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51, ER in 11 months? Trying to escape golden handcuffs...
Old 01-27-2013, 07:33 AM   #1
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51, ER in 11 months? Trying to escape golden handcuffs...

Hi. Love this site, and I've spent a few weeks reading all sorts of helpful material.

I'm 51, I live in Austin, and have been in high tech sales my entire career. Lately (last 5-6 years), as a manager, I've made very good money - $400K-$550K. I have about $1.5M saved, with half in 401k/IRAs and the rest in a brokerage account. Recently downsized significantly to a smaller house since the last kiddo is out of the house (in college). My annual budget is about $80K, and while my spending in the past five years has been above that (sometimes significantly), I am working on really tracking that very closely as I enter what may be my last year at this job. I have a financial advisor who I will keep. Not only is he a close personal friend (who has done a tremendous job with my finances), I find that letting someone else worry about what to invest in has significantly reduced my stress.

DW has recently re-entered the workforce at a job she loves, and has no intention of stopping any time soon (she would do what she does for free, but makes about $45K/year, and the job has health insurance if we want it). I also have an annuity of $26,000/year. In-laws have significant assets (I think about $7M-$10M) that will be split among the three kids when they are gone (which I hope is a long time from now!!)

Part of my reluctance in leaving is the amount of $ that I'm leaving on the table - not just the salary, but stock options and other significant benefits of my current job. However, the stress in high tech sales -- where you are only as good as your last quarterly results -- is driving me crazy, and I am certain it is impacting my health. In addition, I travel extensively (anywhere from 50%-75% of the time). While this gives me perks (airline miles, and other reward points), it's just too much time to be away. I get 5 weeks vacation, but rarely take more than 2 just due to the fact that if I leave, my results are at risk. Also, if I just stay "a few more years," I could make some significant contributions to my account balances. I feel massive guilt about being so selfish as to want to retire, get a dog, work in the garden, when I could be providing so much more for my family's future. My in-laws would look at me like I had lobsters crawling out of my ears as they both view work as "what the man does to take care of his family," and as long as I was healthy, why would I not? FIL is 80 and still working full time.

Love my DW as she knows the stresses in my life, and she is completely supportive of me retiring at the end of this year. Financial planner is telling me that if I can control the one thing within my control - our budget - then all will be good.
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Old 01-27-2013, 07:45 AM   #2
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Welcome. You will find a lot of good advice and support here.
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Old 01-27-2013, 07:46 AM   #3
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You've made $400-$550K per year in the last 5-6 years? Or is that the total of the last 5-6 years?
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Old 01-27-2013, 08:06 AM   #4
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Quote:
Originally Posted by Unpaintedhuffhines View Post
Hi. Love this site, and I've spent a few weeks reading all sorts of helpful material.
Welcome!

I have about $1.5M saved. My annual budget is about $80K
Wife makes about $45K/year,
I have ann annuity of $26,000/year

That makes...71K/year expenses.
With a budget of 80K, that leaves 9K gap.
9K on 1.5MM investment is .6% WR. Certainly sustainable!


I have a financial advisor who I will keep.
I too had a financial advisor that I thought I would keep. Close family friend. In the end, I decided to do it myself because the .8% advisor fee and the average 1.3-1.4% ER fees for the funds he used was too high...and I had the time to do it. Saved me close to $40,000 a year in fees by doing it myself and choosing a low-cost, passive index approach. How's that for budget control?

In-laws have significant assets (I think about $7M-$10M) that will be split among the three kids when they are gone (which I hope is a long time from now!!)
As LBYM type, I would never count on this...

Part of my reluctance in leaving is the amount of $ that I'm leaving on the table - not just the salary, but stock options and other significant benefits of my current job. However, the stress in high tech sales -- where you are only as good as your last quarterly results -- is driving me crazy, and I am certain it is impacting my health.
Was in the same boat, only a different part of tech. Lots of money to be had. In the end decided the stress was too much. I stress about other things now (like will my money last), but I think that is inherent in type A's. Only the paranoid survive.

if I can control the one thing within my control - our budget - then all will be good.
See Financial Advisor Section

See above
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Old 01-27-2013, 08:32 AM   #5
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Utrecht - that's per year. Lot's of money in high tech sales... and my top sales rep makes a lot more than me - typically $600K-$1M. Again, per year. We're constantly at DEFCON 5 on the stress level.

REattempt - yeah, I think I am conveniently ignoring the facts around FA costs because I don't want to dump him. And no way am I counting on any sort of inheritance. My feeling is that anything I get will just be passed to the kiddos, so I don't factor any of that in.

Talking to a retired friend of mine, he also makes a very good point - in retirement, you have all kinds of time to find ways to save money. Past five years I've spent zero time thinking about that. Need to take clothes to laundry? Take them in. I don't look for a coupon, or figure out which day has the better deal on ironed shirts. Not that I'm going to be sending out my shorts, t-shirts and flip flops to the laundry, but you get my drift
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Old 01-27-2013, 08:38 AM   #6
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The reason I asked is because I'm wondering how why you only have $1.5M saved if you make that much money and have a yearly budget of $80K?
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Old 01-27-2013, 08:51 AM   #7
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The reason I asked is because I'm wondering how why you only have $1.5M saved if you make that much money and have a yearly budget of $80K?
Mainly because my budgets have been much higher in past years, and we just downsized (in a big way) to a much smaller house. Plus (didn't mention this part), had 3 kiddos in college. Still have one in college, but all the money for him is set aside. Budget now is $80K. I am tracking closely this year to see if I can be true to that. I think I can, but time will tell.
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Old 01-27-2013, 09:07 AM   #8
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Quote:
Originally Posted by Unpaintedhuffhines View Post
REattempt - yeah, I think I am conveniently ignoring the facts around FA costs because I don't want to dump him. And no way am I counting on any sort of inheritance. My feeling is that anything I get will just be passed to the kiddos, so I don't factor any of that in.

Talking to a retired friend of mine, he also makes a very good point - in retirement, you have all kinds of time to find ways to save money.
Good luck. Search the board, there are a bunch of good recommended books on investor psychology. Like the st***d things we do with our money...sell on a correction, keep advisors that are expensive, etc. you will have plenty of time to get your investments in a row. Once you do, if you use a passive, low cost, index approach, all you have to do is evaluate the asset classes and rebalance. The investment is up front in time to get it into your head, then the rest is easy.

Btw, took me a year to fire the FA. His response? You are welcome back anytime, I want the best for you, let me know how I can help. Conversation was a non-issue. If your "Friend" pushes you and tells you it is a mistake, or causes issues, then he/she is only in it for themselves anyway.
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Old 01-27-2013, 09:07 AM   #9
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How realistic is the budgeting of $80k? For someone with very high annual income your amount of savings - while significant - is not what one would expect for someone with spending of $80k (I assume this doesn't include savings). But I note you say your budget is $80k but actual spending has been above that.

It isn't the budget that matters - it is the spending.

When I DH was working (he is retired now) and I was working full time (now ESR and work very part time) we had high income (although not as high as yours) and every year I laid out all this really nice budgets...and we exceeded them. The point is that the budgets were more aspirational than actual restraints on spending.

I also planned our retirement budget as being significantly below our spending while we were working full time. To an extent, I was right. We now spend well below what we spent when working full time. Still I spend a lot of time tracking spending. And, even now, in some categories I tend to budget what I would like a category to be rather than what I actually spend... For years I played a little game. I constantly budgeted Groceries and Dining out expenses at $X but every year exceeded it. I finally realized that my budgeted amount - while reasonable from an objective point of view - wasn't really reasonable for us. I really didn't want to cut the things I would have to cut to get to the budgeted amount. It made more sense to increase the budget. I would suggest that you look carefully at your spending over the last 5 years to see what you are really willing to cut to get to $80k and whether you need to adjust to be more realistic to actual spending.

You are relying a lot on DW's income. But consider some possibilities. If she recently re-entered the workforce she may be more vulnerable to layoffs or other negative financial events in her working. She may not expect it ...but stuff happens. What happens to your plan if she loses that job or her income decreases? What if after a couple of years of you being off work she decides she wants to quit as well? Job conditions change. The job she loves now may be a job she hates in 3 years.

For a married couple you should also always consider what happens if you weren't married. What if your wife died? I know that isn't something you want to think about, but the reality is that in most couples there will someday be a survivor and bad stuff can happen.

If you are going to be so dependent on your wife's income, does she have disability insurance? Does she have life insurance? What if her job eliminates health insurance? Have you budgeted for buying your own?

As far as the financial advisor - Here's the thing. When you make $400k+ a year you can probably afford to waste money on a financial advisor. When you are retired at 51 with a nest egg of only $1.5M then I would suggest that this is an indulgence you may not be able to afford.
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Old 01-27-2013, 11:41 AM   #10
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Katsmeow, thanks for those comments. I think you are spot on, especially with the budget versus spending; in the past 10 years I really haven't tracked my spending that closely, but I am now, so I'll see over the next 12 months how close I can get to my budget.

And I have thought about the whole "what if my wife isn't here" scenario, but to date, I have solved that problem like I have some other hard problems in my life - by thinking about something else! haha. In any case, it is something that I will have to plan for, so thanks for pointing that out. Certainly *one* of us would have to be working making that kind of $ for a while at least.
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Old 01-27-2013, 12:43 PM   #11
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Welome aboard!

Don't mean to be rude, but downsizing to $80k budget from $4-550k annual income could be a culture shock requiring discipline to accomplish. Including tracking spending as you said. And supportive spouse is a big asset. Yet sometimes folks with big incomes find it tough to actually live on significantly less. Others are amazed at how little their true standard of living changes once they start applying value-based purchasing to the family budget. In most markets there is a sweet spot above which spending tons more $$$ nets a minimally better product. As Ben Franklin said- Thrift can be a powerful income

Good luck in your quest to step down from DEFCON 5.
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Old 01-27-2013, 02:37 PM   #12
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Welcome to a fellow Austinite! Definitely do that expense tracking for as close to a year as possible before you pull the trigger (you can also do a pretty good job of it retroactively by downloading transactions from your credit cards and bank accounts). I did lots of simulations using FIRECALC and other retirement calculators before deciding it was OK to ER. But we are both LBYM types so we did not have to deal with spending concerns.

You are correct that it is easier to save on some categories after ER if your personal habits allow: we spend very little on clothing now (and when I get an urge to shop, I start at Goodwill); we rarely eat out or buy prepared foods as I enjoy cooking and now have time to do things "from scratch" nearly every day; etc. But in other areas we spend more.

I will say that getting out of the high-stress corporate world has done wonders for my overall temperament.

You should find lots of useful information on the site - it really helped me decide that it was OK to ER. Good luck with all of your planning and keep us posted!
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Old 01-27-2013, 03:01 PM   #13
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At that pay, pre-FIRE I'd be tempted to take my 5 weeks of vacation plus see how much I can de-stress the j*b before anyone questions my w*rk. If they question it then FIRE.
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Old 01-27-2013, 03:34 PM   #14
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Welome aboard!

Don't mean to be rude, but downsizing to $80k budget from $4-550k annual income could be a culture shock requiring discipline to accomplish. Including tracking spending as you said. And supportive spouse is a big asset. Yet sometimes folks with big incomes find it tough to actually live on significantly less. Others are amazed at how little their true standard of living changes once they start applying value-based purchasing to the family budget. In most markets there is a sweet spot above which spending tons more $$$ nets a minimally better product. As Ben Franklin said- Thrift can be a powerful income

Good luck in your quest to step down from DEFCON 5.
Amen, and this is actually one of my biggest fears: I am reasonably comfortable that I could hit my budget (I will certainly find out), but my underlying fear is would I want to live that way? Truth is, I don't know. Today if I go out to eat, I really don't care what it costs (now, it's pretty rare that I go out for $200 steak dinners). So I'll use this year as an experiment to see. I don't know -- maybe I just need a sabbatical.

But this site, and those that are responding, are giving me the best perspectives on this whole journey. Thanks for that.
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Old 01-27-2013, 04:46 PM   #15
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"Part of my reluctance in leaving is the amount of $ that I'm leaving on the table - not just the salary, but stock options and other significant benefits of my current job."


Stock options are difficult to walk from....there's a reason they call them golden handcuffs. One way I got around leaving them on the table was doing part time work for a few years for the same company which allowed the options to continue to vest. Didn 't get any new ones but the one's that had already been granted did ultimately vest. Is that an option?
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Old 01-27-2013, 04:53 PM   #16
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Keep DW working. Take a year off and de-stress. Then decide if you are going to hang it up.
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Old 01-28-2013, 07:03 AM   #17
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Hi, sorry if I am presumptuous but I second the part about ditching the finncial advisor and saving the significant management fees. It sucks when business is mixed with friendship or family but if you look at it purely from a business point of view - having the funds in a simple index fund portfolio with a very low ER *WILL* save you a a lot. At the very worst you can still go with Rick Ferri or some other low cost manager if you dont trust yourself to do it.

My brother is in tech sales and I am very intimate with the lifestyle and agree with you that it is not sustainable or healthy for a long(er) period of time. I would suggest to work out, get healthy [if you are not already] and reduce your work bit by bit till you feel comfortable to either quit or change into another track.
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Old 01-28-2013, 07:11 AM   #18
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Been there, done that (ORCL, SAP, etc), leave Sun return Fri, global services on United, exact same age, easily LBYM which wasn't saying that much when I was making $400k-$500k. Once I was out it was a total shock trying to go to our ER budget. Took way too many things for granted. After a year+ we are starting to adjust but in hindsight it would have been better for us to live 2-3 years on the ER budget before I clocked out.

Good luck with you decision.
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Old 01-29-2013, 12:51 PM   #19
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Check out this site for a little perspective...

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Old 02-01-2013, 03:29 PM   #20
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Another "close to" Austin... just down the road about 30 miles.

No advice but I'd like to make your salary for about a year! I'd retire for sure then!
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