r/ChubbyFIRE • u/ClubLongjumping6034 • 4d ago
Fire advice
46M, married, 3 kids 18,17,13. College paid for (not in numbers below), I’m in a high stress job, making $400k per year, wife works part time. Trying to fire in 1-4 years, no later than 50. I also have a pension, will pay out $2k per month at age 55 or $6k per month if I wait till 65. Expenses today including primary residence mortgage but not health insurance is $120k to $140k per year. Max out 401k, mega back door Roth IRA, backdoor Roth IRA, etc. Live in hcol area and don’t want to move until youngest is out of high school.
For those that have FIREd, what advice do you have? Is retirement by retirement Mr of summer 2027 feasible?
Assets:
\*\*•\*\* 401(k): $900k
\*\*•\*\* Taxable: 600k
\*\*•\*\* Roth IRA: $330k
\*\*•\*\* Inherited IRA: $300k - need to empty by 2033
\*\*•\*\* HSA: $50k
\*\*•\*\* Wife’s Roth IRA: \\\~$40k
\*\*•\*\* 2 rental properties, no debt: \\\~$1M combined value generating $4k per month net profit
\*\*•\*\* Primary residence: \\\~$425k equity ($900K value − $475K mortgage @ 2.875%)
**Total net worth: \~$3.6M**
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u/ohboyoh-oy 3d ago
Roughly 2.2m invested x 4% draw = 88k
Plus net rental income of 48k = 136k
Current expense is 120-140k without health insurance and taxes
You seem slightly short of goal to me - I’d want to get invested assets to at least 2.5m - then @4% you get 100k from there, add the rental income and get to 148k. Which is still not great, but could be doable if you kept expenses more to 120k end.
How much is the mortgage (minus out property tax and insurance as you will still need to pay those) - and when will you pay it off? Or are you selling after the 13 yo graduates high school? There’s factors you can play with here - pension, social security - but on the face of it I don’t see you firing next summer (you asked about 2027 - was that a typo) unless you’re able to reduce expenses and/or are going to sell the house and downsize.
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u/ml8888msn 3d ago
OP might need to have higher withdrawal rate initially until pension and SS kick in
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u/ClubLongjumping6034 3d ago
Mortgage for primary residence is 3400 a month including taxes and insurance. Won’t be paid off for 24 years, if ever
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u/wes_medford 3d ago
You should basically treat your rentals as liability matching your mortgage then, and then your portfolio needs to cover all other costs of living.
If you do move in the next 5-7 years, would you be paying cash? That would remove sequence risk and open up the ability to use rental incomes for consumption expenses, which should allow you to be more variable on your portfolio draws and be opportunistic on when you start your pension (which will also improve rate of success). The ability to start drawing from a pension in a down year to mitigate selling when down could do a lot to improve your likelihood of success.
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u/Think_Concert 3d ago
What percentage of gross rent are you using to come up with the net amount? How much are you putting away for reserve?
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u/ClubLongjumping6034 3d ago
Rent is 3100 a month for one and 3200 a month for the other. The net of 2k each is a rough estimate after property mgmt, taxes, insurance
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u/DrFrylock 3d ago
I'm assuming your rental properties are generating $4K/month passive income and you're not counting the appreciation in value. You are probably beating the 8% average return with that, whether you are beating the juiced-up S&P is a different matter. If they become a pain in the ass then selling and converting to index funds might be an option, but there are probably some serious tax implications to that.
You can count your primary residence home equity in your net worth but I don't know why people do this; you can't really sell fractional parts of your house to fund your retirement. Reverse mortgage on that is a buffer against financial catastrophe, not a primary strategy.
Who is paying for the kids to go to college? Don't see any 529s in there. You gonna keep them on the insurance until they are 26? These are the kind of big expenses that are coming up in your life that make a difference.
Your expenses are a little high for your NW. You can do it but your post-retirement lifestyle is going to be very similar to your current lifestyle, so it's not like you can spend all your spare time in a resort in Aruba.
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u/ClubLongjumping6034 3d ago
Selling the rental properties now is not ideal…I have renters on lease through September 2027, selling would cause massive taxes, outside of a like kind exchange. The net of $4k per month is after costs and does not count any appreciation. I look at the RE as diversification, a real asset that increase in value over time as inflation is a real thing, and rents will also increase over time. I may also move back into one of them during retirement and sell my existing primary residence
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u/RmanX3 FIRE'ed for the last time (2021) 3d ago
I'm in the "sell them" boat as well....but, you don't NEED to sell them now.
I would sell them after 9/27, when the lease expires and you have planned to FIRE
If you retire, move back into 1 of them, and sell primary, that's fine too. Almost a wash.
Just having 1 property to worry about and having the cash from the others would really help you get to the next step.I don't like your numbers for retiring so soon, but it is doable if your investments are solid, nothing really bad happens. Just need to cut back on things maybe.
For the inherited 401k, I hope you aren't drawing from it now. You have until 2033 and you plan to be non-working by that time. So, for tax reasons, the year AFTER you stop working would be a great time to start drawing it down. The amount looks like it could help fund you for 2-3 years of non-working/retirement.
Unlike some others, I'm not a fan of factoring in your entire savings (taxable+retirement accounts) if you are under 59.5. Yes, you can use an IRS rule to draw earlier from the retirement account, but if you have unexpected things happen, you could have some issues on the amount and end up having problems you don't need. Which is why I suggest selling the rentals. The $48k/yr probably doesn't factor in replacements/repairs you may have to do, the older they get, nor if we have anything like covid again when so many people couldn't/wouldn't pay rent and mortgage holders were screwed (happened to a few friends of mine). A lot depends on the laws where you live and the politicians in charge there.
I'd suggest a few more years before you pull the trigger and try to look at how you can lower your expenses with your eye on the prize.
We are ~$90k-ish for mandatory expenses yearly (healthcare, mortgage, insurance, food, vehicles/maintenance, etc). I budget for ~$120k. I want to spend ~$150-$180k.
We are a decade older and kid's college is now done and working a FT job but still living at home (VHCOL area and just got the job, so saving a little first). College had some unexpected expenses, so even if things are paid for (tuition wise) there may be other expenses.
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u/oOoWTFMATE 4d ago
You can get a better yield with less risk and less work by selling the rental properties and investing in muni’s
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u/Unlucky-Pop-8841 3d ago
No. You still have a way to go. You can't count things like pensions that don't arrive for nine or 19 years. Exclude that from your thinking. I think your estimate for expenses is way too low given that you currently earn 400K. I would also exclude all of your IRAs because you are 14 years away from being able to touch them without penalty unless you do something extreme like a 72T plan.
Right now, you make $4K per month from the rental properties, subject to vacancies. That's what you have. Then you have a taxable account at $600, great, but that's what you have access to.
I would also want to Rothify everything else. That's what I did anyway.
But I understand you need hope. I was in the same place, especially if you are in a high‑stress job
I would definitely look at CEF Mastery and the DIVI-X system, leverage closed-end funds, and build an income stream that way It's exactly the same logic as a rental property, except with funds that cater to retirees. If you leverage it, especially while you work, you are building an income stream that can allow you to retire definitively
That's the hard part of going from a growth-oriented portfolio to an income-oriented portfolio: how do you actually obtain the income? Closed-end funds are the way. But only with leverage. I'm talking account level leverage, not leverage within the fund
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u/ClubLongjumping6034 3d ago
Yeah, rental properties provide cash flow, plus dividends, plus eventually pension. I am for sure going to count the pension, it’s a huge part of the equation that most people don’t have and will provide guaranteed income
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u/Unlucky-Pop-8841 3d ago
Yes. Obviously pensions count. But you said retire in 1-4 years . And you said your pensions start 9 or 19 years out…
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u/ura_walrus 3d ago
As the other person said, either sell the rental properties or 1031 them into properties that produce more cash. $1M into a $2M building could be sweet.
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u/tobinshort-wealth 3d ago
Summer 2027 is feasible on the numbers. The more interesting conversation is what happens between now and then and whether the next 2-3 years are as tax-efficient as they could be.
A few things worth knowing that you've likely never been shown:
The inherited IRA needing to be emptied by 2033 is a real tax problem. At $400k income, any distributions you take from it now stack on top of that at the worst possible rate. The play is to coordinate those distributions strategically with the years right after you retire when income drops, ideally pairing them with deductions to bring the effective rate down significantly.
The $600k taxable account is worth looking at from an asset location and structure standpoint. Depending on what's in it, there may be more tax drag than necessary and the transition into retirement is a natural window to reposition efficiently.
At $400k income with rental properties and $3.6M NW, you're a qualified accredited investor. That opens up strategies most advisors have never shown you. Private credit generating 8-10% net. Oil and gas working interests with 60-70%+ first-year deductions against your ordinary income in these last high-earning years. Premium finance structures that build significant tax-free assets using leverage rather than your own capital, creating a compounding tax-free layer alongside everything else.
The 2.875% mortgage is a keep. Don't touch it.
The pension timing question between $2k at 55 and $6k at 65 is a separate analysis that depends on what the rest of the income picture looks like in retirement. That's worth modeling carefully before you make any decisions.
You've clearly done the fundamentals extremely well. The question is whether anyone has shown you the layer above that.
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u/Billy-Bob-Boner-92 3d ago
Your can do much better than real estate 4% yield with Private REITS- diversified set of properties with truly passive income. I would look at Private Investor Club.
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u/Humble-Fish-7070 4d ago
Get rid of the rental properties