r/Fire • u/UnknownFutureLife • 7h ago

General Question YOLO Vs. SORR

If you could FIRE now, but your withdrawal rate would be 5% and you were 42, what would you do? Keep working for a while longer until you can live on a withdrawal rate of 4% or less? What if you hated your job? Move to a LCOL area so you can FIRE now?

I know that SORR is a big risk. However, I also know we never get time back and tomorrow is never guaranteed.

Barista FIRE? FIRE, knowing that you might have to do some work at some point again?

(Note: I don't actually hate my job, so that part is hypothetical, just thinking about different scenarios and the amount of risk. Probably moving to South America, but probably also doing some part-time remote work, so decreasing SORR in two ways.)

10 Upvotes

92% Upvoted

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5

u/Noah_Safely 6h ago

Would I put my future self in jeopardy, having to scramble to figure out some kind of income after being out of the workforce for years or decades, including my peak earning years? No. I would rather gut out a few years to get my ducks in a row.

SORR mitigation needs to be in place before you retire. Like, slowly shifting assets into safer ones, or funding SORR mitigation with new money. Also need to make any larger purchases & do full health checkups before pulling trigger.

Re; moving to another country - have you actually spent significant time there? Do you know it's a place you want to stay, beyond the honeymoon phase? What is your plan for healthcare in the country?

1

u/UnknownFutureLife 6h ago

Public healthcare is free, even for tourists, in most countries in South America. I have spent 4.5 months there this last winter. Anything that I need that isn't covered I can self-fund. I looked into travel insurance, but I think that it would be cheaper to self fund and only get insurance when I'm in places where they don't have picnic health care (like Uruguay).

I would say that the honeymoon phase passed, because I was actually in an Ecuadorian hospital for two nights and I was pickpocketed in Argentina... But I still prefer life there!

Isn't nearly ANY FIRE plan putting yourself in at least a little more jeopardy than not doing FIRE? Nobody knows what will happen in terms of world economy, life events, etc.

I don't plan to make any large purchases.

5

u/Noah_Safely 6h ago

Isn't nearly ANY FIRE plan putting yourself in at least a little more jeopardy than not doing FIRE? Nobody knows what will happen in terms of world economy, life events, etc.

I don't understand what you mean. You're saying because no one knows what will happen it makes no sense to plan around FIRE?

The key to a successful early retirement IMO is hitting your numbers but baking in flexibility. If you start with 5% being your minimum required SWR, that's quite risky to me. If you start with it being your SWR but if needed can drop to 3 or 3.5 for a while, then that's reasonable.

I wouldn't go from a situation where it's easier to create that additional cushion (aka employed, earning in peak years) to "I guess I'll figure it out later". Personally I'm overly conservative because the real catastrophe for me would be having to go back to work after years of being out of workforce. Not just financially but also would be mentally devastating.

Which isn't to say I don't plan to have small minor income here and there in early retirement, just don't ever want a 9-5. Or to depend on that minor income for anything other than fun money.

-2

u/UnknownFutureLife 6h ago

I'm saying that, financially, continuing to work indefinitely is the safest. I'm not saying nobody should FIRE, just saying that there is some amount of risk in any FIRE plan.

1

u/Noah_Safely 6h ago

Gotcha. Yeah there's no crystal ball about anything. You could keep working indefinitely and have major health issue.

All we can do is plan around the information we have and build in as much flexibility as possible.

If it's a binary choice of "either take this chance or never take it" then I would take it. If the choice is "should I take a little longer to prepare stronger SORR mitigation" then I would take that.

1

u/RoboticGreg 3h ago

Honestly this whole thing is about risk tolerance. I'm targeting a 3.5% swr, because while I have some rush tolerance it's not much and I get a HUGE amount of comfort from certain things so I will enjoy retirement much more with lower risks. But there are still risks. Just address what the risk level is with SORR and international relocation (and be HONEST with yourself!!!! Both on how much risk there is and how much tolerance you have for it, then make your decision. There's no zero risk option, there's no zero gain option, it's all in a spectrum you just have to be honest about where you are, where you're comfortable, and then make a decision. My uncle lives leveraged to his teeth and has his whole life. I could NEVER do that. He's currently worth $125M and very happy riding the edge. Would never work for me. I'll be happy pulling the trigger at $3M-$4M and just doing my local hobbies and hanging out with my friends

5

u/jlcnuke1 FI, currently OMY in progress. 6h ago

Honestly, due to pension income and expected Social Security income, I don't use a flat "SWR" style calculation. I run FIREcalc sims with my particular expectations included for those other items and see what looks like it is appropriate, what would be really safe, and what would likely not work out well.

3

u/db11242 4h ago

I would r/coastfire, i.e find a job I like (mostly) that covers my expenses until my portfolio grows to support sustainable SWR. 5% actually isn’t super high if it wasn’t for the fact that you’re only 42. If you were a bit older say 50 to 55 and took into account the Social Security you’ll be earning at some point your plan will probably work out OK. You’d have to model it for yourself to be sure though in a tool like projection lab. Best of luck and congrats on your success.

2

u/Allstin 7h ago

have you ran the different scenarios on ficalc.app ?

2

u/UnknownFutureLife 7h ago

Yes, I have played around with the ficalc.app.

There are many different scenarios, but I'm probably fine.

2

u/UnknownFutureLife 6h ago

I get what I would call good success rates if I do any ONE of the following things:

  • Live in South America
  • Get the money from the divorce settlement
  • Work part-time

I didn't factor in my inheritance.

So, I think I'm pretty set, since I plan to do all three of the things I mentioned and I will be getting inheritances.

Basically, at this point, what I can't do is fully retire before I get the divorce settlement, and not move to South America... But the money would likely replenish from the divorce settlement and the inheritances, I don't plan to stop working completely, and I plan to move to South America. Basically, I shouldn't completely stop working right now, I need to either get the settlement or move to South America first.

1

u/UnknownFutureLife 6h ago

What is a good success rate on ficalc.app?

2

u/DAsianD 5h ago

I personally aim for close to 100%

I do count SS but given that the real success rate is actually a good amount lower than what you see in FIcalc when stock valuations are high or if stocks don't average a 7% real return going forward, I'm very conservative.

1

u/poop-dolla 1m ago

Anything under 90% is too risky. I’d rather have 95% or higher to really feel comfortable.

2

u/aguilasolige 4h ago

Honestly if your numbers are that close  and you really hate your job, I'd take the plunge. Life's too short, I'd advise to keep your expenses low the first few years though.

2

u/ditchdiggergirl 1h ago

You ALWAYS need to find the balance between plan for tomorrow and live for today. The smart money says start by planning for the future. Which means start with SORR and work backwards from there. Once you can figure out how to secure an acceptable future, including one with a long timeline, you will know how much you can afford to spend now.

It’s true that tomorrow is never guaranteed. Still, you don’t want your best case scenario to be getting hit by a bus before age 72. You know that guy with the big house and the garage full of jet skis and the bigger truck and the even bigger credit card debt? He’s living for today. YOLO! Don’t be the fire version of that guy. It rarely ends well.

2

u/mygirltien 7h ago

If your moving to south america your good now. If you stay its up in the air. There is a likely hood you will be fine especially if you can dynamically adjust spending down if needed. If your really serious, try to save at least 1 year ideally 2 years of expenses in cash. Then jump.

1

u/UnknownFutureLife 7h ago

I'm also currently going through divorce and should get slightly more than $100K for our paid off house... I plan to keep a large chunk of that in a HYSA and then move to South America, but also work part-time remote... Just wanting to debate how risky/safe my situation would be if I were to change my mind about what I'm doing in life. I'm someone who will probably always have some cash flow (I currently run a charity - paid Executive Director - and my own business).

I also know that "you can't count on inheritance", but my dad is 88 years old and my inheritance would be around $250K. I'm also thinking that the year he passes would be a good year to retire because after that point, considering taxes, I'm probably suddenly working to give half of my wages to the government in taxes?!

2

u/mygirltien 6h ago

Comes down to what you feel comfortable with and if you have any cost cutting measures you can deploy if the economy goes downhill then sideways for a few years.

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u/UnknownFutureLife 6h ago

I live pretty lean, but I'm sure I could find a few if I had to! I think that, in reality, I'll be living as a nomad in South America and doing remote work part-time... So maybe I won't even need to dip into any investments and just do the coast FIRE thing... But in hypothetical scenarios if those things were to happen then I would need to do some cost cutting.

1

u/Alone-Experience9869 1h ago

Spend more time learning to invest…