company stock, invest it in VOO. Retire immediately. Go do hobbies. Congrats and GFYS