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42 - I'd like your opinion - Can I RE?
Old 01-05-2014, 01:46 PM   #1
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42 - I'd like your opinion - Can I RE?

Hi All,

I've been reading posts on the site for a few weeks. Good stuff. I'd like some help if you're willing to provide it. The bottom line is I am questioning if my wife and I really can retire. Here are the stats:

We're both 42. No kids. I sold my company last year. My wife still works and carries health insurance. $4.8mm in liquid assets and $810k in home value. No debt. Taxes have been paid from gain on sale of business. Liquid assets are allocated as follows:

65% equity/45% bonds/cash. Equity is comprised of some MLP's, ETF's, tactical funds and single company stock. Bonds are muni's. Cash is about $300k.

Our total annual spend with ACA individual policy (including deductibles maxed out) would be about $135K pre-tax. We would have to pay our income/cap gain tax expense out of the $135k.

The only people I have consulted about this (aside from my wife) are those that stand to benefit financially from our relationship such as money managers, etc. I was looking for some un-biased opinions. On the surface it looks like it would work, but we have a long life ahead of us. It seems like a very long time. We worked hard and risked a lot to get here. We just don't want to screw it up.

Thanks in advance.
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Old 01-05-2014, 01:58 PM   #2
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Hi scott,
It all depends on your annual spending. You're young and have no kids, have you considered adopting? I'm available.
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Old 01-05-2014, 02:16 PM   #3
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Stick your numbers in firecalc, orp or quicken lifetime planner and see what comes out!
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Old 01-05-2014, 02:23 PM   #4
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Sounds like you only need a 2.8% SWR....should be cake.

If you don't mind, what type of business did you build to 6 million dollars by age 42? It might give me some ideas for a side gig.
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Old 01-05-2014, 03:09 PM   #5
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Only issue I see is how much is concentrated in the single company stock. If it is a lot and/or related to the business you just sold it might cause a problem.

A few years before retired at 40 with similar assets to your I had 75% of my assets in Intel stock. It was 50% when I retired, I engage in some significant selling the year I retired and it was down about 20-25% by Jan 2000. The dot com bubble bursting brought it down to the 5-7% (the hard way) where it has remained
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Old 01-05-2014, 03:33 PM   #6
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You're young and have no kids, have you considered adopting? I'm available.
What he means of course is that unless you have an expensive lifestyle you're good to go.

Others with more knowledge than I will come along with options on investing and expenditures.
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Old 01-05-2014, 04:49 PM   #7
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Sounds like you only need a 2.8% SWR
Taking a total of 135k / year means you need to take less than 3% of your portfolio annually which is very good. Will you or your wife also collect SSI at some point also ? I think you're very well positioned financially and in your shoes I would not hesitate. You could always cut back on expenses for a couple of years if things start looking iffy (which I doubt will happen). I second the thought of running your numbers through FIRECalc.

Congratulations on your success and welcome to the forum
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Old 01-05-2014, 04:59 PM   #8
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We just pulled a year's worth of bank and CC statements and ground through them to figure out how much we actually did spend over a twelve month period. Add in a fudge factor for intermittent big ticket items like a new car or roof. Think about possible increases in spending like more travel, more golf, more eating out. Health care expenses go up with age and, ACA or no ACA, health insurance costs rise faster than the rate of inflation.

Once you pull the plug, it is hard to go back. We consider our stupidly expensive house to be our reserve to cover assisted living, if needed.
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Old 01-06-2014, 09:14 AM   #9
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A tentative yes. I'd pay an independent fee based RIA - one with fiduciary responsibility to you - to look over your portfolio with an eye at reducing costs and risk.

I think it might be easy to get bored at your age and start spending more money. One consideration for retirement is how you're going to spend your time for the next 40(?) years.

Just something to think about.
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Old 01-06-2014, 09:22 AM   #10
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Originally Posted by dscott745 View Post
Hi All,

I've been reading posts on the site for a few weeks. Good stuff. I'd like some help if you're willing to provide it. The bottom line is I am questioning if my wife and I really can retire. Here are the stats:

We're both 42. No kids. I sold my company last year. My wife still works and carries health insurance. $4.8mm in liquid assets and $810k in home value. No debt. Taxes have been paid from gain on sale of business. Liquid assets are allocated as follows:

65% equity/45% bonds/cash. Equity is comprised of some MLP's, ETF's, tactical funds and single company stock. Bonds are muni's. Cash is about $300k.

Our total annual spend with ACA individual policy (including deductibles maxed out) would be about $135K pre-tax. We would have to pay our income/cap gain tax expense out of the $135k.

The only people I have consulted about this (aside from my wife) are those that stand to benefit financially from our relationship such as money managers, etc. I was looking for some un-biased opinions. On the surface it looks like it would work, but we have a long life ahead of us. It seems like a very long time. We worked hard and risked a lot to get here. We just don't want to screw it up.

Thanks in advance.
Welcome to the forum, dscott745. While you look over the threads in search of helpful information, a very good place to start is here Some Important Questions to Answer Before Asking - Can I Retire?
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Old 01-06-2014, 10:13 AM   #11
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Thanks for all of the quick responses. They are helpful. Keep 'em coming...
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Old 01-06-2014, 10:24 AM   #12
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Welcome to the forum, dscott745. While you look over the threads in search of helpful information, a very good place to start is here Some Important Questions to Answer Before Asking - Can I Retire?
Thanks to Gumby for the FAQ ! And thanks to Michael to pointing us to it. Great list of questions !
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Old 01-06-2014, 10:31 AM   #13
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You clearly have the assets to leave the world of the working. Having said that, life happens and there is no telling what the future holds for you and your wife. You would be starting ER relatively early, but you have numerous alternatives, i.e. downsizing or relocation, should you feel the plan is in jeopardy. Also, and this is just a guess, I suspect there are very few 80 year olds living on an annual budget of 135K. Realistically, you can expect your annual expenses to decrease considerably by then for numerous reasons. I factored in a 2% annual decrease starting at age 65 through 85. Look around at the lifestyle of any 80 year old that you may know. I think you'd be hard pressed to find one spending 135K on an annual basis. You may be the exception.

When I left the work force on our ER adventure, I did so knowing full well that the worst thing that could happen was I had to go back to work. Oh the thought of it.
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Old 01-06-2014, 01:10 PM   #14
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Over $5 mil in assets and a wife who still works. Sounds pretty sweet! If it were me I wouldn't hesitate to pull the trigger.
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Old 01-06-2014, 02:25 PM   #15
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Thanks for the reply 5971 - the head scratcher is if my wife doesn't work. We still have to answer the question as to how we would occupy our time. The elephant in the room is can we pull it off financially given the stats I listed above.
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Old 01-06-2014, 02:52 PM   #16
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Thanks for the reply 5971 - the head scratcher is if my wife doesn't work. We still have to answer the question as to how we would occupy our time.
That is a question many here grapple with but it is a nice problem to have, all things considered. My DH is the youngest in his seniors hiking group by far and he is in his fifties!

In some ways life is simpler when you get up every week day morning and have no choice but to go into work. Most people with regular jobs also have a ready made peer group. I am not saying that is better, just simpler.

Jaime Johnson made a documentary called Born Rich that is quite interesting. Some of the trust fund kids have a real struggle finding a life purpose -

http://topdocumentaryfilms.com/born-rich/
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Old 01-07-2014, 12:23 PM   #17
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Congrats, dscott, on your successful exit!

At 42 (2011) I sold my tech company to a very large dotcom and then did a 1 year earnout at the acquiring company before "retiring" 3 weeks after my earnest period ended. (Then my family and I jumped into a sailboat and headed for the Bahamas for a year of R&R, but that is another story.)

I put retiring in quotes above because at 42 or 43, let's be real, it is not like we are going to just play golf everyday and meet our other retired buddies at McDonald's for coffee once a week to trade war stories. For one, we don't have any retired buddies.

I think with your assets you should be ok as long as you think you can stay within your 130-140k budget. But I am assuming you and the wife are used to a larger budget and have friends who spend way more than that. You'll need to have discipline and realize you are now on a fixed income, even when your working friends are spending 300k or more.

The bigger question will be what do you envision dedicating your time to in early retirement. You may think this will not be a big deal, but trust me, it will be. 18 months after retiring I am still exploring "what do I want to do when I grow up." I have several hobbies that I spend a lot of time on and I have a few modest advising roles in my old industries and I do some public speaking and some angel investing, but I am still feeling a need to latch onto what my version 2.0 life is going to be--what is worthy of the next 10 year's of my life. I imagine anyone with enough drive to build and sell a company at our ages will have these questions.

Feel free to message me privately too if I can be of further help.
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Old 01-07-2014, 01:07 PM   #18
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The key thing here is that anyone who can build a company to the 6 or 7 million dollar level in less than 20 years is not going to eat cat food even if they run out of money. They will just start a new venture if funds get low. It takes a certain kind of person to build a company to that size, unless of course you inherited a 20 million dollar company from your parents and bailed on it after you had wrecked it down to 6 million
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Old 01-09-2014, 05:54 AM   #19
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To answer the OP's question, yes.
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Old 01-09-2014, 09:24 AM   #20
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Welcome to the forum, dscott745. And congratulations on the sale of your business!

You did not share much detail on why you want to consider retirement. Are you still involved in the business you sold? If not, are you doing anything to earn income now? Are you burned out, or just looking to do something new?

I was the CEO of a company for 12 years before retiring last year at 46. I posted a similar thread in this forum before making my decision, and got similar responses. I then consulted with my Vanguard financial planner who told me to stop worrying and just retire if I want to. I was more than ready to leave, and so I did.

But I remember a comment the planner made to me when we were having this discussion. He told me that once I leave, it is likely that opportunities that I never thought of will come my way as a result of being CEO of a visible company for so long. I brushed it off as not relevant to me, but within three weeks, I found myself working in a part time consultative role for a competitor in a role that allows me to almost never have to go into the office and just rely on my rolodex to bring some business their way. And I make a nice salary for doing so while enjoying the freedom to be home all the time, or travel for pleasure, and not have any of the typical pressures related to holding a job. It's worked out great, but I never would have foreseen it when I made the decision to retire.

I suspect you will have many opportunities presented to you as a result of your success in building a business. Some may look interesting, others you will quickly decide to pass on. So you don't need to look at this decision as the final last day you will ever work. Just look at it as a chance to move on, relax, and enjoy the adventure, not knowing exactly what may come your way. But having the financial independence to be able to do this will ensure that you will only pursue things that you find exciting and enjoyable to work on. You're in a position where you can't lose, so enjoy the moment and celebrate your success!
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