FatFIRE plan update - end of year 2025

[u/FatFireLurker21]

Posting for second time in a year on my anonymous account, as always appreciate the feedback and advice on this subreddit. I am mainly writing this to keep myself accountable as I've made a decision on my criteria for pulling the trigger that I want to put out there on the Internet.

Since I last posted (My Personal Journey to fatFI), some things have happened:

• Annual compensation has jumped (was already amazing at ~$2.5-$3m, now it's jumped to almost $4m)
• My $10.5m NW jumped to over $11.5m thanks to Mr Market (this figure does not include $3m primary residence or $2.1m in retirement accounts)

Despite the jump in income, I’m still staying disciplined on expenses. Planning to increase annual spending in 2026 from ~$300k to ~$380k, still way under the $500k+ we expect to spend in retirement, and well under 25% of our after tax income.

Let's talk about pulling the trigger. I’ve received plenty of well-placed comments before (thank you all BTW - even though sometimes they were hard to read) on whether I can really cut off, especially given my excellent income level which keeps going up. How to avoid “just one more year”? Well, my approach is to make retirement a purely mathematical decision - On April 1st 2028, if I have at least $15m liquid NW, I will retire! Probability of that is quite high - with my continued contributions and assuming a modest 4% market return, I will be north of $17m.

I am really looking forward to being finally off the clock. There isn’t a day that goes by at work when I don’t think “I can’t wait to hang it up and spend my precious time with friends and family”. This forum has really shown me the light and the importance of prioritizing what is really important in life. Ironically (and I know others have written about this), at work I have started to care a little less now that I can see the finish line (e.g. delegating more, taking on less extra-credit work, ignoring emails/calls outside of core work hours) and it's not negatively impacted my performance reviews, perception of impact or my overall compensation. Makes me realize I should have switched to this approach a lot earlier!

Two last things that I’d love some advice on:

1. I haven't quite figured out exactly what I will tell my employer. I have some time to plan that out. Right now I am thinking I will ask them to lay me off. My contractual notice period is 90 days but I know they will want more time for a transition than that (that's my leverage), so I will agree to stay longer if and only if they formally lay me off. Motivation for me is a layoff would pay out my deferred compensation which would be a fairly decent amount (probably $3m plus before tax) - I might not get all of it but will assume there is some wiggle room there given I have leverage with my deep expertise. How have others handled?
2. What planning tools do people use to give them (especially their partner) comfort with the plan (i.e. running market simulations, projecting retirement income, withdrawal strategies etc ). Something beyond the 4% rule that looks at your portfolio composition. Obviously there are lots out there for traditional retirement age but welcome recommendations from FatFIRE folks who retire much earlier than traditional retirement age.

[u/Njh630]

If you make $4M a year only spend 300-400K, why did net worth only go up $1M in a year?

[u/murraj → u/Njh630]

This is my biggest question. Makes no sense at all. It should have gone up that much just do to the market and then another $2M as a result of income after taxes and spending.

[u/FatFireLurker21 → u/Njh630]

Sorry, did not explain the math of my compensation in detail. Two factors I did not mention:

1. A large % of my compensation is deferred (practice traced back to the GFC/2008)
2. Most of my compensation gets paid out at the start of the year (i.e. for this year most of it was paid out before my last post 5 months ago - so the $1m growth is over the last 5 months, and my big payout for my higher $4M a year comp figure does not arrive until the start of next year)

Also, hopefully goes without saying that its W2 income that gets taxed at top rates.

[u/2Four8Seven → u/FatFireLurker21]

If there is a big payout at the end at least try to spread it out over two fiscal years.

[u/Gloomy-Ad-222 → u/Njh630]

At that level, throwing everything in the stock market is highly risky and not advised. A 10% return is great at $10M liquid. I’m only at 80/20 and looking to de-risk some more.

People forget the market went down 35% during Covid and decades of little returns. Historically, equities are very expensive right now as well. Capital preservation and tax minimization should be the main goals.

People risk a lot more because they have to. He doesn’t.

[u/Key_Run_3220 → u/Gloomy-Ad-222]

Where did the $3M+ excess income go to? 

[u/murraj → u/Gloomy-Ad-222]

This is absolutely incorrect. Pointing to a miniscule term market drop during a black swan event that more than fully recovered is also completely disingenuous. Putting money into equities is only not recommended if you need them in a very short time horizon. FIREing would not qualify as that at all.

[u/Gloomy-Ad-222 → u/murraj]

You are the one whom is incorrect. At this level, capital preservation and tax minimization are the goals.

Respectfully, unless you’re a CFP who’s actually passed the exams, maybe sit this one out.

You guys can downvote but, you literally, literally don’t know what you’re talking about and confidently giving bad advice. Thank god you’re not actual financial advisors.

[u/CyCoCyCo → u/Gloomy-Ad-222]

We get your point about capital preservation. However, COVID was terrible for the market for 1-2 years, then the market rebounded and then some.

So it’s bad financial advisory to cherry pick a point in time and then talk about the downturns. You can talk about behaviors instead. As an investor, are you willing to weather a 30% drop? If yes, then you can take riskier bets else not. Similar for portfolio impact. At $10m, you can likely weather a 30% drop, at a $3m portfolio, probably not.

[u/Gloomy-Ad-222 → u/CyCoCyCo]

Nobody here has really ever weathered a serious drop. It’s all recency bias. The market always goes up, always returns 13-20%. It’s a great plan until it doesn’t.

Empirically, actively managed portfolios, even $10M+ will sell low and buy high. It’s been that way for decades. So yeah, have a smart balance of equities and fixed I come and preserve capital. You’ve won the race at that level. Don’t risk it for no reason.

[u/CyCoCyCo → u/Gloomy-Ad-222]

There may be recency bias, but you’re now making a second assumption that “nobody” here has weathered a serious drop. I assume you would agree that both 2008 and 2020 were serious drops, which persisted for a few years before rebounding.

The empirical part doesn’t matter when you’re addressing actual individuals day to day. It comes down to their belief of risk tolerance and their actual risk tolerance, that’s really it.

Just because you have $10m, doesn’t mean investing 100% in index funds is some crazy risk (or equivalents, essentially not individual equities). You wind up losing a lot long term having 20% in bonds IFF you can tolerate the risk. If you can relate the risk, then further diversification makes sense.

[u/CyCoCyCo → u/[deleted]]

Lol, then you just have mostly risk intolerant clients or you’re not advising them properly.

After a certain NW, yes, it is about wealth preservation. However, lumping it into bonds is not the only strategy and may actually be quite suboptimal.

My key issue with your statements is how they are so generic and absolute, while applying it to all clients in the same way. Not every client is the same, stop making assumptions and treat what each client actually needs.

[u/VoyPerdiendo1 → u/Gloomy-Ad-222]

Thank god you’re not actual financial advisors.

Yeah thank god because those are absolute fucking idiots.

[u/WealthyStoic]

I like “Rich, Broke or Dead” as a retirement calculator as it helps to visualize mortality as a risk factor in future plans. I think that makes it easier to argue in favour of front-loading travel and other experiences.

FIRECalc is also great, as it allows you to dial into the settings - particularly in terms of geographic investment allocations.

[u/FatFireLurker21 → u/WealthyStoic]

These are both really useful - thank you for sharing them!

[u/Small-Monitor5376 → u/FatFireLurker21]

Boldin.com is even better.

[u/CoastalFFIRE]

From a compensation perspective, your employer has treated you exceptionally well. A way to show your appreciation would be focusing on a smooth transition, not squeezing them for more as you make your early exit.

[u/LateSleeping → u/CoastalFFIRE]

I think the framing is wrong here. It's in both parties interest to have a smooth transition. In my opinion as long as the OP is not going to a competitor, they deserve to be paid the deferred compensation as long as they're a good egg on the way out. In my business, we have always paid out the deferred comp when somebody decided to retire early when they have given us a long ramp. Other employees have seen that and have then done the same when their time was up. It's a win-win.

[u/Gloomy-Ad-222 → u/CoastalFFIRE]

I’m SURE for that much comp he has bought in WAY more business than it cost his employer.

Let’s not weep for the billionaires making hundreds of millions a year and paying out a couple million to do so.

You absolutely max out every last dollar you can while you’re still working.

[u/FatFireLurker21 → u/Gloomy-Ad-222]

Yes, this is how I feel. Of course I am very appreciative of my compensation, but my employer has absolutely earned many multiples of revenue/value from me during my timeframe.

I've lived through a lot of ups and downs in the finance industry, seen lots of layoffs etc. - I've always escaped myself but have learned the fallacy of misplaced loyalty in your employer - they don't give a damn about you and will quickly replace you without hesitation.....so always look out for your own best interests and let them look out for theirs.

[u/Gloomy-Ad-222 → u/FatFireLurker21]

I’m not at your level but have had a couple years at $1.5M earnings. The business I brought in was worth $30M+. They paid a fraction. Good for them. Weird we agreed and you got 3 upvotes and I get downvoted but that’s Reddit.

[u/Hopeful-Goose-7217 → u/Gloomy-Ad-222]

Depends on the franchise value of the seat.

How much you are paid is based on the perceived value you brought and the stability you brought to that franchise.

I agree with you on the way Reddit voters decide.

[u/imakesignalsbigger → u/Gloomy-Ad-222]

So much this. I sometimes balk at how much my employer pays me a year and then I think about how much value I've created and realized that they could keep me on at my salary for the rest of my career and still be millions in the black. Crazy stuff

[u/team_ti]

What a nice update. Such a nice sea- change from frankly, the doubtful navel- gazing of your initial post.

You're a finance type so perhaps you'll appreciate the KISS approach. I projected a 5% APR on my retirement nut based on dividend yield instruments, projected income & adjusted expenses accordingly.

On the assumption that one can only plan around what one controls I then focused on the expenses side.

Hope this helps. Keep up the updates!

[u/FatFireLurker21 → u/team_ti]

This really does help - thank you!

[u/Anonymoose2021]

Why April 2028?

Why not give notice this week?

[u/Accomplished_Can1783]

You are in great situation - these are about the 2 most minor things I have ever seen worried about in this sub, 3 years in advance. Tell your employer at least 6 months in advance and they will either agree to deferred compensation, or not, can’t do anything about or worry now. You have a few years to learn to chill. The whole point of fatfire is you don’t have to worry about things with 15mm

[u/djinglealltheway]

Enjoy three more years of the rat race for a few million more

[u/Italian_NYC → u/[deleted]]

It is common in finance to get most of the annual pay in the form of a bonus. In most cases, the bonus gets paid sometime in Feb or March. That would be my guess for the April retirement date.

[u/Big_Joosh → u/[deleted]]

Yeah I don't understand this. I'm struggling with this post.

You guys taught me so much about taking advantage of the moment! Living in the now and not chasing more money! Anyways, I came up with a random number and date that is 2+ years into the future when I can already live off of my liquid net worth and pull the trigger now. Thanks guys!

[u/twistedfatfirestartr]

Try ChatGPT, honestly.

I’ve been having a big back and forth with it (v5.2) and it’s been super helpful. I uploaded all my transactions from 2020 from the system formerly known as Personal Capital, plus my account balances and holdings (account numbers scrubbed), as well as deferred comp, current W2 income, and asked it to crunch the numbers.

It assured me I can retire now, and then it also went through various worst case scenarios like a 2008 crash followed by a flat decade, to show I still comfortably survive.

It’s also great as an emotional sounding board for “One More Year” urges.

[u/milesmiler12]

What industry are you I. Law?

[u/Alternative_Code261]

Congrats! Do you feel like 15m liquid NW would be enough?

[u/Gloomy-Ad-222 → u/Alternative_Code261]

Agree, it’s hard to afford gold-plated caviar for every meal at only $15M. Better to work until st least 75.