Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
40 now - would like to be retired @ 43-45
Old 09-25-2010, 08:55 PM   #1
Confused about dryer sheets
 
Join Date: Sep 2010
Location: Vancouver
Posts: 2
40 now - would like to be retired @ 43-45

Hello all,

Thanks for letting me share. Currently 40 years old (41 soon) and am looking to retire somewhere between 43 and 45. Here are my particulars:

* Married with 1 child
* 200K / year salary
* House with no mortgage (~400K)
* 2.4 Million in savings (401K + taxable account)
* Zero debt
* Expecting about 150-160K in savings per year for the next few years (stock purchase plan, 401K + match, stock vesting)
* Spending is typically 7-8K / month, but it varies.

Running things through Firecalc gives me a 100% chance of success at 45.

Questions/Concerns:
* Health insurance during retirement years; though the whole family is very active and healthy [knock on wood]
* As I accumulate more I keep thinking I need more to retire.
* Managing my savings to ensure at least a 7% rate of return, keep my capital gains taxes low
* Strategies for withdrawing from savings to live on.
* Inflation concerns

- Chris.
__________________

__________________
wa_chris is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-25-2010, 10:29 PM   #2
Thinks s/he gets paid by the post
Coach's Avatar
 
Join Date: Nov 2005
Location: Colorado, USA
Posts: 1,127
Chris, welcome to the forum!

It sounds like you're well on the way to financial independence and the option to retire early -- congratulations!

Health insurance is certainly a challenge, but it sounds like your budget will be able to support a significant premium.

I'm glad you hear you've been running some scenarios with FireCALC -- it's a terrific tool. Just a couple of points to keep in mind:

-- Your "spending" estimate needs to include any taxes you'll be liable for when you start withdrawing from your pre-tax accumulation and earnings.

-- FireCALC runs scenarios based on historical market performance. This makes sense, but one downside is that the longer your planned retirement, the fewer scenarios it will be able to run. With retirement planned at 45 you are probably looking at 40 or more years in retirement. just as sanity check you might want to run FireCALC with, say, 20 and 30 year retirement periods to make sure the good news holds.

You've done a remarkable job of accumulation in your career. I'll look forward to your future posts.

Coach
__________________

__________________
"Comprehensive health insurance is an idea whose time has come in America." President Richard M. Nixon, February 6, 1974
Coach is offline   Reply With Quote
Old 09-25-2010, 11:04 PM   #3
Full time employment: Posting here.
 
Join Date: Feb 2009
Posts: 886
Quote:
Originally Posted by wa_chris View Post
Hello all,


* Managing my savings to ensure at least a 7% rate of return, keep my capital gains taxes low
.

I doubt that 7% rates of return will be common for the next few years
__________________
Emeritus is offline   Reply With Quote
Old 09-26-2010, 06:17 AM   #4
Recycles dryer sheets
Hobo's Avatar
 
Join Date: Sep 2008
Posts: 274
I retired at 50 with assets a little more than half of what you've got - I am 64 now. My kid had just graduated from college and I was single. Here's some lessons I learned:
1. Most people can't help but find something to do something that brings in money. Unless you've got a defined plan like work for a charity, you will see opportunities come at you like waves coming at surfers - one after the next. Its fun to make money. It's not fun being bored.
2. You will discover your lifestyle adjusts to your income, not visa versa. Most of your spending will be discretionary, so you can choose how much money to spend money on many items. That makes the exact monthly income less important.
3. Health care: I chose to live as an expatriate in Indonesia. Tons of different places you can move to out of the US - if that suits your style. I like the warm weather and the warm ocean water. As a side benefit, medical care is much less expensive and worrisome. Even in Indonesia, a poor country, the doctors can do 90% of any health care problems you are likely to have. I've had knee operations, a broken arm (from a motorcycle accident), plus carry over health problems from the past. All over Asia, South America, etc., medical care is a small fraction of what we all pay in the US. I can buy virtually any drug I need over-the-counter, no prescriptions necessary. I recently went to a clinic to have some moles and warts cut off..cost me $25. Nothing costs more than $1000, including operations, VIP room in the hospital, etc.
On the same subject, I made a conscious decision that a serious, prolonged, incurable illness meant my time on earth was over. I will not spend a massive amount of money on a brain tumor. I always have the option of going to a city like Singapore for complex health problems for a cheap price. There are hospitals all over the world in big cities who cater to the rich (and foreigners) who want high quality care. You don't have to go to a third class public hospital even if you are in the most undeveloped country. US health care is the most expensive in the world - and certainly has no lock on being the best. Look into medical tourism and self-insure. No need for a man of your wealth to need medical insurance premiums.

Guess that's enough from me...
__________________
Hobo is offline   Reply With Quote
Old 09-26-2010, 08:51 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Hobo: Nice post.

I suspect 1 & 2 will hold true for me, I know I can't be idle for long and we reduced our spending substantially starting years ago but don't feel any less satisfied - if anything we feel "smarter" (we were wasting money before).

On #3: The long term uncertainty regarding health care is probably the biggest obstacle to us pulling the trigger now. We're not willing to leave the USA so we'll have to deal with it here. If the USA ever actually gets universal health care, we'll be out of the conventional workforce forever.

Your point on not spending large sums of money (mine or an insurer) on big ticket health care (brain tumor) echo my thoughts entirely. Unfortunately, DW does not see it that way, so we may have a serious issue if we're ever faced with that choice.

Again, thoughtful post, thanks.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 09-26-2010, 09:15 AM   #6
Confused about dryer sheets
 
Join Date: Sep 2010
Location: Vancouver
Posts: 2
Thanks for the feedback folks.

I had run Firecalc with a 50 year period, which is good. I'm curious what people think about the 4% rule?

I'm also curious about folks withdrawal strategies and investments that help limit tax liabilities. Most of my assets will be in taxable accounts and I've been using muni-bond funds to help buffer short-term gains and dividends I'll face as time goes by.

[Emeritus] you said 7% is pretty unlikely in the next few years. Do you have a value that you feel is more realistic?

Thanks,
Chris.
__________________
wa_chris is offline   Reply With Quote
Old 09-26-2010, 09:28 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Quote:
Originally Posted by wa_chris View Post
Thanks for the feedback folks.

I had run Firecalc with a 50 year period, which is good. I'm curious what people think about the 4% rule?

I'm also curious about folks withdrawal strategies and investments that help limit tax liabilities. Most of my assets will be in taxable accounts and I've been using muni-bond funds to help buffer short-term gains and dividends I'll face as time goes by.

[Emeritus] you said 7% is pretty unlikely in the next few years. Do you have a value that you feel is more realistic?

Thanks,
Chris.
You asked Emeritus, but I use 0-2% real return. As you probably know, if inflation is 3% and returns are 5%, real return is 2%. Like Emeritus, I would be uncomfortable relying on 7%.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 09-26-2010, 10:10 AM   #8
Full time employment: Posting here.
 
Join Date: Feb 2009
Posts: 886
Quote:
Originally Posted by wa_chris View Post
T\

[Emeritus] you said 7% is pretty unlikely in the next few years. Do you have a value that you feel is more realistic?
This is quasi political but I'll try. The risk of massive disruption of the economy due to inflation and dollar collapse makes all long term bets difficult. Politicians of all parties have found that they can win elections by promising to cut taxes or increase benefits without anyone paying for it. For example

"If former Maryland governor Robert L. Ehrlich Jr. wins his job back, he promises to roll back the state's sales tax rate to where it was when he left office. That might be good for consumers, but it could cost the Maryland treasury more than $600 million a year - and Ehrlich has yet to say how he would pay for it."
washingtonpost.com

The TIPS real rate of return is 1.7 percent for 30 years. That may be as good as it gets.
__________________
Emeritus is offline   Reply With Quote
Old 09-26-2010, 10:14 AM   #9
Full time employment: Posting here.
 
Join Date: May 2007
Posts: 530
Quote:
Originally Posted by wa_chris View Post
I had run Firecalc with a 50 year period, which is good. I'm curious what people think about the 4% rule?
For those retiring at young ages, some recommend a lower WR to be safe. I'm just now reading the Bogleheads' Guide to Retirement Planning, and the chapter on Early Retirement includes a chart with recommended withdrawal rates based on age. For those younger than 55, the "Safe" rate is listed as 3%. Of course this is just one source and you can find a lot more info if you research it, but I wouldn't feel comfortable with a 4% withdrawal rate at a young age.

Quote:
Originally Posted by hobo
1. Most people can't help but find something to do something that brings in money. Unless you've got a defined plan like work for a charity, you will see opportunities come at you like waves coming at surfers - one after the next. Its fun to make money. It's not fun being bored.
I have absolutely found this to be true, as well. I left full-time employment three years ago, at age 47, and have really enjoyed pursuing opportunities to make some money doing something I enjoy. I find it satisfying to be productive as long as I'm enjoying it.
__________________

__________________
ksr is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Semi-Retired --> Retired ferco Life after FIRE 8 08-20-2009 06:08 PM
You know you're retired when... RASAP Life after FIRE 22 08-18-2009 05:21 PM
Retired at 75 oldman FIRECalc support 4 06-01-2009 10:33 AM
I Be Retired! TromboneAl Life after FIRE 59 08-12-2006 03:46 PM

 

 
All times are GMT -6. The time now is 07:56 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.