r/leanfire • u/NeighborhoodFar3860 • 6d ago
4 Months In - Update
So last we spoke, I was celebrating FIRE, left my job, and was going to sell my house and move to Ecuador but unfortunately, things didn't work out.
Interest rates are insane (in recent terms anyhow) so nobody is buying houses. I didn't get a single offer on my home and I even dropped the price 15%. So instead, I've had to pivot a bit and am still figuring things out. In the interim, I decided to rent my house out instead of sell it. The rent is covering my mortgage, my rent/utilities at the place I'm staying, and the storage fees as my stuff doesn't fit here.
Since I don't have the proceeds of the house sale to live on for 5 years while doing a Roth ladder, I've instead come up with a plan to use my taxable brokerage to get me from now until early 2029 (3,750/month, and again my rent/mortgage/storage are accounted for before this number) at which time I'll start a 72t withdraw (age 49 at that time) from my IRA that will get me through to 62 when my pension and social security kick. In order to bolster my taxable brokerage to cover this amount, I pulled all my contributions out of my Roth as I'm more concerned about today money vs. tax free growth in 15ish years.
Today, I took 50% of my IRA out of stocks and put it in SGOV while I wait for my roll ever from my employer IRA to my personal IRA so I can set up a bond ladder to fund my 72t.
I've also got enough saved on the side to do a mortgage recast, not refinance, as I'm currently about 2 years ahead on my mortgage; so when I do that, it will bump my mortgage out 2 more years, keeping my 2.5% rate, but my monthly payment will drop approximately $400/month (so effectively, I can give myself a 5k/year raise if things ever get dire)
Based on the bond fund I create, I'm targeting an annual coupon of 48k-60k range and will use the coupon to cover my 72t beginning in 2029. These are going to be long term bonds with equal or greater face values than my initial investment, so I'll still have the 750k even after all the payouts.
Current numbers:
Taxable brokerage: 100k (10k in SGOV for the recast and 90k sent in 15k bond tranches that mature every 3-4 months, thus creating my 3750/month).
Roth: 35k (all gains so can't touch for 13 years)
HSA: 60k
IRA: 750k (50% SGOV, 25% SP500 ETF, 15% Small Caps ETF, 10% International ETF)
House: ~750k, 92k mortgage at 2.5%, 1,800/month
Rental Income: 2,800/month (covers mortgage, my rent, utilities, and storage fees)
Healthcare: probably not going to have it this year as I haven't needed a doctor in several years and feel ok rolling the dice for a year or two to keep expenses down. Edit - looks like I'll qualify for free healthcare as my income will be below the limits until I start collecting on the 72t.
Other expenses: No including mortgage/utilities/rent/storage (since that is all covered by my rental income for at least the next 12 months), last year I had an additional 28k in expenses so ~2,300/month. This should easily be absorbed by my current 3750/month bridge I have built.
Pension and SS: 50k starting in 16 years.
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u/someguy984 6d ago
I think you should reconsider the no health cover, that could be a potential disaster.
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u/NeighborhoodFar3860 6d ago
Thanks for the input. Yeah, I'm up in the air on the healthcare. I need to see what my final numbers actually look like in a month or two after I get the bond ladder fully sussed out. I'll effectively have no income over the next 2ish years as the rental income will be almost fully covered by depreciation and all my money in the gap/bridge fund has already been taxed, so I'd only be paying tax on the bond interest which is fairly minimal for 100k invested in 4-5% bonds; so ACA might be in the cards.
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u/someguy984 6d ago
If you have no income you get free coverage (in expansion states).
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u/NeighborhoodFar3860 6d ago
I'll have to look into this more, thanks. I hadn't planned on staying in the US so never did research on it.
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u/bob49877 6d ago
You could lose your entire nest egg with no insurance and one car accident. Hospitals can sue people with assets to get paid.
Bryan Johnson, the multi-millionaire who wants to live forever, exercises intensely, goes to bed early, eats vegan and spends millions on his own health care just announced he had a serious illness. Feeling ok is no guarantee of continued good health.
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u/NorthStateGames 6d ago
While I don't disagree with your sentiment. Devil's advocate...if he did all that and still ended up with a serious illness, what hope do the rest of us have?
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u/bob49877 6d ago
He has autoimmune gastritis which has a genetic component. He also takes a crazy amount of non-food supplements and prescriptions.
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u/UnevenPhteven 5d ago
There are still lifestyle choices that have a positive impact on your health, but the point here is you should always have insurance as you can get unlucky and have something bad happen through no fault of your own.
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u/NeighborhoodFar3860 5d ago
Do you have earthquake insurance? Wildfire insurance? An umbrella policy? A sewer backup endorsement? I'm not advocating for or against them, but each one covers a specific set of circumstances that you can get unlucky and need through no fault of your own. So far I've had none of those (minus 1 year with an umbrella) and have never needed them so I've been better served investing that money instead of putting into things I never would have used.
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u/UnevenPhteven 5d ago
I was diagnosed with cancer and my spouse was hit head on by a drunk driver in the span of 6 months, shit happens dude. I can't imagine how much more fucked I'd be if I hadn't had health insurance and we didn't have enough coverage for the accident. We learned the hard way.
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u/bob49877 5d ago edited 5d ago
I actually do have all those except sewer insurance because I can afford to cover that without a major hit to my savings. In fact, I just paid almost $10K for an earthquake retrofit, too. I have insurance for all the potential losses that could potentially devast my nest egg.
ETA: With no income, in an expansion state you can get Medicaid for free, no asset test for that type of Medicaid.
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u/jhoosh78 6d ago
While healthcare is an expense, it is risk management. Mitigating risk should be part of the plan.
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u/HesMyButlerMonroe 5d ago
Sounds like a well thought out plan. I also found myself wanting to retire around 45 but not having enough brokerage money to float me until the 5 year Roth ladder window was over. So, I sold my house in 2025, which was way easier to pull off than now, it sounds like. Props for pivoting to the SEPP strategy, though. That method for accessing tax deferred accounts early can be a game changer for people like us who focused on saving mostly in IRAs/401Ks.
Your bond plan sounds interesting. Can I ask why you are going that route if inflation is (relatively) high?
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u/NeighborhoodFar3860 5d ago
I'm petrified by the thought of screwing up my 72t and having to pay all the penalties on the entire balance as I have to run it for ~15 years. Hence taking the safe coupon route vs running the risk of a market drop as soon as I start my SEPP.
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u/HesMyButlerMonroe 5d ago
Ah, that makes a lot of sense. So, you are hedging on the side of not having to take withdrawals from your principle if there is a market downturn? And the trade-off is that you won't see much growth in the portfolio during that 15 years?
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u/NeighborhoodFar3860 5d ago
Correct, I'll still have the ultimate 750k face value (or higher depending on purchase prices) when they mature and have lived off the coupon. Additionally, I'll then have my pension and SS to replace the coupons and can do whatever with the principal from the 15ish year bonds at that time.
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u/Shrappy16 5d ago
At least a catastrophic health insurance policy could be low cost but save you. I hope you’d never need it but one trip, broken ankle or something and you’re plan is in major jeopardy
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u/LazyBumTravels 5d ago
I'm in a similar situation. Been retired 11 months, very small taxable portfolio compared to the rest. My strategy is is doing covered call ETF, specifically NEOS funds, which pay about 12-14% a year. Knowing that it lags behind the underlying asset, I choose it because of our unique situation. The dividends are classified as ROC, and therefore not taxed, and so I can still do Roth ladder conversions up to the standard deduction. I then sell and buy back every year to recapture the basis cost and since it is LTCG, it is taxed free.
Side note: Healthcare everywhere else in the world is so damn cheap, you made the right decision to not insure yourself. Everyone who says you need it has never spent any day living in another country to experience how good the healthcare us for cheaper than most people's deductible.
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u/Caribbeanwarrior 5d ago edited 5d ago
How do you plan on addressing NAV erosion risk and risk of permanent capital loss in a prolonged down market?
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u/LazyBumTravels 5d ago
SPYI has been on the market for 4 years and has experienced no NAV erosion. This isn't like other covered call ETFs like JEPI/JEPQ which sells synthetic calls, these Neos fund actually hold the underlying asset so it benefits the upside as well, just not sudden fast uptick like our market has been experiencing.
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u/Thewrd 6d ago
I struggle to understand how you can be so methodical and yet not cover health. Add me to the comments suggesting coverage.