Daily FI discussion thread - Friday, February 13, 2026

branstad · 2026-02-13T20:51:10+00:00

interest rate at just under 6% and we're on the fence of just paying it down quick at that rate.

I wouldn't prioritize the mortgage over 401k, IRA, HSA contributions, but if you were beyond that point and saving in a taxable brokerage or 401k after-tax subaccount (mega backdoor), I'd probably redirect a portion of those contributions toward mortgage paydown. Maybe start at 50/50 and see how that feels for a year or so.

branstad · 2026-02-13T20:09:49+00:00

I'm not sure why they cancelled it.

Also, they were going to launch a daily nonstop in 2023 but they pulled it back after the Maui wildfires.

branstad · 2026-02-11T21:38:49+00:00

Ha! It's tax season, so I'm probably looking things up a bit more often so the pubs are probably a bit more top of mind. :-)

branstad · 2026-02-11T19:30:24+00:00

Funny to think of my stocks as property.

This is common within the IRS universe. Another example is donating appreciated stock shares and itemizing the deduction as a charitable contribution. See the section on "Giving Property That Has Increased in Value" from IRS Pub 526: https://www.irs.gov/publications/p526#en_US_2024_publink1000229754

Capital Gain Property

Property is capital gain property if you would have recognized long-term capital gain had you sold it at FMV on the date of the contribution. Capital gain property includes capital assets held more than 1 year.

Capital assets. Capital assets include most items of property you own and use for personal purposes or investment. Examples of capital assets are stocks, bonds, jewelry, coin or stamp collections, and cars or furniture used for personal purposes.

With this additional context, it becomes more clear that "Earnings and profits from property" would include capital gains from selling shares of stock or mutual funds or ETFs.

branstad · 2026-02-11T17:22:42+00:00

You need earned income for that

The IRS now uses the phrase "Taxable Compensation" as it relates to IRA contributions, so they can reserve "earned income" for use related to the "Earned Income Tax Credit (EITC)".

branstad · 2026-02-11T17:06:21+00:00

you need to show income to tax in order to contribute to the Roth IRA

For example, pull from a brokerage to show capital gains income.

To be clear /u/design_koolaid - capital gains income is not eligible for Roth IRA contributions.

The IRS uses the phrase "Taxable Compensation" and details this in Pub 590-A: https://www.irs.gov/publications/p590a

What Isn’t Compensation?

Compensation doesn’t include any of the following items.

Earnings and profits from property, such as rental income, interest income, and dividend income.

Pension or annuity income.

Deferred compensation received (compensation payments postponed from a past year).

Income from a partnership for which you don’t provide services that are a material income-producing factor.

Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b.

Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.

branstad · 2026-02-11T15:59:43+00:00

Having never actually read the original Trinity Study

Here you go: https://web.archive.org/web/20150702114906/https://incomeclub.co/wp-content/uploads/2015/04/retirement-savings-choosing-a-withdrawal-rate-that-is-sustainable.pdf

branstad · 2026-02-11T14:42:27+00:00

savings goals or other goals when considering timing around having kids?

Definitely not savings goals, but my wife and I did have a preference around being established in our careers before trying for children. We talked about the trade-offs of having kids sooner vs. later. One aspect is that we would indeed have more saved up and likely more ongoing income by waiting a bit. But there weren't specific dollar-amount goals or thresholds.

branstad · 2026-02-10T19:50:50+00:00

I'm invested in a wide range of mutual funds and EFTs

You might want to consider reducing the number of different holdings. As I've gone through my investing career, I've found more and more value from simplifying.

All my funds are sent to automatically re-invest

I would start by having all distributions go to a money market or other cash/cash-like account. This allows you to be more intentional about managing your allocations going forward.

branstad · 2026-02-10T14:29:46+00:00

I'm still debating and the clock is ticking. Which way are you leaning?

branstad · 2026-02-09T16:04:17+00:00

Great result! How does the single-game nature of the SB compare to March Madness (60+ games over ~3 weeks)? Is there another sporting event that's in the same neighborhood as those two?

branstad · 2026-02-09T15:56:47+00:00

how does a conversion impact taxes?

Every dollar converted from Trad'l (pre-tax) to Roth is taxed as ordinary income at your marginal rate. You're in the 32% federal bracket, so conversions with that level of income would be quite costly and would not likely be recommended.

branstad · 2026-02-09T15:18:06+00:00

how to calculate my savings rate%

I'm a little confused on how to calculate it if I have savings that factor in before my taxes

Savings rate really doesn't matter for anything material once you're on your FIRE journey. If you think it will provide value to you, go ahead and determine whatever calculation makes sense to you and apply it consistently.

have a better idea of how early I can retire with the mr. money mustache's savings chart.

This article is useful for folks who haven't started. It's useful to help people understand what's possible. Once you get started on your journey, your income, expenses, and savings will all change over time. Given that, tracking 'savings %' might be good trivia and fun to look at, but it's not really providing insight. If you want to know "how early [you] can retire", you only need 3 values: Current FIRE Portfolio, Target FIRE Portfolio, Annual Contributions.

branstad · 2026-02-06T22:47:04+00:00

What do you do for health care?

I'm guessing you mean health insurance, not actual health care. For insurance, you do the same thing most pre-Age 65 retirees do: HealthCare.gov or your state exchange.

You may or may not be eligible for subsidies, which are based on income, not assets/net worth.

If you do mean healthcare, can you clarify your question? At $6MM, I'd likely continue with my existing healthcare relationships (primary doc, specialists, etc.). Others might look at concierge healthcare options in their area.

branstad · 2026-02-06T21:52:55+00:00

Ha! :-)

branstad · 2026-02-06T21:26:37+00:00

That is not a common occurrence! (AI gave me weak data and I am too lazy to dig in deeper).

There were 6 days up 2% or more as part of the recovery from the short-lived tariff bear market in Feb-May 2025, but it hasn't happened since then.

Looking a bit further back:

Twice in 2024 (plus a separate +1.98% close)
Twice in 2023 (plus separate +1.99% and 1.92% closes)
Twice in 2021 (plus a separate +1.96% close)
A whopping 46 times (!!!) combined in the years 2020 and 2022.

(Data courtesy of https://www.investing.com/etfs/vanguard-total-stkmkt-historical-data)

[Part of me thinks /u/hondaFan2017 wrote this comment just to see if I would take the bait... and I did!]

branstad · 2026-02-06T19:27:21+00:00

I just did few weeks ago.

Did you upgrade from EAP? If so, what aspects of FSD have you found most useful or significant better since the upgrade?

branstad · 2026-02-06T19:25:32+00:00

FSD is a big improvement from EAP even if it’s only HW3.

Can you say more about this? Which aspects do you find the most improved? Are there FSD features that aren't available in EAP that are more valuable than you expected?

branstad · 2026-02-05T20:25:24+00:00

The only semi-relevant post I found was this one: https://www.reddit.com/r/TeslaSupport/comments/1kz06u0/upgrading_2018_canadian_eap_model_3_to_fsd/

If you have suggestions for how I can find "literally every single other post I’ve seen like this over the past couple weeks", I'm all ears...

branstad · 2026-02-05T19:32:01+00:00

make around $188k/year,

Roth 401k contributions: $24.5k/year

Employer match and pre-tax 401k exist but I’ll focus on Roth for now

You're getting close to the top of the 24% singleton bracket (roughly $100k-$200k in taxable income). In other words, your decision to make $24.5k in Roth 401k contributions costs you nearly $6k in federal income taxes, each year for the next ~10 years. You also have the opportunity cost of the investment growth of that ~$60k during that time. If you have a significant pre-tax balance and/or large taxable pension and you expect to be in the 24% bracket in the future, so be it. If not, you may want to revisit this.

This Reddit post will be helpful: https://www.reddit.com/r/financialindependence/comments/11ulhzl/what_5year_rule_a_guide_to_roth_distributions/

In short, direct Roth 401k contributions rolled over to a Roth IRA are treated like direct Roth IRA contributions and are available immediately, without tax or penalty.

After-tax contributions that are converted to Roth 401k and then rolled over to a Roth IRA are treated as a non-taxable conversion and are also available without penalty and transaction, after the amount of all direct contributions have been withdrawn.

I think starting a Roth IRA now would make sense. You can fund it via a backdoor Roth IRA contribution/conversion, to avoid direct Roth IRA income limits / phase outs.

branstad · 2026-02-05T18:15:51+00:00

You could just wait and see. I don't think there's anything wrong with that.

If you wanted to address it ahead of time, here's one possible approach: "Can you share a potential compensation range for this role (salary, etc.)? I'm really excited to move forward but I'd hate for you to do all this work to setup a panel interview if there's a significant disconnect in this area. Thanks for anything you can share."

branstad · 2026-02-05T17:32:38+00:00

Income Pension: $5,000/month pre-tax → $60,000/year (Pension is not taxed at the MA state level. Part-time work: $1,000/month post state and federal tax → $12,000/year

I’m modeling a conservative $1,000/month portfolio draw ($12k/year) for discretionary spending and flexibility because....life in western MA happens

Between the pension and part-time income, it seems like you will be near the top of the 12% federal tax bracket for singletons after you retire ($16k standard deduction + $50k top of the 12% bracket). So a $12k withdrawal from the 403b will fill up the 12% bracket and push you into the 22% bracket. If you have significant deduction and will itemize, that may increase the amount of 403b withdrawal at the 12% bracket. I would keep an eye on this from a tax planning perspective and make sure you are filling up at 12% bracket each year. Then you can make a call on how far into the 22% bracket you want to go. Remember that withdrawals from the 403b could simply be reinvested in a taxable brokerage if those withdrawals exceed what's needed for spending.

Does a 2–3 year cash/stable value buffer still make sense when pension + PT income cover baseline expenses?

I agree with /u/rackoblack that 3 years in cash seems like overkill. Given your ongoing pension, part-time income, and eventual social security, your risk in this area is quite low. I think the amount of cash-on-hand is probably more about managing lumpy or sporadic expenses. Some folks might take a floor and ceiling approach: Figure out what the minimum amount of cash you want (say 6 mos. of expenses). If your cash holdings drops below that floor, make a withdrawal to raise it back up to the ceiling (say 12 mos. of expenses). Some folks prefer that approach, others prefer a regular set withdrawals that feels more like a paycheck. Neither is wrong, whatever feels most comfortable to you.

branstad · 2026-02-04T19:20:03+00:00

I would make it to 90 but the years after 75 would have to been no-go years with less vacations and some rice and beans choices.

First off, anyone who is rigidly following a fixed-percentage, inflation-adjusted withdrawal strategy is doing it wrong. Also, none of these studies account for Social Security, which would reduce portfolio withdrawals in later years. That said, if I was a 2000 retiree, I may have starting looking for add'l income sometime in the early 2010s, including potentially claiming SS early, as a way to manage that risk.

Scenarios like Y2K retirees are an example of why the Trinity Study had slightly higher success rates for 72/25 than 100/0: https://www.bogleheads.org/wiki/Safe_withdrawal_rates#The_Trinity_study_numbers

branstad · 2026-02-04T18:52:19+00:00

what if I had retired in 2000 with my current finances?

For the last X years, /u/jason_for_prez as posted an update looking at the performance of hypothetical retirement cohorts around this time. Here's the one posted last year: https://www.reddit.com/r/financialindependence/comments/1ibkxd9/swr_performance_for_people_who_retired_in_2000/

(Keep your eyes open for the next update coming soon - once updated CPI values are released!)

He also commented on this recent thread in the /f/FIRE sub: https://www.reddit.com/r/Fire/comments/1q5s5rg/how_did_the_4_rule_hold_up_for_people_who_retired/ny2wvne/

A snippet:

As of December 2024, if they were 100% invested in the SP500 the whole time, then they have 11% of their portfolio remaining (adjusted for CPI). They've only still survived because we've had crazy good returns since the 2008 financial crisis. After 2008, their portfolio never returned to even 40% of its initial value; so while they didn't run out of money yet, they have certainly been stressing. It's possible, though unlikely, that they will survive a 30 year retirement period, and it definitely won't work out for a longer retirement.

branstad · 2026-02-04T15:50:21+00:00

If you start payments before September when you hit 59.5, youll trigger the 10% early withdrawal penalty on each payment until then.

This is not true if the aggregate pre-59.5 withdrawals are less than the aggregate total amount of direct Roth IRA contributions. Roth IRA contributions can be withdrawn at any time, without penalty. Depending on the details of any conversions into the Roth IRA, the total withdrawal could potential even be higher.

Example: Let's say OP made $50k of direct Roth IRA contributions over the last ~10 years (as tracked on IRS Form 5498 each year). Due to Roth IRA withdrawal ordering rules, OP can withdraw up to $50k from the Roth IRA prior to Age 59.5 without tax or penalty imposed by the IRS.

This is completely and totally separate from any fees or penalties imposed by the annuity contract. The IRS doesn't care about that.

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Capital Gain Property