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43 and living life in NY & FL - Am I close to FIRE or far far away?
Old 08-07-2017, 11:31 AM   #1
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43 and living life in NY & FL - Am I close to FIRE or far far away?

Hi everyone. I discovered this forum about 2 months ago and have been reading a lot of your great posts. I really got serious about shooting for FIRE about 12 years ago (hadn't saved much at all before that), but have caught up somewhat since then. So, a little about me:

- I'm 43 and not married (have a GF, but haven't been able to pull the trigger).

- I live in NY about 70-75 percent of the time and S. Fla about 25-30 percent of the time. I love S. Fla and my company allows me to work there part of the time.

- I don't work for a megacorp, but a smaller boutique firm where I have a very small ownership stake (only like 6%-10% should we sell).

- I currently have about 1.25 million saved for retirement, this includes:
*535,000 in a morgan stanley brokerage account (large majority stocks, but also 120,000 in an annuity - I know, but I like the idea of having some type of regular income down the road. It matures in 8 years.)
*428,000 in 401k
*26,000 in checking
*255,000 in savings

- I also own a condo in S. Fla that is worth about 450,000, and I owe about 117,000 on it still. In addition to the monthly mortgage, I've been paying an extra 10,000 per year to have it paid off early.

- I know I have way to much in cash, but I may be purchasing a house within the next 6 months (my grandmother passed away and I may buy her house). Also, I'm very hesitant to put more money in the stock market right now since we are due for a correction and I'd like to have money to buy in then (as I did in 2008).

- I make 225,000 a year base, plus commission on my clients which varies between 40,000 - 70,000 a year (I get commission checks every quarter which get taxed at close to 50 percent).

- I'm currently saving about 5,100 a month, with a breakdown of 1,100 to 401k (this is the max for what my employer will match half); 2,000 to savings and 2,000 to brokerage account (of that 1,000 has been going into the annuity). In addition, I save between 1/2 to 2/3rds of my commission checks each year. The rest pays for property and other taxes.

- My expenses are about 80,000 - 90,000 a year. I live below my means, but not even close to as much as I should. I do like to enjoy life, so I go out to dinner too often, go out too often, travel to S. Fla often (I work from there, but it is my choice and my company allows it so I pay for my travel).

- I know my allocation needs to change, and I am very keen do it - possibly putting 1,000 into savings and 3,000 into brokerage (keeping the 1,000 going into the annuity).

- I'm not counting this in, but I should get about 200,000 to 300,000 if/when the company sells (probably within 5 years time).

- In addition, I should be getting another 300,000 - 400,000 in about 20 years (family inheritance).

- No pension (man, I wish I was getting one of those), but I will be eligeable for SS (I guess at 62, but I know the minimum age may go up before then).

- So, from everything I've read, I am in good shape if I wanted to work to 60-65, but my goal is to try to retire in 2023 at 49 years old. Hence, I'm glad I found this amazing site. I'm so impressed by what so many people on here have been able to accomplish.

- I know I need about 2.0 - 2.5 million to be able to withdraw the 4 percent each year to cover my expenses.

Sorry for the length of this post, but it seems you all like more details. I know I haven't posted everything, but this is a good summation.

Any insight into whether I'm on track, what I should do with the cash (I know, I'm crazy to keep that much in cash, but it makes me sleep better and I like having the money to be able to put a down payment on a house, put towards an investment/buy in during a correction/buy a fund, etc.) Or, I also like the idea that if I felt like not working for 3-4 years I could use this money without touching my investments.

Am I crazy to think I can retire in 5 years? I don't hate my job as much as many, but I am certainly feeling burnt out a bit and getting sick of the daily grind. In addition, if/ when my company does sell I want the option of not having to work for the new owners.

Are there any investments I should be looking at/ reallocating my money to help achieve my objective faster? Is the next 750,000 going to come a lot quicker than the first 1.25 million?

Thanks for listening. I'm happy to be here and look forward to learning and contributing.

-bee
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Old 08-07-2017, 11:52 AM   #2
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You currently have ~$1.244 million and are adding $61.2k/year to savings/investments.

If I put in 90k spending for 50 years (assuming you'll live into your early 90's), with 20k/year SS at 62 (random assumption), saving 61.2k/year until retiring in 2023, with $1.244 million currently, FIRECalc says you have an 83.5% chance of success. Not great. Add in a lump sum of $300k in 2023 and it goes to 97.9%. Of course, that assumes you get that lump sum and nothing happens to it between now and then. IF it works out, you seem to be on track, as long as your expenses/spending is accurate and doesn't go up significantly when you stop working...

If, like many, you find that health insurance ends up costing you an extra $10-15k/year, then your budget goes from $90k to $105k and your success rate drops back into the low 8x%.
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Old 08-07-2017, 11:58 AM   #3
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Quote:
Originally Posted by beeboy View Post
Hi everyone. I discovered this forum about 2 months ago and have been reading a lot of your great posts. .....

Any insight into whether I'm on track....
Welcome... if you have been brousing this forum for about 2 months then you should know what our first question will be. Let me know if you need hint.
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Old 08-07-2017, 11:59 AM   #4
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Originally Posted by exnavynuke View Post
You currently have ~$1.244 million and are adding $61.2k/year to savings/investments.

If I put in 90k spending for 50 years (assuming you'll live into your early 90's), with 20k/year SS at 62 (random assumption), saving 61.2k/year until retiring in 2023, with $1.244 million currently, FIRECalc says you have an 83.5% chance of success. Not great. Add in a lump sum of $300k in 2023 and it goes to 97.9%. Of course, that assumes you get that lump sum and nothing happens to it between now and then. IF it works out, you seem to be on track, as long as your expenses/spending is accurate and doesn't go up significantly when you stop working...

If, like many, you find that health insurance ends up costing you an extra $10-15k/year, then your budget goes from $90k to $105k and your success rate drops back into the low 8x%.
Thanks exnavy, you're right, my savings are closer to 1.244 (but, I paid 10,000 to my mortgage today and forgot to deduct that ) In addition, I am saving more than 61.2k/year because I am putting an extra 20,000 - 30,000 a year (as I mentioned, I'm saving half to 2/3rds of my commission checks, but sorry as I realize that wasn't very clear). Thank you for checking firecalc, I have done that as well and came up w/ a similar success rate.
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Old 08-07-2017, 01:20 PM   #5
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Welcome to the forum. Look forward to hearing where you go from here.
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Old 08-07-2017, 01:36 PM   #6
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Originally Posted by pb4uski View Post
Welcome... if you have been brousing this forum for about 2 months then you should know what our first question will be. Let me know if you need hint.
Hmmm.... your first question based on what I've read here - "why the hell do you have anything in an annuity at all," or "Why the heck do you have that much in savings," or "why aren't you invested in a low cost Vanguard fund?"

actually, I could use a hint. thanks!
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Old 08-07-2017, 01:39 PM   #7
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Ok, the question would be "What does Firecalc say?"

Though the next questions would be on the annuity and your concentration in cash.
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Old 08-07-2017, 01:51 PM   #8
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Ok, the question would be "What does Firecalc say?"

Though the next questions would be on the annuity and your concentration in cash.
If I put the lump sum of 200,000 from a firm sale in at 2023 (not putting in the inheritance of 300,000 about 20 years from now), w/ 90,000 a year in expenses, I get a 97.2% success rate.

Without either lump sum, I get a 89.7% success rate.

If I put in both expected lump sums (200,000 in 2023 and 300,000 in 2040), I get a 100% success rate!

However, that doesn't account for my large amount in cash - it assumes the "total market" portfolio split (I don't see how I can account for the savings and annuity in firecalc).

You're right though, I seem to be doing some things backwards (investing in an annuity, having more in my brokerage than 401k, having too large of a cash position) compared to most people here. I thought I was doing OK (diversifying and all), until I came here and realized that maybe I need to seriously reconsider my investment strategy.
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Old 08-07-2017, 02:17 PM   #9
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If you look at the "My Portfolio" tab in FIRECalc you can put in criteria for your portfolio. I would suggest that you put in your target AA rather than your current AA since you are currently so cash heavy.

If the annuity is a fixed annuity then I would include that in your investments as a bond-equivalent.... if the annuity is a variable annuity then include it based on the underlying subaccount/fund investments.

There is nothing wrong with having more in your brokerage than in your 401k... in fact having taxable funds will be helpful to retiring at 49 since you would not have penalty-free access to your 401k until you are 59 1/2 (other than a 72(t) SEPP withdrawal plan).

On investing your cash, I suggest that you value average into equities. Value averaging is a bit of a twist on dollar-cost averaging and results in your investing more when the market is relatively low and less when the market is relatively high. Here's how it works: Let's say that you want to put $240k to work in the market over ~16 months. Under DCA, you would invest $15k a month for 24 months. Under VCA, you invest $15k the first month. When you get to the next month, you invest however much you need to to bring your balance to $30k... so if equities have declined you will invest more than $15k but if they have advanced then you'll invest less than $15k. A month later, invest whatever you need to to bring your balance to $45k. Repeat until the $240k has been invested.
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Old 08-07-2017, 02:35 PM   #10
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Welcome to the forum beeboy.

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Originally Posted by beeboy View Post
However, that doesn't account for my large amount in cash - it assumes the "total market" portfolio split (I don't see how I can account for the savings and annuity in firecalc).
You can account for savings and the annuity in firecalc.

For the annuity - remove it from your portfolio (the $120k you have invested in the anuity) and use this adjusted number as your portfolio (first page). But add it as income on the "other income/spending" page. I assume you have some idea what the annuitized income will be. An annuity is basically a pension - so treat it that way on the income page. Make sure you select or deselect the COLA appropriately. (If you select COLA and your annuity isn't COLAd - it will give false results.)

For the portfolio AA - again - we're looking at the NON annuity balance of the portfolio. Go to the "Your Portfolio" tab. Select Mixed Portfolio. Put the cash in the 1 month treasury bucket - and put the rest in the other buckets to match your portfolio.

I hope this helps.
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Old 08-07-2017, 02:37 PM   #11
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My 2 cents:

First, Welcome to the forum, you will find a diversity of opinions on just about any topic.

Second, you are doing more than OK, you are on track. Maybe not 49, but definitely not 65. A lot can happen between now and then, so hold on to your seat.

Also, don't feel guilty about splurging for reasonable niceties (vacations, dining out, etc). You need to enjoy life, not just put up with it until retirement.

And while annuities and cash are not popular here for someone your age, that does not make it wrong. Just a different way to get there, with a comfort zone. But it could take longer (or not).

Good luck.
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Old 08-07-2017, 02:49 PM   #12
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Quote:
Originally Posted by pb4uski View Post
If you look at the "My Portfolio" tab in FIRECalc you can put in criteria for your portfolio. I would suggest that you put in your target AA rather than your current AA since you are currently so cash heavy.

If the annuity is a fixed annuity then I would include that in your investments as a bond-equivalent.... if the annuity is a variable annuity then include it based on the underlying subaccount/fund investments.

There is nothing wrong with having more in your brokerage than in your 401k... in fact having taxable funds will be helpful to retiring at 49 since you would not have penalty-free access to your 401k until you are 59 1/2 (other than a 72(t) SEPP withdrawal plan).

On investing your cash, I suggest that you value average into equities. Value averaging is a bit of a twist on dollar-cost averaging and results in your investing more when the market is relatively low and less when the market is relatively high. Here's how it works: Let's say that you want to put $240k to work in the market over ~16 months. Under DCA, you would invest $15k a month for 24 months. Under VCA, you invest $15k the first month. When you get to the next month, you invest however much you need to to bring your balance to $30k... so if equities have declined you will invest more than $15k but if they have advanced then you'll invest less than $15k. A month later, invest whatever you need to to bring your balance to $45k. Repeat until the $240k has been invested.
Thanks PB4 - I'll play around w/ firecalc w/ the annuity as you suggest (it's a variable annuity BTW). Also, appreciate the advice on VCA - something to definitely keep in mind.
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Old 08-07-2017, 02:51 PM   #13
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Welcome to the forum beeboy.



You can account for savings and the annuity in firecalc.

For the annuity - remove it from your portfolio (the $120k you have invested in the anuity) and use this adjusted number as your portfolio (first page). But add it as income on the "other income/spending" page. I assume you have some idea what the annuitized income will be. An annuity is basically a pension - so treat it that way on the income page. Make sure you select or deselect the COLA appropriately. (If you select COLA and your annuity isn't COLAd - it will give false results.)

For the portfolio AA - again - we're looking at the NON annuity balance of the portfolio. Go to the "Your Portfolio" tab. Select Mixed Portfolio. Put the cash in the 1 month treasury bucket - and put the rest in the other buckets to match your portfolio.

I hope this helps.
Thanks Rodi! I'll try it in firecalc this way as well. Very helpful tips indeed. Much appreciated.
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43 and living life in NY & FL - Am I close to FIRE or far far away?
Old 08-07-2017, 03:00 PM   #14
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43 and living life in NY & FL - Am I close to FIRE or far far away?

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Originally Posted by CardsFan View Post
My 2 cents:



First, Welcome to the forum, you will find a diversity of opinions on just about any topic.



Second, you are doing more than OK, you are on track. Maybe not 49, but definitely not 65. A lot can happen between now and then, so hold on to your seat.



Also, don't feel guilty about splurging for reasonable niceties (vacations, dining out, etc). You need to enjoy life, not just put up with it until retirement.



And while annuities and cash are not popular here for someone your age, that does not make it wrong. Just a different way to get there, with a comfort zone. But it could take longer (or not).



Good luck.


Thank you CardsFan (I'm a yankees fan, but have always considered the cards my national league team ). I really appreciate your response. I know there is more than one way to get to the promised land. I also know you need to enjoy life in the present (which is why I bought a condo in S. Fla when I was in my late 30s rather than waiting until I was older/ retired).



Right now I only have about 9.5% of my retirement in an annuity (I know SS is also considered that by some on here, but I won't be able to get SS for a while). I did alot of research before I purchased one and love the idea of having at least a guaranteed check each month no matter what happens (again, I'm thinking of it as the pension I don't have).



And, trust me, I know life can throw you for a loop when you least expect it. I try to roll w/ the punches and take it as it comes (as much as I can). I know I've been lucky to be in the position I am and will try to enjoy the ride to FIRE and beyond. (love these 7up spots - hadn't seen those in a while).
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43 and living life in NY & FL - Am I close to FIRE or far far away?
Old 08-08-2017, 06:41 AM   #15
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43 and living life in NY & FL - Am I close to FIRE or far far away?

Quote:
Originally Posted by pb4uski View Post
If you look at the "My Portfolio" tab in FIRECalc you can put in criteria for your portfolio. I would suggest that you put in your target AA rather than your current AA since you are currently so cash heavy.

If the annuity is a fixed annuity then I would include that in your investments as a bond-equivalent.... if the annuity is a variable annuity then include it based on the underlying subaccount/fund investments.

There is nothing wrong with having more in your brokerage than in your 401k... in fact having taxable funds will be helpful to retiring at 49 since you would not have penalty-free access to your 401k until you are 59 1/2 (other than a 72(t) SEPP withdrawal plan).

On investing your cash, I suggest that you value average into equities. Value averaging is a bit of a twist on dollar-cost averaging and results in your investing more when the market is relatively low and less when the market is relatively high. Here's how it works: Let's say that you want to put $240k to work in the market over ~16 months. Under DCA, you would invest $15k a month for 24 months. Under VCA, you invest $15k the first month. When you get to the next month, you invest however much you need to to bring your balance to $30k... so if equities have declined you will invest more than $15k but if they have advanced then you'll invest less than $15k. A month later, invest whatever you need to to bring your balance to $45k. Repeat until the $240k has been invested.


PB4 - any suggestions on vehicles for VCA investing in the current market. Most of my portfolio is in individual stocks (other than the 401k of course). So many here are such big fans of ETFs and fund investing (I do have some in both, but not much). My FA mention a dividend growth ETF and a BlackRock Breit (real estate), so maybe I can put a good chunk in those two and some in CD ladder so I can sleep at night.
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Old 08-08-2017, 06:47 AM   #16
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Hard to go wrong with a low expense ratio total stock or global stock fund. Do you currently have any international equities?
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Old 08-08-2017, 06:50 AM   #17
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Hard to go wrong with a low expense ratio total stock or global stock fund. Do you currently have any international equities?


I do - I have BP and China Petroleum. I also have a percentage of my 401k in an international fund.
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Old 08-08-2017, 07:18 AM   #18
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Beeboy, do you keep bees? I do!

We are in the high valuation market so future returns may be lower for some time (or forever). For that reason, I like to make pessimistic assumptions when running FireCalc. Also cross check FireCalc results with "lower" SWR e.g. 3%.
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Old 08-08-2017, 10:06 AM   #19
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Beeboy, do you keep bees? I do!

We are in the high valuation market so future returns may be lower for some time (or forever). For that reason, I like to make pessimistic assumptions when running FireCalc. Also cross check FireCalc results with "lower" SWR e.g. 3%.
Hi pj - no, I'm not a beekeeper (I'm a little afraid of getting stung), but it's very cool that you do. You must get some nice honey

I know we are in a high valuation market, which is why I'm hesitant to put my cash into stocks right now. And, as you say, a SWR of 4% may not be realistic going forward.
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Old 08-09-2017, 06:57 PM   #20
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Hi pj - no, I'm not a beekeeper (I'm a little afraid of getting stung), but it's very cool that you do. You must get some nice honey

I know we are in a high valuation market, which is why I'm hesitant to put my cash into stocks right now. And, as you say, a SWR of 4% may not be realistic going forward.
I'd guess your boss likes your self-confidence

Having my personal certainties proven wrong more than once, I recommend you consider the possibility you might be wrong and leave yourself an option or two accordingly.
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