Can We Accelerate Our FIRE Date?

Lately I have been feeling really blah at work. Like, I just really don’t care.  Now this is likely mild depression which is why I decided it might be time to schedule a visit with my therapist again but it got me thinking, do I really have to wait another 3 years until we leave our jobs?

Now first things first, I know that just leaving my job won’t make me miraculously happy but not being stuck at my desk all day with freedom to do what I want certainly does sound great.  So could we make it work?  Short answer, yes we can probably do it in less than 3 years.  As I have mentioned in the past I believe we are going to experience a market correction in the near future.  And part of me really hopes this happens soon so that we can be done with it and I won’t have to worry about it before we hit FIRE.  But if we do actually get a market correction in the next year or two, what would that look like for our FIRE success?  Thankfully I think we could still make things work, which is why our FIRE date has been tentatively scheduled for 3 years out anyways.  I have been planning on having a buffer just in case we have a market correction the year we leave our full time jobs.

I have so many different spread sheets, running numbers in a plethora of ways, but I created one more recently that is pretty dang simple and is a nice illustration of how much we actually need to make this work.  I used the following assumptions for this chart:

  • Annual need of $65,000 per year.
  • Gross income from the rented unit in our owner occupied duplex of $17,100.
  • Net rental income from our other investment property of around $8,500 (this number also takes into consideration the small amount of taxes we pay on our owner occupied duplex income as well).
  • Part time work of $10,000 per year.  This is very doable between Mr. SFF’s side gig and maybe a seasonal job for me here and there.  In reality this will likely be higher.
  • Then I solve for the balance we would need to draw from our investments.  In this case it is $29,400 per year.

The next two columns then give the amount of our total investments needed in order to maintain that annual investment withdrawal amount.  I used both a 25 times multiplier which equates to a 4% withdrawal rate and a 30 times multiplier which equates to a more conservative withdrawal rate around 3.3%.

By looking at this chart I can see that we only need around $735,000 of invested assets in order to retire with a fair level of comfort or $882,000 to give us a little more security knowing that we won’t run out of money.  This is huge as we are there now (queue the happy dance)!  What this doesn’t take into consideration is my conservative nature.  Is that $65,000 annual need actually going to be enough to cover the big unknown variable that is health care costs?  So my next step was to create a second chart with a higher need amount of $70,000, giving us a slight buffer in our spending in case health care is more expensive or we want to travel.

In this version we need $860,000 with a 4% withdrawal rate or $1,032,000 for the more conservative 3.3% withdrawal rate.  At what point would I be really comfortable leaving my full time job with full benefits?  My comfort level is much closer with the 30x multiplier on this chart.  But what if we experience a 20% drop in the market?  In order to hedge for this I would want to get our invested assets around $1,250,000:

$1,250,000-20% market drop=$1,000,000
(yes I am rounding from that 30x figure)

Needless to say, we are not there yet.  Womp, Womp.  But we are getting closer.  Could we hit this goal in 2 years?  Possibly.  Depending on what the market does (always that big uncontrollable variable) and if we are able to keep our savings rate high we might be able to make this work.  It’s amazing how looking at my charts periodically helps to keep me motivated to continue to be diligent with our savings and also lighten my mood.  Freedom can happen!

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