PHIRE (English, acronym/verb, pronounced fy-er)
Kristi and I have been asked by many how we were able to retire early and start living our best lives now, in our mid-fifties. Some time ago, we started reading about young people who were tired of the rat race and were leaving their paying jobs at far younger ages than we are. We learned about the FIRE (Financial Independence Retire Early) movement and the drive to become debt free with enough funding to live on for years to come, if not indefinitely. We studied the different ways people in their 20s, 30s, & 40s are achieving this and the clever descriptions others had come up with to describe their plans, like LEAN Fire, FAT Fire, BARISTA Fire, etc., which all can be researched online. We decided that this is exactly what we wanted and came up with our own plan, jokingly calling it OLD Fire. It took some time, but we are now living that life. When we started thinking how to answer those who want to know how we brought all this together and avoided becoming complete DUMPSTER Fires, we came up with the five biggest things that have allowed US to reach our goal of reclaiming our time freedom. We think we’re clever too and modified our plan to be know as OLD PHIRE!
Pensions
Healthcare
Investments
Retirement Income
Eliminate Debt
Pensions
Now, we know not everyone has access to all of these items, particularly pensions. Fortunately for us, Kristi has worked many years in education and will actually receive two different pensions when she turns 62 and will receive these for the rest of her life. The amounts are based on formulas set by the state, or city in which she worked and do have some different options on payout that we will have to decide on as the time grows nearer. Many companies and even government agencies have done away with pensions over the years in favor of other retirement programs such as 401K/A/B and the like. Many Federal and state governments, including departments of education, still do offer a pension to retiring employees.Throughout the employee’s working history they usually contribute an amount to a retirement pension fund. This is sometimes paid in full or in part by an employer, or through some negotiated contract. These funds are managed and invested on behalf of the employees to pay future retirees. At retirement the formula, which includes factors for average salary and number of years worked, is calculated and a monthly amount is paid for life. Assuming the fund is managed well and remains solvent, this can provide a nice income and be a foundation of an overall retirement plan. Unfortunately, the distributions are taxable and Kristi has to wait until she is 62 to start collecting. We will also consider relocating or domiciling in a more tax-friendly state to maximize this benefit.
Healthcare
In all the research we’ve done, all the videos we’ve watched, and all the people to whom we have spoken, one of the most important factors in retirement, at any age, seems to be healthcare. Inevitably, our bodies will breakdown as we grow older. American society has tried to provide medical coverage for the elderly, but it often has many limitations, can be confusing, and there is still an out of pocket expense. Fortunately, the main ongoing benefit I am receiving as a retiree from my job is lifelong health coverage (Medical, dental & vision) for both me and Kristi at the going employee rate. We qualified for this benefit immediately upon my retirement, even though I was only 55 at the time. While this is still a considerable expense each month, it pales in comparison to the cost of private insurance. Some would suggest that we look into Affordable Care Act coverage, but we still have too much income to legitimately qualify for government assisted ACA plans and with changing political policies, this could be an unsettled venture for the future. By all accounts, our benefit has access to some of the best small government health coverages in the nation. Use of a surgery center covered at 100%, free nationwide clinics and free maintenance drugs shipped to wherever our current location may be, liberal vision and dental coverages, free chiropractic services, a nationwide in-network major medical plan, and even worldwide medical service reimbursements are just some of the highlights. Maximum total family out of pocket is $9K, so we keep that amount set aside to cover any major medical emergency. The premium amount is drafted, worry-free, directly from my retirement account funds each month. Once we each reach the age of 65, we are required to apply for Medicare and that will become our primary coverage. Our employer coverage reduces in price, but remains as secondary insurance, basically resulting in no additional expense out of pocket beyond premiums. The total premium cost may increase ever so slightly overall, but is extremely manageable. Since we have been, and plan to continue, traveling around the globe, we also purchase inexpensive, annual international insurance plans to cover possible medical evacuations, etc. The relief of having these benefits and coverages has allowed us to be able to even consider any of this major life change.
Investments
In addition to Kristi’s pensions we do have other investments upon which we will rely in the future. While I did work for almost two decades for a local county government agency, they did away with pensions long ago in favor of an alternative retirement program. While the benefit is quite considerate, it is in the form of funds equal to a percentage of salary and contributed on the employee’s behalf to an investment account. The funds can then be freely managed in the market by the employee themself. Any payout received after retirement is taxable and not guaranteed for life. The account balance, of course, can rise and fall with the markets depending on the amount of risk in which the funds are invested. One nice thing about this particular retirement product is that once leaving employment, after becoming fully vested, the funds are available penalty-free upon turning 55 1/2 years of age, unlike most others that require one to be 59 1/2. This means that these funds are available to us now, if ever needed.
We also each have a Roth IRA. Kristi has contributed a considerable amount to hers since the mid-1990s. We started mine several years ago and contributed a small monthly amount. We also have a money market account, two separate investment accounts, as well as savings accounts for emergencies and general funds. Most of these funds are being held for the future, allowing them to hopefully grow, and they don’t factor prominently in our immediate expense budgets. All of these investments and savings have made it even more comfortable for us to proceed with our plan.
Retirement income
Additionally, we have situated ourselves to receive regular income monthly for many years to come. We owned a wonderful home, more than large enough for the two of us, with a swimming pool, overlooking a lake, that we could have lived in forever. We also purchased the house next door when our youngest daughter and granddaughter needed a place to stay. We saw it somewhat as divesting our investments to include real estate holdings. However, our dreams of the future lay elsewhere. Those plans didn’t necessarily include owning two houses. Now, we’re either not as bright as we believe, or we are very loving and nice. We could have just sold the houses at the height of the recent housing boom in early 2022 before interest rates went insane, if we wanted maximum return. We instead decided to sell the two houses we owned to two of our children. Some may feel we should have gifted these to them if we really loved them. Well, we grew up, and subsequently raised our kids with the understanding that nothing in life is free, and besides, we worked hard to pay those houses off in full and will need that investment returned for our future plans to work. Neither kid was in a position to purchase a house on their own at the time, so we agreed to act as the BOMD (Bank of Mom & Dad). We did do it all legally, above the table with our attorney drawing up actual mortgage contracts with real consequences and filed with the proper government agencies. Of course, the kids benefitted by having no closing costs, no PMI, no realtor commissions, unheard-of low interest rates (we were required by the IRS to charge some interest), the super affordable “kid-rate” monthly payments, and an understanding, not-so-pushy lender! Anyway, all of this allows us to have a regular income amount for the next 15 years or so. Of course, if they decide to pay us off early, we win. Or, if they ever sell, we get paid in full; again, we win. We can also possibly be as benevolent as we see fit at any time.
A second source of regular income for us will eventually be Social Security. Having both worked our entire adult lives to this point, we will each receive a decent monthly amount once we start accepting this benefit. We are still discussing pros and cons of different strategies on when and what order to take these funds. Naturally, the longer we wait, the higher the monthly amount will be. Many people however, believe SSA will not be around forever, that it is in trouble of running out of money. Selfishly, we hope that it will hold out long enough for us, and we hope that those in charge figure out how to salvage it for the future. While this will be a nice addition to our overall portfolio, it will remain only a part of the plan. Of course, we must wait until at LEAST age 62 to collect. Additionally, as posted previously https://mkalmostthere.com/gathering-magic we currently have a side business selling on eBay that has historically provided a decent income. We can continue to work as much, or little on this business as we see fit. We eventually plan to dissolve it completely as we transition to a more mobile lifestyle.
Eliminating Debt
Finally, none of our current plan would work if we hadn’t first prioritized becoming debt free. Arguably, this is the cornerstone of our entire PHIRE plan. Ultimately, through our regular income, pensions, and social security, we will make as much or, for a while, MORE money than we brought home while working, but now with ZERO debt. Owing nothing to anyone has allowed us to maintain the same generous budget we had while working, but we’ve been able to shift funds that previously went to payments to allowances for travel, entertainment, and additional savings or investments. We’ve written several posts on becoming debt free and you can check those out for more information on our story.
Although we call our plan OLD PHIRE, we aren’t really old. We DID retire years early. We are both educated, academically and in the School of Hard Knocks. We figured most of this out on our own, but hope others can derive inspiration and knowledge from our story. We’re just 2 kids from the Hood (not like the Boyz in the Hood or Colors type, just the neighborHOOD, or Apartment Complex in our case) who have been best friends for ages, and much more for many years now, who made the right moves to put ourselves in the position to live our best lives, on our terms. We truly believe with the right knowledge, guidance, and some hard work, that you can too.
Mike
November 2022
We are Mike and Kristi, and we spent the last decade getting out of debt, saving money, and becoming financially independent so we could retire early and travel the globe. You can also follow our journey on Instagram at MKAlmostThere https://www.instagram.com/mkalmostthere/ and eventually on YouTube at: https://www.youtube.com/channel/UCh6VD3QdcfN_2IIHkjk7V-Q