AOC Early Retirement Tips

We often get asked what advice we would give to someone working towards FIRE (financial independence retire early) and there are some great posts out there full of advice from the FIRE community. Most of the people who reach out to us for financial coaching start with questions about investment accounts, annual withdrawal strategies, and health care costs. Once we get through those basic financial topics the conversations move on to focus on the personal and emotional money topics people want to talk about in detail.

When we talk about the personal side of the FIRE journey there are a lot of common themes. The topics we hear about the most include stress over deciding when to resign from work, concerns about setting time and money aside for elderly parents, grief about losing friends who aren’t comfortable with FIRE related values and goals, anxiety about needing to move to a different location to lower expenses, fear about not having enough money to handle health care and long term care, and relationship challenges in a marriage or partnership from working towards FIRE.

We had a lot of those same concerns ourselves before we reached FIRE in 2018. Since then we’ve been looking back at our own FIRE journey to unravel the emotional side of what we experienced when we were working towards FI. Everything seems clearer now with hindsight!

In Our Case…

We needed a financial plan for our money, and we also needed a personal plan for all of the emotional aspects of completely changing our lives. Building our Personal Money Statement helped a lot but we didn’t do that until we were at the end of our FIRE journey, and that didn’t cover some of the other emotional issues we were dealing with during the earlier stages of working towards FI.

As we got serious about reaching FIRE we started feeling distanced from a lot of the people in our lives. We certainly weren’t sharing our goal of early retirement with our colleagues and friends at work. And our conversations with our closest friends started to change when we became less interested in talking about advancing our careers and spending money, and more interested in talking about saving money and changing our lives. When our values about our time and money changed we felt like we were no longer on the same page with many of our friends and family, and it became clear that we didn’t have a lot of people we could talk to who could really understand what we were trying to achieve.

Our biggest challenge during our FIRE journey was our fear of not having enough money. That fear was especially hard on Alison. We were both nervous about pulling the plug on work and trusting in our investments, which made us slow to test our portfolio and declare that we were financially independent. We were in a place of uncertainty when we were working towards FIRE and that uncertainty influenced our decisions as well as the pace of our decision making. We finally verified that we had surpassed our FIRE number in 2017, and in 2018 we verified that we had the early retirement funds we needed in our brokerage account. Looking back we know now that we could have retired a few years earlier than we did. We can’t go back in time so we’re focused on enjoying today, planning for the future, and being available for other people working on their own FI plans.

When we were working towards FI I needed more flexibility and a faster pace, while Alison needed more evidence and a slower pace. Alison and I process information very differently and we have different communication styles too. But we share the same goals, we listen to each other, and we always want to find a way to compromise and reach conclusions we’ll both feel good about. We certainly had our frustrations and miscommunications along the way, but we know our biggest success during our FIRE journey was our relationship. When people started reaching out to us to talk about their experiences on the path to FIRE we realized how lucky we are and how common it is to have relationship stress from your FI journey.

Since so many of our financial coaching sessions focus on these same topics, there are four main pieces of advice we like to share…

1. Go Deep With Your Numbers

First, know that 4% is a generic safe withdrawal rate (SWR), and generic advice is not a perfect fit for many of us. There really isn’t a single portfolio number or SWR that we can all copy and paste into our FIRE plans. Everyone has a unique set of financial circumstances to consider, which is why personal finance is so personal. When we were looking for our FIRE number and SWR we started with the generic 25x living expenses calculation as a baseline, and then we factored in everything that’s unique about our finances and our personal goals. We do want to leave a legacy for our nieces and nephews, and we want to be able to give generously now, and we want to have a healthy annual budget with plenty of wiggle room in our spending. We also want to be prepared to cover larger medical expenses that we might have to face, and we want to be able to self insure for our long term care needs when we’re elderly. On top of all of that we want to travel a lot during retirement, possibly even while keeping a home of our own that we can return to as needed. So we did a lot of planning and calculating before we arrived at our own FIRE goal of saving 33x our 2017 living expenses before retiring. We also wanted to make sure we tested our portfolio with a wide variety of data points since we had not worked with a financial advisor in any capacity while managing our own portfolio of investments and creating our FIRE plan. We still test our portfolio with our calculators and other people’s calculators. But we don’t worry about longterm portfolio recovery after normal market dips during our retirement, and we definitely don’t think about taking our money out of the market and stuffing it in a real or metaphoric mattress. We just want to feel confident about having enough accessible cash in our brokerage account in case our overall portfolio is damaged by black swan events, a major recession, extreme inflation, or a market price bubble during our early retirement years. Which is why we didn’t want to rely on anything higher than a 3% SWR in early retirement.

Second, build a withdrawal plan that will cover your financial needs from beginning to end, especially if you retire early. If you ever plan to retire it’s certainly a good idea to have plenty of money saved in traditional retirement accounts like 401k’s, IRA’s, and Roth’s in the USA, or RRSPs and TFSA’s in Canada. But if you want to retire before those accounts are intended to be accessed it’s also important to have a plan that funds your early retirement years without depleting your retirement accounts while you’re still young. We retired with half of our net worth saved in our brokerage account to provide us with completely accessible funds to withdraw during our early retirement years, along with a five year emergency fund (which is now down to a three year emergency fund since we bought a house last year). We want to leave our IRA and Roth retirement accounts baking in the oven until we are at least 59.5 years old, and we only plan to begin making withdrawals from those types of accounts after we can do so without penalties. We plan to take early Social Security at 62 in order to preserve our investment portfolio. We also want to make annual Roth conversions to move funds from our traditional IRAs to our Roth accounts, which increases our taxable income today but will also reduce future required minimum distributions (RMDs) after we’re 72 years old. And lastly we plan to withdraw funds from our Roth accounts when we’re elderly to cover our long term care needs. It’s important for everyone to evaluate their own unique expenses and budget items so you can build a withdrawal plan that fits your family, lifestyle, location, living expenses, health care needs, and personal goals.

2. Be Open to All of Your Options

Sometimes people can only see a clear path forward if they are open to new ideas. Sometimes people just need to give themselves permission to really consider big changes and new ideas. Being able to fully explore all of your options is a stepping stone to being brave enough to put your decisions into action. We first came up with the motto “All Options Considered” in 2007, when we were making a change from individual stock investing to owning rental properties. We wanted to give ourselves permission to try anything and our new family motto helped. There were plenty of times during our FIRE journey when we felt stuck in our circumstances or scared to make big changes, and we’ve used the idea of All Options Considered for every big financial decision we’ve made since 2007. It definitely came in handy in 2017 when we set dates for quitting our jobs, selling our condo in Seattle, and completely changing our lives. In 2020 when the whole world changed because of the pandemic we sat down to consider all of our options again and we came up with a new lifestyle to fit our new surroundings. All Options Considered has been a great mindset for us and it’s an idea we want to share with others.

3. Build a Community 

Human beings are social creatures, even those of us who are socially awkward introverts thriving in isolation are still incredibly social creatures. We have lots of FIRE friends now but we didn’t start building our community of FIRE friends until 2018 when we had already reached our FI goal. Our FIRE journey was pretty isolating since we couldn’t talk to our work colleagues about our plans and most of our friends and family weren’t comfortable talking with us about money in detail. We found the FIRE movement in 2014, but we didn’t find FIRE community people at that time that we felt like we could relate to or wanted to become friends with. As shy introverts we didn’t feel comfortable reaching out to people we had come across on the internet back then. But we are different now and we have learned that we sometimes make really important close friends after one of us just reaches out with an introductory message on Twitter, or Instagram, or Facebook, or a blog. If we could go back in time that’s one thing we would do differently, we definitely could have made more of an effort to start building our FI community back then. Being able to talk openly with people about all of your financial independence related plans, dreams, and questions makes a huge difference. So if you’re one of those people or couples who feels alone on the path to FIRE like we did, be brave enough to introduce yourself to others who are also working towards FI and to people who have reached FIRE already. No matter where you are on the path to FI or what your particular circumstances are, there are amazing people in the FIRE community who can relate to you and be supportive!

4. Build a Written Plan for Your Financial and Emotional Needs

In a sense we took our earliest steps towards FIRE in 2005 by starting to manage our own portfolio and by committing to learning everything we could about investing. By the time we opened a joint brokerage account and joined a women’s investment club we felt like we were on top of our finances, but back then we didn’t have a real FIRE plan and we weren’t always focused on a clear goal (just saying “we need to save more money and we want to retire early” is not a clear goal!). We also didn’t yet have the personal finance vocabulary or support structure we needed. One thing that would have helped us back then was a detailed plan to keep us moving forward. We were just drawing whatever lessons we could about what to do and mostly what not to do from our family members, including both successes and failures. When we found the FIRE movement in 2014 we identified a few good examples to learn from in other bloggers, podcasters, and authors, and our plan started to take a vague shape.

In 2017 we finally took the time to build a complete written plan we called our Personal Money Statement (PMS). Having our PMS written out meant we knew what our goals were and we knew how to react or not react during different financial events. Our PMS gave us the structure, personal accountability, and confidence we needed to quit our jobs and leave our career focused lives behind. I wish we had done a better job of creating a FIRE plan sooner, including both financial and emotional planning to help us get organized early on, but we got to it eventually. Anyone could benefit from taking the time to organize their goals and needs in a written document, and the earlier that kind of plan takes shape the better. Having something to continue referencing and updating over time during your FI journey could be helpful and reassuring!

So There You Go!

The nuts and bolts of reaching FI include more than numbers and calculators, there are just as many personal and emotional things to figure out along the way. So here’s our advice: Focus on all aspects of your FIRE journey and your life, not just on money, and remember that you are not alone!

No matter where you are in your FI journey, take some time right now to think about your personal and financial goals and make real plans for what you need. Take the time to build your own FIRE number, SWR, and withdrawal plan based on your circumstances and goals, and make sure you have accessible funds if you’ll be retiring early. Create a personal plan that considers where you’ll live, who and what your life will include, and what it will take to get there. Find a community to talk to about your finances, and all of your fears and concerns too because you’re going to need support and encouragement along the way. Lastly, keep an open mind… All Options Considered!

We do our best to weather the storms!


We are not certified financial professionals. For more information about us please read our Disclaimer.

37 comments

  1. The most common advice we heard before we retired was to “know what you’re retiring to.” What we weren’t expecting is how often our perspective on that would evolve after we retired. We now realize that “achieving FIRE” was just the starting point for the rest of our lives. Our plan continues to be a guide as we have new ideas and changing perspectives about what we want to fill that time with. Thanks for sharing this great advice! Oh, and socially awkward introverts rule!

    Liked by 3 people

    • Hey fellow socially awkward introverts! Thanks for the feedback, you are awesome! 🤖

      I think we got similar advice to yours before retiring. It was basically “know what you’re retiring to” because you don’t want to be bored. Being bored in retirement is just a non issue for us though. I could write a whole post on the myths of retirement boredom lol. When I was still working I felt like nothing ever changed. And since we retired it seems like our lives, ideas, goals, and our plans change every 5 minutes (or at least every 6 months or so). Now we get to enjoy making plans and changing them on a regular basis. And honestly we love that!

      Liked by 1 person

    • Totally agree with this comment… 18 months into our early retirement, I realize that we are still babies when it comes to FIRE. So I expect that my perspectives on life, what I want, and how I spend my time will continue evolving every year. And since we already broke the mold by stepping away from our corporate jobs, switching up how we spend our time in retirement seems much less daunting in comparison.

      What an incredible privilege to be able to explore the world, our relationships, and ourselves, while we still have the energy to do it!

      Liked by 1 person

  2. I’m finding that as much as I thought about the emotional side of my post-FIRE life while I was working, there was no way to really get the feel for it until I was actually living it. In my opinion, preparing for FIRE and living FIRE are quite different, and there’s no way to rush the reality of that. Kind of like, for me I prepped like crazy for having my first baby, but the experience of living it was completely different from my best expectations. Or like when I knew someone close to me was very ill and not going to make it, and I thought I was mentally prepared for their passing but once it happened I was not prepared for how I felt. So, I guess as you say, be ready with All Options and relax as much as possible in the journey around all of this.

    Liked by 3 people

    • Hi Kathleen. You are right that we can never be completely prepared for the emotional impacts of big changes or losses in life. All we can do is try our best to be logistically and financially prepared, and then be gentle with ourselves when we’re in the thick of things emotionally.

      Liked by 1 person

  3. Is cash in a brokerage account just like a savings account in which it’s easy to withdraw and offers a small interest rate?

    5 years sounds like a very large emergency fund! A 5 year emergency fund would likely be enough to make me feel safe to embark on a financially independent journey, assuming the rest of the portfolio was at its mark. After building a 1 year emergency fund, the focus will shift to retirement accounts and investing in the brokerage account. Once those have reached their number, will return to building that 5 year cushion. The PMS (teehee) is not very detailed yet, but it at least meant assigning jobs to each paycheck as they come in. What goes into the Emotional Needs plan? Is that mostly to prevent pulling investments during a down market and avoiding OMY syndrome? The level of emotional well-being of nearing the 1 year emergency fund provides is remarkable! I feel more creative and able to execute plans effectively.

    Luckily, friends and family are very supportive of reaching FI. I’m not especially pushing for the RE part right now, so maybe that’s why my family is being supportive. My friends are unconditionally supportive. We talk openly of salary, saving, taxes, and investments often to pool our knowledge. A win for any of us is a win for all!

    Right now, FI means the ability to pursue a PhD and try to make a difference without subjecting myself to any toxic work or personal environment. Can’t predict feelings once reaching FI, so can’t say with certainty what I will actually do.

    One thing that’s been on the mind is how difficult it will be to conduct IRA Roth conversions for the 401k after leaving employment with a filing status of Single. That also raises concerns of how pursuing FI would affect hypothetical dating and relationships. How does someone determine the relative importance of sharing financial values compared to other significant factors?

    Liked by 2 people

    • In my case, the brokerage account has investments. I do have an high yield savings account for the cash portion as brokerage accounts are paying next to nothing in interest. When I need access to funds beyond what I have in the savings account, I can sell the investments in the brokerage account without having to worry about paying early withdrawal penalties, like I would with an IRA prior to 59.5. I do have to factor in paying taxes, if any, on capital gains though.

      Liked by 2 people

      • It’s fun to hear what you are doing with your brokerage account and other funding sources. The money in our brokerage account is all invested in either ETF’s or mutual funds. Our other accounts are all ETF’s. We generally keep very low savings and checking balances. Sounds like you have a really good plan and it’s working well. Good for you!

        Liked by 1 person

      • Hi Pam! Thanks for sharing how yours is set up!

        The almost 1 year fund is parked in a money market savings account through my credit union with 0.5% interest, down from 2% before the pandemic. The small after tax brokerage account actually has a tiny amount of cash left over from purchasing stocks from when I first started investing, which needs to be pulled out or figure out how to invest the rest.

        It’s probably excessive having a full year in a savings account. It currently gives me a lot of peace of mind, but it may mean missing out on potential gains. How much is reasonable to keep in a money market savings account versus investing in more bond heavy ETFs? Are there other recommendations besides bond heavy ETFs that are compatible with possible near term use of a 1 year emergency fund?

        Liked by 1 person

        • We keep maybe 3 weeks of cash in our savings account. And then about a year of cash each in a short term bond ETF, a US aggregate bond ETF, and a money market mutual fund. If we had a different sized emergency fund we would split it up the same way. We used to have 1 year, 2, year, and 3 year CD’s for cash but those aren’t very appealing to us right now. Hopefully those CD options will get stronger again in the next year or two.

          Liked by 1 person

          • Looks like there’s a homework assignment this weekend! Need to get that money working harder than 0.5% with tolerable risk.

            Liked by 1 person

          • Which ones do you use for those funds? In my 80/20 brokerage account I keep 15% in BND and 5% in BNDX – that’s just for my long term portfolio mix. But for my near term cash I’ve been looking at BSV (and thinking about VTIP). Any recommendations?

            Liked by 1 person

          • We’re using BSV for our short term bond ETF, SCHZ for our US aggregate bond ETF, and SWVXX as our money market mutual fund.

            Like

        • Chickadee,

          Have you considered I-Bonds for some of your emergency funds? They are guaranteed by full faith and credit of U.S. Government and keep pace with inflation. If you aren’t familiar with I-Bonds, take a look at https://www.bogleheads.org/wiki/I_savings_bonds and https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm.

          If you buy by the end of May, you’ll receive at least 3.54% for 6 months. Then the rate will reset depending on inflation for next 6 months. This continues until you sell the bonds or they mature after 30 years, whichever comes first.

          One thing to be aware of is that you can only buy 10K worth of I-Bonds per person per year (plus another 5K per tax return via tax refund), so you’ll have to build your position over time. And you can’t sell them for one year, so keep that in mind.

          I have been buying I-Bonds for the last few years for some of the cash portion of my portfolio.

          Hope this helps. Let me know if you have any questions.

          Liked by 3 people

          • Hi Pam!

            Had not heard of I-Bonds before. From reading the links, it looks like there’s a limitation that it cannot be redeemed in the first 12 months. Is this correct, or is it possible to sell with a penalty in the 1 year timeframe rather than just the 5 year timeframe?

            The emergency fund would need to cover my expenses immediately should I become unemployed. The I-Bonds will make more sense for when that fund is built up to 5 years on the tail end of the accumulation phase.

            The tentative plan is to divert the funds coming in from paychecks to an after tax account and purchase some bond ETFs. The amount sitting in the high yield savings will be used to pay the mortgage and other expenses until it reaches 3-6 months expenses instead of the 11 it is at currently. This slower process should help emotionally wean from the idea of having a year easily accessible in the bank.

            Once the 12 month expenses saved mark is reached for the aggregate of the high yield savings and the after tax bond ETFs, the 401k contributions will be increased to max out this year.

            Liked by 2 people

          • Chickadee,

            No, unfortunately, I-bonds cannot be redeemed before 1 year is up (11 months actually as you can buy at the end of the month and redeem at the beginning of a month and still earn a full month’s interest). Once a year is up, you can redeem anytime. However, you lose 3 months interest if redeem within 5 years of purchase.

            In your case, it does sound like you cannot afford to tie up your emergency funds for 11 months, so it is best to invest it in something that is more liquid and can be withdrawn in case of job loss or any other emergency. Just keep in mind that bonds can lose value, as you may have seen during February-March 2020 when several of them lost value along with stock funds. Hopefully CDs will become more competitive in the next year for you to take advantage.

            I have a year’s worth of expenses sitting in a savings account earning a paltry 0.5% for that reason. Because it helps me sleep better in case of a true emergency or a black swan event. Rest is in mutual funds/ETFs and I-bonds.

            Liked by 2 people

          • Hi Pam!

            Thanks for the detailed information about I-Bonds. We’re on the same wavelength regarding maintaining a 1 year emergency fund. It is likely overly cautious in my case, so I’m transitioning to only 6 months in the savings account.

            Liked by 1 person

    • Hello Chickadee!

      Sure you could say cash in a brokerage account is like cash in a savings account. The 3 years of cash is our emergency fund and it is invested in a money market account and in a bond ETF. That way we’re getting growth and interest. And it’s easy to withdraw but it can take a couple days to access. We do have a savings account at Schwab that has a more normal amount of cash in it which we can withdraw immediately.

      And yes our original 5 year emergency fund was very large. It was funded by things like selling our car and our house and it felt right since we were basically leaving the country for a couple of years and what might happen next was a big mystery. We started with 5 years of living expenses in cash and it’s down to 3 years now. We have settled into retirement now and grown more comfortable with our accounts, our plans, and our portfolio in general.

      Whatever you choose for your cash fund amount is personal, just make sure you have your plan mapped out in your PMS! Teehee! The PMS name always makes us chuckle. 😁

      The PMS is a living document. It does take time to build it out and then of course it will change over time. Ours definitely has. It helps to add guidelines about when you change things, like giving yourself an annual review and update reminder (maybe on your birthday?), and a 3 month waiting period for brilliant new ideas if there are bigger changes that come along unexpected. That helps if you get cornered by a whole lift insurance salesman trying to offer infinite banking as a way to protect against sequence of return risk, cuz you can say, “my PMS stays I have to wait 3 months before making big decision like this.” It gives you permission to say no and walk away from certain kinds of surprises.

      Regarding an emotional needs plan, everyone is so different that we don’t have a roadmap for that. Other than to remind people to ask yourself what you need that you don’t have yet, what you are worried about, if there’s something you’re afraid of or anything holding you back from reaching your goals. We each have different personal “buttons” that you need to think about as you go. Some people say there are categories in the PMS document that get you overly excited, scared, or triggered in some way and that helps them identify the money and life related things they need to do something about. For Alison that included knowing that she shouldn’t panic if the market drops 30%. Our PMS says if that happens we will respond by doing nothing with our investments and instead take a walk, take a nap, cook dinner, or go sit in the hot tub. Wait we don’t have a hot tub!

      Sounds like you have found your passion and you’re already pursuing it with your PhD. Good for you!! Also – you are very lucky to have such a wonderful community of supportive friends around you!

      Regarding Roth conversions, you might consider doing some larger conversions while still working and then contributing to a donor advised fund to offset some of your taxes on the conversions. Because once you quit, depending on your health care needs, you could also be in between a rock and a hard place.

      It’s definitely possible to find someone that you can be in a romantic relationship with who will 100% share your financial values, but it’s also possible that when you first meet you wouldn’t be in the same place. I had student loan debt when Alison and I met, so we weren’t in the same place financially but we shared the same goals and values. Our salaries matched when we met but over time my salary grew while Alison’s didn’t. And we 100% mingled our money and that was what worked for us. On the other hand, what matters the most is generally sharing the same financial values and life goals. You can still keep your finances separate and safe and just let your relationship be about the two of you without money being in the middle. You can keep your money YOUR MONEY, and focus on having fun with your person!

      Liked by 2 people

      • Thanks for the thorough response! So much great advice!!

        The almost 1 year fund is currently in a money market account. Down the line when that fund gets expanded at the tail end of FI, the other years’ worth will need its own plan. Bond ETFs will be a starting point for research for the PMS section addressing the multi year fund to minimize sequence of returns risk.

        Love the waiting period idea as a great answer to any big financial decisions. Best to allocate a set time period to researching all the options before making an important decision. The annual review is a great idea! Thanks for the clarification regarding the emotional needs plan. There’s plenty of work to be done on that section now that I have a better idea of the types of things that can be useful. Having well defined and productive planned responses is a huge plus! Are soaks in a hot tub high enough priority for you two to acquire one? I assume the operational and maintenance costs are high, but could be worth it if it brings enough enjoyment.

        I haven’t applied for or started a PhD program yet. Currently, it’s the best way given my skillset that I could contribute to solving real problems that cause suffering in the world. The plan is to apply once reaching FI, so that finances will not be a factor in the decision of what and where to study. My current job is great and also contributes in a meaningful way, so there’s no rush to leave to do a PhD.

        My great group of friends is what brings me the most joy in life and I am so grateful we are in each other’s lives 🙂

        Is it possible to do Roth conversions in a 401k during employment with the company that runs the 401k? Currently, this plan does not allow Roth contributions. Almost all of my IRA is Roth, but I could convert the tiny traditional amount. My current plan is to start DAF or other giving once I reach the halfway point to FI.

        The cost of health care is the biggest uncertainty in my predictions. FI is far enough out that there could be so many changes to the laws before then. My current plan does not allow for an HSA, otherwise I would definitely max that every year.

        Thanks for the thoughtful advice regarding handling finances as a couple! Growing up, I saw finances used as a tool to control that caused real and lasting suffering, so it would be very hard for me to mingle finances without significant worry.

        Definitely agree that common goals and values are important! No need for both parties to enter the relationship in the same financial position as long as discussions and agreements could take place. Trust, respect, love, and enjoying each other’s company would rank high on the list of emotional needs.

        Liked by 1 person

        • Looked into the Roth conversions. If all spending came from existing after tax accounts for the year and there was no income for the year, it looks like an amount equal to the itemized or standard deduction could be converted without incurring any taxes. The conversion must be done before Dec. 31st instead of tax day for contributions.

          Liked by 2 people

        • Money market mutual funds and Bond ETF’s are still decent options for cash. Hopefully our CD options will improve again over the next couple of years as the economy recovers. Something to watch!

          Annual reviews for your plans and portfolio are good housekeeping and waiting periods work great for us. All wild new ideas are encouraged, but not spontaneous unresearched wild ideas! We shall see if the hot tub idea becomes a reality for us over here. Sounds like it could boost our utility bill by $25/month. Eek!

          That makes sense about your PhD idea. Sounds like you still have a good amount of time to research how that plan could come together and change things for you post FIRE.

          As for Roth conversions, I don’t think you can do anything with a currently active employer sponsored 401k. You can roll an old 401k into an IRA and then into a Roth IRA, or you can roll an old 401k directly to a Roth IRA. You can also reduce contributions to an existing 401k in favor of maxing out your Roth while you’re still working. There are lots of options for the traditional retirement accounts (401k, 401k Roth, Traditional IRA, Roth IRA) and it can be tricky to figure out exactly what works best for you in your personal circumstances.

          We don’t use a DAF personally since only about half of our giving is to qualified organizations. But truly DAF accounts are excellent giving vehicles. The tax implications of giving will likely change in the next couple of years again (hopefully replacing the changes made in the Trump era that removed tax benefits for average and low income people). Any type of giving is wonderful!

          We didn’t have access to HSA’s while working either. No worries! Hopefully by the time you hit FI the ACA health care system will be greatly improved and much more affordable. We were thrilled to see the temporary changes from Biden’s Rescue Plan this week when our ACA costs went from $144/month to $0/month! Those changes will allow us to boost our Roth conversion a little at the end of the year too. So stay tuned and we’ll see how the ACA evolves during the Biden era (and hopefully the Harris era too).

          As for relationships and money, sounds like you know what you need. Keeping your finances separate is totally doable. Respecting your emotional needs around money is the priority. It’s not always possible to find a partner with the same income and debt experiences as you, and frankly that isn’t critical. I think it’s more important to reach a point where you and your partner have common financial goals and values that you can work towards together!

          Liked by 1 person

          • “Sounds like it could boost our utility bill by $25/month. Eek!”
            Planning to use an AC unit this summer after going through last summer with no AC. The utility bill will likely go up by $25/month, possibly more. A lot of thought went into the decision and ultimately quality of life won.

            After researching Roth conversions, the new plan is to have enough liquid savings at the time of RE to do the $0 tax conversions. Alternately, if a job change occurs, it can be addressed during the working years after being able to move the 401k to an IRA. Currently trying to max the traditional 401k and Roth IRA for the first time this year. Prioritized Roth IRA in the past and never had enough to also max the 401k.

            The fund that you two have created for financial education is really inspiring! I’d be inclined to set up a scholarship program for pursuing a bachelor’s in STEM currently. There also appears to be a great need for the basics as well, like food and housing insecurity. Lots to consider when the time comes.

            That’s great that ACA has already improved for you! Researched ACA plans yesterday for 2021 to get an idea of what it’s like now. Planning to add a section for annual research of the current health care and charitable donation laws to the PMS.

            Thank you so much for all of your great advice! It feels good to be excited about the future again 🙂

            Liked by 2 people

          • You are clearly a great planner! It’s exciting for us to see your progress and all of the steps you’re taking. Most of all it’s fun to share in your excitement. Keep it up! 👏

            Like

  4. Another informative and interesting post, thanks. Sounds to me like there may be an opportunity for you, I don’t know of any “how to determine and build your personal money statement “ type manuals. If you know of one that outlines guidelines of what to consider let me know. Or like I said, maybe write one. 😉. I’d buy it. Ps, if possible, I’d love some help with the calculator thingy you posted about recently, I put my numbers in and I think I’m missing something or doing something incorrectly as the outcome was not as expected. Thx

    Liked by 1 person

    • Hey thanks for the feedback. We would be happy to go over your calculator data with you. We can set up a video chat to talk calculators and PMS documents soon. Have you already downloaded our PMS template and tried to fill that out?

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      • I thought I’d chime in here – the first time I ran Ali and Allison’s calculator I made an error that completely changed my results in such an unexpected way – numbers that left me totally panicked for a few minutes, and I’m wondering if you possibly did the same thing…

        If you change the “Average Fees” without entering a percent sign at the end of your number your results will be wildly off.

        For example, I entered my expense ratio as “.04”

        ***HOWEVER***

        what I needed to enter for proper calculation was “.04%”

        This changes everything 🙂

        Liked by 1 person

  5. I was nodding along s you spoke about feeling distanced from family and friends as you began working towards FIRE. Money is such a loaded and layered topic, and sometimes choices that one person may view as “wise and resourceful” another may view as “stingy and overthinking.” I have a friend that I adore, and our spending patterns are very different – shopping and treating herself is a form of self care for her after a childhood where she didn’t have much. As a social worker she also gives so much of herself, and she will be a 40+ year retiree with our state’s pension fund, where I’m glad she will be taken care of – she’s earned it! She doesn’t like math, and relies on the fund to cover her, so what’s in her account today, is money for today. Shopping doesn’t fill me up, and so we try to meet for walks and chats, and I recognize that she sometimes sees my choices (e.g. not going out of town to go shopping for a weekend) as a form of depriving myself and being a little cheap, whereas I see my choice really as my own form of self care. I love feeling secure, knowing my dollars are quietly doing their job, and knowing that at 24x I am closing in on Financial Independence!

    Because of society and my social circle (fellow parents at my kid’s school) – there just isn’t anyone in my day to day life that knows my financial situation; one person knows I fully own my house, and another knows that I actually also outright owned the second house I sold last summer (but they don’t know that I own the one I live in now!). Anyone else who may know about that house sale would naturally assume I had a mortgage, and the fact that I’d paid it off years ago (at 41) isn’t something I would share in my peer group either; with everyone muddling through, speaking openly about my financial situation would feel crass – and you’d never guess it from my wardrobe, car, or my modest house in my modest neighborhood.

    And as I move through the upcoming stages in FI I imagine that I won’t tell anyone I’m retired; I’m already a freelancer so it’s easy to be vague about how much or how little “work” I am doing. I’m also single, and if there happens to be dating in my future – with my FIRE approach to life – well, that is a niche!

    The internet FIRE community is where I’ve been able to ask questions, found encouragement, tested multiple calculators, and discussed long term plans. Maybe one day I might make it to a Chautauqua to find my people! In the meantime I greatly appreciate the two of you for sharing your experiences and knowledge with us readers. Truly – thank you!

    Liked by 2 people

    • Wow Kate. Thank you so much for this comment.

      The way you described your important friendships sounds so familiar. We did decide to tell our friends more about our financial situation when we retired, and yes it was awkward. Some people pulled away from us which was tough initially but really ok in the end. Other people seemed uncomfortable in the beginning but a year later they were excited to be able to talk with us about their financial situations and those friends and family feel closer now than they did before. So that’s amazing! Whatever you do or don’t tell your friends and family is your choice. Just make sure you are taking good care of yourself and are also getting the emotional support you need.

      The FIRE community provides an ever growing and changing source of internet friends for you to lean on, including us! We are really grateful for this community and especially for all of the friends we have been able to meet in real life. It sounds like you are really benefiting from the FIRE community as well and that is awesome. And since you mentioned a Chautauqua, we are so glad we went to the Ecuador Chautauqua in November of 2019. Those events really are a great way to make friends!

      Liked by 1 person

  6. Another interesting and informative post. I would love to know more details regarding the PMS, is there some sort of questionnaire or checklist or format you used as a guideline to put that together for yourselves?

    Liked by 1 person

    • We found a few examples of life planning binders and estate planning binders and looked at the table of contents for those types of things, and then we just adapted those ideas to include the full list of categories we wanted to cover in our own binder. Then we were asked to talk about that and try to make it into a blank template for others so that’s what we were aiming for with our Personal Money Statement. It had a really basic name in the beginning but a life planning binder is just not as fun as a PMS!

      Liked by 1 person

  7. Love your blog and very relatable to me personally. My biggest question is what is the best way to find housing without W2 income? We are seeing limited options in our new city when applying for rentals due us not having jobs even though we have substantial assets. Do you have any recommendations for ways to find better housing options? Thanks

    Liked by 1 person

    • Thanks and glad you found us. Regarding finding better housing without W2 income, I would think that either offering to pre pay say 6 months or showing a bank statement to prove you have some of the rent money in the bank might work. We have only even “rented” with Airbnb when traveling. But all our other friends have offered to pre pay a few extra months. And I would just start asking the land lords what they would accept for proof of income. Good luck and enjoy.

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