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Old 04-20-2014, 09:44 PM   #21
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Originally Posted by MooreBonds View Post
Some may be willing to roll the dice and take the risk, but if I had the chance to virtually 'guarantee' that I could work just 2-4 more years now in my 30s, vs having a 15%-25% chance of having to work 8-10 (or even more!) years in my 50s/60s, I'd take my lumps now to be done with it all.

Thanks, MooreBonds. Working another three years, as opposed to stopping now or a year from now was my idea of taking my lumps now and "guaranteeing" my financial independence, but your points are well taken. They're many of the issues that I've been debating in my own mind.
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Old 04-20-2014, 09:50 PM   #22
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Originally Posted by daylatedollarshort View Post
If it were me, I would work enough to be able to live off income only from assets I could reasonably control, like rental income, CD ladders and TIPS interest. I would not earn $6M from long hours at work and then risk losing $3M. I might work longer to invest some extra in stocks, but I'd invest the $6M in lower risk investments, the Bill Bernstein won the game approach -

daylatedollarshort - I agree with your thinking. I plan / hope to be generating enough passive income from real estate and stock dividends to live off of in a year or so. The extra money I expect to be earning beyond that will be invested in growth oriented stocks.

So maybe not quite the numbers you specified, but I'm thinking 3 million or so in income generating investments that should provide for our annual spending needs and another 2-3 million in growth oriented investments like a well diversified stock portfolio.
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Old 03-24-2015, 06:14 PM   #23
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Hi Everyone,

It's been about a year so I thought I'd check back with an update. It was very interesting to have a "paper trail" of what I was thinking last year and I'm happy that not much has changed in my big picture plan. I'll definitely do this at least once a year to hold myself accountable. Here are the highlights:

* My net worth is now around $4 million.

* I plan on working 2 more years (glad to see I didn't push that out).

* I've spent the past several years aggressively building passive income sources and I should begin enjoying the fruits of that labor. I project I should get 120k or so of passive income this year.

I did make some adjustments to my savings strategy which jives well with my 2-year horizon. I enrolled in my company's non-qualified deferred compensation plan. If all goes well, I'll have about 2 million saved in the plan when I call it quits in 2017. That'll shift a significant amount of money from a 39.6% federal tax burden to something much more modest. Once I quit, the money will be paid to me in 10 annual installments. Besides the tax savings, I like the psychological benefit of continuing to have an "annual salary" for 10 years to smoothe the transition from working to FIREd.

There are a couple of questions I'm still trying to figure out. I have about $1 million of deferred compensation that I will lose if I quit. I haven't included that in my net worth since I don't see any way of ever getting it. The only way to get it is to work until normal retirement age (NOT happening) or getting laid off (seems unlikely). It's going to be a bummer to just walk away from all that money, but I guess I just have to mentally write it off and come to peace with that decision. There's a small chance the company would work out some arrangement with me, but I'm not counting on it.

The second idea I'm toying with is starting a personal finance blog or something that would both be enjoyable and potentially generate some extra income. That's not a big deal, though, and is probably something that will just naturally happen if I find myself getting bored.

Questions, comments? Feedback welcome. Thanks!


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Old 03-26-2015, 11:49 PM   #24
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Very impressive progress with FI! There are many that post on here with very big retirement portfolios, but very few have the NW at your age. You must be the envy of this board. However, as someone has advised, retiring before 40 is very tricky. You don't say where you live or what field you work in, but given your income from a W-2 job, NYC and Finance would be a guess, or Houston and Oil, or North Carolina and Biotech, or LA and Entertainment, etc. If you have kids your expenses would change drastically. I think if I were in your shoes with the earning potential you have without stressing yourself out, I'd work until 40 or slightly less and aim to have at least 6-8m in NW before walking away, to rule out having to go back to work again and survive bear markets, depressions, bad health, disability, divorce, etc. and be able to live well, travel freely and pay for health insurance.
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Old 03-27-2015, 05:28 AM   #25
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Very impressive progress with FI! There are many that post on here with very big retirement portfolios, but very few have the NW at your age. You must be the envy of this board. However, as someone has advised, retiring before 40 is very tricky. You don't say where you live or what field you work in, but given your income from a W-2 job, NYC and Finance would be a guess, or Houston and Oil, or North Carolina and Biotech, or LA and Entertainment, etc. If you have kids your expenses would change drastically. I think if I were in your shoes with the earning potential you have without stressing yourself out, I'd work until 40 or slightly less and aim to have at least 6-8m in NW before walking away, to rule out having to go back to work again and survive bear markets, depressions, bad health, disability, divorce, etc. and be able to live well, travel freely and pay for health insurance.

Thanks for your comments, Mohenjo. I do work in finance, which has the dual benefit of a high W-2 income and being able to use my finance skills to manage my personal finances.

As far as working to 40, I understand where you're coming from, but at the moment, I just can't see myself lasting that long. I find my job increasingly boring/meaningless and am constantly thinking about my eventual exit. I'm also valuing my time more and more and would happily work less and take a prorated pay cut if I could. Unfortunately, it's very much all or nothing in finance, which is why the only option I see is to work/save really hard early on and then call it quits.

I am genuinely curious, what do you see as the big difference between a $5-6 million net worth (what I'm targeting in 2 years) and an $8 million net worth? It seems to me that either should allow one to rule out having to go back to work again in the event of a bad scenario. Or put another way, if I find myself having to go back to work after having saved $5-6 million, would an additional $2 have really made a difference? Thanks




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Old 03-27-2015, 08:25 AM   #26
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I am genuinely curious, what do you see as the big difference between a $5-6 million net worth (what I'm targeting in 2 years) and an $8 million net worth? It seems to me that either should allow one to rule out having to go back to work again in the event of a bad scenario. Or put another way, if I find myself having to go back to work after having saved $5-6 million, would an additional $2 have really made a difference? Thanks
If you spend 100k even 5-6M is borderline ridiculous imo. That's 50 years of living expenses, assuming a portfolio just keeping up with inflation. But you know that already.

Another perspective: 1M per annum vs. 4M net worth is basically a 25% "return on investment". In turn you do have to work full-time. That's really good. Once you hit 8M it drops to 12%, still good but less impressive.

Anyway, the only thing in my view what you need to consider from a financial perspective is what will extra money do for you other than providing you with a decent living? e.g. Do you want to fund startups, donate to charity, collect art, etc ..

If there is nothing there, only work if you enjoy it. You are one of the very lucky ones: wealthy enough to be free, young enough to have all the options to enjoy it.

(In case you were wondering: I'm 34 with +/- 750k usd or so)
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Old 03-27-2015, 09:01 AM   #27
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If you spend 100k even 5-6M is borderline ridiculous imo. That's 50 years of living expenses, assuming a portfolio just keeping up with inflation. But you know that already.

Another perspective: 1M per annum vs. 4M net worth is basically a 25% "return on investment". In turn you do have to work full-time. That's really good. Once you hit 8M it drops to 12%, still good but less impressive.

Anyway, the only thing in my view what you need to consider from a financial perspective is what will extra money do for you other than providing you with a decent living? e.g. Do you want to fund startups, donate to charity, collect art, etc ..

If there is nothing there, only work if you enjoy it. You are one of the very lucky ones: wealthy enough to be free, young enough to have all the options to enjoy it.

(In case you were wondering: I'm 34 with +/- 750k usd or so)

Totoro - Well done on the 750k. It really starts to accelerate around there IMO.

I agree with everything you've said. I have no burning desire to fund startups or collect fancy material possessions.

I expect we will spend a decent amount of our time in charitable activities. We'll also donate financially, but I don't feel obliged to donate very large sums of money.

Mainly, the money will find freedom and travel (what we enjoy doing most).


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Old 03-27-2015, 09:15 AM   #28
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Keep the timer countdown going then and set a fixed date, in my book you are way off in OMY territory (I mean this in a good way, you're already there!).
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Old 03-27-2015, 09:18 AM   #29
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You got it . I will be checking in at least once a year.


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Old 03-27-2015, 09:25 AM   #30
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RB like I mentioned the extra 2mil could be useful in many circumstances. If you decide to have kids would be an obvious one. A massive market correction early on in your retirement. A huge increase in healthcare costs. A disability or severe illness. You like travel (so do I, I've been too many many countries and traveled dirt cheap for $1 a day to $1000+ a day) and that can easily add up. If you only had 20-30 years to go it would be different. What is the vol term structure? Its not an easy straightford answer, even with 5m in the bank and <100k in current expenses. I'm not even talking about charities and starting companies.
So I got finance right, but NYC prob wrong as 70k would cover just housing costs unless you are a trust fund baby.
FYI, I'm in a similar situation as you, except older, lower NW, kids, higher expenses. Ok so maybe not so similar! I plan to be FI @ 40 or early forties maximizing my saving while I'm young, able and still find my job exciting and being able to enjoy life at the same rimw.
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Old 04-07-2015, 10:02 PM   #31
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I "retired" today at a few years older than you, with much the same financial picture.

I wrestled a lot with omy, but I finally decided the opportunity cost of not doing what I want to do at this age was too high. I already feel old. (Sorry, older people -- no offense!) I have a lot of interests outside of my companies' specialized domain.

I'm about 80% sure I'll go back to "work" in some form after taking a while to decompress and get outside for a while. In my industry, with my specific skillset, it would not be too hard to get back into something approximating 1M a year (ahem, before taxes). I think it is really unlikely I'll do that, though. I'd rather work with kids or volunteer or something and just live cheaper.

I can definitely empathize with your scenario, and I think your choices are fine. I expect to see your upate in a year with that same stopping date, though.
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Old 04-08-2015, 09:43 AM   #32
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I "retired" today at a few years older than you, with much the same financial picture.

I wrestled a lot with omy, but I finally decided the opportunity cost of not doing what I want to do at this age was too high. I already feel old. (Sorry, older people -- no offense!) I have a lot of interests outside of my companies' specialized domain.

I'm about 80% sure I'll go back to "work" in some form after taking a while to decompress and get outside for a while. In my industry, with my specific skillset, it would not be too hard to get back into something approximating 1M a year (ahem, before taxes). I think it is really unlikely I'll do that, though. I'd rather work with kids or volunteer or something and just live cheaper.

I can definitely empathize with your scenario, and I think your choices are fine. I expect to see your upate in a year with that same stopping date, though.

Symbiotic, thanks for posting here. I read your introduction thread with great interest. Congratulations on ER!

I'll be sure to check back in a year with an update and look forward to hearing what you're doing a year into ER as well.


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Old 03-19-2016, 07:41 AM   #33
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Hi everyone, time for another yearly update.

* 34 now and net worth has increased to about $5 million
* Still thinking next year is when I call it quits with a net worth of around $6 million hopefully. We do need to set aside money for a house so approximately 600k to 1 million of that net worth number will not be in investable assets.
* With more history under my belt, I'm comfortable that we'll have passive income of about 175k - 200k from a combination of rental income, dividends and interest.

I worry less about the financial aspects of early retirement at this point as I do feel financially independent now. I think hitting the $5 million mark and having consistent passive income got me there psychologically. Before, I struggled with feeling FI just based on the 4% rule. Having passive income come in every month has really boosted my confidence.

So at the moment, instead of finances, my focus is more on what our lives will be like post-work. Where we'll live, how much travel we'll do, what forms of volunteer activities we'll participate in, etc.

Symbiotic - if you're still on this board, I'd love to hear how your first year of retirement went. Any words of wisdom you can impart?



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Old 03-19-2016, 05:19 PM   #34
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Thanks for the update rb35...its cool to see the journey. If you don't mind me asking, what do you do for a living?
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Old 03-20-2016, 09:25 AM   #35
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Thanks for the update rb35...its cool to see the journey. If you don't mind me asking, what do you do for a living?

Thanks, YeahNo. It's a finance / Wall Street type job.


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Old 03-20-2016, 11:30 PM   #36
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IBD?? Lol no problem if you don't want to disclose more.
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Old 03-24-2016, 03:40 PM   #37
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Symbiotic - if you're still on this board, I'd love to hear how your first year of retirement went. Any words of wisdom you can impart?
Hey, great news to see your update. Yes, I'm still here, I've just been hard at work not working lately. I will post an (overdue) update in that other thread soon... thanks for reminding me.
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Old 03-24-2016, 05:44 PM   #38
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Hi everyone, time for another yearly update.

* 34 now and net worth has increased to about $5 million
* Still thinking next year is when I call it quits with a net worth of around $6 million hopefully. We do need to set aside money for a house so approximately 600k to 1 million of that net worth number will not be in investable assets.
* With more history under my belt, I'm comfortable that we'll have passive income of about 175k - 200k from a combination of rental income, dividends and interest.

I worry less about the financial aspects of early retirement at this point as I do feel financially independent now. I think hitting the $5 million mark and having consistent passive income got me there psychologically. Before, I struggled with feeling FI just based on the 4% rule. Having passive income come in every month has really boosted my confidence.

So at the moment, instead of finances, my focus is more on what our lives will be like post-work. Where we'll live, how much travel we'll do, what forms of volunteer activities we'll participate in, etc.

Symbiotic - if you're still on this board, I'd love to hear how your first year of retirement went. Any words of wisdom you can impart?



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RB35,
Just came across this thread. I had a flashback to 28 years ago when I retired from the same field at 33 and 11 months, same Dollars, location,marital status,no children, etc. Congratulations on your success. Despite what others have said, I never felt the desire to work again but owned several companies over the years. I gave away most too my ex-Wife years ago, moved to a new country, started a new life and am at the happiest point in my life right now with my 2 Sons aged 11 and 1. I can only wish you the same in your life.
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Old 03-25-2016, 08:23 AM   #39
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NYExpat,

Thanks for posting. It's rare to find people who voluntarily take an early exit from Wall Street so great to hear your experience. That kind of money 28 years ago would've been really something so congrats! I'm glad things have gone so well for you.


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Old 03-25-2016, 11:41 AM   #40
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RB35, I've enjoyed your story. I'm not a WS guy, but, I'm in a similar situation as you. I have a few friends that retired at 35, 1 with kids and 1 without kids. Both of them are working again, in some form or fashion to support their hobbies. We have found that hobbies become very expensive over time. Do you want a boat, do you like to travel in style, do you want an airplane, etc. I'm still working at 40 to support my flying addiction! I plan on retiring at 41, but, offers keep rolling in for different jobs. The one thing I noticed is that being FI, I dictate the terms, which is extremely important to me. However, I do realize that my RE might not happen soon as I wish, as I'm having fun with my job. I've lived in Europe for several years, that was great, and I stopped counting the countries I've visited at 50. Additionally, I started having kids @ 34 and I now have 3 younglins running around. So now, I work when they are in school and travel when they are not.

The one thing my friends and I have discussed in great lengths is that we didn't have a good work / life balance when we were young. This was financially rewarding, but, very taxing on our lives. Now that we have balanced out, working isn't so bad. Actually, we all do different things and enjoy it. Hell, just the other day, we all laughed at ourselves because we find ourselves doing jobs we wouldn't do in our 20's. 1 friend owns multiple car dealerships... he works the floor now and enjoys his interactions with his customers. The other friend is a commercial real estate developer and finds himself doing some of the basic maintenance work on his buildings. Just the other day, he was helping change toilets out. I work in the healthcare industry and found myself working the front desk at one of our locations. When we were all younger, all of us, said we would have never done these jobs.

So I'm not saying you will get bored, but, once you leave the grind, you might potentially find something you really want to do.
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