41 and retired a year ago...

[magellan_nh]

Hello all,

I'm 41, married with no kids and have been semi-retired for about a year.

I used to be in high-tech and have been planning for ER since shortly after I started working (along with DW). I remember noticing the lack of gray hair at my first job and thinking that engineering is a young person's profession. Watching the trauma of a few tough layoffs at Data General Corp in my first year of working set me (and DW) on a lifelong course of banking one salary and living well on the other, but always behind our means.

Anyhow, the savings plan and some good luck along the way paid off and made it possible to get off the treadmill early. Now I just need to figure out what to do with the next 40-50 years.

In this first year off, I had a great opportunity to volunteer in Cambodia for a month working on a business plan for a rice mill (I have a pretty decent business background). It was a great experience, but I fell into the opportunity through chance and haven't seen anything else that looks as interesting on that front. Also, DW isn't as adventurous and we have 2 dogs, and other responsibilities, so you know the drill on that. We do both like to travel though.

I'm into some local volunteering, and reading a lot and doing some loafing. I may get bored with it eventually, but I've gotten into a pretty comfortable routine and I'm definitely liking life at this point. It's amazing how easy it is to not have a real job and be very busy!

On the work front, I do occasional teaching at a local community college and also am involved in a web startup (with some old work friends) that's been going on for 6 or 8 months. The startup takes 1 day or less per week (flexible) of my time.

Anyhow, this is a great site and I've been lurking for a while and thought I'd join into the community.

Jim

[Lazarus]

Welcome, I have learned a lot here myself. Wish I was retired like you, but it will be a few years yet.

[donheff]

Quote:

Originally Posted by magellan_nh I'm into some local volunteering, and reading a lot and doing some loafing. I may get bored with it eventually, but I've gotten into a pretty comfortable routine and I'm definitely liking life at this point. It's amazing how easy it is to not have a real job and be very busy!

Welcome to the board Magellan. I am in about the same position as you (but with fifteen extra years of age). I ERd at 56 and was concerned about boredom. But 19 months in I find myself fully occupied with a couple of mornings of volunteer work, a lot a reading, some golf and other sports and hobbies, and a good deal of loafing. Similar to you, I have the anchor of two dogs and a DW who will continue working for a couple of more years (poor me) so we don't do as much traveling as I would prefer.

It will be interesting to see how we all fare 5-10-15... years in.

[astromeria]

Welcome Magellan, and congratulations! Your volunteer work in Cambodia sounds unusually rewarding--I hope you get more such opportunities.

I am curious about a few things--is your wife also retired or semi-retired? do you earn enough from your little bit of work to pay expenses or are you withdrawing from savings? Do you care to share your investment plan--slice & dice portfolio, individual stocks? How about withdrawals--do you rebalance and take an annual/semi-annual withdrawl, just live on interest and dividends, or what? Not to mention the all-important: Did you pay off your mortgage? :

Sorry to pepper you with questions upon arrival (and feel free to ignore any you feel are impertinent-), but my curiosity got the best of me!

[Khan]

I always like to put in a plug for this organization:

http://www.earthwatch.org/site/pp.as...kGiF&b=1322375

[Nords]

Welcome to the board, Jim.

It's amazing how the "Whaddya DO all day?!?" question just answers itself, isn't it?* Reports like yours are what give others the confidence to make the change.

[magellan_nh]

Quote:

Originally Posted by astromeria I am curious about a few things--is your wife also retired or semi-retired? do you earn enough from your little bit of work to pay expenses or are you withdrawing from savings? Do you care to share your investment plan--slice & dice portfolio, individual stocks? How about withdrawals--do you rebalance and take an annual/semi-annual withdrawl, just live on interest and dividends, or what? Not to mention the all-important: Did you pay off your mortgage? :

Ok, since you asked, here are the details...

First, DW (around my age) left her engineering job about 5 years ago to work at local nonprofits, She was pretty burned out and we could see the light at the end of the tunnel by then. As usual, she plunged head first into her new line of work. Unfortunately, after a couple of years, signs of burnout started to set in again. Now she's working on her artistic side (painting, stained glass, and weaving). I've definitely learned by watching her early moves after leaving work.

On earnings and withdrawals, it's interesting that you ask...

The first (gulp) withdrawal from an investment account into a checking account came just last week. As much as you plan these things and do the math, seeing money move in the "wrong" direction is a bit unsettling. I hadn't really thought much about cashflow management, so I'm just starting to work that. I expect to use a combination of living off dividends and interest and skimming funds off as part of annual rebalancing. I turned off automatic reinvestment on all the accounts a few years ago to make rebalancing easier.

Overall, we're earning very little, so most of what we'll live on will be withdrawals from savings. We've both been Quicken diehards most of our adult lives so we have a good handle on what we spend. Our annual expenses (including some travel and insurance) are about 3 percent of our nest egg. So as long as we stay frugal, we should be fine, even with our long-term horizon. That is, unless a disaster happens.

As far as the mortgage, yeah, we paid it off. I could probably argue this one either way, but in the end it FELT better not to have it.

[magellan_nh]

Oh, and as for investing and portfolio, here are the details:

Over the years, I've come around to the "use index funds and focus on asset allocation" camp. I still think there's "alpha" out there to be had, but I just don't think I can consistenty find it or hire someone who can. I don't own any individual stocks and have only a couple of legacy actively managed mutual funds.

So my main focus is on asset classes. I don't really have a system except to look at as many model portfolios as I can and then go with my gut. I'm more internationally invested than normal, and I've worked my way into some less traditional asset classes over the years such as commodities and gold (through funds). In addition to countless investment books (most mentioned here), I subscribe to the indexinvestor.com site and newsletter (also mentioned here before).

Here's the approx. portfolio allocation at this point:

30% International
(11% asian, 6% emerging, 13% european)
30% US Stock
(market cap weighted balance between lg/sm gr/val)
10% Commodities and REITS
(6% commodities - PIMCO, 4% gold, 0% REIT) -
20% US Bonds
mixed between Corp, Muni, and TIPS funds
10% Foreign Bonds
American Century Intl Bond

I've been very disciplined about making changes to the allocation very slowly. However, as you can see, some market timing has crept in (0% REITS, some dollar hedging with large intl stock and bond allocations).

I bailed on REITs slowly over the course of about a year (from around 4%) after seeing a greater than 100% return. With hindsight I probably shouldn't have tried to guess it. I still think they're overvalued, but I missed a bit of the run in the past year or so by trying to get out early.

I've had the gold fund since it opened, and the commodities for years. They've both been stellar, except for recent so-so performance. I'm not planning any changes there except that I'll eventually mix the REITS back in. (yeah, I know - how do you decide when they're no longer over valued?)

[astromeria]

Thanks, Jim. I hope you'll dive into our discussions as the spirit moves you--it's clear you have a lot to share on our favorite subjects.

[magellan_nh]

Thanks for the comments...

I'm surprised I didn't get more grief for my allocation choices (gold??).

I usually think of my asset allocation as kind of far out of the mainstream. I guess not so much here (or maybe people are just being polite).

Anyhow, this is a great board!!!

Jim

[astromeria]

Just a little more aggressive than my allocation (DH and I are 57):

20% US Stock
(5% each large blend, large value, small value, small & micro blend/growth)
20% International
(5% each developed markets, emerging markets, value, and small cap)
10% Real Assets
(5% REITs, 3% natural resources-mainly oil, 2% precious metals)
10% Hybrid funds (moderate and conservative allocation)
15% Bonds
20% Cash (money market accounts and CDs)

I'd like to increase REITs, but they don't cooperate by having a blow-down

EDIT Adds only to 95% because I keep 5% in an Emergency Fund.

[magellan_nh]

Quote:

Originally Posted by astromeria 10% Hybrid funds (moderate and conservative allocation)

What are these if you don't mind me asking? Are they like balanced funds with some stocks and bonds? Are they all US?

Thanks,

Jim

[astromeria]

My hybrid funds:

OAKBX (Oakmark Equity & Income--10% foreign stock)
DODBX (Dodge & Cox Balanced--11% foreign)
VWELX (Vanguard Wellington--12% foreign)
PRPFX (Permanent Portfolio--45% US & Swiss bonds, 40% US & foreign real assets such as gold & real estate, 15% US & foreign aggressive growth stocks). An unusual fund designed to hold up under all conditions of inflation and deflation--it's done very well for me, but is expensive. I replaced my Wellesley (VWINX) with this a couple years ago when bonds were declining such that holding a heavy bond fund felt unwise, at least while DH is still working and we don't need the immediate income. I avoid predicting the market these days, but glad I made this particular choice *

* An example of a really bad choice about predicting the market: selling GIM (Templeton International Bonds) when I was down...in an IRA...poor, stoopid Astro : Bless Ray Lucia's heart for helping me avoid such moves!

[magellan_nh]

Quote:

Originally Posted by astromeria PRPFX (Permanent Portfolio--45% US & Swiss bonds, 40% US & foreign real assets such as gold & real estate, 15% US & foreign aggressive growth stocks). An unusual fund designed to hold up under all conditions of inflation and deflation--it's done very well for me, but is expensive. I replaced my Wellesley (VWINX) with this a couple years ago when bonds were declining such that holding a heavy bond fund felt unwise, at least while DH is still working and we don't need the immediate income. I avoid predicting the market these days, but glad I made this particular choice

I'm learning that this is what makes market-timing-itis such a terrible affliction. Being right every now and then just encourages more.

Anyhow, thanks for the details. You sure have some interesting and eclectic stuff in there.

[astromeria]

Quote:

Originally Posted by magellan You sure have some interesting and eclectic stuff in there.

You're very tactful--no wonder you're a success!

[jaimee]

<<Our annual expenses (including some travel and insurance) are about 3 percent of our nest egg. So as long as we stay frugal, we should be fine, even with our long-term horizon. >>

So what is your 3% exactly if you don't mind answering? A lot of us are afraid to jump into ER thinking that what we have is not enough. Knowing what other get by with helps.

[astromeria]

This was the last net worth poll, I think (November 2005).

http://early-retirement.org/forums/i...p?topic=4901.0

[Nords]

Quote:

Originally Posted by jaimee So what is your 3% exactly if you don't mind answering?* A lot of us are afraid to jump into ER thinking that what we have is not enough. Knowing what other get by with helps.

It's up to you... you have to do the math for your situation and decide if that's the lifestyle you want to live.

One poster on this board is famous for his year of spending $12,000. Other polls have pegged two other groups, one at $24K/year and another around $48K/year. And we've had at least one poster who can't possibly imagine retiring on less than $80K/year.

If you can't "get by" in your ER, I doubt that any of the posters on this board will jump in with financial assistance!

[Lazarus]

Quote:

Originally Posted by Nords It's up to you... you have to do the math for your situation and decide if that's the lifestyle you want to live. One poster on this board is famous for his year of spending $12,000. Other polls have pegged two other groups, one at $24K/year and another around $48K/year. And we've had at least one poster who can't possibly imagine retiring on less than $80K/year. If you can't "get by" in your ER, I doubt that any of the posters on this board will jump in with financial assistance!

Almost like energy levels of electrons! Nothing is allowed in between the levels. I want the highest one that allows me to retire the earliest

[magellan_nh]

Quote:

Originally Posted by jaimee So what is your 3% exactly if you don't mind answering? A lot of us are afraid to jump into ER thinking that what we have is not enough. Knowing what other get by with helps.

As the other posters already indicated, figuring out your post-retirement spending needs is something only you can do. I could tell you what we spend, but the number is pretty meaningless to someone else, and I'm not really sure I want to be that forthcoming

There are plenty of resources that can help you come up with your own retirement spending estimate, but the first step is understanding what you are spending now.

You can do this by hand or with the help of financial software like MS Money or Quicken. Both of these tools can be great for getting a handle on your finances, as long as you're willing to put in the time on them. Alternately, you can try to estimate your current spending with a pencil, paper, and your bank and credit card records.

Once you have a categorized list of your spending, you can make adjustments for expenses that are likely to change in retirement.

That's my $.02. Hope it helps...

Jim