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Old 01-30-2009, 02:48 PM   #41
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Originally Posted by sofl mom View Post

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 !
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Old 01-30-2009, 02:58 PM   #42
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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.
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Old 01-30-2009, 03:51 PM   #43
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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
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Old 01-30-2009, 05:54 PM   #44
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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.
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Old 01-30-2009, 06:03 PM   #45
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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!
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Old 01-30-2009, 11:23 PM   #46
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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!
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Old 01-31-2009, 06:43 AM   #47
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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
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Old 01-31-2009, 11:34 AM   #48
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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?
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Old 01-31-2009, 11:22 PM   #49
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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.

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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.

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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?
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Old 02-01-2009, 02:22 AM   #50
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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
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