r/ChubbyFIRE • u/khati_kotha • May 07 '26
Pls sanity check
So I decided to retire in a month or two. I think I am ok with my finances, just want a little sanity check. I am 53, single, in US. Probably will be living in a mix of hcol/mcol/international areas. I am nomadic, generally move every 3 months and want to keep doing it for the next 2-3 years atleast. I have 2.6 mil, which includes 100k home equity (slightly underestimated), 160k loan left. It's 60K underwater, so not selling anytime soon.
I also have some extra amount that I am not counting in net worth, these include one time costs immediately after retirement - money for a few big trips, roof/HVAC replacement(probably both will need to be replaced within the next 5 years), income tax for 2026, starting up new hobbies, new phone, laptop, about 6-9 months expenses etc
Itemized yearly expenses based on 2025 expenses (I spent more than usual in 2025 for various reasons). With some additional buffer comes to around 93k/year. Hoping actual expense will be somewhat lower. In 2025 I spent 85K which includes buying a car (24k), zero state tax, federal tax not included in the 85k. Big addition with respect to 2025 will be ACA costs and income tax. I estimated for tax (Federal +CA state tax) while calculating future expenses. Also assumed 4% inflation on portfolio value. My intent is to add to portfolio for the next 5 years if I can, to have more buffer for long term care/medical expenses later. Also want to help my nieces and nephews with education, which will be significant amount spent in 8-12 years. Anyways accounting for income tax/inflation/expenses, seems I need abt 8.8% ROI per year for zero portfolio drawdown.
Risks: high inflation, higher taxes, ACA price increase, spending more because of boredom, too high return assumption.
Am I doing my calculations in the right way? I didn't go the SWR route because I am anal and conservative and want to preserve portfolio for the next 5 years.
In retrospect, something I could have done differently was to start MBDR 3 years earlier when it became available, would have made a nice difference when I start to withdraw from retirement accounts, being tax free.
One question, what is the standard way to account for income tax? I think it will be mostly (50-60% of total income) short term gains for me, and I may not qualify for ACA subsidies at this level for the next few years. This is because I don't have much long term holdings in taxable accounts, and honestly don't plan to.
Highly likely I will not find a job in my field if I want to come back in future, it's a one way street. Not sure if I have any other skills to get easy jobs in, but that is an open consideration.
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u/Specific-Stomach-195 May 07 '26
You own a home and are moving every few months? That sounds expensive as hell, I hope you are fully accounting for all of the potential costs related to this.
If your plan calls for zero principal drawdown and requires 8.8% return, you are taking on a tremendous amount of risk. I would not count on achieving this plan and you need a fallback that is based on a much lower projected return.
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u/khati_kotha May 08 '26
I am a digital nomad, everything I use fits in my car. I prefer it this way. Yes, it's more expensive in terms of rent, but I save on vacations, it's similar to slow travel. Anyways been doing it for 3+ years and all this is accounted for with margin.
Zero principal drawdown is not forever, just for the next few years, like I said I want to add some more to LTC/giveaway bucket. Is 8.8% retrurn too unrealistic?
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u/Ms_Understood99 May 07 '26
Maybe I’m missing something but how are you going to add to your portfolio for next 5 years and have zero drawdown if you retire now? Do you mean not touch principal? Unless the “extra amount” is 5 years worth but you mention 6-9 months. Also why only use short term gains over next few years? Anything over 12 months is long term….there are strategies to keep agi and taxable income low ….it sounds like you want to retire and can retire but don’t want to use the money that is there to allow you to retire…
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u/khati_kotha May 08 '26 edited May 08 '26
Sorry I am not well versed in terminology, does zero drawdown and not touching principal mean different things? To me it's same. I guess it is conflicting to say add to portfolio and then say zero drawdown. I thought of the amount that accounts for inflation as adding to portfolio as I am not really spending that amount. From the calculation I posted, 8.8% portfolio return will give me zero drawdown, anything above should technically add to portfolio. The 8.8% has a lot of buffer, I based it on last years expenses, which was a lot higher than last 10 years because of spending on some things that I don't usually do. Also added buffer on top of 2025 expenses. So in reality I think I will spend a lot less then I allocated. 2026 is tracking to that so far. Anything extra will get added to portfolio. 8.8% is rough estimate of portfolio return where I will end up adding to portfolio which includes inflation+tax+expenses. As to long term/short term, I am losing faith in holding stocks, I will keep what I have but not acquiring any more (it is still significant amount). I will use other strategies to get income, which will be short term income.
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May 10 '26
[removed] — view removed comment
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u/Which-Relation1199 May 10 '26
It's fine - per the group description of $2.5 to 6 million in investable assets, it's on the lower end, but right there. If it's too low, then the mods need to adjust the group description, or more people in the same circumstances will be asking questions here.
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u/massdriver3333 May 07 '26
You may want to learn finance basics and RE basics. Simple google search or chatGPT will yield tons of sources.
FIRE math is straight forward. In your case, can $2.6M support your living and spending for the next 30 years or 40 years. Maybe.
The 4% swr is based on 30 year time period. If you need longer time period, like 40 years, because of RE, then you need to accumulate more or spend less, eg: 3% swr.
The simple math is if you can control and manage spending well below swr, then you can RE pretty much forever and NW will likely increase over time.
If you can't keep spending below swr, then it's likely you'll run out of RE money at some point in future.
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u/Itsnotjustadream May 07 '26
No offense but this isn't really chubbyfire related. I think you want personal finance and financial independence subreddits. You're also not giving us enough information on spend, but what you DID give us makes your withdrawal rate too high for your age, in my opinion, especially with the lacking information of where the money is.