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42 year old, saved $3M, thinking to retire next year
Old 03-19-2014, 05:42 PM   #41
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42 year old, saved $3M, thinking to retire next year

+1 on ditching the FP

We have a small managed account as part of a separation package - no choice at this point for a years, as part of the separation agreement. It's set up to the same (60s/40b) AA as my Vanguard account. VG in 2013 had a personal return around 20% (that covers stocks, bonds and cash). The managed account under 7%. After fees, the managed account has about $10 less than what's been deposited on a monthly basis. Figure that one out. (The total ER on that account is closer to 2%). The FP and the fund managers made money, though. As soon as there are no penalties, that money's getting rolled over. Our overall ER, even with this disgusting account, is .12%, thanks to Vanguard.

I suspect your total costs are actually higher than 1% - that's just the FP. What's your actual ER - the total cost you pay every year? How often does your FP argue that you sell one investment and buy another, increasing costs? A fund can 'beat the index', yet still provide lower returns than an index fund. Morningstar put out a recent article concluding that even managed funds which produced higher percentage numbers still paid less of a return - over time - than compatible indexed funds.

You have enough to retire, depending on your lifestyle. Hopefully you're running your time horizon out about 50 years in FireCalc, since it seems your family is longer lived.

Good luck, whatever you decide.
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Old 03-19-2014, 06:03 PM   #42
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No doubt there are pros and cons of a FA. A few thoughts:

1-our advisor takes a decreasing % the greater the assets...ie I pay about 0.75% overall. Keep in mind the % may be negotiable. I would think at 2.5 mil you should be paying less than 1%.

2-while you may be manage your own, some folks just can't and this is something you really don't want to mess up. . .you will count on that money.

3-my FA focuses very much on after-tax returns. Currently I am at a very high income and perhaps this will be less important after retirement but I consider this of great value right now.

4-our FA assists with ALL financial factors in our lives: life insurance, disability, any real estate transactions, estate planning, asset protection, etc.

I used to manage my own but I do find value in the advisor we found. But, it took years to find her. Most I felt were worthless.

Just my 2 cents. I'm also 42 and will FIRE in 2 years, 3 months. Good luck!
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Old 03-19-2014, 06:45 PM   #43
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I guess you could also go the Jack Reacher route and just buy a new set of clothes every few days and keep moving.
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Old 03-19-2014, 06:58 PM   #44
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Originally Posted by seraphim View Post
+1 on ditching the FP

We have a small managed account as part of a separation package - no choice at this point for a years, as part of the separation agreement. It's set up to the same (60s/40b) AA as my Vanguard account. VG in 2013 had a personal return around 20% (that covers stocks, bonds and cash). The managed account under 7%. After fees, the managed account has about $10 less than what's been deposited on a monthly basis. Figure that one out. (The total ER on that account is closer to 2%). The FP and the fund managers made money, though. As soon as there are no penalties, that money's getting rolled over. Our overall ER, even with this disgusting account, is .12%, thanks to Vanguard.

I suspect your total costs are actually higher than 1% - that's just the FP. What's your actual ER - the total cost you pay every year? How often does your FP argue that you sell one investment and buy another, increasing costs? A fund can 'beat the index', yet still provide lower returns than an index fund. Morningstar put out a recent article concluding that even managed funds which produced higher percentage numbers still paid less of a return - over time - than compatible indexed funds.

You have enough to retire, depending on your lifestyle. Hopefully you're running your time horizon out about 50 years in FireCalc, since it seems your family is longer lived.

Good luck, whatever you decide.
Thank you! Those are great insights. I'll surely be looking into it!
Yes I did a 50 yr horizon in FireCalc, although none of my family members ever lived beyond 90, yet.
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Old 03-19-2014, 07:01 PM   #45
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I've now seen many posts like this. Clearly, OP has enough to retire financially. In this case and many other similar posts, OP seems to need some kind of assurance to push him/her over the edge. The real question behind the OP is not financial. It's mental assurance he/she seeks.
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Old 03-19-2014, 07:55 PM   #46
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Thank you! Those are great insights. I'll surely be looking into it!
Yes I did a 50 yr horizon in FireCalc, although none of my family members ever lived beyond 90, yet.
Careful. When you go beyond ~ 45 years, a calculator like FIRECalc has to drop off the recent 45+ year scenarios, as it won't have a complete data set.

So do 30, 35, 40, and then start going year by year. When you see success rates increasing rather than decreasing as expected, you know you are dropping off some data. You can kind of plot an expected curve, it will start to flatten out.

-ERD50
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Old 03-19-2014, 09:47 PM   #47
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Welcome! I'm also a 42-year-old single woman with no kids, looking to retire next year. Your finances look very good. My expenses are a bit lower than yours, but I live in a lower-cost area and have my house paid off. I'm also planning to travel a lot after I retire.

I would hold off on any condo purchase until you've spent some time living overseas. You may find you never want to come back. Sounds like that's what you're planning to do in any case.

I feel some anxiety about retiring too even though I've analyzed all the finances to death and they look good. I'm guessing the anxiety will get more intense as the date approaches. My parents retired with a very solid financial outlook and my dad had stress-induced hives for a year after giving up his income, believe it or not. So I guess all I can do is prepare mentally for some anxiety to inoculate myself against One More Year syndrome.
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Old 03-20-2014, 08:10 AM   #48
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Jpearl, i'm in about the same position you're in (single, 42, healthy savings), except I've already quit my day job about 10 years ago. I'm still working on where to live and how much to travel. Anyway, good luck. You've found the right board for advice!
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Old 03-20-2014, 08:55 AM   #49
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Not sure if this has been mentioned, but I believe the OP can get a free consultation with a Vanguard CFP due to the amount of assets (over 500K). I think at that level you get a free annual meeting as well. Hey, its free so it is at least worth a call!
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Old 03-20-2014, 08:59 AM   #50
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Originally Posted by ERD50 View Post
Careful. When you go beyond ~ 45 years, a calculator like FIRECalc has to drop off the recent 45+ year scenarios, as it won't have a complete data set.

So do 30, 35, 40, and then start going year by year. When you see success rates increasing rather than decreasing as expected, you know you are dropping off some data. You can kind of plot an expected curve, it will start to flatten out.

-ERD50
Good to know! Thanks a lot.
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Old 03-20-2014, 09:14 AM   #51
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Welcome! I'm also a 42-year-old single woman with no kids, looking to retire next year. Your finances look very good. My expenses are a bit lower than yours, but I live in a lower-cost area and have my house paid off. I'm also planning to travel a lot after I retire.

I would hold off on any condo purchase until you've spent some time living overseas. You may find you never want to come back. Sounds like that's what you're planning to do in any case.

I feel some anxiety about retiring too even though I've analyzed all the finances to death and they look good. I'm guessing the anxiety will get more intense as the date approaches. My parents retired with a very solid financial outlook and my dad had stress-induced hives for a year after giving up his income, believe it or not. So I guess all I can do is prepare mentally for some anxiety to inoculate myself against One More Year syndrome.
So good to see your post Inky! And thank you for your kind words. I totally agree - retire early is a life changing event, one that can bring more stress than working especially during the early years into RE. We will have to rethink about who we are, what we want to do, and search for our purposes in life. All the stuff that we did when we were teenagers! It is more than finances that we will have to figure out.

I plan to spend a lot of time, quality time that is, with my elderly parents in Asia, reconnect with my friends, travel, and visit friends (I am fortunate enough to have friends living all over the world that I can stay with)... I will likely fill the first 2-3 years of my retirement with traveling and financial planning. I will try to keep myself busy, so I won't feel lost or depressed.

Good luck with your One More Year Syndrome! I am dealing with mine and it is getting lousy - no, my work ethic is getting lousy.
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Old 03-20-2014, 09:15 AM   #52
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Not sure if this has been mentioned, but I believe the OP can get a free consultation with a Vanguard CFP due to the amount of assets (over 500K). I think at that level you get a free annual meeting as well. Hey, its free so it is at least worth a call!
Thank you for the recommendation! Seems a few people have recommended Vanguard, either professionals or indexes. I will surely look into it!
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Old 03-20-2014, 09:23 AM   #53
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Jpearl, i'm in about the same position you're in (single, 42, healthy savings), except I've already quit my day job about 10 years ago. I'm still working on where to live and how much to travel. Anyway, good luck. You've found the right board for advice!
You quit your job at 32? WOW that's early! But if you could find something that you really wanted to do other than a day job, and could financially swing it, why not.

In terms of figuring out where to live, where have you lived so far? I have friends (a couple) that relocate every year or every 2 years. They live/rent in one country for a year (or 2 if they really love it), then pack up and move to the next. They are in their late 40s and are FI. I like the idea, but relocating to a new place every year may be more interesting and suitable for a couple, than for a single woman. I like to have a place I call "home", then travel and stay at different places for a few weeks at a time.
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Old 03-20-2014, 06:38 PM   #54
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JPearl, congrats on great savings. You clearly have enough, stop giving away 1%, put money in index funds and withdraw at 3%.

Enjoy your life, that is why you saved, right?
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Old 03-20-2014, 06:59 PM   #55
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Hi JP!

Quote:
Originally Posted by JPearl View Post
I totally agree - retire early is a life changing event, one that can bring more stress than working especially during the early years into RE. We will have to rethink about who we are, what we want to do, and search for our purposes in life.
I know, right? It's exciting and scary at the same time. I'm actually thinking of meeting with a life coach to talk through some of these issues as I go through my transition. Strange to think that retiring might require more courage than staying at work!

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Good luck with your One More Year Syndrome! I am dealing with mine and it is getting lousy - no, my work ethic is getting lousy.
Ha, I know what you mean! I think I have light-at-the-end-of-the-tunnel syndrome... it's getting to the point where I just can't stand the stupid stuff at work anymore. Before, I tolerated it, but now that I know it's near the end it feels excruciating. First World Problem, I know...

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I like to have a place I call "home", then travel and stay at different places for a few weeks at a time.
Agree, I'm the same way. I love to go on adventures but then come home to family and friends and a healthy diet.

It's great your parents live in Asia since that will be a little bit of home for you there then, making it easier to stay long-term.

Good luck and I look forward to following your adventures!
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Old 03-21-2014, 09:07 AM   #56
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Hi JP!


It's great your parents live in Asia since that will be a little bit of home for you there then, making it easier to stay long-term.

Good luck and I look forward to following your adventures!
Cheers! I can't wait to hear that you quit your job and start your adventures too! Will surely be following your RE stories, if you'd like to tell.
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Old 03-27-2014, 09:47 AM   #57
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I don't think the stress is worth the increase in net worth. You have an awesome amount saved up. You need to spend sometime to determine what you are passionate about and change to another job, full or part-time which you look forward to doing everyday. I can tell you I love my current job which pays about $83k a year, I hated a job a few years back when I was making over $120k a year. I don't regret the decrease in salary because I love working. You can take a job that pays far less and enjoy working because in reality you aren't working to survive financially anymore. Honestly, you have so many options. Explore your passions, travel for awhile, take some classes or training.....so many choices because you have done a great job saving for your future.

Statistics show once you have about $75k a year you can live a happy, comfortable life. More income does not necessarily bring more happiness.

Good luck on your decision.
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Old 03-27-2014, 10:09 AM   #58
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You quit your job at 32? WOW that's early! But if you could find something that you really wanted to do other than a day job, and could financially swing it, why not.

In terms of figuring out where to live, where have you lived so far? I have friends (a couple) that relocate every year or every 2 years. They live/rent in one country for a year (or 2 if they really love it), then pack up and move to the next. They are in their late 40s and are FI. I like the idea, but relocating to a new place every year may be more interesting and suitable for a couple, than for a single woman. I like to have a place I call "home", then travel and stay at different places for a few weeks at a time.
Well, I went off on my own at 32. I had enough $ for 10 years or so.. But, my own projects took off and set me at where I'm at now. The projects were internet websites, and they sort run themselves, so I've been about 1/2 retired most of the last 10 years. I've only lived in a few places (NYC & PA), but I'm looking all over for interesting places. But, as you say, moving all over isn't as fun alone.
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Old 03-27-2014, 03:55 PM   #59
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You are right --a house would definitely be a drain. Besides, I certainly have no interest or the skills taking care of a house. I was thinking to buy a condo, which can be rented out while I travel or stay with my parents part of the year.
I'm not ER'd but have a friend who is and downsized to a condo with the strategy of renting it while he travels six months a year (which he is doing in central america). What he found out is his condo association only allows a certain percentage of the units being rented---which they were already at. So---his unit sits empty for six months with no income (leaving ~ $2K a month on the table). He's "OK" with it but said he didn't realize that element of the association rules. The 2nd ah hah is that his dues and property taxes are about $550 a month which is very common in Seattle WA. But ultimately he doesn't miss the house maint!! Cheers.
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Old 03-27-2014, 04:55 PM   #60
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My wife and are the same age and have recently started moving in the direction of ER. Similar to you, we have the assets to make it work. If I were you, I wouldn't buy property. Given the interest rate environment, prices will eventually moderate once they begin to rise substantially unless you're in Manhattan. Think of the property purchase as a 10 year investment. If you're not up for that kind of anchor, just rent.

To be honest, our home has been a source of aggravation. If I had to do it again, I would rent. It makes things much easier at this stage and we would be much more mobile. Eventually we'll sell the house and move, but it's just one more large obstacle to get through.

Congrats on your success! Go enjoy the freedom. Life is short. This isn't a dress rehearsal.
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