The Intersection of FIRE and Disney

[Starport Seven-Five]

I'm a bit gob-smacked by some of the retirement amounts mentioned here! I think we will be at about 1m (excluding the house which will be paid off and will hopefully be worth 1m by then). I'm hoping, like the Canadian poster above, that our healthcare (pretty much free) will be helpful.
That's for a DINK couple, professional, saving pretty hard, too
With our tax rate (37%) I'm not sure how we could do anymore..

It depends a lot on target age. When retiring early, you have a lot of years to bridge without SS/Medicare so the amount does have to be much higher. That being said, I agree that when we start talking 4+ million it raises questions in my head about assumptions as there is more to that number than just early retirement. There are reasons that make sense (leaving large amounts to family members is common) and everyone has their own path/life goals but it's rarely strictly retirement.

I wonder about your statements regarding tax rate along with DINK professional couple. Not sure how much you want to share beyond that but I think most in the FIRE world make good salaries and live middle to upper middle class lifestyles. Personally, we make ~150k household gross and live on about half of that.

 

[Sjm9911]

It also depends on where you live also. I just moved about 4 years ago and my property taxes are about 10k a year. For me this was a win, as it was more then half of what i was paying. And this is just for normal , single familly homes. When i retire, i will stay here u till my daughter finishes collage, then move to another state, if not sooner. Lol.

 

[KEK1]

Is that 37% your federal marginal tax rate or your all-in tax burden? If that's your US federal marginal tax rate, you and your spouse have in excess of $622K of taxable income. Even if your all-in tax burden reaches 50% between federal income taxes/SALT/FICA, that leaves $300K+ of cash each year.

I won't pretend to know the specifics of your life, expenses, and lifestyle, but I suspect that you can find at least $100K to save each year without blowing up your finances.

Personally, I won't get close to where a number of these other posters are either! But in the 22% federal marginal tax bracket, I don't expect to have the cash on hand to get there.

LOL yeah we wish! We are in Australia. Tax rate of 37% for most people, goes to 50% when you earn more than 180k/year.
We are on about 140k gross /year.

 

[Chickinvic]

Is that 37% your federal marginal tax rate or your all-in tax burden? If that's your US federal marginal tax rate, you and your spouse have in excess of $622K of taxable income. Even if your all-in tax burden reaches 50% between federal income taxes/SALT/FICA, that leaves $300K+ of cash each year.

I won't pretend to know the specifics of your life, expenses, and lifestyle, but I suspect that you can find at least $100K to save each year without blowing up your finances.

Personally, I won't get close to where a number of these other posters are either! But in the 22% federal marginal tax bracket, I don't expect to have the cash on hand to get there.

I was assuming (based on their use of "gobsmacked" and mentioning close to free healthcare, that they are in the UK most likely). They are not from the US in my estimate. 37% tax rate would not require an extremely high income at all. Here in Canada, about 100K income would have you paying 26% federal and your provincial income tax rate on top of that. Here in BC, the provincial tax rate at that income would be over 12%.

ETA: Just saw their post above about being in Australia. I knew they couldn't be from the US. I am totally shocked at how low income taxes are in the US that it would take $622K of taxable income to be at that tax rate. No wonder social services are so limited down there. Completely different mindset. Canadians (and Europeans, etc) are used to paying higher taxes, but we get a huge social safety net and better public services/school. People still ***** about taxes though. I think that is human nature lol.

 

[RamblingMad]

I was assuming (based on their use of "gobsmacked" and mentioning close to free healthcare, that they are in the UK most likely). They are not from the US in my estimate. 37% tax rate would not require an extremely high income at all. Here in Canada, about 100K income would have you paying 26% federal and your provincial income tax rate on top of that. Here in BC, the provincial tax rate at that income would be over 12%.

ETA: Just saw their post above about being in Australia. I knew they couldn't be from the US. I am totally shocked at how low income taxes are in the US that it would take $622K of taxable income to be at that tax rate. No wonder social services are so limited down there. Completely different mindset. Canadians (and Europeans, etc) are used to paying higher taxes, but we get a huge social safety net and better public services/school. People still ***** about taxes though. I think that is human nature lol.

We're basically you have to work forever because you can't afford healthcare because you can't save enough to pay for healthcare even with lower taxes, so are you really better off? It's crazy here.

 

[georgina]

We're basically you have to work forever because you can't afford healthcare because you can't save enough to pay for healthcare even with lower taxes, so are you really better off? It's crazy here.

It is sad here. We are SO fortunate that DH's company covered retiree health care until we hit medicare age. He retired at 63, at that time I was 55. We continued to pay the usual contribution ($250-$275/month per person) for good health care. He is now on medicare, but I am still covered through his old company. They do not offer this to newer hires, he started there in 1980.

 

[Frwinkley]

Very true about how much is enough saved.

My DH is retiring at the end of May. He's in a high pressure IT position (data analysis for a major hospital system) and hates 4 days out of 5. He's 59. He just doesn't care anymore; says let the younger people who are interested in the technology and climbing the corporate ladder have at it.

I manage all of our finances. I began to take a good hard look at where we would stood financially back in March. Using a variety of calculators, I realized that our financial situation was quite comfortable. I was so excited to tell my husband that he could bail; just knowing that he could leave has been quite liberating. His dad died at 49 after a very brief cancer bout. He was a total workaholic; my DH wanted no parts of that. I couldn't stand the thought of telling my DH "no, you can't retire yet...we need xx more dollars."

Having said all of that, I will continue to work for the next 3 years and retire at 63. I am a teacher. My pension is tied to my years of service, so financially, it makes the most sense. I also carry our health insurance. Fortunately for me, I still really enjoy my job. Having a pension makes an incredible difference. I will never take that for granted.

I know many people who have retired without pensions and the struggle is real. Even with plenty of cash (3-5M), it's a mental thing--cash is going out but none is coming in. I know that would be tough for me also.

 

[SouthFayetteFan]

FWIW: I'd prefer we not delve any deeper into the political spectrum here and just keep things generally positive. America has pros and cons, much like every other nation. I'm sure there's many places on the DIS or Facebook for that stuff, but I don't want our thread to derail and get shutdown.

Nothing said thus far has caused an issue, we just all know how quickly things can move in a bad direction.

 

[Rob Huff]

LOL yeah we wish! We are in Australia. Tax rate of 37% for most people, goes to 50% when you earn more than 180k/year.
We are on about 140k gross /year.

I'm glad you LOL'd because I LOL'd when I read your reply! It's absolutely incredible how different various developed nations approach their tax regimes.

We're in the same gross ballpark and pay much lower federal taxes...but also get much less for our tax dollars. Last year we spent $5,000 on medical appointments, another $400 on medicine (very low for an American family - we're lucky), another $3,400 on medical/dental premiums, and my employer paid $16,000 on my family's health insurance (again, we're exceptionally fortunate to have such strong employer support).

To me, it's nearly impossible to compare across national borders.

 

[TK123]

FWIW: I'd prefer we not delve any deeper into the political spectrum here and just keep things generally positive. America has pros and cons, much like every other nation. I'm sure there's many places on the DIS or Facebook for that stuff, but I don't want our thread to derail and get shutdown.

Nothing said thus far has caused an issue, we just all know how quickly things can move in a bad direction.

ummm are you even a mod??!!

what about muh Libertys???

 

[Hoosier John]

ummm are you even a mod??!!

what about muh Libertys???

No, he's not a moderator, but he is the one who would have to beg the monitors not to shut down our thread here, if it should digress.
I think he was just looking out for our mutual benefit, for those who enjoy following this thread

 

[dclpluto]

We are on track to have around $10 million upon retirement, so we are pretty far along on the FI and RE stage in our early 40s,

so very sorry. How are you going to be able to live on only 10 million dollars? I hope you like soup because I see a lot of soup kitchens in your future. Just kidding of course great job.

 

[KEK1]

I'm glad you LOL'd because I LOL'd when I read your reply! It's absolutely incredible how different various developed nations approach their tax regimes.

We're in the same gross ballpark and pay much lower federal taxes...but also get much less for our tax dollars. Last year we spent $5,000 on medical appointments, another $400 on medicine (very low for an American family - we're lucky), another $3,400 on medical/dental premiums, and my employer paid $16,000 on my family's health insurance (again, we're exceptionally fortunate to have such strong employer support).

To me, it's nearly impossible to compare across national borders.

Yep, I would be up there at about those expenses too. Our health system is great for acute/accidental stuff happening- e.g. I could break my arm, go to emergency and have it treated (incl surgery) and not pay anything at all. But for chronic health conditions not so much- you have to pay, $$$$ for specialists, and meds, and we also pay around $300/month for private health insurance (which covers being hospitalised in private hosps for being treated by specialists.) Private health insurance goes up ++++ when you get older, of course, as well.

 

[Castlequeen5]

So I’m trying to understand how Vanguard works. It looks like they have a variety of services, but I’m specifically talking about Roth IRAs. How much involvement is required from the investor? I just want to set up the account and then make deposits. Do they have people that manage it? With my 403b account once it was set up, I had no responsibilities. It is managed by the company as far as how it is invested. I can look at it online at any time and see how it’s doing. Does Vanguard offer the same? I know nothing about stocks and bonds, and therefore I’d rather someone more qualified handle it.

 

[TreeFalls]

So I’m trying to understand how Vanguard works. It looks like they have a variety of services, but I’m specifically talking about Roth IRAs. How much involvement is required from the investor? I just want to set up the account and then make deposits. Do they have people that manage it? With my 403b account once it was set up, I had no responsibilities. It is managed by the company as far as how it is invested. I can look at it online at any time and see how it’s doing. Does Vanguard offer the same? I know nothing about stocks and bonds, and therefore I’d rather someone more qualified handle it.

You can set up the account and make deposits all on your own, and you can easily watch the balance over time. It will ask you which funds you want to put the money in, though, which you need to be ready for.

Vanguard offers a lot of different mutual funds to invest in. The funds will invest your money in a combination of stocks/bonds/maybe other things. It can be pretty hands off, because "qualified" people are tweaking the funds' investments all the time to try to make them work, but you do need to set it up in the first place by deciding which funds to invest in and how much to put in each. Once you get it set up, you can just let it run, though you may want to make tweaks here and there.

Start with this page:

https://investor.vanguard.com/mutual-funds/
I would start researching Vanguard funds, and finding some that look good. Then look for articles about the funds from other sources, to see if there are downsides that you are missing from vanguard's own literature. Also read some articles about balancing different "types" of funds based on your age and when you plan to retire (Details will vary widely, but the basic premise is you want to back off on how much of your money is in riskier funds as you get older.) Whenever you encounter a term you haven't heard before, google it.

 

[disfanforlife]

So I’m trying to understand how Vanguard works. It looks like they have a variety of services, but I’m specifically talking about Roth IRAs. How much involvement is required from the investor? I just want to set up the account and then make deposits. Do they have people that manage it? With my 403b account once it was set up, I had no responsibilities. It is managed by the company as far as how it is invested. I can look at it online at any time and see how it’s doing. Does Vanguard offer the same? I know nothing about stocks and bonds, and therefore I’d rather someone more qualified handle it.

They have target date retirement funds which can be a good place to start. That is what we did. For example, we thought we would retire in 2025 so that is the fund we chose to start. It is easy to switch to a different one if you want to later.

 

[TarraLee]

They have target date retirement funds which can be a good place to start. That is what we did. For example, we thought we would retire in 2025 so that is the fund we chose to start. It is easy to switch to a different one if you want to later.

This is simple, easy, hands off, and low expense ratios. Not as low as rebalancing for yourself over time, but lowest for someone else doing it by a good bit. Vanguard Target Date is what I’ve recommended to family and friends who want to set it and forget it. You can always start here, then adjust in a few years as you learn more if you have interest.

edit to add, just in case— You would open a Roth IRA at Vanguard, and within that IRA, or any other VG account, you would choose to buy the Target Date Fund with the anticipated year of when you will start needing the money. VG fund manager will adjust the ratio of stocks to bonds and the types of stocks, etc., as the years go on, to take advantage of more reward for more risk when you have lots of years left, and then to convert to less risk, more stable investments as your date comes closer. They do this automatically, your only job is to keep depositing into the fund. There are other ways to invest, to do your own asset allocation, rebalancing, and adjusting to try to minimize taxes, etc., it for most people who don’t have time or inclination, the Target Date funds are a much better alternative than high fee “advisors” or “wealth managers” or other such ”helpers” from places with an office in every suburb.

 

[Castlequeen5]

Thank you for all the responses. I already opened the account, but I’ve been struggling as with what to do next. I intend to get this figured out as soon as I can. Thanks again!

 

[SouthFayetteFan]

Thank you for all the responses. I already opened the account, but I’ve been struggling as with what to do next. I intend to get this figured out as soon as I can. Thanks again!

All in VTSAX!

 

[SouthFayetteFan]

Related to my prior comment, I’m sure I’ve shared this one before but I just love this interview with JL Collins. I could listen to him talk all day - based on both the content he shared AND his soothing voice!

The hour is honestly worth it but if nothing else skip to 12:40 and listen to his response there - love the man!!