How I Plan to Retire Early on a $50K Salary

Can you retire early without a high-paying tech industry salary? In this episode, we talk with Stephen about how he plans to do just that. At 30 years old, he’s earning $50k as a higher education administrator, yet he plans to retire with at least a million dollars by his early 50s. How will he do that? Join us as we discuss his plans, the role of financial discipline, why he doesn’t feel he’s overly frugal, and the challenges of his FIRE path.

Show notes may be found below the video


Show Notes

Essential Background:
Are you newer to the show? If so, you may not have seen our first two episodes, which include a lot of background on Jason + Eric’s lives. Check out Our Financial Past and our FIRE Present and Two Careers, Two Paths to Financial Independence, to learn how we got our own start in life and in the workplace.

Stephen’s Budget: Are you interested in more details on Stephen’s financial picture? He graciously shared the Sankey diagram below, which captures his Jan-Jul 2022 income and expenses. This visualization makes it easy to see both sides of the balance sheet, and provides a lot more detail on Stephen’s finances than we were able to achieve in our conversation.

The Shockingly Simple Math Behind Early Retirement is an article by blogger Mister Money Mustache, which many cite among their most important inspirations for getting on the FIRE path. As you heard from Stephen, MMM was one of his early sources as well.

Still doubting whether FIRE is achievable on a more traditional salary? See The Millionaire Next Door (Thomas Stanley), a profoundly insightful book for a very easy read. Dr. Stanley studied wealth and the habits of the wealthy for many years, capturing his observations in this work and others. Learn how frugality, living below one’s means, and investing, truly powers the path to financial independence.

The Simple Path to Wealth (JL Collins) is widely regarded by many in the FIRE community as the most impactful book to their own journey. This fast and easily digestible read is chock-full of investment guidance that you will understand immediately and can readily apply. There is no better starting point to your FIRE journey than this book.

We didn’t dig into it, but you may have heard Stephen refer to feeling “YNAB poor” in this episode. What is YNAB? You Need a Budget is a popular budgeting tool for many in the FIRE community. If manual spreadsheets aren’t your thing or you’ve struggled with budgeting in the past, this may be a good solution. YNAB has a generous, free 34-day trial so you can see how well it works to help you understand and control spending. (affiliate link; no credit card needed )


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

Don’t Let the Cost of Healthcare Break Your Early Retirement Plan

Calculating the cost of health insurance is a complicated and stressful exercise when you’re retiring early. Hear Jason’s experience with his first full year using the California ACA Exchange and learn how Eric arrived at his budget of $350K, his worst case scenario. We discuss how to choose a plan, ACA subsidies, differences by state, and other alternative options. If you missed our earlier healthcare episode, be sure to see the link below in the Show Notes.

Show notes may be found below the video


Show Notes

Essential Background:
If you missed our earlier healthcare insurance episode, “Healthcare is my Second Highest Cost in Early Retirement”, it’s a great one to review. In that video, we were joined by a career HR benefits expert, and covered a huge diversity of topics – unlike the ACA focus here. We talked about Medicare, COBRA, Long Term Care, prescription drug coverage, among others.

In this episode we mentioned a number of useful resources primarily for US residents seeking healthcare that we’d like to share with you. Note that many apply whether you are on a FIRE path or traditional retirement age.

Healthcare.gov is the best starting point when it comes to information about Affordable care Act (ACA or “Obamacare”) plans. In many cases, you will be directed to a state-run plan with its own website, but this is not always the case. Presently, a number of states have federally-run, state-federal partnership, or federally-supported plans. Where there isn’t a state exchange, you’ll see options and apply for coverage directly from healthcare.gov.

Choosing a metal tier is an essential part of selecting an ACA plan. This chart from healthcare.gov explains the details of the Bronze, Silver, Gold, and Platinum options available. Importantly, the plan categories are based on how you and your plan split the costs of your health care. As Eric mentioned, they have nothing to do with quality of care.

ACA plan subsidies are a topic we spent some time on in the episode. Many on a FIRE path plan on having incomes well within the limits where cost-reducing subsidies apply. Typically, as long as your household income is below 400% of the Federal Poverty Limit (FPL), these apply. When you investigate ACA coverage options, information will be provided on your eligibility for these based on the income information you supply. Importantly, in 2021 and 2022, provisions of the American Rescue Plan (ARP) legislation made further improvements to eligibility, eliminating so-called “subsidy cliffs”.

Obamacare Optimization in Early Retirement is a great Go Curry Cracker article that goes into extensive details on ACA optimization, for those ready for a deeper dive. It’s worth noting that this is just one of a number of good ACA-related articles on GCC, which you can access via this tag.

States where Obamacare plans cost the most in 2021 is an interesting post from Policygenius that digs into the diversity of plan costs across US states. Some states have much higher average costs by plan, so this is a key factor worth investigating when considering where to live if you will rely on ACA plans.

Healthcare Sharing Ministries (HSMs) are an option of interest to many. We’ve decided they weren’t for us, as they’re not bound by the same requirements as true insurance plans. That said, this page seems to be a reasonable starting point for high level information on a number of options available. If you have interest in these plans, be sure to dig deeper. Many user stories are available online via Reddit and other sources. For information on the potential downsides of HSMs, we found this recent John Oliver segment very eye-opening. Caveat emptor, friends.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

What the FIRE Community Gets Wrong – Talking with Karsten Jeske (and our follow-up conversation!)

Note: This post has been updated to include our episode with our follow-up conversation, in which we we review our take-homes from that conversation, and react to comments and feedback we received about the episode with Karsten.

What would you do if you ran out of money in retirement? It’s hard to imagine a scarier outcome, and yet many on the FIRE path may be at risk for this if they get their portfolio withdrawal rate wrong. In this episode, Eric + Jason talk with Karsten Jeske, the creator of the Early Retirement Now blog. Known by many as “Big ERN”, he is an economist who is well known to the FIRE community for his extensive work in characterizing safe withdrawal rates (SWR). In this episode, we dig into Karsten’s free, powerful SWR Toolbox, and discuss topics including the downsides of FIRE calculators, 100% stock portfolios, the bucket strategy, why dividend investors are wrong, and his own post-FIRE life. If you’re interested in FIRE, you can’t afford to miss this information-packed episode!

Show notes may be found below the videos

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.

Conversation with Karsten:

Follow-up episode:


Show Notes

Essential Background
One of the key dangers underpinning the importance of safe withdrawal is Sequence Risk (sometimes called Sequence of Returns Risk). Sequence risk is “the danger that the timing of withdrawals from a retirement account will have a negative impact on the overall rate of return available to the investor” – for example, starting withdrawals in a period with several years of severe market underperformance. This is a topic we’ve discussed before but for those new to the topic, check out this post from Investopedia.

Key Early Retirement Now Content
We referenced a number of Karsten’s blog posts from Early Retirement Now in this episode. Below you’ll find links to that content, along with the main landing page for his SWR series. You’ve got enough reading to keep you busy!

But first a little guidance: given Karsten’s extensive knowledge and expertise on these topic areas, his approach employs analysis which some may find unwieldy or even a little overwhelming. Don’t panic! Skim the math and stick with the text, and you’ll find that it’s not essential to fully comprehend all the analyses to understand the messages being delivered.

The SWR Toolbox: This is the free, downloadable tool that Karsten developed and which we discussed in this episode. Part 28 is the post where the revisions to the original calculator are described and the latest tool is linked. To see the history of this tool, you’ll need to go back to Part 7 of the series.

  • Safe Withdrawal Rate series: This is the landing page for the SWR series for which Karsten is best known. However, it’s also a 53-part series (now; it will surely grow). So we recommend following the guidance he provides about how to get started. You might begin with a topic of interest found below or listed at this landing page rather than diving into the whole series – though it’s a great read if you have interest in going through the whole thing!
  • Equity Glidepaths are a type of dynamic asset allocation plan often discussed in retirement planning. In Karsten’s words, “if we start with a relatively low equity weight and then move up the equity allocation over time we effectively take our withdrawals mostly out of the bond portion of the portfolio during the first few years. If the equity market were to go down during this time, we’d avoid selling our equities at rock bottom prices. That should help with Sequence of Return Risk!”. He covers glidepaths in Part 19 and Part 20.
  • Dividend stock strategies are commonly touted in the investment community, yet are seemingly poorly understood. We talked about this idea in our episode, and Karsten has written several great articles on the topic: Part 29, Part 30, and Part 31.
  • How often should we rebalance our portfolio? This key topic is addressed in Part 39 of the SWR series. Rebalancing isn’t a panacea for sequence risk, but it’s certainly an important element to consider. As we’ve discussed previously, being consistent + avoiding market timing is essential.
  • Is it crazy to hold 100% equities until retirement? Eric asked this question in response to his portfolio moves earlier this year to change his allocation to include 30% fixed income (Two Sides of FI episodes: Part 1 and Part 2). See Part 43 of Karsten’s series for further detail on his position, expanding on what he said in this episode.
  • Bucket Strategies is a topic we’ve addressed before on the show, including our conversation with Fritz Gilbert (The Retirement Manifesto). In Part 48, Karsten tackles this topic as well. In the episode, Jason also mentioned an article by Michael Kitces on this.
  • Inflation is certainly a topic on everyone’s mind at the time this episode was recorded. In one of his more recent posts (Part 51) Karsten digs deep on this topic. Is what’s currently predicted for the inflation path within historical norms – and is our withdrawal rate modeling at risk? Read on to find out…
  • The Retirement Income Style Awareness (RISA) assessment was discussed in our follow-up episode. This tool, by Wade Pfau and the team at Retirement Researcher, came from research performed on individual styles, risk tolerance, and other factors, and is aimed at deriving a personal retirement income strategy. Fritz Gilbert at Retirement Manifesto posted a nice write up on this last year, which we’d recommend. If you’re interested in learning more about this assessment, check out Wade’s book: “Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success”.
  • Bonus: If you haven’t had enough yet, we’d recommend Part 26: “Ten things the ‘Makers’ of the 4% Rule Don’t Want You to Know”. It’s written rather tongue-in-cheek, while still being packed with the insight we’ve grown to expect from Karsten’s style of writing. We touched on some of these points in the episode but there are a bunch more not covered that are very much worth reading.

You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

Download Our FREE Portfolio Rebalancing Calculator!

In our episode titled “Stock Market on FIRE: What We’re Doing in a Downturn”, Jason mentioned a spreadsheet that he uses to track his asset allocation and to model rebalancing. So many of you have asked for a copy of this, that we decided to up the ante – we’ve created an improved standalone calculator that we’re making available for free to our Two Sides of FI viewers. This calculator provides a convenient mechanism to enter and track your asset allocation, flag when any assets exceed your allocation targets, and model any rebalancing that may be needed. It’s really easy to use as you’ll see in our introductory video:

Would you like your own FREE Rebalancing Calculator?
Please fill out the form below to request a copy:

NOTE: Two Sides of FI will NOT share or sell your information with 3rd party sites. If you are a new subscriber to Two Sides of FI you will receive several emails, including one to confirm your email address.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site. To navigate to this material at any time, just click the menu button at the top of any page on the site.

We Each Hired a Flat Fee Financial Advisor. Was It Worth It?

Here’s what we learned by hiring a financial advisor for a fixed fee of $1,000. Rather than pay a costly ongoing assets under management (AUM) fee, we wanted to test out this increasingly popular fee-for-service advisement model. We each hired the same fee-only, advice-only advisor to evaluate our portfolios and answer our questions. We share how we found this advisor, what the process was like, the specific questions + answers we had, and who we think could benefit from such a service.

Is this the right option for you?

Maybe.

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.


Show Notes

Essential Background:

How do you find advice-only planners? Below you’ll find two resources. Please note that Two Sides of FI has no relationship nor do we receive any compensation from either.

1) XY Planning Network was mentioned in this episode. As described on the site, their member advisors ascribe to fiduciary and CFP standards, earn no commissions, and require no minimum assets. They have convenient filters to allow searching by advisor specialities, including those with FIRE experience. Many work under multiple fee models, including advice-only, which can be a good source for one-time consults without any

2) Cody Garrett, CFP and advice-only planner from Measure Twice Financial, recently shared this list on Twitter. As he described it, “these 11 advisors provide comprehensive financial planning without any expectation, obligation, or even the option to manage client investments. Options for project-based, hourly, or ongoing.” You’ll note there is overlap between these resources, which makes sense. But this is the list Cody shares with prospective clients, so one can presume there’s been some personal vetting.

As we discussed in the episode, the advisor recommended some actions that we elected not to follow. Note that this doesn’t mean it was bad guidance, we just determined it didn’t fit our plans at this time.

Our lists:

Eric:

  • Increase emergency fund to 3 months living expenses.
  • Consider a more conservative stock/bond mix given retirement timeline of 24 months.
  • Increase umbrella insurance coverage to cover entire net worth (complicated to procure given two teenage drivers in Eric’s household).
  • Purchase disability insurance (Eric considers them to be self-insured).
  • Contribute to a medical flexible spending account. (Not actually that ‘flexible’ as unspent balance disappears annually which requires knowing your medical expenditures in advance).
  • Consider a SPIA (single premium immediate annuity), or a rising equity glide path to cover sequence risk early in retirement. (Still evaluating).
  • Consider a HELOC (pre 62) or, HECM (at age 62) to access home equity as a buffer asset. (Possible point of leverage in the future).
  • Consider a Cash Balance Plan for Eric’s business (Eric researched, chose not to proceed given costs to set up + unpredictable nature of annual revenues).

Jason:

  • Increase umbrella insurance coverage to cover entire net worth.
  • Evaluate needs for long-term disability insurance. (self-insured)
  • Re-evaluate your need for long-term care at age 50 or sooner. (self-insured)
  • Pay off the mortgage (Jason researched and elected not to proceed).
  • Consider flood and earthquake insurance (former doesn’t apply, have evaluated latter previously and elected not to proceed).
  • Consider utilizing additional risk management strategies (SPIA or rising equity glidepath, and HECM once you qualify at age 62).
  • Re-evaluate partial Roth conversions as Affordable Care Act(ACA) subsidy rules change, and/or once you become eligible for Medicare at age 65 (or earlier) (deferred for now)

You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

Stock Market on FIRE: What We’re Doing in a Downturn

You’re on a FIRE path and the markets keep falling – what do you do? In this episode, Jason + Eric revisit the topic of market downturn, and candidly discuss their pre- and post-FI moods in this turbulent time. Join us to learn what they’re doing and thinking about right now as Jason nears the two-year post-FI mark and Eric contemplates pushing his 2024 FI date back. Topics discussed include rebalancing, how to monitor portfolio performance, moves we are making now, and feeling down about FIRE.

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.


Show Notes

Essential Background:

Two studies on rebalancing were discussed in this episode, both of which we’d recommend. Here’s a link to the Vanguard article as well as the one by Michael Kitces.

Personal Capital is a commonly used free tool for tracking your various investment accounts, understanding your asset allocation + rebalancing opportunities, and monitoring your net worth. PC has simple to use account linking to make it a more automated experience. Give it a try risk-free!

Our Asset Allocation + Rebalancing Calculator provides a convenient and easy mechanism to enter and track your asset allocation, flag when any assets exceed your allocation targets, and model any rebalancing that may be needed. Jason mentioned a spreadsheet he uses in this episode, and this tool is an improved version of that which we’ve now released for all Two Sides of FI viewers to use.

Never pay taxes again? In this episode we referenced this article from Go Curry Cracker, in which they discuss how with $100K of income they are paying very little in taxes. Much of this comes from the 0% capital gains limit, but there are other considerations as well.

Tax Loss Harvesting is a concept we’ve discussed on the show before, but haven’t dug into deeply. This Investopedia article is a good summary. In brief, TLH is an approach by which investors can sell an asset at a loss, reducing the total amount of capital gains taxes due from the sale of profitable investments. You can then use the sale proceeds to purchase a similar asset or security, maintaining your asset allocation.

The Wash-Sale Rule is critical to keep in mind, particularly when looking at opportunities for tax loss harvesting. This article from Investopedia provides good background on the topic along with supplying several examples. It’s important to know about this rule and ensure you understand the implications of buying and selling (whether intentionally or automatically via dividend reinvesting).

Passive income through option writing is part of Karsten Jeske’s (i.e. “Big ERN”) passive income generation strategy post-FIRE. This link will take you to the first article in the Early Retirement Now series, which also has a directory of everything he’s written on this topic across a series of articles.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

My New Life: Two Years After Early Retirement

Wondering what a day in the life in early retirement is like? Eric travels to California to shadow Jason and find out what his FIRE life is like nearly two years into early retirement. We learn how Jason fills his days, hear his concerns pre- and post-FI, discuss the merits of part-time “fun” jobs, and the reality of finances.

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.


Show Notes

Essential Background:

  • Did you see our earlier episode called “What I Learned in My First Year of ‘Early Retirement'”? Our most popular video to date, this installment captures Eric + Jason’s discussion about the latter’s lessons learned in year one of RE.
  • How did Jason + Lorri decide where to relocate post-FIRE, and what are Eric + Laura considering for their own next steps? If you missed our two-part series on “Where to Live”, be sure to check it out here: (part 1 and part 2).
  • Talking With Our Spouses about FIRE” is the first part of our conversation with our partners on the show (part 2 here). To get the full picture of what Eric + Jason’s FIRE paths have been like, it’s essential to hear from Laura + Lorri as well.

Jason has been blogging since he left his career nearly two years ago. Part of that has included a series of milestones posts, in which he captures how he’s feeling at various points in time post-RE. At this link, you’ll learn more about what that journey has been like over the past two years.

What I’ve Learned From Two Years of Retirement is a great post by Fritz Gilbert @ The Retirement Manifesto, on his own experience in RE. No two FIRE journeys are the same, so we think it’s highly informative to learn from others’ paths too.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

If You Want Financial Freedom You Can’t Ignore This (Parts 1 and 2)

We avoided estate planning for a long time; here’s why you shouldn’t. Without an estate plan, you’re giving over the control of what happens to all your assets to others. In part one of this two-part series, Eric + Jason talk about what they did to – finally – get their respective plans in place. Topics discussed in this episode include the elements of estate planning, why people delay + how to get started, living trusts, and taking care of your heirs. Don’t be like those who put this off “until they’re older”: join us now for the first episode of this two-part series.

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.

Part 1

Part 2


Show Notes

Essential Background: If you’re not familiar with our family situations, check out our earlier videos where we’re joined by our spouses (part 1 and part 2), and the recent episodes about our kids (part 1 and part 2). Note that each is a two-part series, and separate links are provided for all videos.

Estate planning FAQs: After viewing these videos, you’ll be better equipped to ask deeper questions about your own estate planning needs. We found this resource from the American College of Trust and Estate Counsel (ACTEC) to be really helpful. All of the high level topics discussed in our series are covered here.

What is a trust? This Investopedia article is a good starting point for clarification on the different types of trusts and other pertinent details. This is a subject where it’s easy to fall down a very deep rabbit hole, and having a good foundation first is always helpful. Be sure to research the particulars of your state or country as well, as things differ substantially.

Advanced care planning is an essential element of estate planning, and one we touched on in part 1 and expand upon in part 2 of this series. Thinking through your own preferences can be difficulty, but planning for them is vitally important.

Umbrella Insurance is among the most important (and least expensive) tools available to protect your assets. These policies sit on top of your existing liability coverage (auto, home, etc) and extend it. To learn more about umbrella policies, check out this Investopedia post.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

Breaking Up With My Financial Advisor?

Did you know that financial advisor fees can eat up HALF of your portfolio’s value over time? While happy with the good support and great relationship he had with them, Jason was thinking about leaving his financial planners late last year. In this episode, we capture a conversation Eric + Jason had on this topic, as they discussed the merits and downsides of paying assets under management (AUM) fees. Topics covered in this episode include why he stuck with them over the years, the value advisors can bring, more cost-effective options for financial advice, and how Jason is making his decision. Get the facts and make the right choice for yourself!

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.


Show Notes

Essential Background:

  • Have you seen our two-part series (part 1 and part 2) on asset allocation? These episodes provide context from Jason on his portfolio and work to date with advisors.
  • The Bogleheads wiki contains some great content about investment advisors and financial planners, helping to clarify the differences between them. In these two articles you can learn some important definitions and information that provide key background to this topic.

10 Questions to Ask Your Financial Advisor was put out by the Certified Financial Planner Board of Standards, Inc. (CFP Board), which is a “non-profit organization that serves the public by fostering professional standards in personal financial planning”. This document is a must-read for anyone even considering financial planning services, and helps to arm you with the information you need to have any conversations.

Interested in researching financial advisors? This link will take you to one of the better resources we’ve seen for investigating potential options. As described on the site, XY Planning Network’s member advisors ascribe to fiduciary and CFP standards, earn no commissions, and require no minimum assets. They have convenient filters to allow searching by advisor specialities, including those with FIRE experience. Many work under multiple fee models, including advice-only, which can be a good source for one-time consults without any ongoing feels. [Two Sides of FI has no relationship with XY Planning nor do we receive any compensation from them.]

BrokerCheck is a resource by FINRA (Financial Industry Regulatory Authority), which allows you to research individual financial planners and brokers, as well as firms. This is a key site for looking into the details of a potential financial advisor or perhaps one with whom you are already working.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.

Our FIRE Portfolios Are Down 20%, What Now?

How has the recent market downturn changed our plans? Jason + Eric candidly discuss their pre- and post-FI moods in this volatile time. Learn what they’re doing and thinking about right now as Jason nears the two-year post-FI mark and Eric contemplates pushing his 2024 FI date back.

Note: This content does not constitute investment advice and is being presented for informational and educational purposes only.


Show Notes

Essential Background: Let’s start out with some definitions. Terms like correction, market crash, and bear market are thrown around casually at times and knowing their meaning is important. This Fortune article is a brief and effective summary.

Buying Stock in a Down Market is a part of show guest, Fritz Gilbert’s, post-FIRE strategy, which he discussed in a recent conversation with us. In this episode highlight, we discuss how he felt during the 2020 market decline and learn about his approach to continue buying in order to take advantage of low equity prices.

The Psychology of Money (Morgan Housel), is the book Eric discussed in this episode. Subtitled “Timeless lessons on wealth, greed, and happiness”, it recounts 19 short stories “exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics”.

Fixed Income has an essential role to play in any portfolio, particularly as you approach your retirement date. Did you miss our two-part series on Eric’s recent efforts to change their asset allocation from 100% stock? As he referenced in the current episode, that was an important part of increasing his confidence in this down market. Be sure to check out part one and part 2 of our conversation, as well as the behind the scenes conversation Eric and his wife Laura shared on this essential topic.

Tax Loss Harvesting is a concept we’ve discussed on the show before, but haven’t dug into deeply. This Investopedia article is a good summary. In brief, TLH is an approach by which investors can sell an asset at a loss, reducing the total amount of capital gains taxes due from the sale of profitable investments. You can then use the sale proceeds to purchase a similar asset or security, maintaining your asset allocation.


You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.