Financial Independence Case Study #4: Using the 4% Rule and Asset Allocations


Today’s Case Study gives us a chance to explore how to determine net worth and how to apply the 4% withdrawal rate against it. It also takes us into the arena of applied asset allocations.

Since this correspondence and its questions come from somebody with a high net worth, it also gives me a chance to share with you an asset allocation strategy I’ve been contemplating. It is a variation of the 50/25/25 model discussed here and here. We’ll do that at the end of the post.

But first, let’s read EmJay’s letter and answer his questions.

Hi Jim,

Let me begin by expressing my appreciation for all the time and energy you have devoted to providing the content on this website. I discovered both the MMM and your website just a few weeks ago and there has been a bit of an obsession consuming all the valuable information provided. Great stuff!

Let me fill you in on my situation and I’ll pose a few questions where I would greatly value your thoughts and input. If you don’t have the opportunity to respond, I totally understand as I’m sure you receive quite a few of these messages. If nothing else, my questions may provide some ideas for some future articles.

My wife and I are in our late 40s and we have two early teen year children. My current take home income after taxes and 401K deductions (max) is approximately $120K.

Already a big fan of Vanguard, this is where we have all our savings/investments. However, our investments are spread over many mutual funds (combo of indexed and managed funds) as well as we own several stock purchases. I know what I need to do as far as reallocation goes based on your series.

I believe we have achieved Financial Independence based on the 4% Rule (but this is the source for some of my questions that follow) and I’m ready to step away from my current job into semi-retirement as I explore possible 2nd career opportunities and other valuable ways to spend my time doing things that I enjoy.

Current State:
Annual Spend: $70K
We’re actually closer to $65K but through a combination of cost cuts that I know we can make while also accounting for an increase in our health insurance costs as we move off employer-provided coverage, I want to cautiously plan assuming an annual spend of $70K.

Non-Retirement/Taxable Vanguard Accounts: $1.1 million
Retirement Vanguard Accounts: $900k
Total Savings: $2 million
Current Allocation is roughly 80% Stocks, 15% bonds, 5% cash

Additional Assets:
529 College Savings Plan for the kids – $250K (Note: Our State’s plan is run by Vanguard and has the lowest fees of any 529 Plan in the country)
Home Equity – $350K (still have about $150K left on our mortgage with 13 yrs remaining on our 15 yr loan @ 3.5%; $1400 monthly mortgage)


1.  Am I able to include our Retirement Savings as part of the overall Financial Independence (4 % Rule) calculation? Or should I only be taking into account my assets in the Non-Retirement/Taxable accounts? I have seen some conflicting views on this point.

I’m 48 so I won’t be able to access my retirement accounts for another 11+ years. My thinking is that the Retirement funds continue to grow untouched while we live off the dividends and capital gains in the non-retirement/taxable account to cover our expenses in the interim. Make sense?

2.  Should one typically include their Home Equity as part of the 4% equation? I haven’t been and view it more as a surplus for the future if/when required.

3.  With our home equity, does it still make sense to also invest in the Vanguard REIT index if for no other reason than diversification of Real Estate ownership?

4.  In doing the reallocation of my many mutual funds to the select few index funds in my non-retirement account, will the capital gains on those funds that are moved to another fund be subject to Taxes? My understanding is yes which could have some bearing on when and how swiftly I do the reallocation as I believe I could end up paying dearly in taxes.

5.  Should I go with the suggested 50/25/25 allocations in both the Taxable and Retirement accounts or would you suggest that I place my investments in the Vanguard REIT Index and Vanguard Total Bond Index in the Retirement Accounts only? (I seem to recall you making this suggestion elsewhere)

I’m close to being ready to pull the trigger on semi-retirement and financial freedom but need to have my ducks in a row to help get my wife totally on board and comfortable with some aspects.

I know more paychecks will be in my future. I don’t know when, I don’t know what I’ll be doing and how much I’ll be doing it (full-time vs. part-time) but I want it to be on my terms. I haven’t experienced much work joy in my 25+ years of employment to date.

Thanks again for sharing your experiences and wisdom and for considering my questions.

Man walking down path

Walking thru the questions

My reply:

Hi EmJay…

Let me begin, in turn, by offering a hearty “Job well done!”

Based on the “4% Rule and your projected $70k annual spending rate, you are already comfortably well into Financial Independence (FI). At 4% that spending rate requires only $1.750 million and your net worth is around $2.6 million.

You have earned the financial right to do whatever you please. Plus you are entering an age where your time is far, far more valuable than adding more money to your stash.

Let’s walk through your questions:

1. In thinking about the 4% rule, you should look at your total net worth. Tax-advantaged and Taxable accounts are simply the buckets in which you hold your investments. Based on your numbers, this gives you $2 million.

You are correct to think about them separately when it comes to withdrawals. The taxable accounts will provide your living expenses until you hit 59.5 while the tax-advantaged accounts grow untouched.

2. Yep, your $350k home equity is also figured as part of your net worth. So now you are at $2.350 million. You can certainly view this as a surplus if you like and as you have. You might also just think about it as an extra cushion that puts your financial picture in an even more powerful position. At $70k your withdrawal rate has now dropped to only 3%. Sweet! And this will allow your stash to grow even more over the years you are retired.

Also consider that at 4% $2.350m throws off $94k: $24k more than your projected spending. While I wouldn’t suggest you ramp up your spending to this level, you should be aware that you have some “splurge money” if you so choose.

With a basic withdrawal rate of 3%, you could easily splurge once every couple of years. Maybe a big trip, maybe a new car, maybe a house remodel or maybe even your own charitable foundation.

3. Since your home equity is part of your net worth, you also use it in calculating your allocations. If you choose the 50/25/25 allocation I personally use, you’ll want 25% in real estate.

25% of $2.350m is $587.5k. Since you have $350k of this covered in your home equity, the balance of $237.5k would go into the REIT VGSLX.

While you didn’t ask, I’d also keep your 3.5% 150k mortgage. That’s a nice low rate and I see no need to pay it off early.

Let me also make the point here that when calculating the cost of owning a home, the opportunity cost of any equity should be included; the $350k in your case. For more on that, check out this post.

4. Yep. Anytime you sell shares in your taxable accounts it will be a taxable event. You’ll want to tread carefully here.

First, do as much of the reallocation as you can using the tax-advantaged accounts.

Second, consider you might be better off just holding the funds you have rather than taking the tax hit.

Third, if you have losses in any of these investments you can harvest them to offset the gains as you reallocate.

Fourth, since your living expenses will be coming from these funds, by carefully selecting the order in which you draw from them you can slowly and more tax efficiently reduce the number of funds you have while improving the overall quality of your remaining holdings.

5. As a general rule you should keep the investments that pay dividends and interest in your tax-advantaged accounts. Stock index funds are inherently “tax-efficient” and so are the better choice for taxable accounts. Of course these are fine in tax-advantaged accounts too.

Once you retire and your income drops this will be less of a concern. Even with your net worth, your taxable investment income still should leave you well under the 15% tax bracket ceiling. Keep in mind any income from your new activities could alter this.

Next under the category of “You didn’t ask but…”

…let’s turn our attention to the $250k in the 529 plans for your kids. Not much to say. You’ve got it well invested. (I’m guessing Utah is your state?)

But careful readers will have noticed I included this 529 plan money in initially pegging your net worth at $2.6m. But then I went on to exclude it in the conversation on allocations and withdrawals. The reason is, this money is earmarked for a very specific goal. As such, I prefer to set it aside for these kinds of discussions.

Finally, you say: “I haven’t experienced much work joy in my 25+ years of employment to date.” You are not alone in that. But those days are about to be behind you and a long, bright future awaits.

 Exit sign

You’ve done a wonderful job in positioning yourself and your family for a path on your own terms. You’ve paid your dues and you deserve it.


Addendum: How EmJay went from zero to 2.6 million in 25 years.

Follow-up: January 10, 2016. In the comments below, EmJay checks in and tells us how things have gone since this case study over two years ago.

More Case Studies

Allocation Variations

As mentioned at the beginning, I’ve been noodling some ideas on modifying the 50/25/25 allocation model for folks with a high net worth, high risk tolerance and an aggressive investing profile. For our purposes here we’ll consider $2 million+ as high net worth.

This is an aggressive option to consider. It is for those who seek maximum growth and have maximum flexibility and the intestinal fortitude to accept the additional risk.

If we review the thinking behind the 50/25/25 stock/bond/real estate allocation, recall that stocks serve as our growth engine, bonds as our deflation hedge and REITs as our inflation hedge. The bonds and REITs also help smooth out the ride and provide a bit more dividend and interest income. But those are secondary benefits.

We are mostly using them to hedge against another deflationary Great Depression or a bout of hyperinflation. Of course they also hedge against much more minor variations of these, too.

Now remember, if we start to see large deflationary or inflationary moves, our bonds or REIT investments will grow dramatically. That is, after all, the core idea: We have one asset class performing well even as the others suffer so we remain—relatively—fiscally healthy.

But how much do we really need? Once over $2 million in assets you are in pretty rarefied air. So maybe, just maybe, rather than percentages, total dollars in each asset could be the measure. This would cap the amount in bonds and REITs while letting the amount in the more powerful (and more risky) growth engine of stocks grow. With $2.350m it might look like this:

  • $500k in bonds (21%)
  • $500k in RE (21%)
  • $1350k in stocks (57%)

Of course the dollar amounts can be whatever best fits your risk tolerance and your desire for growth. You could, for instance, set the threshold for switching to this approach at $3 million. The 50/25/25 percent formula would give us:

  • $750k in bonds
  • $750k in RE
  • $1.5m in stocks

Once over $3 million it would start to change to a dollar allocation. For instance $3.350 million would then look like this:

  • $750k in bonds (22.4%)
  • $750k in RE (22.4%)
  • $1.85m in stocks (55%)

The point is not that one of these is “right” but rather this is another way to think about your asset allocations. Using it, the numbers can change to match your goals and personal preferences. However, I would suggest this is something for only those over $2 million in net worth to consider. Short of that, using the straight percentages is more helpful.

Let me know what you think in the comments.

Addendum 1:  Please note – I no longer hold VGSLX. Please see Stepping away from REITs for a discussion as to why.



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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.


  1. EmJay says

    Hi Jim,

    EmJay here. Wow! Thanks for the comprehensive review. I really appreciate the depth in which you covered my initial set of questions and even added some bonus feedback tied to the mortgage, etc. You actually answered a few additional questions that I had but didn’t pose because I didn’t want to be too greedy in my solicitation of your input.

    You are correct in the 529 Plan being Utah.

    As for the mortgage, you validated what I was thinking. While tempting to pay it off and remove the most significant annual expense that we have from the mix, I was thinking the smart thing to do is to leave the money invested and hopefully reap greater returns than the 3.5% mortgage.

    Thanks for sharing your thoughts on the Allocation Variations. Since my investments will need to sustain us for another 40+ years (we hope), I was thinking about going with a slightly more aggressive allocation of 60-20-20 which seems in alignment with what you were tossing out as food for thought, assuming one has the stomach for a little more risk. I think we do.

    Thanks again for your service to the FI community and for taking the time to review my situation – much appreciated!

    • jlcollinsnh says

      My pleasure EmJay…

      Glad it helped and glad I hit those other questions you had.

      I like your 60/20/20 idea and, in fact, have considered moving in that direction myself.

      Please keep us posted and let us know when you pull the plug on that pesky job. 😉

      • EmJay says

        Hi Jim,
        Your insights combined with comments from others have really bolstered my confidence that we’re financially ready to make this move. One of my favorite quotes in your case study was your comment ‘Plus you are entering an age where your time is far, far more valuable than adding more money to your stash.’ This really resonated with me.

        The last mental/emotional hurdle for me evolves around health care insurance and costs. Removing the security blanket of company provided health care insurance coupled with alot of the uncertainty tied to the future of the Affordable Care Act and health insurance in the US, it is a bit unsettling because we have all heard of stories where someone becoming very sick leads to financial ruin. MMM’s recent post on the Affordable Care Act coupled with getting insurance estimates and gaining a better understanding on out of pocket maximums for individuals and families has eased those fears a bit. But, that remains the most scary financial component in the equation at this point.

        I will definitely provide an update when I pull the plug on the ‘pesky job’. It could very well be quite soon.

        • jlcollinsnh says

          Agreed! There has been some great additional info from the readers posted here.

          Health insurance is beyond my pay grade. 😉

          At the moment my wife still works as a school libraian, a job she loves. It provides lots of time off for our travels and great insurance.

          Back in the 1990s there was a five-year period when we both were not working. Our daughter was born in the middle of this time. That stuff happens when you’ve got time on your hands….

          Anyway, we bought a high-deductable plan that worked well for us. I can’t recall the details, and they likely wouldn’t apply today anyway.

          MMM has given this quite a bit of thought and seems a good source to me. For our other readers, here’s a link to that post you mentioned:

          Definitely something you want to resolve, but also very resolvable. Let us know what you choose to do.

  2. Jeremy says

    Congratulations EmJay, enjoy your retirement 😀

    You are in great shape. A couple other things that stood out to me that make your situation look even stronger:
    In 13 years, your mortgage goes away. This should drop spending by ~$17k a year
    Around the same time, you could choose to start collecting Social Security (Age 62)
    Your children will start college and then careers, draining the 529s but reducing your current spending further
    Once the nest is empty, you may downsize the house, reducing costs further

    In other words, there is a lot of safety margin. You are set for life. Enjoy

    • jlcollinsnh says

      Great input Jeremy…


      That kids’ college expenses dropping off as SS kicks dynamic is something I’m personally going to benefit from in the next few years. It looks to be a very sweet bump. 🙂

    • EmJay says

      Thanks Jeremy for weighing in with these additional thoughts. They certainly do provide for an even greater safety margin that I wasn’t previously factoring in. If it didn’t shine through in my original message to Jim, I’m very keen on safety margin. These events will significantly alter the FI equation for the better which is great. Thanks again.

  3. J.R. says

    I always enjoy these type of posts because it gives us, the readers, a real world example of how to apply everything you preach Jim – keep up the good work!

  4. Cash Rebel says

    Wow, it’s fascinating to read about folks who are in such a strong financial position. I congratulate anyone who’s been able to build up a net worth of over $2m! That’s incredible. I especially like the idea of using the extra money each year to find a charitable foundation.

  5. cgk says

    I’d love to have you do a “case study” of our situation. We are financially secure, yet still hear from friends and family that it is too early to consider retirement – we’re 50!

    • jlcollinsnh says


      That’s a common problem for those walking the FI path. It runs against everything our live large and in debt consumer culture preaches.

      Part of the problem is, I think, most…

      …never even consider or are aware of the possibility.
      …think of retirement as sitting around in a rocking chair waiting for the next round of golf and/or death.

      Pretty clearly, EmJay has a different concept. 🙂

      As for me, FI doesn’t equal retirement. It equals freedom. 🙂

  6. John says

    To expand on the charitable foundation idea, the fact that there are some investments in the taxable account that have unrealized capital gains offers a great tax savings/reallocation opportunity. If the gains are long-term (ie, the asset was held over one year), EmJay could donate the assets directly to a foundation, never have to recognize the gain, and get an immediate tax deduction for the current market value (not just his cost). I also am a fan of Vanguard and have my investments there as well. I set up an account at Vanguard Charitable, moved some assets with long term unrealized capital gains, and now donate and tithe from the Charitable account. The gains I had in the assets transferred never had to be recognized for tax purposes, and I received a tax deduction for the gift when it was transferred (not when the assets move from the Charitable fund to my church).

    Also by doing this, it lowered my taxable investment account balance, and allowed me reallocate my total portfolio (taxable account plus IRA’s) more easily, with no tax implications (in my case).

    If you consider this idea, I’d move the assets to the Charitable fund while you’re still working as your tax rate will be higher (and thus the tax savings higher). The timing of your grant requests to disburse funds from the Charitable fund is irrelevant for your personal tax situation.

    Job well done, EmJay, and great response, jlcollinsnh.

    • jlcollinsnh says

      Welcome John…

      Thanks for your comment and the great contribution.

      +1 on both the idea of donating appreciated assets and doing it while EmJay is still working and the deduction is most valuable.

    • EmJay says

      Thanks John for expanding on your usage of a Charitable Foundation. Hearing your real world story of how you were able to leverage this for multiple benefits is really valuable.

  7. Done by Forty says


    I love this analysis. Asset Allocation is THE most important investment decision (other than, I suppose, avoiding fees) but I am always unsure as to how to pick an AA. We are using Bernstein’s Simpleton’s Portfolio (25% Large US Stocks, 25% Small US Stocks, 25% International Stocks, 25% Short Term US Bonds, all in index funds). But we are using it because we read it in the intro to Bernstein’s book, which was too complicated to get all the way through, and said, sure, that sounds good.

    Probably not the best way to handle the most important investing decision we’ll make. Now that we’ve picked, we don’t want to switch AA’s until we have a much better idea of why (and how) to pick another…

    • jlcollinsnh says

      Hi Dby40…

      Glad you like it!

      While asset allocation is important it matters most in the broad strokes of what percentages in what asset class.

      The specific funds matter in the sense that you want low cost index fund, but that covers a wide range.

      In my posts I describe the three we use and, obviously, these are my favorites.

      I haven’t read Bernsteins’s book, but looking at the four you mention you have a 75/25 stock/bond split. That’s about what I have (REITs being stocks) and if that’s the right allocation for you, no worries.

      In my view, VTSAX (a total stock index fund) could replace all three of those stock funds. I don’t feel the need for international for reasons explained here:

      But having said all that, those funds will serve you just fine. No need to rush into changes from where you are. What is important:

      Low cost and a stock/bond balance that reflects your personal risk/reward needs.

  8. Jay Jay says

    Another Jay here, but the coincidences between us go beyond our nom de plume (or nom de guerre, if you prefer 🙂 ).

    I’m also 48, have about the same net worth, make a few $k more per year, and spend a few $k per year less. But no kids. So this one really this one hits close to home for me.

    On the other hand, I do enjoy my job (in limited doses), so I plan on sticking it out till around at least age 50 (18 months away!), before I ratchet things back to what can hopefully be a part time or consulting gig.

    In the meantime, we’re considering dropping back our savings rate a bit (currently save 60-70%), and possibly ratcheting up our lifestyles an equivalent amount.

    Or maybe not. Decisions, decisions….

    But as you say, FU money provides options!

    • jlcollinsnh says

      Welcome Jay…

      Sounds like you are in a beautiful position!

      As I’ve said elsewhere on the blog, once you hit FI you can choose to expand your lifestyle as the dollar amount of your investments increases and as it in turn increases the dollar amount of the 4%.

      That is, 2.5m = 100k per year at 4%
      If it grows to 3m = 120k per year

      Anyway, nice decisions to have! 🙂

    • EmJay says

      Hi JayJay — Glad my story was able to hit close to home for you. I always enjoy reading about other people’s situations and questions and drawing parallels to my situation. I agree with Jim that you have some nice decisions to make.

  9. Mark says

    Jim, I agree that your home Equity is part of your net worth but I don’t see how you can include that in your 4% withdrawal rate? The only way I could see including equity in a home would be that it was a rental property. Plus, if I read the analysis properly you suggested leaving the tax advantage funds alone and only drawing down the taxable accounts. But 4% of $900,000 is only $36,000, and he needs $70,000. What am I missing as isn’t it all about cash flow or income coming in? Sorry if I’m missing something very obvious! Lastly, for a person this young thankfully he’s got only a 3% withdrawal rate, if your analysis is correct, because some would debate 4% is a safe withdrawal rate going forward. I have read your post on this but have also read other analysts that think 4% is pretty aggressive.

    • jlcollinsnh says

      Hi Mark…

      Having equity in your home offsets your cash living costs. But the price is that money tied up in equity can’t earn any money itself. This is called opportunity cost.

      In the case of EmJay, were he to sell the house and invest the 350k in VGSLX it he’d get a 3.5% dividend stream of $12,250 per year. This is why I said in the post he needs to calculate this in evaluating the cost of owning his home.

      For instance, right now I rent. My investment in VGSLX pays enough in dividends to cover this cost. I could take that investment and buy a house. I’d lose those dividends but provided my house and all its attendant costs were no more than my current rent the net result would be the same.

      For more on this:

      As for the withdrawals, you look at the whole when calculating the amount 4% equals. It doesn’t matter which pile you take it from. Obviously if you take it all from one pile, that pile will be depleted over time. But at the same time the other piles will grow unmolested.

      Certainly 3% is a safer withdrawal rate than 4%. But 4% has worked out just fine 96% of the time. And that’s with annual inflation adjustments. In fact, most of the scenarios in that 96% left huge piles of money at the end of 30 years.

      So the real question is, how badly does the person want to quit working? If you are having fun, sure, keep building until you’re at 3%.

      But if you are miserable, or just ready to move on, and you have 4% you gotta ask yourself if you really want to hang on when your odds of success are 96%. Especially when you consider your time is an irreplaceable resource.

      For me, I’d take the 96% odds and then, if the market moved dramatically against me, I suck it up and live a more modest life. 😉

      The only real security lies in our ability to be adaptable in an uncertain world.

      For more on this:

      Make sense?

      • Mark says

        Thanks Jim, makes sense now.

        Thank you for your detailed reply. I just entered semi-retirement one minute ago. I own my own business so cutting back as of now.

        My $570,000 house is paid off and we have $1.1 million in investments, my wife makes $80k and wants to work another 5 years. I have a small pension ($1400 per month) that I can tap in 5 years at the age of 63 and my business would sell for about $400K before taxes of course.

        So as far as i can see I don’t need to bust my butt anymore.

  10. Naomi says

    I would love to see a followup post on how to start taking money out.

    Let’s say they retire tomorrow and invest their money in stocks/bonds/real estate as you suggest. How, exactly, would they pull money out? Would it be monthly? Once a year and invested in cash?

    From which investments?

    Earnings only and leave principal untouched? What if earnings are insufficient?

    I haven’t been able to find much written about this.

    • jlcollinsnh says

      Hi Naomi…

      As it happens I have just such a post under construction. I’ll add your question to my notes and I’ll make sure to cover them.

      Stay tuned!

      • Maverick says

        I look forward to it as well. Very interested in how to continue to extract AND how to continue to save (when possible). Would also like to know your thoughts from the perspective of asset preservation and taxes. I dived into FI recently (triggered by a layoff), and my wife is planning to retire next year. Thanks in advance!

  11. Dave says


    These posts always satiate my voyeuristic nature (financially speaking, of course)! Though I am relatively early in my FI journey, it helps to see how the end game plays out. This is one of the aspects of having an engineering mind – I feel a need to know all the steps of a project to feel comfortable with it. Even though my position will likely be different than EmJay’s when I reach FI, I can extrapolate from his example to fit my particular circumstances.


    Rock on! – and thanks for acting as the catalyst for this great post!

    • jlcollinsnh says

      Welcome Dave….

      Glad you are enjoying these case studies. They are fun to write as well.

      I really looking forward to the next, which will be somewhat different….

    • EmJay says

      Thanks Dave! And, happy and honored to serve as the catalyst. Also, for the record, my wife has the same engineering mind as you and I have a lot of experience with projects in my line of work so I can definitely relate to your mindset. Good luck in FI journey!

  12. 2lazy2retire says

    Hi Jim

    Thanks for the great work you do. I have a quick question as regards SWR. My position in not dissimilar to the OP but I want to correctly understand how to calculate the value of a future pension which will start to pay out in 14 years when I hit 60.
    It is a final salary pension (from an earlier life) with an index linked annual payment of around $20k ( using current exchange rates).
    I am planning on a slightly more conservative withdrawal rate of 3.3%, should I just multiply the 20K by 33 and add it to my NW, or does the fact it is not payable for 14 years alter the standard calculation.
    I plan to retire in 2-3 years.

    many thanks

    • jlcollinsnh says

      Welcome 2l2r…

      thanks for the kind words.

      I don’t know that there is an “offical” answer to your question, but I think you are on the right track.

      At a 4% WR (withdrawal rate) you’d need 500k to generate 20k.
      At 3.3% WR you’d need 606k

      So in effect your pension adds ~5-600k to your net worth.
      Of course there are important differences.
      Unlike actually investments you own, the pension part of your net worth in like an annuity.

      It won’t increase or decrease with market changes.
      And you can’t leave it to your heirs.

      Maybe a better way to think of it: The 20k reduces the amount of income your investments need to generate. Thus the amount you need for FI is reduced.

      Make sense?

      • 2lazy2retire says

        Thanks Jim , I was thinking along similar lines, most likely I will disregard it in the SWR calculation and know that it is a safety net in future years along with social security.

        • 2lazy2retire says

          Back again if I may be so indulgent, but I decided to take the pension question a step further and requested a “Cash out Value”.
          At today’s exchange rate that value is $480k which I could transfer to a self directed pension ( would be an index fund). The $480 currently supports 15k at 3.3 % which may be slightly less than the projected 20k but I have control and the capital is mine.
          I plugged the number into a calculator with the money invested over the next 14 years at 6% return and 3% inflation and Capital increased to 1.1M which would support 36K annual withdrawal exceeding the 30k pension ( while accounting for inflation).
          I guess it comes down to risk assessment again, should I leave it be or grab the cash and hope to have better returns with the option to leave the money to heirs which you referred to earlier
          I should note that this is an optimal time to cash out as the value quoted is tied somewhat to Gilt rates which are at lows right now.

          Many thanks

          • jlcollinsnh says

            Great move checking that out.

            Essentially you are deciding between an annuity (your pension) and investing the money on your own.

            Since pension companies are very good a predicting mortality rates over large groups of people, they can very accurately calculate how much they can afford to pay out.

            Since some will die early, this payout amount is typically more than you’d earn on your investments if you held them yourself.

            The longer you live, the more valuable your pension will turn out to be. If you are one of the ones to die early, you’ve helped finance the lifestyle of the longer-lived.

            Of course, as you’ve noted, once you die the money is gone and your heirs get nothing. Take the money and invest it yourself and it remains yours. You also have it available should large and unexpected expenses show up.

            That said, there is something to be said for guaranteed income for life. Seems studies have shown (and in full disclosure I’ve not read these) that retirees with guaranteed income sources like Social Security, pensions and annuities tend to be happier.

            Since investing is mysterious and scary for many, I can believe this.

            It really comes down to your personal temperament and, as you say, your own risk assessment.

            Overall, a nice problem to have. 😉
            Good luck!

  13. Jeremy says

    Jim, I’ve been thinking about adopting another investment allocation, which could apply to people with extremely high savings

    We might be able to get our spending under a level in which VTSAX dividends could fund everything. In that case, why not go all in with VTSAX? It would be more volatile, but that is ok since we would be living solely off the cash flow. In the end, this might leave behind the largest endowment

    • jlcollinsnh says

      Hi Jeremy…

      I have been thinking the same thing!

      VTSAX pays a dividend of about 2% so if that is enough to live on it is all you need to own. Plus, as you observe, since that spending level is so low you are very likely to leave a very large pile behind.

      Plus, you could always pull out some splurge money in the robust market years like this one.

      The only short coming I see is that you lose the buy low/sell high dynamic reallocation across multiple asset classes provides. But, at the same time, with VTSAX you are concentrated in the best performing asset class of all.

      When I hit the lottery I will very likely do just this. 😉

  14. Tom says


    Thanks again for a great post! I stumbled across your blog earlier this summer and have spent the last few months catching up from the beginning, now if I could only get my parents and girlfriend to read the stock series!!

    Question for you and any other readers for that matter.. I believe I’m one of the fairly younger readers here (25) and recently have gotten very serious about savings, cutting expenses as well as building my income (from work & recently, in 2013, attempting to find other ways – investing, etc.) As I have begun to do this, its apparent i missed out on a few things those initial years of working, maxing out 401K, investing my excess cash instead of letting it sit in a bank acct, etc. With that in mind, I have made it a serious goal to grow my income as fast as possible, so the compounding effects will be felt later on.

    Now for that question –(do not feel obligated if you would rather not share further details)

    Through the course of your career, what is the level in which you achieved that income that would were satisfied, and knew could bring you to this end result? Based on your net worth it seems like you may have been making that salary over 100K for quite some time. Is this a level that you have just built up to over the course of your career? Or were there times that it was higher and you have adjusted/switched positions for lower salary as you became closer to FI?

    I think this may be an interesting topic to look into and could greatly benefit the younger readers — What should be the typical growth of salary year by year (for your main source of income) to achieve these goals? Are we on the right track?

    Best Regards & Thanks again,

    • EmJay says

      Hi Tom,
      If you are getting a start on developing a lot of the good habits identified on this and other similar forums at the age of 25, you are off to a good start and well ahead of most of your peers. You’ll also be well ahead of my schedule. I’d say the only thing that I did right in the early stages of my career is put money in company 401K’s. I didn’t really get serious and smart about our investments until I was approaching 30. If I would have had an information source and community such as this in my mid-20’s, I can only imagine how much earlier we would have achieved Financial Independence. There were definitely mistakes made along the way.

      You pose an interesting question. The most complete way that I can think of answering it is by walking you through my financial journey and some of the milestones along the way.

      The vast majority of my career has been spent working in Corporate America and it has been a pretty steady and stable upward trajectory in my salary. Here’s an overview of my income and savings trajectory (to the best of my memory) starting with my first job out of college:
      – I generally started with zero savings coming out of college but also had zero debt. My wife started an IRA while in college and also finished school without any debt. Major thanks to both sets of parents for helping us to get started without a mountain of debt.
      – Year 1: My starting salary in my first job was $22K. (FYI – Based on an online inflation calendar that would be roughly equivalent to $43K in today’s dollars). Assume 4-7% annual salary increases until the next big job change. Started putting money into 401K right away.
      – Year 5: Changed jobs/industries and my new salary was in the low $50’s plus a bonus plan.
      – Years 7-8 (30’ish years old): Living together and then marriage, becoming DINK’ers (Double Income No Kids). Between both salaries, surpassing $100K for the first time. We were saving about 40-50% of our joint take home pay while also contributing to 401K’s up to at least the company matching amount. This was the time period where I ramped up my knowledge on investing. We started with a financial advisor for a year or two. After further educating myself and realizing how much we were paying in fees and commissions, we ended our relationship with the advisor and decided we could do better on our own. We also bought our first home for $180K. Started investing in Vanguard mutual funds around this time.
      – Year 11: Have first child. After working a part-time schedule for a year or two, my wife decides to be a full-time Mom. Back to living on one salary. My standalone salary is in the low $90’s. Also start investing in 529 Plan.
      – Year 13/14: This is about the time that my salary cracks $100K for the first time; saving rate of 30-35%; also start maxing out 401K each year based on govt. limits.
      – Year 15 +/-: First time that portfolio cracks $1,000,000. This is probably the first time that I’m thinking, WOW, I might be able to take an early exit from the work rat race if we can keep this up.
      – Year 16/17: Decide to pursue an Entrepreneurial opportunity. Make approximately $25k and zero savings during this time period. The opportunity didn’t work out as planned but no regrets in trying.
      – Year 18: Sell first house for $490K (the house we purchased 10 years earlier for $180K). Buy new home in the $500’s. Re-enter Corporate America with a salary of $120K; we continue on the one salary. I see annual increases in salary of 5% on average leading up to the present day.
      – Years 20-23: The dark days of the market. Our portfolio is roughly cut in half during this time period. I stay the investing course, do not withdraw from the market and continue with auto-investing into Vanguard Funds and 529 Plan each month.
      – Year 25/Present Day: Salary in the $160K range. Continue maxing out 401K and investing approx 30% of take home pay; wife has picked up some part time work the past few years which pays peanuts but she enjoys it. The equivalent of all her income goes into an IRA for investment and tax deduction purposes. Also re-financed the home mortgage a couple of times over the past seven years.

      Additional Income:
      – Throughout the course of my career, bonus’ and stock options probably contributed another $200K of after tax income. I believe it is important to disclose this for a complete picture of our journey and some things that made our present day situation possible. Aside from using some of this income for home remodeling projects, the majority went directly into Savings.

      Mistakes made along the way:
      – Used a Financial adviser for a couple of years; paid high fees and commissions
      – Purchased a lot of individual stocks along the way and still own many of them. Some did pretty well. But, many did not.

      Things we did right along the way:
      – I’m not sure if it was an article here on Jim’s website or another but somewhere along the way, I read that rule #1 on the path to Financial Independence is (assuming one marries) to make sure you pick a spouse with similar financial views. My wife and I have always shared similar values and beliefs when it comes to finances and our journey has been a true team effort.
      – Investing:
      o Since we’ve been married, we’ve been investing 30-50% of all take home pay per year.
      o We have stayed true to investing for the long haul and have not committed the common mistakes of buying high and selling low
      o Discovered John Bogle, Vanguard, and Index funds fairly early in life.
      – Spending:
      o We have lived well below our means, especially as it relates to big ticket items such as home and cars
      o We drive our non-fancy cars forever
      o Hardly ever go out for dinner
      o Do a lot of our own home improvement projects
      o Always pack a lunch for work
      o Keep house temperatures low during the winter and high during the Summers; use the dryer as little as possible
      o Some other frugalities

      Final Thoughts:
      We don’t lead a Spartan life by any means. We have a nice home, drive two cars, pay for Cable TV, have a calling/data plan that is more expensive than it should be, have some expensive hobbies/interests, etc. But, we also have some frugal spending habits and have saved at a fairly good rate. There is no question that we can and will reduce our spending habits. I applaud those folks that are able to save 50-75% of their earnings, keep their expenses way down and achieve Financial Independence even earlier in life. We took a less extreme path along the way than some others but have still been able to achieve a level of Financial Freedom that a majority of Americans will never achieve. I guess my point is that there are different ways in getting there and now you have a better picture of our journey.

      • jlcollinsnh says

        Wow EmJay…

        Great, helpful and detailed response.

        One of the things I’ve learned writing this blog is that many readers don’t bother with the comments. At least around here that’s really too bad. There is great stuff in these dialogs.

        I think Tom’s question and your response just might be my next Case Study post. This deserves a wider audience.

      • Mike says

        Why does the $350k in home equity increase the amount that can be withdrawn under the 4% rule? Does the house not need to be sold to achieve this?

  15. Mr. 1500 says

    It’s great to hear someone speak of the 4% rule in positive light (shout out to MMM’s post on the same topic).

    The stuff that the mainstream media spews forth is all negative: (“Why the 4% doesn’t work anymore”, “Why the 4% rule should be the 3% rule” On and on.) The headlines initially make me fearful, but then you read the stories and realize that they haven’t done their research.

    • jlcollinsnh says

      Right you are, Mr. 1500!

      Here’s the problem:
      —The media is looking for headlines that draw readership.
      —Us humans are hard wired to respond to fear.
      —We crave absolute guarantees. There is no such thing.
      —The 4% rule does fail about 4% of the time. Focus on that and you have your fear driven story.

      The story that said, “This just in! 96% of the time spending 4% of your money each year ends decades later in huge wealth surpluses!” ain’t gonna trip the fear trigger.

      The 4% rule is an excellent guide that is going to work the vast majority of time. For those few times it doesn’t, yer gonna have to be flexible.

      Our own resourcefulness and adaptability are the only true guarantees.

      For more:

      For those who just can’t get past the small risk at 4% and who are willing to work longer to build a bigger stash, by all means go for 3%. Then you can even indulge in a bit a splurge money in the robust market years.

      Of course if 3% becomes the standard you can expect breathless articles telling you 2% is the only way to go. 🙂

      • Mr. 1500 says

        Wow, your 4 points are right on. Great stuff. Those could be a post in themselves.

        One other point I’ll throw in there is most people who write about it probably don’t really understand it or the study behind it. I myself had no idea about the Trinity study until MMM enlightened me. I’d bet that most of the clowns who disparage the 4% rule would give you a blank stare if you asked them about the Trinity study.

  16. Pura Vida Nick says

    Thanks for this great case study! I love reading about you guys who are farther along on your journey then me. Gives me reason to dream and learn from you guys. Jim, I have learned so much from this site. I recently took the plunge and invested a big chunk in VTSAX – thanks to this site. Before it was sitting in the bank. Thanks for the tips! And EmJay, good luck! I hope you enjoy yourself!

    • jlcollinsnh says

      Welcome Nick…

      Glad you found your way here and congratulations on buying VTSAX. Just remember to stay the course when the going gets rough. And it will. 😉

  17. rabbithutch says

    Following up on this and EmJay’s 4th Question. Do you recommend changing your investment strategy as you are approaching retirement?

    For example, let’s say for years you have been investing 90% Stock/10% Bonds. As you approach retirement date (say 2-3 years out) do you recommend changing what you are investing in, to say 70% REIT/30% Bonds.

    That way, you may have a good chunk invested already diversified along the 25%/25/50% split, and won’t have to sell (as much) stock to reallocate in REITs and Bonds, thus minimizing taxable events.

    Does that make sense?

    • jlcollinsnh says

      Welcome RH…

      Makes perfect sense and it is a very reasonable approach.

      Personally, I did our 50/25/25 rebalancing about a year after retiring.

      As I think about it, for most people I’d say do it when you retire or in stages during the years immediately before as you propose.

      Certainly for those who are retiring with the bare minimum they need, moving gradually into it over a few years is the less risky approach.

  18. Simon Kenton says

    1) I think you are better off – safer – if you treat the house as a house, not an ATM or a savings account or an investment. Basic rule: If you are not willing and able to sell an asset in 5 days (settlement period) you don’t own it. Move it into the net worth column of your kids. This is true for a lot of hard assets (which are peculiarly soft, financially speaking) like guns, jewels, collectibles, as well as houses. The other point about hard assets that needs to be hammered home is that they are a rich field for self-delusion. They are so illiquid that you think they are worth what a neighbor said at a cocktail party; or a half-remembered Sunday Supplement article may have said if your memory serves; or what you paid for them; or “goodwill;” or “great growth prospects;” or what the county assessor has hoked up as a ‘valuation’ in order to increase your taxes. Never value any of them at more than your cost; you’ll be better off to set them at zero (“$0.00”) in your annual financial retrospective and your future projections. Review Graham – an investment is an operation that upon mathematical analysis promises safety of principal and regular paid returns. A house doesn’t make it unless you are renting part of it out. Pay it off ASAP with heavy infusions of cash flow (NOT principal) from other real investments while the loan is young and either 1) drop it out of the net worth if you are going to live in it, or 2) make it a rental while moving to a smaller place. (If you transmute it to a rental you may restore it to the net worth column.)

    This advice is sound partly because if you follow it, the surprises you get when you sell out of a particular hard asset will be positive, or at least non-negative.

    2) Figure your 3% or 4% on assets that have a daily quotation and a positive cash-flow.

  19. Chris says

    Hi EmJay

    I was wondering if you happen to have an update pertaining to your questions and situation…

    I am curious if you did decide to retire, what you did pertaining to health care and any other updates pertaining to your questions.

    I found this post very interesting as it is pretty close to what I am thinking of doing myself .

    Wishing you and your a Very Happy Holiday Season and New Year


    • EmJay says

      Hi Chris,

      Emjay here. Thanks for reaching out and for the interest in learning how my situation played out. Also, Happy New Year to you. I hope it is a happy, healthy, and prosperous one for you.

      I’ve thought about providing an update on my chosen FI path following my JLCollins Case Study ( on a few occasions but never made it a priority. However, in light of interest in knowing what became of my FI journey, I’m happy to provide an update and share some of my learnings and experiences along the way.

      Let me begin by saying all is well although I find myself currently in a different situation than I thought I would two years ago at this time. I’ll get to the present day but let me share what took place on the way to getting here.

      Following the case study and the reassurance that I felt and, more importantly, my wife felt based on the feedback provided, I followed through with it and made my early retirement a reality. However, we didn’t take the plunge until my wife completed a very thorough review of our expenses and we put in place a formal budget for the very first time. I provided notice to my boss mid-December 2013 and agreed to stay on for about a month to help with transitioning work. Instead of referring to it as retirement, my wife and I used the term sabbatical. We weren’t sure what the future held so we thought this was the better way to classify it and that it would also be better accepted by friends, relatives, acquaintances, etc. More on this later.

      I live outside a ski resort mountain town so that first winter consisted of lots of skiing (downhill and cross-country) and lots of walks with the dog. I also took on all meal planning and cooking duties since I enjoy this more than my wife and this was one of the conditions set down by my wife for moving forward with this plan. I also had the pleasure of running the kids to their various after school activities and became much more interwoven into the daily rhythms of the family unit. This was all good and I was really enjoying my new found independence for the most part.

      So, what is this “for the most part” all about, I’m sure you are wondering. Was I stressed about finances? Nah – I felt secure that we were in good shape and had no regrets with the decision. However, my wife was still battling some worries as to whether we had “enough” and this did result in some tension between us along the way. We ultimately discovered that a big source for my wife’s worries were tied to the fact that she was managing the budget, while I was managing the income/investments. She was looking at all the money going out, while I was looking at both the money coming in as well as the money going out on a monthly aggregate level. The lesson learned: make sure you and your spouse are both viewing both sides of the ledger on a regular basis. It took longer than it should have but we ultimately figured this out.

      The other thing that really weighed heavily on me, and I’m somewhat embarrassed to admit it, was that I struggled with the stigma that went along with my decision. I felt like the vast majority of friends, relatives, and acquaintances were either jealous, thought I was out of my mind, lazy, irresponsible or some combination of these. I’m sure these thoughts and feelings were real in many cases and probably just some of my own insecurities in others. But, it was a disappointment that I felt like there were very few people in my life that were genuinely happy for us. Truth be told, I understood that. If the situation was reversed (and we had chosen to live a different lifestyle) I’d probably have some of those same feelings.

      So, as much as I hate to admit that I care what people think about me, I found through this experience that I care more than I would like to admit. Frankly, this was the most difficult aspect of the whole experience of my sabbatical. I share this because I wasn’t really bargaining on this weighing on me like it did. But, reality is that we (the early FI’ers) are really a very small group of people in society and you probably shouldn’t expect a lot of true, genuine support from your normal support system of family and friends. Or, perhaps you have more like people in your circle of family and friends. If you do, this will definitely help smooth out the transition. Or, perhaps you couldn’t care less what other people think which, if that’s the case, that will be to your benefit as well.

      As for health insurance, we did end up getting insurance through the Affordable Care Act through a health insurance provider in our state. Based on our income, which was projected to be about $65-70K through a combination of my wife’s part time job, my month of pay for January 2014, and investment income, we did qualify for a subsidy. Based on the plan we chose which was a “Silver” plan and was pretty much middle of the road as far as coverage, co-pays, deductibles, etc. we ended up paying $600/month which I found was reasonable for a family of 4. We ended up making some changes to the 2015 plan which saw the monthly cost further reduced to $480/month.

      Back to some other highlights and positives of the sabbatical, because aside from the psychological components referenced above, it was all very positive. The highlight by far was my family did a month long vacation in Europe that Summer. We have some family in Europe that we stayed with for a few weeks, but then did some travel with just the four of us to some of the most beautiful sites we have ever seen. It was a trip that will remain near and dear to us for the rest of our lives. We also did a couple of other smaller scale family trips, plus I was able to spend some quality time with aging parents that live on the opposite side of the country. I also did some volunteer activities and rode a lot of bike that Spring, Summer, and Fall.

      By the time Winter 2014/2015 rolled around, I felt it was important to get involved with something to interact with more people on a regular basis. I found it was easy to lead the life of a hermit if I allowed myself to, since I am a fairly strong introvert by nature. I ended up taking on two part-time “lifestyle” jobs in the tourism/recreation part of our resort economy and this worked out really well. While only making a little above minimum wage in both jobs, they both came with some nice/fun perks and it provided me with an opportunity to meet some really interesting people from all walks of life. My colleagues ranged from college students, to stay-at-home Moms who worked a couple of days a week on the mountain, to a lawyer who was figuring out what was next, to a retired pilot, and another fellow early FI’er. I enjoyed my newfound friendships and the social interaction provided via colleagues and customers.

      As these winter jobs were winding down, I started considering a return to a professional/career position and started looking at opportunities back in the software industry from which I came and felt extremely burned out with 15 months earlier. However, I was looking at roles different from what I had been doing the 15 years prior to my sabbatical. I knew I would only return to the corporate world for a special opportunity that allowed for me to do something different and grow in some new ways. As much as I enjoyed the sabbatical and definitely settled into a nice rhythm with with family and came to peace with some of the insecurities I highlighted above, I felt that I had some unfinished business career wise. Long story short, a special opportunity came along in May 2015 and my sabbatical officially came to an end. It has been almost 8 months in the new job and I’m enjoying the work as I’m in a very different role from what I had been doing. It’s quite possibly the hardest that I have ever worked as well, and while I do wish the hours were less, I feel that I have grown more in the way of new knowledge and skills in the last 8 months than I had in the prior 8 years.

      One thing that I’m pretty certain about is that this will most likely be the last career job hoorah whether I’m there one more year or five. I think this will provide the exclamation point on any financial security concerns that surfaced with my wife from time to time. We currently pay the vast majority of our bills with the income from investments, while I invest 80% of the income from my job each month into a couple of different Index funds. We continue to lead the same frugal lifestyle that we have the past 20 years together, although we have been a bit more generous with the occasional splurge since I went back to work.

      I wouldn’t trade the experience of the last two years for anything. I certainly have no regrets. I was able to re-charge my batteries, strengthen bonds with my wife and children, and have returned to a career job where I feel I’m learning and growing each day and have the opportunity to be part of something special. I have no idea how long this chapter will be. But, I’m trying to enjoy this chapter instead of looking forward to the next one.

  20. Chris says

    Hi Emjay and Jim:)

    Sorry for the late reply as I was traveling for work.

    EmJay – greatly appreciate the update as I find your situation fascinating – you are an excellent writer and Jim has the Best SITE on the Web – he has a way of making feel like your part of his extended family 🙂

    For what it is worth I read your case study at least once a week as I find myself in a similar position but WITHOUT the courage to leave the work force. I re-read it frequently to give me hope and confidence in my financial situation.

    I was hoping you might answer a few more questions –

    Specifically -is their a total net worth number that you are seeking to attain that would make you and your wife more comfortable with your retirement based on your initial withdrawal from the workforce? For example attaining $3MM with no debt at all and $300,000 set aside for college – would that cause you to go back to the “low pay -low stress job” or is it another number entirely

    I ask this – as I wonder – why did you return to working – especially in a very demanding position again – was it to build your wealth to a higher more comfortable level or did you just return based out of boredom.

    Also, what advice would you give someone whom is close to pulling the trigger (leaving their full time employment) – since you were out of work – was it harder than you thought, did you rethink the 4% withdrawal rate – should it be higher/lower anything else you would put into discussion from your recent experience? I look at your experience as a “fresh case” and wonder what else you learned – was Health Insurance harder and more expensive than you thought, could you have stayed retired – but you just went back to work out of boredom?

    Since I am prying into all your financial specifics it might be only fair if I share my specific situation with you 🙂 – and Jim

    I turn 52 this April and my wife turns 46 this April

    We have a 13 and a 3 year old –

    Before the market drop, we hit $3MM net worth – no debt. This includes Cash, Stock and a few rental properties – value of everything is $3MM before the market drop.

    We in addition to the $3MM have $250,000 set aside for college

    The $3MM and the $250,000 (college funds) does not include our equity in our primary home. We exclude that equity as we need a place to live

    I have worked for the same company for 28 years and make roughly the same salary as you

    My wife earns $120,000 gross

    My wife and I have been toying with the idea of me leaving work. I am scared to do so. I have read everything I can about withdrawal rates and I am looking (Jim – don’t fall off your chair ) at withdrawing between 2.5% and 3% max.

    With my wife continuing to work we would not be withdrawing more than 1% until she was unemployed —hopefully she can last another 5 years

    In a nutshell…. I am asking you all these questions….because I feel your case study is very close to our situation.

    I am hoping I can improve my probability of success by asking you as many questions as possible since your experience is / was so recent….For what it is worth, you and your wife are very sharp folks to achieve what you have so early in life – so I want to learn as much as I can from your situation

    In closing, if I were to leave in June 2016 – I would look for a low stress low wage job so i could take even less from out nest egg, my wife would continue to work as long as hse could but most likely not past 5 years —-she then would join me in the low wage low stress job….

    Strangely enough I have asked my employer for a demotion to a more work/life friendlier position, they have not said no yet as they are shocked by my request – they love my output but they do not understand that stress it has caused me over the last 28 years – I am hoping my employer and I can come to a compromise – less pay, less stress and still have a dedicated employee

    EmJay, no problem if you do not have the time to respond – i totally understand with your new position and all

    In closing I want to thank you again for being an inspiration to me and I can imagine to many others! I hope some day our paths cross, if your interested in sking at Sunday River Maine – let me know I can get you a deal on a rental 🙂

    Jim, I read and re-read all the comments from people thanking you for the help and advice, I wonder sometimes do you REALLY understand all the GOOD you have done for folks? I hope you do, I really hope you do – your website serves as an educational tool but your insights – your insights – serve as life changing mechanisms for many people to improve their lives



    • Todd says


      I’m much earlier on in my journey than you are, but like most in the FIRE community have been reading all I can on the subject.

      Based on what you wrote above – congrats man, game over, you won! Don’t let fear of the unknown shackle you from what you’ve earned – I hope to see an update from yourself talking about pulling the plug!

      • Chris says

        Hi Todd

        Thanks for the kind words!

        The fear is a huge road block for me something I struggle with daily

        In terms of an update I accepted what seems to be a less demanding role in the company I currently work at. I start 9/1 – if it does not turn out to be less stressful then I plan on leaving Jan 1st –

        I did make an error on my net worth I was at 2.7 million versus the 3 million when the market was at its high point

        Funny – I have Emjays case study printed out and I read it once a week to build my confidence

        Fingers crossed I develop the brains and courage to leap into something more fun than what I am doing today

        Best wishes for you and your journey!!!


        Ps – thanks again for the words of encouragement

        • Todd says

          Glad to hear you have a solid gameplan!

          Emjays case study is great – im right at that age 30 mark and love having these examples to use as benchmarks.

          However, the most revealing thing for me (i actually spoke with my wife about it at length after reading the article/comments) was the lack of support emjay received when retiring. That is the paychological part of FIRE I feel like i have to prepare myself for. While it will be a key achievemant for my wife and i – at that stage, our life work so we don’t have to work for life – it will be completely baffling to those around us. I realize now how uninterested people are to talk personal finance (how could they not want to read jlcollins for hours on end like myself?!?), so many will not be able to comprehend our decisions.

          That’s something I hope i can learn to live with/resolve as I work my way through this journey.

          • Chris says

            I agree Todd!

            I can tell you from reading a large number of BLOGs I feel Jim’s is the most educational. I learned alot from the stock series and learned even more from reading all the comments after each of the stock series.

            Congrats on being so young but so wise! I wish I had started earlier:0)

            I agree about the support. Personally for me the key to my support is my family. I think having your wife on board is the #1 factor in life – Happy wife Happy life – been my experience 🙂

            In terms of what other people are doing, I see it everyday at work—eating out, the traveling and the non stop spending….It blows my mind. Then when someone learns that I am think of leaving to start a new chapter in my life they cannot believe it, especially with young children.

            The position I am in today and the position you will be in tomorrow does not happen by accident or without making choices and the 1st choice for me was to not have everything I wanted and to live with less—looking back on it 25 years later best choice I ever made

            Todd – what are your financial goals? Seems like you are well read on the topic of FIRE – what goals do you and your wife share pertaining to when and what you will need to pull the plug? 🙂

            Wishing you a very Happy Saturday night where ever you may be—

            Thanks again for your kind words as well—-

          • Todd says

            It’s funny, about a year ago when we really decided to “go for it”, my wife trusted me but I don’t think really believed me. At first it was, “Hey, if we do this and this, I think we could retire by 50.” And then with a few more adjustments/buy-in, projections became 45. Now, with getting her on-board w/ the idea of moving to lower cost of living area around 40 (right now we’re located in NYC area), this has developed from a fantasy to realistically talking about retirement in less than 10 years.

            I made several large goals this year, as it’ll be our first full-year proactively saving with FIRE in mind. We’ve been tracking expenses every month and I’m constantly pumping more and more into investments. We’re very fortunate to earn around $200K a year as a couple – so a basic way to look at it is live on the first $100K (which is still an absurd amount of money – after a paid off home/no childcare costs, should be able to have yearly expenses in retirement around $60,000) and invest the rest. For the year I set out to invest $65,000 which we’re going to blow by (coming into the year we made about $165K combined income), want to get to $500K net worth by 34, $1M by 37, and then see where things are at by 40.

            Two quick things: 1) This mindset/goal for FIRE came about when offered an opportunity for a pretty significant pay increase/lifestyle change that I rejected when my wife and I came to the conclusion after discussing it, “What would we actually do with that extra money? Just invest more …” Our time/lifestyle became the #1 priority vs. things money could buy

            2) I’m very fortunate that I enjoy my work (as does my wife) and have no need to pull the plug immediately once hitting our FIRE goal. The part that makes me uncertain is that I don’t have a ton of aspirations of what I/we want to do when we’re done. I just know that I like being in control and having options. Getting to the point where we are financially independent, I trust that we’ll make the best decisions for us at that point

  21. Chris says

    Hi Todd

    Thanks for sharing! I’ve been traveling hence the late reply.

    Your goals and achievements, as well as, your level of maturity is admirable!

    Thanks for sharing your goals – Keep in mind your mindset will serve you well when and if you begin to dislike your careers:) I loved mine the first 25 years—-then as time passed became less enjoyable – luckily I anticipated this could come about:)

    You will blow by my results in time!

    Love to keep in touch –

  22. kindoflost says

    I like case studies. Specially those like this one that show a slam dunk success. But I really love this one because there is an actuall follow up that also shows a success “pulling the trigger”. This thing works. And this post gives a nice reassurance.
    Congrats to EmJay and thanks to Jim and all for the imput.

  23. Andy says


    I am a reader that has followed you for a long time. I have listed to multiple podcasts you were on, including your speech at Google. You have really helped me and my wife in so many areas. We have adopted your investing philosophy in VTSAX. I don’t have a question, I really wanted to give you a heartfelt thank you.

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