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Close to ER in flyover country
Old 02-10-2013, 08:54 AM   #1
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Close to ER in flyover country

Greetings! Iíve been lurking here religiously for the past two years and it is liberating to finally make my first post. I canít express how grateful I am to this community. This forum has literally changed my life

I was raised in a LBYM environment and had the great fortune to marry my incredible DW whose support and LBYM attitude has made ER an attainable goal. Fortune has (quite undeservedly) also smiled on me throughout my career. I was involved with two successful businesses early in my career and proceeds from those businesses gave our family a solid jumpstart toward ER.

DW and I are in our late thirties and plan to pull the ER trigger when I hit forty. I am a firm believer of retiring to something as opposed to simply retiring from something. Although I intend to run some technical side projects for fun (and to keep my skills up-to-date in case of a financial emergency), my primary focus post-retirement will be home schooling our DD. I have always enjoyed teaching and consider it a true privilege to have the financial freedom to spend time teaching my daughter. Hopefully she will feel the same way

I owe a great debt to a former financial advisor who taught me an important lesson of investing: ďFinancial advisors do not share your agenda and goals even if they work for you.Ē Roughly ten years ago, I handed my portfolio over to my advisor and assumed that he would have my portfolioís best interest at heart. Wow, I was naÔve. It was a hard lesson to learn (2% fees for the privilege of sub-market performance!?!?) but after a few years I finally came to the conclusion that I needed to learn to handle my own finances. Thinking about all of those wasted fees is easier when I try to think of them as tuition for a financial school of hard knocksÖ

My investment philosophy is pretty straightforward and will be familiar to many people on the forum. Iím an indexer who rebalances when my AA gets outside of a 5% band. My current portfolio is (roughly) as shown below. Iíll switch out the VMIUX tax exempt bonds for TBM once I retire and drop to a lower tax bracket. Roughly 10% of the portfolio is in tax-deferred accounts with the remaining 90% in taxable accounts.
  • 55% equities (VTSAX, VTIAX, VGSLX)
  • 35% bonds (VWIUX, VFSUX, VAIPX, I-bonds)
  • 10% cash (MM, long-term CDs)

Other data points:
  • No debt
  • No pension
  • Emergency fund with 6 months living expenses
  • I have tracked every penny in Quicken for over 3 years and know our budget well
  • Expected budget will use 2.6% WR (includes moderate budget cushion)
  • I'm planning for an indefinite retirement (55+ years, maybe more with medical advances!)
  • Plan doesnít rely on SS, but SS at 70 would be a nice bonus
  • DDís 529 plan is (relatively) well funded and is not included in my portfolio figures
  • Plan B: If the market isnít co-operative, I may ladder small SPIAs to bump up my WR
  • Plan C: If the market completely tanks for the first several years of retirement, I may go back to w*rk while my skills and social network are still current
  • I survived 2008 without panicking (at least outwardly) and I followed my plan and rebalanced into equities so hopefully Iíll have the fortitude to handle future crashes too. Of course, Iím sure things will feel different once I no longer have a paycheck arriving every two weeksÖ

My main concerns are:
  • Medical: I've run all the online health care cost calculators and it looks like we should be fine. However, there is still a lot of uncertainty around the ACA and I'll feel a lot better (or worse!) once we see actual costs of bronze and silver plans instead of relying on estimates.
  • Mental & emotional adjustment: I think that I'm ready to leave the grind and focus on my own interests and DD's schooling. I've always been self-motivated and I don't see that changing in the future. However, I still see this as a risk that I'll need to monitor -- especially once the novelty of leaving work fades. Or does it fade?
  • LTC for parents / in-laws: Neither my parents nor my in-laws have long-term care insurance. My plan has a buffer that would allow us to help out with some of that, but we may be in trouble if all four needed care concurrently.

So, thatís me. I welcome any advice or comments on my plan and I look forward to interacting with all of you on the boards!

Fean
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Old 02-10-2013, 09:00 AM   #2
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Welcome, Fean. Have you entered your numbers in Firecalc ?
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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Old 02-10-2013, 09:04 AM   #3
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Welcome! It sounds like you're in great shape, congrats!
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Old 02-10-2013, 09:09 AM   #4
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Welcome and congratulations on a well thought out plan and achieving a long term goal ! There will always be risks we can't account for in our retirement plans - one just has to hope that the puts and takes average out in the long run.
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ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
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Old 02-10-2013, 09:46 AM   #5
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Originally Posted by obgyn65 View Post
Welcome, Fean. Have you entered your numbers in Firecalc ?
Firecalc reports 100% success even when I increase my projected expenses by another 45%. I don't expect the future to be quite as rosy as the last century, but I think that the buffer is enough to let me sleep at night. It also gives us some wiggle room for unexpected expenses and/or LTC for parents or in-laws.

-Fean
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Old 02-10-2013, 10:10 AM   #6
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Quote:
Originally Posted by Fean View Post
  • Mental & emotional adjustment: I think that I'm ready to leave the grind and focus on my own interests and DD's schooling. I've always been self-motivated and I don't see that changing in the future. However, I still see this as a risk that I'll need to monitor -- especially once the novelty of leaving work fades. Or does it fade?
Welcome into the light, it's a great community here.

I won't add to the $ aspects because:
  • $ is the simple but not easy part.
  • There are hundreds of books & articles on $ and a whole industry to "help" as you well know.
  • Your $ plans look solid, sensible and well thought out.

The mental/emotional adjustment of leaving an active, rewarding career were the last obstacle for me. What helped me leave with no anxiety:
  • Doing the Get-A-Life Tree exercise in the book How to Retire Happy, Wild & Free by E Zelinski. Though not great writing, the content of the book was helpful to me, the whole book is mostly about the non-$ aspects of retiring, far fewer books written on those aspects. But if nothing else, check it out from a library and do the one exercise. It took me about 15 minutes, though I revisited and added to the results a few minutes here and there. I was amazed at all the things that might interest me in retirement once I really thought about it, about 50 activities! After 19 months retired, I haven't needed list - but I might one day, and it reassured me before I pulled the plug.
  • I consciously forced myself to join groups, against my nature. I don't over think those opportunities, I just join anything that might be of interest. Sitting home wondering 'what if I don't like it' is a waste of time IMO, just try it and find out. What's the saying, 'half of life is just showing up.' If I like the group, great. If I don't or tire of the group, I just stop showing up. Even if the group doesn't appeal to me, I might meet someone that leads to something else.
  • And I haven't ruled out an encore career. I was definitely tired of my first career, and fortunately FI, but if I get bored with retirement I can go back to work full time, part time, seasonal, whatever. I wouldn't have to find a career in a high paying field anymore. So knowing that I could go back to work at a second, very different career without worrying about $, was mildly liberating.
Best of luck, your concerns are very common and understandable, and again you're well prepared when your stars align. And I'm in flyover country too...
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Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 02-10-2013, 10:53 AM   #7
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Quote:
Originally Posted by Midpack View Post
The mental/emotional adjustment of leaving an active, rewarding career were the last obstacle for me. What helped me leave with no anxiety:
  • Doing the Get-A-Life Tree exercise in the book How to Retire Happy, Wild & Free by E Zelinski. Though not great writing, the content of the book was helpful to me, the whole book is mostly about the non-$ aspects of retiring, far fewer books written on those aspects. But if nothing else, check it out from a library and do the one exercise. It took me about 15 minutes, though I revisited and added to the results a few minutes here and there. I was amazed at all the things that might interest me in retirement once I really thought about it, about 50 activities! After 19 months retired, I haven't needed list - but I might one day, and it reassured me before I pulled the plug.
Thanks for the book recommendation. I'll definitely grab a copy. I already have a spreadsheet with a prioritized list of over 30 topics, activities, and skills that I'd like to pursue in retirement so the exercise you mention sounds very interesting to me.

-Fean
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Old 02-10-2013, 11:27 AM   #8
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Quote:
Originally Posted by Fean View Post
Thanks for the book recommendation. I'll definitely grab a copy. I already have a spreadsheet with a prioritized list of over 30 topics, activities, and skills that I'd like to pursue in retirement so the exercise you mention sounds very interesting to me.

-Fean
After reading your first post, I might have guessed you'd be one step ahead on the non-$ aspects of retirement. Sounds like the Get-A-Life exercise may be redundant.

You're going to do fine whatever you decide, you're far better prepared than most IMO. Best...
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Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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