55 yes, but maybe 54, 53, 52... oh heck, now?

[JoeWras]

Hi All. Been lurking on and off for a few years ever since I typed in a search on "retirement health insurance" and found this board. I think the good stock market this last year has gotten me thinking about FIRE more and more.

So, my DW and I are both 49. We're in good shape. We have about 2.5M saved, with an allocation of 45% equities, and the rest split between bonds and cash. Actually, I didn't realize how conservative it was until I looked up the numbers last night for this posting. Might be making some changes now that I'm paying more attention, although at this high stock market, not sure if I want to rebalance right this moment.

We have no pensions. The above is our pension. About 800k is in IRA/401k, the rest taxable. If we FIRE before 55, then we can let the 401k/IRA ride until 59.5.

How did we get here? LBOM. DW and I are one and alike. We met 3 years after college, but in those 3 years, we lived alike -- like college students even though we had great jobs. So, at 28 or 29, we had a great start, even though we drove junkers, had hand-down furniture, and watched TV on a 12" B/W set. We both brought that to the union. Once we saved enough, then everything but the house was bought with cash. Cars, furniture, everything. I can't impress on the youngsters reading this board how much you get ahead if you do this. We didn't even find it to be a problem, it was just like college, except now we were saving 60% of our take home pay. Less as we finally bought a few things.

Second good move was paying off that death-measure (mort-gage). During the internet bubble, I got a bit lucky with a decent bonus of about 50k. I just dumped it into the mortgage. 2 years later, that sucker was gone. I did this despite pleading from professionals to do the "right" thing and "invest" it while taking my tax break. I guess it would have padded their pockets too with commissions. Had friends who did such (invested back into tech) and nearly lost it all. Look, there is no feeling better than having that roof over your head, free and clear. I still remember the people at the county office stamping that note and actually clapping for me with a hearty "congratulations." Very nice of them to be of the same mind.

Anyway, DW and are both targeting 55. But with a conservative spending estimate of 100k per year, we could probably FIRE now. We've never spent 80k in a year, and 20k of that was charity. (BTW, another good discipline, giving money away.)

Health insurance is a concern. I have 4 months until I can buy into my BigCo plan at their cost - about 7k per year single. DW doesn't have that, but I could put her on for another 7k. However, at 55 she gets a sweet bene with really low cost HI, but who knows what happens with HI by then?

I think 55 is still our plan, but if either of us are offered an ER, we're gone. Or maybe the boss just has had enough or visa versa. Basically, work is fun knowing you can just walk if you had to. Also, we've vowed to take all our vacation and smell the roses. No more falling on swords for The Man. And those vacations? Simple. We love to walk in the National Parks. Nothing better.

I plan to stick around here. I like the ideas people have. It is good to see similar thoughts. Seems like everyone around me at w*rk is still fighting The Man for more cash because they have just bought a second home at the lake, mountain or ocean. Nothing against second homes, but man, they really crimp ER. My second home at the ocean is called Hampton Inn, and I'm fine with that.

 

[pb4uski]

Welcome Joe. Looks to me like you are all set from what you describe especially since you ignored SS. Have you run your numbers through Firecalc?

Since the equity markets are current so high and you are lighter than you would like to be in equities, you may want to set an amount you want to invest in equities over a certain period of time and then value average over that time period.

For bonds, while I expect interest rates will stay about the same for a couple years the interest rate risk after that scares me.

 

[JoeWras]

Thanks pb4.

I didn't mention SS because I was always of the opinion it wouldn't be there. My early working life was during the last big reform where they jacked the rates and added the medicare split out. That shook my confidence.

However, now that I'm closer to seeing it, I care.

I did use firecalc and it comes out looking nice, even when I put my 40% equity part in there. Your suggestion on dollar cost average buying is good and that's what I'm going to do. Actually, have been, but fell behind recently. For firecalc, I set SS at 67. I don't plan on taking it early.

I should also mention that both me and DW are children of depression parents. We were both born when our parents were in their 40s. Doing the math: 2012 - 49 - 40 = 1923. Our parents were profoundly impacted by the great depression. Poverty and hunger were well known. Debt was evil. My mom and dad had a 10 year mortgage in the 50's. Didn't even know such a thing existed, but found out it was actually common then.

Mom taught me well about credit cards. I thought it was so cool when she went to Mongomery Ward and bought something with a card that they used this printing press on. She was quick to give me a lesson that a bill will come in the mail which must be paid off quickly. That's what I learned and remembered. That little bit about interest and monthly minimums was for me to discover later. Overall, my parent's lessons from their childhood rubbed off on me (and likewise DW).

 

[pb4uski]

I think SS will be there for us (I'm a bit older than you) so I factor it in at 80% or so.

Value averaging is a bit different from dollar cost averaging. DCA is investing a set amount each month - say $10k a month for a year if you had $120k to invest. Value averaging differs in that if relates to the balance in relation to the planned balance. So if the initial 10k is worth 11k at the end of the first month then the second month investment would only be 9k, but if the initial 10k was worth only 9k at the end of the first month then the second month investment would be 11k. You can google and find out more about the mechanics, but what happens is you invest less when the market is relatively high and more when the market is relatively low. IIRC studies have found that it is slightly better than DCA over long periods of time.

 

[bo_knows]

Welcome to the board Joe. I'm more of a lurker (young for these boards at 31), but I wanted to thank you for your story. Makes me even more giddy to think about paying off our mortgage in a high COL area.

 

[JoeWras]

pb4: hey, that's good info. Makes sense, and that's a strategy I need to start pursuing. Thank you.

 

[JoeWras]

Welcome to the board Joe. I'm more of a lurker (young for these boards at 31), but I wanted to thank you for your story. Makes me even more giddy to think about paying off our mortgage in a high COL area.

Bo: it's a great feeling. Nobody can take your roof away. And then imagine this: since you are in the habit of writing that check, why not pay yourself and save that huge chunk each month? That's what we've been doing for 12 years, and I can tell you it added up.

The only problem I had with paying off a mortgage in my 30's was discussing it with others. For some reason, in casual discussion, people would talk about mortgages. They'd discuss rates, terms, and especially refis. They'd just outright ask me what mine was. I'd say I don't have a mortgage.

<stare>

I mean, what do I have 3 eyes? EVERYONE in their 30's has a mortgage, right? Ah, no. Not when you've been saving since you were 22. Not when you have discipline. Not when you don't move every 3 years. We paid it off fair and square, no inheritance or anything, just that one time bonus windfall, along with extra principal each month for many years.

After that, I'd just ignore the question. Now that I'm 50, it isn't so strange to have friends that are also free and clear, although most of them are still paying the death-gage.

 

[pb4uski]

You get the same 3 eyes stares when you are in your mid 50s and retired - but it sounds like you are accustomed to it.

 

[bo_knows]

The only problem I had with paying off a mortgage in my 30's was discussing it with others. For some reason, in casual discussion, people would talk about mortgages. They'd discuss rates, terms, and especially refis. They'd just outright ask me what mine was. I'd say I don't have a mortgage.

<stare>

This is hilarious. On a similar note, we too have had the same conversations with friends (especially recently with a lot of people refinancing). I mentioned that we were looking to refi to a 15yr loan. A friend of mine gave me a stare like I had been speaking in chinese. "Why would you want a 15yr mortgage? Isn't that more of a payment?" "Well yeah, but we've been doing double-sized payments for awhile and really want to pay it off." That resulted in a lot more stares... and this is from 2 couples who are DINK's and make more money than my wife and I.

Good times.

 

[pb4uski]

Tell them, the 15 year rate is much lower and while the payments are higher that you can afford the higher payments. It'll make them wonder what they are missing (LBYM).

 

[JoeWras]

Actually, part of this whole process is preparing for the stares and questions from friends and family. My sister is much older than I (almost 60), and is still working. She and her husband made a LOT more than me. But here's their rub: their property tax alone is $23k per year. Talk about stares, it was mine when I heard that! So, they gotta keep working to get to retirement. Guess that's what happens when you buy a mansion.

So, I dread the discussion with her. I think she'll be irked at me.

As for LBYM, it is just natural for me. It has taken me 30 years to understand that most people are not wired this way. The money comes in -- or is available as credit -- and out it goes. I honestly just don't understand, just like they don't understand about the benefits of paying more per month for 15 years less.

Maybe the ER people here are wired differently? I feel like I found my long lost brothers and sisters that understand me, finally.

 

[Mulligan]

Congratulations Joe. I love hearing stories like this, and you are on the door step of receiving the benefits of your planning. Make sure you back up what you say and take full advantage of the vacation time until 55. You have earned it!

 

[MBAustin]

Welcome and congratulations to Joe (and Mrs. Joe). I especially appreciate you pointing out that LBYM doesn't mean being stingy with sharing what you have with others. I am very happy that we have maintained our charitable giving at our pre-RE dollar levels although our actual income is less than half of what it was when we were w*rking. It truly is a blessing to share!

 

[LauAnn]

Good post. Thanks best wishes.

 

[tdv2]

Joe, My story is almost exactly the same as yours. My DW and I are from the same mold....frugal , frugal , frugal. I'm 49 she is a few years older. Never had any debt but a 15 yr mortgage that was paid off in 8. currently save $110k /yr and have $2.6mm invested with a $32k pension benefit. could call it quits now but on the fence still. The key for me is that my lifestyle can get better in retirement since I'm currently spending less now than what will be possible in retirement. It's a nice place to be.

 

[JoeWras]

Thanks everyone. I'm looking forward to participating here.

And, hey, already learned something from pb4 (value averaging).

Joe, My story is almost exactly the same as yours. My DW and I are from the same mold....frugal , frugal , frugal. I'm 49 she is a few years older. Never had any debt but a 15 yr mortgage that was paid off in 8. currently save $110k /yr and have $2.6mm invested with a $32k pension benefit. could call it quits now but on the fence still. The key for me is that my lifestyle can get better in retirement since I'm currently spending less now than what will be possible in retirement. It's a nice place to be.

Tdv2, wow! That is a parallel. We're pretty happy with our lifestyle, and not sure how much we'd change, except for maybe some more auto touring of the USA.

Since sweating it out early in life, we've had a few treats. For instance, we buy new cars -- except we keep them for 12 years or so. The newest years with the car is a treat. And we've recently been doing a house remodel -- but again, lots of DIY and frugality. The professionals looking at my total home value are probably not happy with me choosing laminate flooring over hardwood, but I sure am. This house is for us, not for resale. We've been here 23, and expect another 23+. I haven't even factored the house in the networth, or consider it any kind of investment. We love the place, but it is for us, and that may mean still using those chairs and table from 1986. We're happy. It looks fine, not crappy, just maybe a wee bit outta style. So it goes.

 

[tdv2]

Thanks everyone. I'm looking forward to participating here.

And, hey, already learned something from pb4 (value averaging).



Tdv2, wow! That is a parallel. We're pretty happy with our lifestyle, and not sure how much we'd change, except for maybe some more auto touring of the USA.

Since sweating it out early in life, we've had a few treats. For instance, we buy new cars -- except we keep them for 12 years or so. The newest years with the car is a treat. And we've recently been doing a house remodel -- but again, lots of DIY and frugality. The professionals looking at my total home value are probably not happy with me choosing laminate flooring over hardwood, but I sure am. This house is for us, not for resale. We've been here 23, and expect another 23+. I haven't even factored the house in the networth, or consider it any kind of investment. We love the place, but it is for us, and that may mean still using those chairs and table from 1986. We're happy. It looks fine, not crappy, just maybe a wee bit outta style. So it goes.

Same here. Home not included in my assets. Lived in the house 20 years in central Jersey. Problem here is the taxes, $10K on a $475K house. Not the greatest scenario for retirement. Done some improvements DIY bathroom remodel, hung 72 boards of Sheetrock to finish my basement, and other things. I now struggle to tackle the big jobs, but if I was retired, the decision might be easier.

 

[obgyn65]

Welcome to the forum, JoeWraz.

 

[CMH in CO]

Hi Joe and welcome. I love your enthusiasm and pride about LBYM. I am also 50, DH is 52. DH also has depression age parents and both of us always were frugal and saved. You touched on something not mentioned much---staying put. So many people upgrade their house often. We have done really well. But we think back to the fact that we would be much better prepared for ER now if we had stayed in our first, maybe second house and not felt the pressure to move up. Moving is expensive but more important than that, we live in an area where the housing market doesn't change much. So our upgrading houses didn't gain us a lot of returns when sold. Hopefully we got smarter, though. We knew we didn't want to retire where we live now. So we saved and bought a condo for our retirement and the home we live in now will be sold to tide us over until DH is 59 1/2. We are putting our own sweat equity into updating the house to prepare for eventual sale.

I understand the connection you feel with the members here. It is just so awesome to find people with the same mindset, a mindset that is not at all the norm. Most people I know are so far from even thinking about retirement, that ER isn't even in their vocabulary.

Cass

 

[NW-Bound]

Welcome Joe.

Just found your intro thread. Yes, you will find many fellow LBYM'ers here. For a while, people talked a lot about this most simple way to retire early, as it was the way most of us got our freedom, not by inheritance, or winning big in the stock market. Then, of course we do not want to keep repeating ourselves, so we talk about "curmudgeon" and other topics. Inevitably, we would talk about leisure and how we are spending our money. That may make newcomers think we are spendthrifts, which is not true. You will find some real tightwads here. Heh heh heh...

Anyway, have fun hanging around here.

PS. Heh heh heh is the signature of UncleMick, a long-time poster here. I just "borrow" his line when he's not looking.

 

[JoeWras]

Thanks NW-Bound! Been here a few weeks and have already learned a lot.

I'm spending time getting my ducks together, understanding the big issues and have learned stuff like:

• Health care: eligible for MegaCorp's plan in 3 months "at cost", but have discovered that obtaining my own similar -- if I qualify -- might be significantly cheaper. I think this is due to the fact I'm not in MegaCorp's home state, which is a known Super High Cost state, whereas we are in a more cost friendly state. It comes down to pre-existing conditions, but learned here about rule changes 2014.
• Expenses: working on charting my expense history so I know my required SWR. Also, do we want to spend more (travel?) during ER.
• Investing: never heard of stuff like peer to peer lending till I came here. Intriguing, but probably not my thing.
• It isn't just money. It is living life to its fullest.

 

[BigE]

Welcome Joe and thanks for the most recent update. Not yet retired, me and spouse are essentially same age as you/spouse but have 3 kids. The latter changes the dynamics from the DINKers. I had to laugh at your initial post b/c my wife and I met in grad school and had the same exact brand and model 13 inch black and white tv, yes that's right black and white; oh man we were both frugal. I guess this was a sign. Anyway 23 years of marriage later, she is retired and I hopefully am on the "five year plan". As you have already discovered this is an awesome site with loads of helpful information. Thanks for sharing your story and good luck.

 

[Milton]

I haven't even factored the house in the networth, or consider it any kind of investment. We love the place, but it is for us, and that may mean still using those chairs and table from 1986. We're happy. It looks fine, not crappy, just maybe a wee bit outta style. So it goes.

Those folks who prefer to carry a mortgage - and there are some on this board - tend to be the same people who insist that the value of (the equity in) one's home should properly be included in one's net worth calculation. Pretty ironic, really.

Like you, I prefer the KISS principle over creative accounting: so our mortgage was paid off within a very short time, and I never consider the house in my financials.

Old furniture is not crappy if it has been decently maintained. If anything, it is likely much better quality than the new stuff. While the saying "they don't build things like they used to" is not universally accurate, it does tend to be true of furniture.

 

[JoeWras]

Besides our recent mattress purchase, the last furniture purchase was 1999. At that time, the factory goofed up and actually installed the wrong fabric pattern on a few panels of the couch.

The Lane company, to their credit, made it right and had a master upholsterer come out and fix it. Amazing work. And it got me thinking... Some day, I just may hire this guy to re-upholster this piece instead of buying new. Not there yet, but in a few years, I'll explore that idea, especially since the frame and mechanism are holding up well.

 

[Sun456]

Hi Joe,

Similar life style for us. We also paid the mortgage off early. We hemmed and hawed for years as everyone says to keep it for tax deduction. However if I'd known the psychological advantage of having it gone I'd done it a long time ago. I think where you and I, and some others are, is due to a lifetime of good decision making. We never bought something we couldn't pay for and that included a house that we could see when and how we'd pay it off.

I also liked my furniture when I bought it, otherwise I wouldn't have paid anything for it no matter how cheap it was. Doesn't bother me that some of the fine wood pieces came from garage sales.

Cheers!