DRiP Guy checking in

[DRiP Guy]

Hi to all!

I am recently pondering the ideas and information around FI/RE, and am learning a lot by reading the forums.

I am in my mid forties, single, and have been socking away part of my salary into a 401(k) and also buying individual Dividend Reinvestment Plan (DRiP, hence DRiP Guy)stocks since the nineties.

I have been 100% allocated in stocks either directly held through DRiP or company stock, and in a single midcap fund in the 401(k). That won't do for risk management going forward. So, with a sniffle and a hearty virtual "Thank You" for the returns they earned, I recently sold all the company stock and DRiPs, moving the proceeds to a Money Market for now, and also reallocated my 401(k) to an allocation of:
35% Midcap, RPMGX
35% Large, TRBCX
10% International, FDIVX
20% bond fund, FAGIX

I'm sure I have some other financial housekeeping to do, but it's a start. I have a 29K balance on my 300K house, and no other debt. Quicken seems to stubbornly insist that my NW is well north of 800K, but you wouldn't know it by my lifestyle - very low impact.

My slow assembly of information regarding FI/RE is starting to leave me with the now-tantalizing idea that I might not have to wait 'til 67 as the government would have me do... I might not have to wait 'til 65 as tradition would have it, nor 59 1/2 as some feel for standard 401 (k) distributions, nor even 54 which was my own prior goal to quit work, and begin taking 72(t) distributions, but that it could actually be... well, very shortly!

Anyway, I might not post too much, but I appreciate the chance to look in and see what others have to say.

 

[wabmester]

Welcome to the board, DRiP!

Love your work over at the h*c*mania asylum!

Have you already run your numbers through FIREcalc?

 

[DRiP Guy]

Welcome to the board, DRiP!

Love your work over at the h*c*mania asylum!

Have you already run your numbers through FIREcalc?

I sure did. I know that it is just a single tool, but it is giving me a feel for how different factors can vary my plan outcome. I plugged in a pretty frugal annual draw, assumed zero SS, but also underestimated my NW (I intend to sell my house prior to FIREing and buy a smaller one where I relocate, but market here is getting a bit softer after being hot...)

The key result: a 94.3% Success Rate

To me, the most valuable thing to look at was the 'bookend' outcomes - could have as much as $4 million extra, or a shortfall of 300K, but looking at the probabilities of outcomes in between is pretty easy with the graph provided, and can play with what happens with more saved at the beginning, or different drawdown rates...

 

[DRiP Guy]

Hi to all!

Hey! I was semi-randomly putzing around the forum today, and ran across this post from when I first came on the board. So, I am going to make a bit like Bill and Ted did in their "Big Adventure", and have 'old DriP Guy' conversation with 'new DRiP Guy'....

I am recently pondering the ideas and information around FI/RE, and am learning a lot by reading the forums.

Excellent, Drip Dude! I'll bet within seven months, say by around June 1, 2007, you will be doing more than just thinking -- you will committed to making it happen! But, I'll bet you will still be learnin' by reading!

I am in my mid forties, single, and have been socking away part of my salary into a 401(k)...

Whoa! Dude! me too!

...and also buying individual Dividend Reinvestment Plan (DRiP, hence DRiP Guy) stocks since the nineties.

Not doin' that! Except for a single rebalancing, I am at the AA I was at the end of this post.

I have been 100% allocated in stocks either directly held through DRiP or company stock, and in a single midcap fund in the 401(k). That won't do for risk management going forward.

Whew! Too many eggs in too few baskets then! I was pretty fortunate it worked out.

...reallocated my 401(k) to
35% Midcap, RPMGX
35% Large, TRBCX
10% International, FDIVX
20% bond fund, FAGIX

...and there I stay!

I'm sure I have some other financial housekeeping to do, but it's a start. I have a 29K balance on my 300K house, and no other debt.

House now paid off, and that valuation must have been at the top of the bubble, an honest current valuation probably more like 280, now.

Quicken seems to stubbornly insist that my NW is well north of 800K, but you wouldn't know it by my lifestyle - very low impact.

If anything, my lifestyle has gotten *more* frugal while trying out the spending rate I expect in RE. No problems though, and if I move, those dollars will go even further. NW has gone up another 100K through miracle of compounding, putting bonus straight into 401(k) and that mortgage payment and other debt not being there.

...might not have to wait 'til 67 ... 65 ... nor 59 1/2... nor even 54... could actually be... well, very shortly!

I don't know a lot about aircraft but I know they have two parameters that are vital to the pilots as they go down the runway, V1 and V2 -- I think V1 means 'if things go bad, I will jam on the brakes and not take off at all" and V2 means: "If things get crazy, I can still take off anyway, and then figure out what best to do next..."[/quote]

I am certainly past V1, and I think I am also at or slightly past V2.

Anyway, I might not post too much, but I appreciate the chance to look in and see what others have to say.

Okay, that was an outright lie in retrospect. I'm a motormouth.

Anyway, time to get back, strange things are afoot down at the Circle K....

 

[tricky88]

Ha! I like that you came back to your intro thread. Maybe in 5 years I'll do the same. Your original post wasn't that long ago, but I'm curious if there is anything else that you learned or assumptions you had made that you've had to revise since then.

I'm in my mid-30s and getting very frustrated with my current job. If I change I know it will impact the strong savings rate we've been enjoying, and the cars are getting closer to death, which means I'm going to have to lay out a big chunk of cash to replace (at least) one of those as well.

 

[DRiP Guy]

Ha! I like that you came back to your intro thread. Maybe in 5 years I'll do the same.

heh heh Well, being the motormouth that I am, when I saw these articles:

“Retired by 50: What it really takes”
Retired by 50: What it really takes - MSN Money

"Retired by 50: Real-life stories"
Retired by 50: Earning independence - MSN Money

“Retired by 50: Where they are now”
Retired by 50: Where are they now? - MSN Money

I thought I might come back for an update, to follow in next post, even though it has only been around a year and a half since the last one.

Unless it gets too tiresome for anyone, perhaps I will come back every 18 months to two years with another update.

Unlike those outlined in the Liz Weston article, (see last link, which is a recent update on their unhappy status) I think I was relatively 'financially independent' before taking my own 'early retirement' and not relying on income through a part time job to make my plan work. IMHO, that factor is the single biggest cause that I see of early retirement plan failure -- insufficient funds without relying on outside source of income (relying on a big home sale, an inheritance, book authoring income, woodworking business somehow becoming wildly successful, etc). Call me old school.

 

[Bestwifeever]

Not tiresome, good idea, can't wait to see how you came through the last twelve months financially.

 

[DRiP Guy]

Except for a single rebalancing, I am at the AA I was at the end of this post.

Well, that has now changed substantially. I had some separate International, and separate company stock, and some other odds and ends even though I had simplified greatly from my 100% stock and DRiP investing days, to a Stock/bond allocation around 80/20. Now, I am both about as simplified as I think I can get, and also at a more conservative risk stance, geared more to preservation than to growth, but still supporting about a 4% SWR from my investable assets. Current allocation:

VTENX - (Target Retirement 2010, ~52% stock, 48% bonds) = 46% of NW
Cash - (CDs, MM, checking) = 29% NW
Fixed assets (Paid for home, paid for new car, antique cars, etc) = 25% NW
Debt = 0

House now paid off... an honest current valuation probably more like 280, now.

Wow, hard to believe my home was at the peak shown @ $330K by Zillow. I use the current Zillow value in my NW calcuations, and that is now down to 190K, although I think the Zillow estimate was way high at the peak, and that the current estimate is a bit low.

If anything, my lifestyle has gotten *more* frugal... NW has gone up another 100K through miracle of compounding, putting bonus straight into 401(k) and that mortgage payment and other debt not being there.

NW has gone up another 100K, to just over $1 MM, but I am now not working, and not contributing to 401(k) or other savings with any new money.

"If things get crazy, I can still take off anyway, and then figure out what best to do next..."

Still holds.

AS the man said when he jumped from the 40th floor, when he passed the 20th floor: "So far, so good!"

 

[Martha]

Hey DG. I caught the update on *****. If he has to go work it is going t be tough for him to find a job I would think. Out of the game for years and a crappy economy.

 

[DRiP Guy]

Not tiresome, good idea, can't wait to see how you came through the last twelve months financially.

I thank my lucky stars to have weathered a 30% decrease in home value, PLUS a (temporary) drop in the market of my portfolio of ~30%, yet with the market turn around, and the final year of adding to my 401(k) and cash savings, I managed to maintain a pretty steady rate of growth, to my final goal of > $1MM in NW at early retirement, with ~75% of that being investable assets, placed in a 50/50 or thereabouts overall AA.

This chart shows my investable asset (stocks, bonds, cash) over recent tumult. Note that it is about 50-60K short of my true amount, since it does not include separate corporate stock grants and options that I have in a stand alone account, that will be maturing over the next several years.

 

[DRiP Guy]

Hey DG. I caught the update on *****. If he has to go work it is going t be tough for him to find a job I would think. Out of the game for years and a crappy economy.

Yup, not to add salt to his wounds, but if the wheels fall off of both the general economy and my own plan tomorrow, say we go to economic meltdown part deux, I think I could fall back as well as anyone:

* I've kept my professional ratings and continuing education current

*I maintain my membership in several professional organizations that keep me abreast of trends and 'networking' if I ever do need (want?) to go back to work

*I've gotten a broad skill set over the past decades, so that while I would probably start looking at the top, in exec management, I could also look as line manager, individual contributor engineer, or even as a technologist/ repairman of high tech gear, or use my automotive/mechanical skills to repair autos/appliances. Again, I keep certifications/currency in both technical and admin domains so that even in as bad a market as we currently have, hopefully if I was willing to relocate, I could get back in the workforce at a reasonable rate.

* No wife, or passel of young kids to fend for.

Sadly, I'm not sure any of that applies to ******.

 

[CuppaJoe]

Um, hello. What do you do all day?

 

[DRiP Guy]

Um, hello. What do you do all day?

I see your smiley, but I'll answer for those reading anyway -- I suspect you already know!

So far, I have enough interests in my guns, cars, house, internet, relationship with GF and her extended family, including doing 'honey do's" for them, catching up on DVDs, reading, and just generally relaxing that I have not had to worry about 'filling up' any open time. In fact, I wonder how I ever had time to work with all the things the house needs -- of course, what really happened is that for twenty years of working while living in my house, I've let some things go, that now I can catch up on.

The weather in South Florida is too hot to really enjoy fully (to me) during the summer, but I still managed to go out to the beach for a walk most mornings, for the first few months of being out of work. That fell off recently, but with the more temperate weather, I may resume it.

One of the things I thought I would do right away, but it hasn't happened yet, was an extended 'road trip' across the country just moseying along at whatever pace appeals to me. I have always enjoyed both driving and riding motorcycles, and usually I took a week or two per year to go somewhere, so this really appeals to me. The reason I haven't is that there is a lot going on in my GF's sphere right now -- young grandchild at home, one kid graduating from trade school and planning a wedding, getting another into the workforce and ready to finally leave home... so, probably after the holidays and the New Year, that will be a good time for me to take a southern trip, weather cooperating.

After that, another trip I want to make is up to Ft Collins to spend at least two or three weeks to get the feel of whether that would be a good long term retirement location.

Mostly, I am just feeling better having 'dropped the yoke' after so many years of answering the bell for someone else. I think it may take me a while to get used to that, but every day I thank goodness that I am where I am.

If I ever get to where I do feel I am wasting away or bored, I don't have an 'official' bucket list, but there are at least two interests I had when I was younger that I would probably explore again -- learning to fly and competitive racquetball.

 

[CuppaJoe]

Thanks for the update, DRiP Guy, I really didn't know. I joined here after your last post on this thread. I've seen you at another financial site but didn't know your RE story. Hope you can find time to keep us posted.

 

[Milton]

Unless it gets too tiresome for anyone, perhaps I will come back every 18 months to two years with another update.

Sure, please do.

Unlike those outlined in the Liz Weston article, (see last link, which is a recent update on their unhappy status) I think I was relatively 'financially independent' before taking my own 'early retirement' and not relying on income through a part time job to make my plan work. IMHO, that factor is the single biggest cause that I see of early retirement plan failure -- insufficient funds without relying on outside source of income (relying on a big home sale, an inheritance, book authoring income, woodworking business somehow becoming wildly successful, etc). Call me old school.

I agree.

 

[DRiP Guy]

Thanks for the update, DRiP Guy, I really didn't know. I joined here after your last post on this thread. I've seen you at another financial site but didn't know your RE story. Hope you can find time to keep us posted.

Glad to.

MY GF must have somehow snuck a peek at my last post -- this weekend I was asked to bring my gas powered pressure washer over, and we pressure washed all of her walks. They really needed it, and it is kind of fun, so did not mind. Of course, since I have a truck, I also was elected to go out on Saturday to pick up some furniture she got for free on Craigslist. She has become quite the Craigslist detective in the last months. She has picked up some really good finds, for free or next to free that really fit well in her place, but now I am worried about whether she is going to stop, or start filling up the garage!


In any event, once the family got wind of the fact I have time during the day, and a truck, my popularity has soared!

 

[Nords]

She has become quite the Craigslist detective in the last months. She has picked up some really good finds, for free or next to free that really fit well in her place, but now I am worried about whether she is going to stop, or start filling up the garage!

Nah, she'll "upgrade" everything in the house by bringing home new finds every week or so and selling off the old.

I don't want to get into how I learned that. But as long as you own a truck, you won't be able to escape...

 

[DRiP Guy]

I thank my lucky stars to have weathered a 30% decrease in home value, PLUS a (temporary) drop in the market of my portfolio of ~30%, yet with the market turn around, and the final year of adding to my 401(k) and cash savings, I managed to maintain a pretty steady rate of growth, to my final goal of > $1MM in NW at early retirement, with ~75% of that being investable assets, placed in a 50/50 or thereabouts overall AA.

This chart shows my investable asset (stocks, bonds, cash) over recent tumult. Note that it is about 50-60K short of my true amount, since it does not include separate corporate stock grants and options that I have in a stand alone account, that will be maturing over the next several years.

Well, since I posted today, might as well update this thing, since it was almost exactly a year ago that I last updated.

I said I was looking forward to my corp options 'kicking in.' No such luck. Due to a very atypical, but deep corporate stock price reversal, this year's (and maybe several years) expiring options are underwater... useless.

So 'stay the course' means I took a lump or two but then benefited from the upticks, also. In all, with virtually zero in the way of income/additions outside of investment earnings, it looks like I still got the growth I had hoped for. And, instead of a 4% WR, I think my actual WR has been substantially less over the last 18 months or so... not due to purposeful frugality, just being more of a homebody. Outside of a 'double-dip' recession, I think things are fine, and even then... my horizon is long.

* Chart has one more year of data...
* Changed scale to accommodate new balance.

 

[RockMonkey]

This is only my second post on this board. I just want to thank you for this thread, it's probably one of the most enlightening threads I've read on here. I've been reading for months, but not posting.

 

[walkinwood]

This is my 909th post & I too want to thank you for the thread. I benefited from reading this whole thread. It is great to see the progression of your plans. Thanks for sharing.

 

[DRiP Guy]

Wow, I appreciate the feedback that I am possibly doing more than documenting my own history for myself to look back on -- that someone out there is actually taking some value from it!

One thing I will note for those just in the middle of their accumulation, or getting started, is that as Bogle (I think) said: "Invest we must..."

I am going to post two charts here in a minute -- one showing how my Investable assets just snapped higher by a startling fifteen thousand dollars in just two weeks (compare black line of last post to black line on this post. Yet taken as a percentage, or in the context of various other jiggles and jaggles I have experienced... well, it's just a ho hum month... as it will be if I lose 12K next month... weird, huh?

It was stomach tightening to see those various 'big' drops in NW, as we have gone through hard times, but I really did believe 'stay the course' would work. Oddly, the speed of the recoveries have been just as surprising to me as the onset of the dips were (look at chart with blue line):
NOTE: My chart year tick marks are anchored in Dec, not in Jan as is convention, because my first data was Dec 1991 -- so that shifts where the actual year is, from what you are likely used to:
1997 early
1998 midyear
2001 9/11 spike
2002 Q2-Q3 sag
2004 midyear
2006 midyear
2008 Q4 2008

Any of those dips might have been enough to scare me out of staying the course, had I been wired with a hair trigger. Fortunately, my investments were on autopilot, and I never dared do anything except annual re-balancing, or to re-allocate when I lost my job to be a bit more conservative -- exactly as I said I would do in that contingency per my prewritten investment plan. That means I was there for the (usually) rapid, but difficult to anticipate recoveries.

Anyway, best wishes to all reading this, regardless of your specific investment choices!

 

[mnopqr]

I've also enjoyed following your story. Thanks for the updates.

 

[OrcasIslandBound]

Hello DRiP Guy,

I admire your gumption and style to go ahead and retire, and, apparently, to make it work. I see that the balance on the Investable Assets has continued to increase, despite the fact that you are now consuming at least the dividends.

I'll try to follow your lead and start posting my own plans, as I'm almost 53 and plan to retire on my 56th birthday in Jan, 2014. I like the fact that you come back periodically and keep us up to date. Thanks

 

[DRiP Guy]

Hello DRiP Guy,

I admire your gumption and style to go ahead and retire, and, apparently, to make it work. I see that the balance on the Investable Assets has continued to increase, despite the fact that you are now consuming at least the dividends.

I'll try to follow your lead and start posting my own plans, as I'm almost 53 and plan to retire on my 56th birthday in Jan, 2014. I like the fact that you come back periodically and keep us up to date. Thanks

Thanks, I will indeed keep things updated at significant junctures, and I'd encourage you to share as well: the comments, advice, and criticism I've gotten both here and at Bogleheads has been terrific.

One aspect that I am not sure I gave sufficient credit to, that provided me a definite 'tailwind', was a series of stock options, vesting from between 2007 through 2011. Some of them nearly expired worthless, but in the end all of them were eventually sold for at least some gain. I think the minimum for each of those 4 years so far was ~$5,000 net realized income, and the max was perhaps $15,000. The last of the options will probably be sold before 2012, so I would guess I still have somewhere between zero and another $5 to 10K to be realized from this source. I only point it out to be sure not to mislead anyone -- just like when I hope I previously made clear that I did not (and don't see any need to) segregate my market returns from new monies I put in from payroll savings in growing that nest egg.

Finally, over the years, I've used a spreadsheet, then Quicken, then a spreadsheet again, then Mint to help me visualize and track my progress. The spreadsheet still lets me be the most flexible, but as a free tool, I think Mint is great to get a quick snapshot -- here, the "investments" (includes stock, options, IRA) get added to the "cash" (includes checking, saving, MM, CDs) to total up what I consider my 'investable assets.' The credit card balance is atypical (Christmas splurging!) and will be paid off in full shortly - that is a habit I have kept to for a decade or more.

 

[DRiP Guy]

Final post

Hello! It’s now closing on 10 full years since I started this thread. I wanted to do one final update to this thread, for two reasons:


One, as a close-out to the ‘story’ for anyone who read the thread. I feel it’s far enough along the journey now to serve it’s purpose as just one story among many, so far a success, but no guarantees for me or for anyone, of course. If a meteor strikes, or world financial meltdown occurs, I’ll be scrambling for scrap beer cans and shooting rats with a slingshot, just like the rest of you will be. Short of cataclysm though, I feel pretty solid.


Two, as a synopsis/case-study for a very important person in my life, who just recently is starting to gather up their own affairs and head into the retirement phase of life. Easier for them to read it as it happened, than have me explain it verbally like a war story.


So onward we trek…..


* I said I would sell my ~$250K house and buy one for about $100K, in a cheaper and more ‘livable’ area. Mission accomplished.


* Still living the frugal life. I am able to do what I like, when I like, but my tastes are simple. Initial WR after stopping work at ~47.5 y.o. was probably 4%, but over time has tapered to about 2.5% just through less expenses, and not doing too many things that cost a lot of money. The last year is probably back to 4%, due to moving expenses, and doing a bit more spending to equip the new place. Tax bracket is still low enough.


* NW is a bit less than where we left it at last update at the end of 2010, but not significantly. Still over the magic mark we love to see, but that means nothing in and of itself. I already expounded on how in percentage terms the ups and downs are not too bad, but if you ever take the time to look at absolute dollar value as the market gyrates, you can tie yourself into knots. So I don’t. As Bogle, and later his students have famously said: “I don’t know and I don’t care.”
I don't know and I don't care - Aug. 29, 2001


* Allocation is now roughly 60/40, stock to bonds, cash & cash equivalents. I do subscribe to the theory that you need a goodly amount of those stocks to keep your portfolio earnings up, and anyone who has looked at fixed income would probably agree. (Except h**** of course!) As to any increased risk, I’m still well within my own comfort zone. Although….


* I did start a 72(t) at age 54.5. I did this just because I felt more comfortable pulling some from the stock portion rather than using my on-hand cash reserves exclusively. By drawing from 401(k) now, and with CD rates now so low, those factors will be ‘pulling’ my portfolio to spin off less return, unless the market makes up for it. I think it’s all okay, as long as the trajectory always leaves me ample income until I pass. Since we don’t know what the markets will do, or when our own number will be up, there is no 100% guarantee; but as the years and decades progress, I’ll check my balances from time to time to avoid surprises. I did not count Social Security into my retirement planning, but it is always there as a backstop once I’m old enough.


*Well, that’s about it financially. I wish all of you a good ride, and will be signing off, and enjoying the retired life some more.