46 YO looking to retire within the year

[Racer X]

Greetings,

First let me state how grateful I am to have found such a great resource as this forum. I’ve been lurking for the past few weeks attempting to absorb knowledge like a sponge. This appears to be such a well-run, polite, knowledgeable forum compared to so many others out there. Thank you to those who have already increased my understanding of FIRE, and given me valuable food for thought as I contemplate my move to ER.

Now let’s see… I read the “Read This” about introductions, so let’s see if I can hit the highlights:

I am 46 YO, married (Mrs. X is 45), with no kids, living in the mid-west. My wife and I have mostly-good financial habits, and have long talked about retiring early in a vague sense. We now find ourselves pretty fed up with our respective corporate rat races, and are seriously contemplating ER.

As of yesterday, we have about $4M in brokerage accounts, weighted pretty heavily in mutual funds and stock. We’ve got another $1.2M in 401Ks, and then about $400K in cash. By January 2016, we are planning our assets will be above $6M, not including homes, cars, or stuff like that.

Out annual spending has been the tricky thing to determine. We’ve done a lot of analysis over the past couple of years, and have averaged about $115K per year, not including income taxes. Frankly, there’s a lot of waste in that number, but it is pretty inclusive (home repairs, a major medical situation, hobbies, travel, etc.). Taxes and health care would obviously have to be added on to that for future projections.

I’ve run some of the most pessimistic FIRECALC scenarios that I can run – high taxes, high health care costs, high inflation, flat spending curve, no social security, no inheritances, buying a stupid expensive retirement home within 5 years, living to 100, etc. and it always seems to come out positive.

Obviously there are a lot of smart people here succeeding on much less (both nest egg and spending-wise) than the numbers above. But it’s still scary to contemplate making a big life decision like this. Our jobs are such that once we retire, we feel like there won't be an opportunity to "go back" in to the workforce at anywhere near the level we are now. The fear of “running out” of money at 85-90 is something that keeps me up at night.

Anyway, I look forward to learning more and hope to someday even be able to contribute something of value to the forum.

Cheers!
Racer X

[Katiek]

Welcome, you have done a great job saving and built a solid financial base for ER. I think the key for you is really being confident about your expenses number, but I understand that no matter how solid things seem, it's still a scary step.

Do either of you have a chance of working part time or some more flexible schedule? Do you want to FIRE at the same time, or would it make sense for one of you to try it first while the other keeps working for a bit longer?

Does your spouse think you're ready or is she relying on you to make the determination that you're good?

It certainly sounds like you're financially able to take the step, but I get that transitioning can be a big move. You've done a great job of saving and investing, I look forward to your future contributions here!

[Racer X]

Quote:

Originally Posted by Katiek Welcome, you have done a great job saving and built a solid financial base for ER. I think the key for you is really being confident about your expenses number, but I understand that no matter how solid things seem, it's still a scary step. Do either of you have a chance of working part time or some more flexible schedule? Do you want to FIRE at the same time, or would it make sense for one of you to try it first while the other keeps working for a bit longer? Does your spouse think you're ready or is she relying on you to make the determination that you're good? It certainly sounds like you're financially able to take the step, but I get that transitioning can be a big move. You've done a great job of saving and investing, I look forward to your future contributions here!

Thanks for the kind words. I absolutely agree - we both need to be confident about the spending. That's the biggest obstacle in my mind at present. It's something that despite religiously recording in Quicken, we've never really given much thought towards. So history is easy to review, but then trying to forecast that spending forward in a different life style is a challenge. We won't need super duper fancy cell phone plans when not working, but we'll likely travel more. We won't have "work wardrobe" costs anymore, but we won't get a lot of free meals and other perks from work, either. And then you have to factor in things like heath care and taxes, which will be vastly different, and the FUD rises exponentially.

The plan is for both of us to RE at the same time. My wife is much more nervous about it than I am, owing that she's newer to the FIRE mindset, and she is also less certain about "what to do in retirement" than I am. But we've been spending a lot of time reviewing the numbers, and I've done a fair bit of research and scenarios for her based upon her questions and concerns. She's rapidly coming on board. We used to light heartedly joke about RE in January of 2016, and now we have the number of days on a countdown clock.

Scary but exciting times, for sure.

[robertf57]

Welcome and congratulations on your great job of saving. I am surprised at your postre-tax accumulation ratio. I suspect you must have had a very nice paycheck and LBYM lifestyle; or else you missed opportunities to starve the tax man!

Even in the most conservative of projections you seem to be good to go. Your current "waste-full" expenses are less than 2% of your nest egg and you presumably will have some social security on top of your investments.

[Racer X]

Quote:

Originally Posted by robertf57 Welcome and congratulations on your great job of saving. I am surprised at your postre-tax accumulation ratio. I suspect you must have had a very nice paycheck and LBYM lifestyle; or else you missed opportunities to starve the tax man! Even in the most conservative of projections you seem to be good to go. Your current "waste-full" expenses are less than 2% of your nest egg and you presumably will have some social security on top of your investments.

Thanks. We have been blessed to both have very good, very stable careers, with very good incomes through regular pay, bonuses, and some IPO goodies. Not having kids... has helped us financially. I'm a LBYM person, but I like to say that DW is tighter than bark on a tree when it comes to money. I'm mostly disciplined about spending, but prone to the occasional flight of fancy. DW is my rock and not shy to slap me back to common sense when necessary.

[Katiek]

Maybe making some "wish list" activities and starting to plan for them would help your wife focus more on the exciting opportunities of ER and less on the transition difficulties - trips that you want to take, classes that might interest you, gardening or home projects that would be fun?

It's hard to get excited about transitioning to an unknown, but the more there are some concrete ideas, the easier it is to focus on them.

[Whisper66]

I'll add my congratulations to the others. You are very clearly free to retire if you wish assuming your current asset / expense estimates are in the ballpark of where you think they are. Only suggestions I'd have are things I've learned from this board (a) use the I-ORP tool (Optimal Retirement Planner - Parameter Form ) to plan how to manage the amount of taxes on your tax deferred accounts and (2) keep your investment account costs very low so not wasting money there. Both excellent things you'll hear talked about extensively on this board.

[wrl11]

RacerX,

I am the same age and our numbers are very close to each other. I also use Quicken for the past 8 years, tracking expenses in detail. Being a financial-investment analyst, I have studied and projected our expenses in detail, which are higher than yours (3 kids) and am very confident it is enough. I moved to part time last year (very rare in my industry) and am enjoying it a lot (it came with a huge pay cut of course). Its been a good thing to do for me because it confirmed I will not be bored at all in full retirement. I started exercising, eating much better, taking various lessons and spending a lot more time with kids and hobbies. It has been great. So do it and enjoy, you have enough!

What do you race? I used to race SCCA and PCA until a few years ago (talk about a cash drain! But it was a lot of fun.)

[valueplayer]

Congratulations, i have no advice to offer, but just felt compelled to acknowledge you and your wife's accomplishment.

[Racer X]

Quote:

Originally Posted by wrl11 RacerX, I am the same age and our numbers are very close to each other. I also use Quicken for the past 8 years, tracking expenses in detail. Being a financial-investment analyst, I have studied and projected our expenses in detail, which are higher than yours (3 kids) and am very confident it is enough. I moved to part time last year (very rare in my industry) and am enjoying it a lot (it came with a huge pay cut of course). Its been a good thing to do for me because it confirmed I will not be bored at all in full retirement. I started exercising, eating much better, taking various lessons and spending a lot more time with kids and hobbies. It has been great. So do it and enjoy, you have enough! What do you race? I used to race SCCA and PCA until a few years ago (talk about a cash drain! But it was a lot of fun.)

Thanks. I used to race IT7 and the occasional Formula Mazda, but gave that up a few years ago due to not having enough time/space to do it "right." Now a days I run TaG and shifter karts, and my friends have tempted me in to the occasional Lemons/ChumpCar race. I find karts to be very enjoyable, challenging, and about 1/4 the cost of cars.

[MBAustin]

Welcome, Racer X!

As you have already found, there are lots of friendly and knowledgeable folks hanging out here, including plenty who approached ER with FUD (myself included). It was the good folks here who helped me take that step, and I haven't regretted it one bit since then.

Regarding spending, what I have found is that we have a lot more discretion over spending. I splurge on some things I wouldn't have in the past but economize in other ways (we rarely eat out anymore, for example). YMMV.

In any case, welcome and enjoy that countdown calendar!

[Travelwanted]

Quote:

Originally Posted by Katiek Maybe making some "wish list" activities and starting to plan for them would help your wife focus more on the exciting opportunities of ER and less on the transition difficulties - trips that you want to take, classes that might interest you, gardening or home projects that would be fun? It's hard to get excited about transitioning to an unknown, but the more there are some concrete ideas, the easier it is to focus on them.

+1 - retire to something, not from something.

Congrats on your success. I am slightly younger but with kids. I have a bit more in investable assets, yet I'm nervous about pulling the trigger also. There are no guarantees! Like another poster I have gone part-time for the past few months and love it. However, I'm done in July. Is part-time an option for you and would you consider it? It might help ease you into ER. Also, with no kids, you have fewer unknowns. . . other than where to travel next!!!

[Rothman]

I'll add my congrats Racer X, quite an accomplishment at your ages. I don't see need to run more numbers, $6M with 3% SWR throws off $180k, seems more than enough to cover taxes, so unless you want to put $1M aside to "invest" in your racing hobby you can start enjoying life spending time on what you want.


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[wingfooted]

You and DW have done very well to be able to retire in your mid 40's with $6MM investable. I am in a state of extreme envy.

I don't get the sense you are passionate about anything outside your job and really there is nothing in particular you are retiring "to". No exotic travel, you don't plan on through hiking the PCT, ocean front property is not in your immediate future, et al. Therefore, besides slightly bored with your fantastic job - why exactly are you retiring ? Sure you can probably go forever spending down your pile at $200K per year but $200K per year really isn't a luxury life style. Is this what you really want to do ?

You've got a good chance here at becoming truly 'rich' (> $10MM+ net worth) at the cost of at most 5 to 8 more years. You are fairly young. You have the option of letting off the throttle a bit at work and smelling some roses along the way. And maybe at some point discovering something that you really, really want to do that costs a whole lot of money.

Don't let me be a ER party pooper and certainly with your success I am in no position to criticize - but just asking the question.....

[Racer X]

Thanks again to all who have replied. This seems like such a great forum.

As to why we would retire. DW and I both travel quite a bit for our jobs. Sometimes up to 80-100% of the time. We make it work, but it would be nice to spend a bit more time together. I'm fortunate that after 18 years of marriage, we still actually like each other!

We want to travel at our own pace - for fun, not profit. Buy a nice road trip car and drive across the country. Visit national parks. Investigate places to settle down in retirement. We want to get a dog. I want to have enough time to run for my local track's season championship. We have some money set aside to do home improvements. We both love to read. We love college football and tailgating with friends. We want to spend time with our nieces and nephews. We want to have time to assist aging parents. I want to get good at welding.

Admittedly, my job has evolved over the past few years, as a buy out and extreme growth have changed the culture and values of the firm. I am no longer as passionate as I once was. DW does still love her job, but is starting to tire of the constant travel. She had a bit of a health scare recently, and I think it made her re-evaluate if the constant pace of work was really worth it.

So there are some "retiring to" items, and admittedly some "retiring froms." We've got everything we want at our current spending rate. Being "truly rich?" Might be fun. But honestly if you could tell us we could maintain current spending for the rest of our lives, and not have to worry about anything in our old age - I think we'd go ahead and lock that in now.

[Rickt]

Racer X Congratulations on your financial success. Have you tried taking a loong vacation or a sabattical with your wife? It might give you both an opportunity to learn a little more about yourself and what you would like to do in ER. Just saying..
Cheers.

[Rdub]

Congrats Racer X! I enjoy racing as well (auto crossing, track days). I took a shifter cart class at Bondurant last year, that was scary fun.

Lots of great advice and people on this forum. There are a ton of unknowns out there, so it will really come down to when you are ready. At your withdrawal rate, you are in very good financial shape. I'm still looking for a guarantee that I am good to go for the rest of my life. If I don't find it before next May, I'll take my chances.

My wife went part time after we had kids and then FIRED last May at 38. It has been a year and she hasn't completed 1/4 of the things she planned on doing, but is busier now than when she was working.

After we put our kids to bed at night, we talk about our days. Mine are full of work stories, non-stop meetings/deadlines/employee issues/product changes/updated models/eating spreadsheets for lunch/etc. She is just as tired from waking up at 5am to work out with one of her girlfriends, back home in time to help me get the kids fed and off to school, another workout with the school moms or volunteering at the school, coffee at the office (Starbucks) with her co-workers (other moms), home in time to shower and meet a friend for lunch/ shopping/mani/pedi/eyelash/massage (depends on the day), then pick up the kids from school, after school activities with kids (gymnastics, piano, soccer, etc), getting dinner ready... She can't believe she ever had time to work before.

It was good for me to see her FIRE for a few reasons: 1) She doesn't have time to be bored, 2) she is in a much better mood, 3) she doesn't miss work, 4) our actual expenses are spot on with my forecast, and 5) I can't wait to join her... next year.

[pb4uski]

Congratulations Racer X. You're good to go anytime you want..... now you just need to decide what to do though I see you have some good ideas in mind. I didn't really retire to something.... nor even from something since I still liked my job after downshifting to part-time to reduce my travel. After selling our second home I decided that we had enough and I had had enough.... if you know what I mean. Things will inevitably come along that occupy your time.

You mention taxes and health insurance as being unknowns in your OP. I assume that you have explored health insurance through your state exchange or healthsherpa.com which is a good place to start. For taxes, take last year's tax return, zero out your earnings since you'll no longer be working and make any other appropriate adjustments and I suspect that you'll get a very pleasant surprise. If you didn't do your last year's tax return yourself you can sketch it out on Taxcaster.

[wingfooted]

Racer X

One thing not in your story is how you are invested to support your SWR. Obviously how well or poorly you do over the next 50 years with a $6MM pile makes a big difference.

Running a big portfolio with a high stock allocation is not for the faint of heart. The swings can be both exhilarating or terrifying. And if you are 'actively' managing, the time commitment in addition to a full time job is significant.

So what are you doing ?

[Al18]

Congrats on your retirement plan - you've amassed a small fortune and think your good to go.

Would you be the same Racer X that occasionally posts on that other Mac forum? If so, long time no post BTW I use a different handle on this forum - don't want to clue my present employer in on my retirement plans yet.