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Can I Relax?
Old 08-26-2019, 09:38 AM   #1
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Can I Relax?

Hi,
New to forum but have had strong interest in personal finance and trying to find financial balance in my life. Offering my financial overview below for feedback and guidance on where I stand. My personal issue is that I don't know if I can ever stop being over focused on increasing net worth.

- Married with two kids. 53 years old.
- One child out of college and second one entering 8th grade
- Live outside major east coast city
- Net worth overview
Taxable Accounts - $2.25M
Retirement Accounts - $1.65M
Pension - $105K lump sum when I turn 65
House - $650K market value, no mortgage
Annual Expenses - $90k/year
Future Social Security - $3080 at retirement age ($3800 at 70 years old)

Current Income: Me- $240K, Wife - $30K

Have been in sales my entire career which is extremely stressful and I have burned out. Current job is less stressful which is tradeoff for less financial upside in job which I'm fine with at current moment.

All my calculations say I'm in solid financial shape but I can't change my mindset to relax and live in the moment more. I'll always want to work in some capacity but not always for maximum $'s and worrying about maintaining a marketable resume

I also want to be able to leave some $'s to my kids later in life.

I struggle with the crazy gyrations in the stock market which are politically driven and not based on fundamentals. Ready to minimize my exposure as can't handle the volatility. Yes I'm more conservative in asset allocation of stocks/bonds but with a large portfolio a few % points is still a lot of $'s to me.

Interested in your feedback.
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Old 08-26-2019, 09:46 AM   #2
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Can you relax? That depends on your personality which the "...don't know if I can ever stop being over focused on increasing net worth" indicates it will be difficult for you to do.

May you relax? Yes, based on the numbers you posted and $90K annual expenses, looks like you are in great shape.

A few FIRECalc runs might help you gain some level of comfort.
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Old 08-26-2019, 09:50 AM   #3
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If you are sure that your $90K expenses estimate is correct then I'd say relation is warranted. At that rate, with $4M in investible assets your WR is only 2.25% (not including SS). That's pretty bulletproof.

Good luck with your next step!
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Old 08-26-2019, 10:02 AM   #4
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A lot of people have problems adjusting/transitioning from watching net worth increase while working to declining net worth burning the nest egg when retired.
For me, a steadily increasing bank balance was a sign that things were OK. My wife would say I was/am obsessed with it.
I'm now 3 yrs retired (involuntary) and about the only thing keeping me sane is my net worth is about flat and not declining with extremely conservative investments (and an extremely low (compared to most) burn rate).
You don't mention your age, if your 90K burn rate includes post-employment health ins, etc. But in general terms I would be happy to trade shoes with you (you can keep the kids... ! )
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Old 08-26-2019, 10:11 AM   #5
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A lot of people have problems adjusting/transitioning from watching net worth increase while working to declining net worth burning the nest egg when retired.
For me, a steadily increasing bank balance was a sign that things were OK. My wife would say I was/am obsessed with it.
I'm now 3 yrs retired (involuntary) and about the only thing keeping me sane is my net worth is about flat and not declining with extremely conservative investments (and an extremely low (compared to most) burn rate).
You don't mention your age, if your 90K burn rate includes post-employment health ins, etc. But in general terms I would be happy to trade shoes with you (you can keep the kids... ! )
Sorry 53 years old. $90K does not include health insurance as I am not opposed to working job with benefits just might not be a $200K pressure filled job.
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Old 08-26-2019, 10:28 AM   #6
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If it was me I would have left the working world yesterday. You look good to go. Just remember you can't get the time back with your kids etc. Good luck with your decision. I look forward to reading what happens.
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Old 08-26-2019, 10:30 AM   #7
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Sorry 53 years old. $90K does not include health insurance as I am not opposed to working job with benefits just might not be a $200K pressure filled job.
Out of an abundance of caution, I would look around your coworkers/networking contacts in the same industry+role and see how many people your age or older are still working. Maybe you won't have a problem finding a job with benefits. I'm finding it next to impossible when "over 50".
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Old 08-26-2019, 10:37 AM   #8
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Your previous job burned you out. You say your current job is less stressful. Are you still adapting to it? How long do you see yourself staying in the new job?

It would seem to me that if the new job pays your expenses, provides insurance and other benefits - even if you can't save anything at all, your existing investments will continue to grow and increase your margin of safety.

So far, no one has pointed out that the $105K pension at age 65 is a huge windfall. I priced an immediate annuity paying $8750/mo at Schwab, for a 65-year-old living in an east coast state - it would cost $1.7M. So be sure to include that in your planning. Is this a traditional pension that would give you a reduced benefit at 55?

Your house is paid for, you've got one more child to get through college. But oh, that pension! I say you're in good shape.

I would like to hear more about your intentions to either a) work till 65 or b) retire before 65.
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Old 08-26-2019, 10:47 AM   #9
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Your previous job burned you out. You say your current job is less stressful. Are you still adapting to it? How long do you see yourself staying in the new job?

It would seem to me that if the new job pays your expenses, provides insurance and other benefits - even if you can't save anything at all, your existing investments will continue to grow and increase your margin of safety.

So far, no one has pointed out that the $105K pension at age 65 is a huge windfall. I priced an immediate annuity paying $8750/mo at Schwab, for a 65-year-old living in an east coast state - it would cost $1.7M. So be sure to include that in your planning. Is this a traditional pension that would give you a reduced benefit at 55?

Your house is paid for, you've got one more child to get through college. But oh, that pension! I say you're in good shape.

I would like to hear more about your intentions to either a) work till 65 or b) retire before 65.
I thought that the pension was a lump sum... as such it would barely move the needle.
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Old 08-26-2019, 11:10 AM   #10
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I thought that the pension was a lump sum... as such it would barely move the needle.
+1
He stated it is a lump sum.
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Old 08-26-2019, 12:14 PM   #11
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I thought that the pension was a lump sum... as such it would barely move the needle.
Correct it is lump sum. Believe the monthly annuity amount is around $670. Might pay the cable bill at that time.
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Old 08-26-2019, 12:17 PM   #12
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Believe the monthly annuity amount is around $670. Might pay the cable bill at that time.
We can help with that!

Update on Cord Cutting (Cable TV)
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Old 08-26-2019, 12:17 PM   #13
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Annual Expenses - $90k/year

Current job is less stressful which is tradeoff for less financial upside in job which I'm fine with at current moment.

All my calculations say I'm in solid financial shape but I can't change my mindset to relax and live in the moment more. I'll always want to work in some capacity but not always for maximum $'s and worrying about maintaining a marketable resume

I also want to be able to leave some $'s to my kids later in life.
If you expect to continue to live on $90k/year going forward, you should be able to relax and do whatever you choose.

If you enjoy your current job and want to continue working, that sounds terrific. Too many folks retire when they don't really want to and find their life lacking. Work until you no longer want to.

Don't worry much about a marketable resume if you can be flexible in your work area. There are plenty of jobs and volunteer opportunities for older folks - but not always the job you currently have. And it's far easier to be flexible when you aren't dependent on a particular income level.

Whatever you do, make sure you are enjoying yourself.
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Old 08-26-2019, 12:27 PM   #14
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I thought that the pension was a lump sum... as such it would barely move the needle.

Oops, my bad. Well, it's better than nothing.


You can also reverse-annuitize your SS to see its equivalent value, if you wanted to buy an equivalent income on your own.
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Old 08-26-2019, 02:02 PM   #15
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I was in Sales my entire career and ER'd this Jan at age 55, primarily because like you - I was totally burned out. I also was convinced that it would be pretty much the same everywhere..so, instead of getting yet another job - decided it was time to hang things up and focus on living my life vs watching the weeks and years zoom by with little to show for all the 80+ hour weeks other than more pennies in the piggy bank. So, I empathize completely.

Not clear what you're looking to do, though. Can you "relax"? Sure - with that portfolio and expense level. You could retire TODAY and be just fine..but it sounds like you're continuing to work (hence no need to pull $$ from the portfolio) and want to work for the foreseeable future.

FWIW, our expenses are similar although we'd include a fairly nice vacation ($10-20K) and taxes in that number. If we also include HC, we're north of $100K annually. That's a lot to pay for, so my own approach is very heavy on dividend income and lighter on selling from the portfolio. Many will argue / debate that approach and advocate "total return" instead, but it's what I'm personally comfortable with..ESPECIALLY in this insane market we find ourselves in.

Like you, I stress big-time about the market's reactions to the "Tweet of the Day" and political nonsense from BOTH sides of the aisle. It seems like buy and hold is pretty much D-E-A-D, and the smart money is not just buying and selling day by day but minute by minute. (I realize this is sacrilege here and elsewhere - especially Bogleheads, but just voicing my opinion and observations). It's frustrating to see total return up only minimally since 1/1/2018, especially as I'm not yet entirely comfortable with the "de"cumulation part of things. (Like many, I'm just fine mentally when the kitty is increasing or staying pretty much level..but when it starts to drop by big chunks due to spending or market gyrations, it gives me serious stress).

Happy to help whatever way we can.
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Old 08-26-2019, 02:42 PM   #16
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All my calculations say I'm in solid financial shape but I can't change my mindset to relax and live in the moment more. I'll always want to work in some capacity but not always for maximum $'s and worrying about maintaining a marketable resume.

I also want to be able to leave some $'s to my kids later in life.

I struggle with the crazy gyrations in the stock market which are politically driven and not based on fundamentals. Ready to minimize my exposure as can't handle the volatility. Yes I'm more conservative in asset allocation of stocks/bonds but with a large portfolio a few % points is still a lot of $'s to me.
If you have at least 50% equities exposure in diversified ETFs/MFs, then yes, you're in solid financial shape. I see you as very safely FI, and ready to RE today. More than likely, if you take $90-110K/year (I bumped this up to account for health insurance), your porfolio will continue to grow over the next 30 years, and you'll be able to leave an inheritance in excess of $16M. Of course, the markets and economy could crash, but that's something even $4M, or $8M, can not completely insulate you from. My only recommendation is that you could consider some real estate in lieu of all bonds/equities. Diversification can make you safer, but real estate also includes risk.

If I were you, and I had no desire to up my annual spending, (or even if I did, to 3.5% WR), I'd take the plunge now. You can relax to the best of your ability. Best wishes!
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Old 08-28-2019, 06:21 PM   #17
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I would spend your time planning what you will do in retirement and that should be a pull factor. If you live to 85 then each year deferring it is a year less enjoying it.

My Dad worked until 65 and his wife (Mom) died of cancer that same month. He lived alone until 95! I vowed to retire early and I am convinced it extended my life.
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Old 08-29-2019, 08:53 AM   #18
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IMHO, the cautions are: health insurance and 8th grader, teen years can be challenging. I say this from immediate family situations, not my own. We don't have kids. Everything else is lined up.

Approx, $40K SS in 12 years (your wife SS included?) The lump sum pension helps (1 year spending).

You're successful in sales. That's a great asset. It means your personality has adjusted to many challenges. FIRE and relax, you can always make up for any shortfall in the future. Getting along with people can be difficult. )
My DB in sales and can make friends in a matter of minutes. He has so many connections with various people/businesses. Again, your personality is your asset. That goes a long way.
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Old 08-29-2019, 09:55 AM   #19
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In retirement, will your expenses be the same they are now? Will you want to splurge a little and travel more, eat out more, etc.? Have you looked into the cost of healthcare and how much that will increase your expenses? If you take 4% WR, which seems to be about the maximum recommended, that'll be about $155,000/yr - excluding the SS that will eventually kick in (assuming it is still solvent). It sounds like you are probably good to go, depending on how much you want to spend in retirement.

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If you are sure that your $90K expenses estimate is correct then I'd say relation is warranted. At that rate, with $4M in investible assets your WR is only 2.25% (not including SS). That's pretty bulletproof.

Good luck with your next step!
When he says expenses are $90k/yr, I'm assuming that means after-tax spending. The 2.25% WR of $90k/yr would result in significantly less than $90k for spending after the tax man gets his cut. I'd guesstimate he'd need to withdrawal around $120-130K to end up with $90k to spend, depending on how much of his taxable account are unrealized gains. $130K would be a 3.3% WR, which is still plenty doable though.
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Old 09-17-2019, 02:51 PM   #20
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I too worked in high stress good pay sales job till burned out and started effecting both mental and physical health and called it quits in October of 2012 at age 51 and DW followed in May of 2013.
Almost 7 years now and I experienced high anxiety over net worth still do to some extent but no where as much and did struggle in year three about what to do with my time. Our expense to liquidable asset ratios were somewhat similar. You are FI and can Fire if you like. I found over time the plan we set up does work granted have only had a couple short lived market corrections in my time frame thus far. Spent much time studying the markets and how to withdraw and manage most efficient tax methods and today our net is 30% higher than it was when retired. Daily gyrations sure they bother me but after studying market history have found it has always had some daily volatility. Some years more than others. The news is different most of the time but the numbers do the same thing. Our budget we created prior was pretty dead on target. Been working on income focus vs net worth building focus. It was difficult at first to withdraw from the savings at first because we were savers and it was not familiar to us to withdraw. So now I just say just grabbing some eggs the goose laid without carving the goose. Lots of eggs stored now. My time is spent doing things I found I enjoy by trying new things as well as helping older people and now enjoying my time. Jump if you want the water is nice! Enjoy!
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