desperate to retire

[haha]

That in itself is not enough to safely retire at your standard of living and at your age, because at this exact moment in time, stocks and bonds aren't generally producing much income (if at all),

I do not understand this comment. In fact, other than treasuries and MM's, both debt and equities are producing more cash income than they have for some years.

Ha

 

[F4mandolin]

I still have trouble even imagining having this much money and wondering if I could retire. I have another couple of years and plan on retiring on $40k a year and plan to be able to live very comfortably on that. Another $150k+ a year on top of that?? I would need to be buying a whole lot of "stuff" to even think about needing this much....downsize.....downsize...

 

[ziggy29]

I still have trouble even imagining having this much money and wondering if I could retire. I have another couple of years and plan on retiring on $40k a year and plan to be able to live very comfortably on that.

Sometimes it's easy to get sucked into "lifestyle creep." You could be living quite comfortably on (say) $50K with your lifestyle, then you get a couple of big raises and promotions and wind up at $75K. Suddenly -- and sometimes not even consciously -- you ratchet up discretionary spending to take your lifestyle to a new level, and then you look back and wonder how you ever made it with $50K...

Sometimes it's a matter of curing yourself of "affluenza."

 

[F4mandolin]

Actually....I have been living in a fantasy world for most of the last 20+ years. Just starting to try and wake myself up....pretty dang late. I think I had a little help in the fact that I grew up in a small 2 bedroom house in a small town in WA without a whole lot of money so I have always just kept my expenses fairly low. It is only in the last few years that my job as a teacher is bringing in decent money. The catch with this job is my housing/utilities are paid for me so I have no way of KNOWING FOR SURE how much it will cost when I move back to the Spokane area in a year or two. I have FINALLY made the effort to try and track all my little expenses....keeping track of ALL the things I buy, even the packs of candy.....sodas etc. I know I spend more than I think (estimate $1500 a year on just diet coke...nope, not kidding). For me, it still isn't the daily expenses that take my extra money.....it is the occasional "toys". Hadn't bought anything in over a year....just bought 2 new computers for about $1400, which isn't too bad, I am weening myself off the higher end toys. Thinking about trying bicycle racing this spring, and if I do...that new lighter weight bike (I ride a recumbent) will be sweet-talking to me...for a good $4K+.

 

[sofl mom]

Here is the thing. I had some peak earning years of making well in the 7 figures. I NEVER lived like I was making that. I had a goal to save and build our house on the water here in SoFl. I did that, paid cash for the dream house and the cars, etc. I still have alot of assets and no debt so I feel like I hadn't or haven't lived beyond my means. But those type of earnings come with many sacrfices in time, personal realationships and general life stress.

I have a hard time saying whether we are upper middle or upper. We don't fly around on a private jet. I have no car newer then 5 years old. We do have nice cars. We do have a beautiful home. But I didn't hire a designer or decorater. My couch is 10 years old. I don't have original art or masterpieces in the house. I have no pool boy or landscaper. I do have a cleaning lady once a week. I clip coupons and shop for food and clothes on sale. My son does go to private school. I do like to vacation nicely and we go on two week long trips per year. I had used miles for the airfare. So I feel like I have a mix of upper middle and upper. I don't usually worry about money and I like that. SO that I know is an upper class luxury. As I said, I grew up lower middle class.

My expenses are high for the house. So I think I need to make a decision about how long I am willing to keep those expenses versus retiring.

Maybe I should start thinking about the lower paying job and start transitioning to that. If I work and make anything and get benefits, it makes the math a whole lot easier. Or I'd like to send my DH back to work. I don't think that will happen.

I was looking at the bucket approach someone suggested on another thread. It is hard to make that work with current CD rates.

Keep your thoughts coming. I do appreciate them.

 

[FinanceDude]

Maybe I should start thinking about the lower paying job and start transitioning to that. If I work and make anything and get benefits, it makes the math a whole lot easier. Or I'd like to send my DH back to work. I don't think that will happen.

You can save some money, make DH the house cleaner........

 

[F4mandolin]

Even though it is a hassle, you might want to try doing what I have just started with the checking of all expenditures. I am 51, British wife that will get about $2000 a year pension if she is lucky. I am making about $60k now and her about $20k and we are saving about half of what we are taking in right now. Jeez...if I had only started doing this more seriously 10 years ago.....I am hoping to retire at 53-54...house paid for and probably around $500K in various places. Luckily I get the health insurance through the Govt which I can keep and will get about a $16k pension. But, I work with another teacher (single) who's salary has got to be at least $70K and she can't save any money. Turns out when I got more details....she just "small stuffs" herself to death. Doesn't do her own laundry, goes to London every chance she gets, she just leads that lifestyle. Nothing wrong with that.....but she doesn't save much. But, I am tired of doing what I am doing....I wouldn't be surprised if I have to do a little part time work for a couple of years until my SS supplement kicks in....but that is a tradeoff that I will probably go with. Or.....I can just keep working "one more year" so that the finances will be easier (and they would be)....year.....after year....

 

[Martha]

Here is the thing. I had some peak earning years of making well in the 7 figures. I NEVER lived like I was making that. I had a goal to save and build our house on the water here in SoFl. I did that, paid cash for the dream house and the cars, etc. I still have alot of assets and no debt so I feel like I hadn't or haven't lived beyond my means. But those type of earnings come with many sacrfices in time, personal realationships and general life stress.

I have a hard time saying whether we are upper middle or upper. We don't fly around on a private jet. I have no car newer then 5 years old. We do have nice cars. We do have a beautiful home. But I didn't hire a designer or decorater. My couch is 10 years old. I don't have original art or masterpieces in the house. I have no pool boy or landscaper. I do have a cleaning lady once a week. I clip coupons and shop for food and clothes on sale. My son does go to private school. I do like to vacation nicely and we go on two week long trips per year. I had used miles for the airfare. So I feel like I have a mix of upper middle and upper. I don't usually worry about money and I like that. SO that I know is an upper class luxury. As I said, I grew up lower middle class.

My expenses are high for the house. So I think I need to make a decision about how long I am willing to keep those expenses versus retiring.

Maybe I should start thinking about the lower paying job and start transitioning to that. If I work and make anything and get benefits, it makes the math a whole lot easier. Or I'd like to send my DH back to work. I don't think that will happen.

I was looking at the bucket approach someone suggested on another thread. It is hard to make that work with current CD rates.

Keep your thoughts coming. I do appreciate them.

Good lord woman, you are rich by most people's standards. Make a decision. Do you want to pay attention to how much money you have to be sure to not overspend? Or do you want to keep working so you don't have to think about it?

 

[Moemg]

Welcome ,
I also live in South Florida . You must be paying incredible insurance and property taxes if your house is valued at 5 million . So you need a hefty amount to keep the property plus the maintenance .

 

[FUEGO]

Could the $5 million house be downsized to a $2 million house nearby with similar amenities? Many areas of South Florida are hurting real estate wise, and you can get a pretty nice canal front home for under $500,000.

Even if you don't want to sell it today, you could always do so in the future. Otherwise, you might meet with failure at some point in your ER.

What type of work do you do that formerly earned you 7 figure salaries in the past, if you don't mind me asking?

 

[sofl mom]

I did a tear down - and reaped some homestead rewards for taxes. But they are still high. My insurance is not that bad as I did bunker style construction and found an insurance company that would take that in to account. Also, with no financing and decent assets, I can choose my own deductible. I picked a high one for wind as I am confident that the house will not blow away. Also, much of the $5 mm value is in the land, not the house. I do have excess flood insurance as I am more worried about that.

I ran my own business providing an obscure financial service to banks. I sold the business 2 years ago and had almost perfect timing in hindsight. Funny, just today I had two people call and ask if I wanted to do it again as they would like my services. So maybe I wouldn't be retired long any way. My non-compete just expired.

I took a job 3 months after the sale to keep income flowing and have found it hard to adapt. It is a unpleasant industry that I don't really like.

The whole answer comes down to the house. I wouldn't even need to sell it now. Just commit that I will sell it at some point in the future - if necessary. I just have to accept that if I want to retire. Hmmm... more thinking to do.

 

[Grep]

More and more people are telling you that:

1) You are rich. What are you suffering and waiting for? Retire already!
2) Your house is a staggering weight and also a huge asset that has to go at some point, almost regardless of whether you work or not. I'm sure it would hurt to say goodbye to it, but the freedom is worth it.

I'll add: looking at the ratio of your current income vs. your net worth, your salary is the equivalent of what a Wal-mart greeter would earn. That is, your $200k vs. your $10M is what $20k would mean to someone who has $1M (I'd argue that your 200k, never mind 50k, means even less - far less - given the reduced marginal utility of each additional dollar).

How many people would keep a hated job at either level who are financially independent and had any choice at all to downsize a bit instead? That's what most people do in retirement, early or not, after all.

Cheers.

 

[haha]

I did a tear down - and reaped some homestead rewards for taxes. But they are still high. My insurance is not that bad as I did bunker style construction and found an insurance company that would take that in to account. Also, with no financing and decent assets, I can choose my own deductible. I picked a high one for wind as I am confident that the house will not blow away. Also, much of the $5 mm value is in the land, not the house. I do have excess flood insurance as I am more worried about that.

I ran my own business providing an obscure financial service to banks. I sold the business 2 years ago and had almost perfect timing in hindsight. Funny, just today I had two people call and ask if I wanted to do it again as they would like my services. So maybe I wouldn't be retired long any way. My non-compete just expired.

I took a job 3 months after the sale to keep income flowing and have found it hard to adapt. It is a unpleasant industry that I don't really like.

The whole answer comes down to the house. I wouldn't even need to sell it now. Just commit that I will sell it at some point in the future - if necessary. I just have to accept that if I want to retire. Hmmm... more thinking to do.

It is not clear why you are here. If your story is accurate, you know more about money than 95% of us, and probably have more net worth than 99% of us. You seem to be in control of your marriage .

While you say you are desperate to retire, you nevertheless appear to be considering a new go at business. It would seem that you are overfunded for what most of us would consider a comfortable retirement.


Realistically, what could anyone here say that could make any difference to how you proceed?

Ha

 

[sofl mom]

When I was running the business, I was laser focused on it and it's success. I never thought about after. I never thought about investments outside of the business. (My DH runs our personal investments.) My business had nothing to do with generating income for retirement. That is where I have questions. I doubt I know more then 95% of you on this topic.

Someone mentioned earlier, that despite my assets it is "normal" to be afraid. Comments here are helping me through that thought process.

It is interesting that some have said I am rich and some have said I don't have enough to retire. I guess it is all a matter of perspective.

 

[ziggy29]

It is interesting that some have said I am rich and some have said I don't have enough to retire. I guess it is all a matter of perspective.

You have plenty to retire -- easily -- IF you're willing to make some lifestyle compromises and perhaps sell that house and downsize to something a lot cheaper. That provides you with capital to invest and generate an income stream, and it frees you from HUGE insurance and property tax bills.

If you two aren't willing to "downsize" your lifestyle and housing situation much (if at all) in the years to come, then it's not as much a slam-dunk.

But for me, if I really hated my job (as you seem to) and I had your assets, I'd be downsizing, quitting and living off of return on my investments so fast it would make your head spin.

 

[Moemg]

It is interesting that some have said I am rich and some have said I don't have enough to retire. I guess it is all a matter of perspective.

I think you are wealthy but are you wealthy enough to afford your current lifestyle . A house worth 5 million in Florida no matter how you rebuilt it would cost about $60,000 in property taxes since they redo the value when you do a tear down and no matter how big a deductible you have on your insurance we are talking another $10,000 and that is without flood insurance which is probably another $10,000 or more . How do I know this ? I live in Florida on the water and my house was constructed 10 years ago with all the hurricane upgrades and it is elevated so that slightly lowers my flood insurance . So almost half of yearly expenses would go to property taxes and insurance that leaves you with $100,000 a year for everything else . Only you know if that is enough !

 

[sofl mom]

You are not far off on the numbers. As I said, I am not living large outside of the house. I have about half of my $200,000 going to private school, house stuff and insurance.

Although I got a much better deal on the insurance.

 

[haha]

When I was running the business, I was laser focused on it and it's success. I never thought about after. I never thought about investments outside of the business. (My DH runs our personal investments.) My business had nothing to do with generating income for retirement. That is where I have questions. I doubt I know more then 95% of you on this topic.

Someone mentioned earlier, that despite my assets it is "normal" to be afraid. Comments here are helping me through that thought process.

It is interesting that some have said I am rich and some have said I don't have enough to retire. I guess it is all a matter of perspective.

Thanks for explaining.

Ha

 

[FUEGO]

sofl mom,

I think the reaction that you are getting is that you are rich in terms of assets, but over 1/2 your assets produce no income and are actually very expensive to maintain every year (taxes, insurance, maintenance, etc). If you reallocated a significant portion of your assets currently in your house to other productive asset classes, then in my opinion, you would be set to retire and do as you like.

It is really a personal choice that only you can make - work to support the house or ER in a less expensive house and do what you like with your free time. Or ER and hope everything goes ok in your present house.

 

[Donzo]

Saving is addictive - I had some concerns/problems with spending money when I first retired 6/06. As time goes on - it gets easier. What is all the saving for? Freedom. You only need "so" much money - you are there - congrats and start enjoying the fruit of your addiction!

 

[se012101]

Hi soflmom,
Welcome to the board! I am a newbie here too.

As others have said, it's seems to be all down to the house. You could argue that a person living in an less expensive house but with the same disposable income as a person living in a more expensive house enjoys more or less the same standard of living - if you define that more as the month to month freedoms the money affords you. But the person with the less expensive house needs less total income to produce that amount of disposable income, and meanwhile, having decided against the more expensive house, has more income producing assets generating that total income. Not to mention less worry about having to keep producing that large total income indefinately.

So to me, it's kind of:
x = difference in overall life enjoyment between living in current house vs a less expensive one.
y = difference in overall life enjoyment between working and not having to, and worrying more and worrying less.

If y>x, trade down in house at the soonest sensible opportunity and enjoy all that free time!

Best of luck!

 

[Rambler]

SoFL Mom, I wish I was in your shoes...no, wait, I am. Well except your numbers are bigger than mine. We (DW and I) would love to retire (she's a SAHM, I'm a mega-corp exec on expat assignment in asia). Our home was appraised at 1.4-1.6mm in 2006, but I'm betting it would barely fetch a mil now. If those assets were working for us, instead of us working for them (insurance, taxes, upkeep), we could pull the FIRE plug. But, we love the house a little more than we hate the job, so we have the "one more year" syndrome.

I think you could make it if you were willing to sell the house, and if you had a specific timeframe to do it. Right now, though, selling any house, let alone a 5mm house, is not an easy task. If I were you, I would probably hang on until the economy perks up a little bit. Let your assets come back a little (if they are down), get yourself educated about personal finances as they related to living off the return on your investments, and earn enough from your j*b while you have it to cover your expenses while you do the above. goo luck!

R

 

[honobob]

sofl mom With your $5,800,000 you could easily start a CD ladder averaging 5% and withdraw $326,000 a year for the next 45 years. You wouldn't be worrying about "where'd my money go" like recent experience. You should also keep the house. You have more than enough money to maintain it and at a very conservative annual compounded appreciation rate of 6% for water front property you'd be looking at a value of about $69,000,000 in 45 years. That should cover any LTC issues and still leave a nice estate.

Like you I've been more concerned about financial independence than retiring early. Now that I'm looking at the retirement part it helps me to look at my assets and try to figure out how I'm going to spend down. Not that I couldn't frivolously spend 10 times more than I have but that's just not me. I do plan to enjoy a better lifestyle than I have over my working years because I can.

So after taxes on $326,000 how would spend the rest each and every year over the next 45?

 

[CaseInPoint]

I do not understand this comment. In fact, other than treasuries and MM's, both debt and equities are producing more cash income than they have for some years.

Ha

Hi Ha,

That's an amazing accomplishment in this economic climate. Good for you!

My stocks and bonds, on the other hand, are down pretty much like the Dow -- more than 30%. So are those owned by just about everyone else I know.

The whole answer comes down to the house. I wouldn't even need to sell it now. Just commit that I will sell it at some point in the future - if necessary. I just have to accept that if I want to retire. Hmmm... more thinking to do.

Exactly. One thing's for sure -- You can safely quit the job that you don't like right now. You can give them 2 weeks notice, then say adios amigos.

You can then take some time off and figure out something you love doing. Maybe by then, your investments will bounce back and yield enough to retire permanently, if you so choose.

sofl mom With your $5,800,000 you could easily start a CD ladder averaging 5% and withdraw $326,000 a year for the next 45 years.

Just out of curiosity, where are you seeing 5% (or more) for CDs?

 

[haha]

Hi Ha,

That's an amazing accomplishment in this economic climate. Good for you!

My stocks and bonds, on the other hand, are down pretty much like the Dow -- more than 30%. So are those owned by just about everyone else I know.

I think there is a misunderstanding. My stocks are down too. That is why they are now offering more cash income than they have in many years.

Remember the inverse relationship between price and yield, given that dividend is held constant?

There seems to be a confusion between what stocks have done in the recent past, and what they offer at going forward.

Two very different things.

Ha