ER in 2017 for Expats Heading Home

[Lucantes]

Have been reading (lurking?) on this site for quite some time but finally decided to post and get some feedback from the fantastic contributors.
Here is my basic data:
DINK's who are both 46 and currently working overseas with a target early retirement at age 50 in the 3Q of 2017 and a combined income of ~$300K/yr.
We currently have a total net worth of ~$2.5M which includes a house in FL worth ~$730K (no mortgage) which we will retire to and live in, another undeveloped property which will be sold near retirement worth ~$200K, a 401K currently at ~$675K, Lump Sum Pension currently at ~$455K and other cash and investments currently at ~$450K. We do not have any debt and there are no plans to have any ever again.
I have computed our required ER detailed budget to be $84K/yr. which includes everything I can think of (excluding taxes which I do not know) and provides us significant discretionary money in the budget for extra fun and possible downturns.
I currently predict that we should have the following available at actual ER in 3Q 2017:
~$1.385M in taxable cash and investments for us to use from age 50 to age 60.
~$1.953M in the 401K and Lump Sum Pension which will be used from age 60 onwards (will remain invested at Vanguard and grow untouched from 2017 to 2027).
Thanks for reading and I would be very interested in any constructive comments and thoughts regarding where we are, and where you think we would be in the long run.

[wingfooted]

Your net worth is now $1.5MM subtracting out the house in Florida, you expect to increase that to $3.3MM in the next 4 years via savings and investment gain.


That sounds like an aggressive savings plan but maybe doable as expenses overseas can be low and with the tax advantages. I assume you are heavily weighted in equities.


How well are you setup stateside for returning 'home'. I know that many expats have minimal property stateside and everything is concentrated in savings / brokerage accounts. You have the house in Florida -what about cars, furniture, boats, RV's and all the usual trappings most couples manage to accumulate ? Will this be an additional expense when you repatriate ?

If repatriation expenses are relatively low, and you manage to meet your savings goals, and the market doesn't crash in the meanwhile, you look to be in good shape to retire with $3.3MM plus the fully paid house. I know it has involved personal sacrifice to get to this point, many do not realize the difficulty of uprooting to a foreign country. Congratulations on the result.

[mikecat]

My own situation is very similar with the same level of income, only I am 58. I'm currently an expat in the Middle East and plan to retire next year. I was at the same point you are when I was your age (prior to the 2008 crash). I have worked up my stash to $4 million excluding a shack that is paid off. My most valuable asset is my hot wife that squeezes a dollar so thin you can read a newspaper through it. I plan to initially live off the $60k in dividend income I currently bring in and then over time draw off the capital gains. I have been contemplating ER for many, many years and finally feel I am there.

You are still very young and yanking down some serious coin. My advice would be to hold on, enjoy the expat life and build up the stash some more. There could be a serious market meltdown in the future, or God forbid a major health issue or even a divorce, that could alter the math in a major way.

[Rambler]

We are expats that returned at the end of last year. I would just caution you on the expense estimates. I had worked pretty hard on getting good estimates together, but have found that what I thought was "about right" was pretty far off. So far we are running just a little higher than estimated in total, but the details are way off. This is the problem of being an expat and trying to put a reasonable budget together...you don't really know because you can't really see the prices. We lived in Japan (read that "very expensive" cost of living) so we couldn't gauge our US expenses off of our Japan expenses.

Best of luck to you.

R

[Lucantes]

Wingfooted: Thanks for the post. The increases to over $3.3M by the 3Q 2017 is based upon several factors including our savings of at least ~70% of our income, annual pay increases that are fairly predictable for both of us for the next 4 years, significant increases in my pension over the next 4 years (it almost doubles between now and my ER date ), an annual corporate bonus that we both receive, a rental income stream of $2k/mo. (after all expenses are factored) and the expected growth of investments. Our actual current expenses are very low but we do not want for much so it works out good for us (we are not “cheap” it is just that we both enjoy the simple things in life and luckily I seem to have a “peasant’s palate” which saves us loads also ). Our investments are fairly aggressive, as we have the lump sum pension to fill the “conservative” part of our portfolio. We currently do not have any items in the US for when we retire (furniture, cars etc.), everything will be purchased new during our last vacation prior to retirement as we will not be bringing anything significant back with us. I have accounted for all of these costs in our overall budget and it does not make up part of the $84K annual retirement budget.

Mikecat: Thanks for the post. My wife also seems to be able to squeeze all the juice from the vine. “Prudent men woo thrifty women” !! By our ER date I will have been working overseas for 21 years and my wife for 16, we will have had enough. When I left the USAF to work overseas I had a goal of being retired by age 50 and I plan to meet that goal, even if that means adjusting my expectations downward. The market I can’t really control but I think I made most of my mistakes early on (2000 was not a very nice year for me! ) which has allowed me to be able to learn and correct in the long run (2008 was not very bad at all). Health is covered by some very good insurance and a quasi-moderate lifestyle. Divorce is not something I think about as my wife and I were both singles until last year and we have similar goals, desires and ambitions which I guess is why we ended up in the same place pursuing the same goals.

Rambler: Thanks for the post. I also assumed that my estimates would be off by a bit, which is why I went ahead and built in a significant buffer into our annual budget that should provide us the flexibility that we would need to correct if required. It always does appear that no matter how much you think you have prepared there are always the unknowns that seem to creep up on you. Of course the internet is now a great resource for getting real world local costing information very easily.

[MichaelB]

Welcome to the expats! Lucantes, have you paid into US Social Security and are you eligible for Medicare?

Mikecat, same question, and you might want to start a new thread to intro yourself.

When we returned to the US we had a similar problem as Rambler. It took us a while to settle into a rhythm and really understand how much we needed to budget. We did some major buying upfront, and later wished we had taken our time.

[papadad111]

I am in a somewhat similar situation. Been an expat off and on for a long time. Ages 44 and 46 respectively, but 2 kids in high school bound for college in a couple years. They each have approx $100K in their college savings plans.

I currently have a nut of about $1.85M in cash accounts, another $0.4M in a private profit sharing fund that gets distributed immediately (and taxed upon termination) and another $0.5M in 401K/IRA's.

We own a modest home, value approx $0.2M in the midwest, fully paid for, and it will be furnished with the stuff that's in various storage units that have accumulated over the years.

I bought a couple of beater cars ($3000 each) used when we are on home leave to avoid renting cars from AVIS/Hertz etc.

Anyway, we are sitting on a net worth of approx $3M today (including home but excluding kids college funds) and thinking of pulling the ER trigger in 22 months --eldest son started junior year of high school today.... will graduate in 22 months ....

Aside the net worth, I will get approx $1000/month tiny pension at age 65. Social security has been maxed for a lot of years for me but not for DW. I dont have a social security estimate -I'd guess I will see $1500/month assuming we get about 2/3 of what SS promises.

We've lived abroad off and on for a long time -- I now need to estimate a USA based budget for the midwest. We are modest people. I anticipate I can get by on about $50K/year (without travel) or approx $65K/year with lot of travel.

We plan to spend a good chunk of our early years of time in retirement abroad (call it snow birding) which will help offset travel expenses by being in lower cost of living environs. Maintaining 2 households is not yet factored in - unlcear if that will be a huge expense or not - lower living cost offsets the dual household (short term rent in overseas location most likely).

This assumes no incremental money needed for the kids to complete college...hope but no guarantee. Ideally, they self-fund with their college savings that has accumulated and a job or both (no loans, preferably).

I need some assistance estimating an annual cost of living in the USA (midwest).

My current budget is as follows (best guess) - last time living in USA was 2006-2007 and so am out of touch ....

The broad categories of health insurance (estimated based on pre-obama quote from e-surance) is an unknown, as is the category of Food/Clothing/Entertainment/Travel which is basically a discretionary bucket...

Other expenses are based on some old 2007 figures, indexed for inflation.

House/Maintenance 200
Health insurance 1000
Car Ins 300
Electric 100
Natural Gas 200
Water 50
Satellite/Cable TV 50
Food/Clothes/Ent 1200
Prop Tax - 150
Homeonwers Insur 210
Gasoline 450
Internet 50
Cellphone 120
TOTAL EXP: 4100/mth

What do you think? this puts me at approx $50K/year living in USA on a minimalist budget. How are we doing?

[scrinch]

I won't go through our particulars, but will say that we are in the same boat. Our lifestyle overseas is quite different than it was in the states, and spending is just done differently as an expat for Megacorp, so I've found estimating a retirement budget very difficult. Well, making an estimate is easy, but one I feel confident in...that's the difficult part. I think in the end we're just going to have to pick an arbitrary but conservative number for our budget, and then adapt as we feel our way into retirement. I have to say, with the savings that pile up as an expat and the uncertainty in post-retirement budget, OMY-syndrome is easy to fall prey to!

[Lucantes]

MichaelB: Thanks for the post. I am expecting to receive some SS, but it does not factor into my retirement calculations as the expected amounts are very low (couple of hundred per month maybe from the last estimate I received?). My wife will also have her UK pension at 67 I think (she still pays into that) but we also do not include that in our ER budget. I do not pay into SS currently and have not since working overseas. I will receive my employer medical plan after ER, for very good rates, and it is my understanding that I will also be eligable for Medicare after that.

[Lagniappe]

Quote:

Originally Posted by biker4life . . Other expenses are based on some old 2007 figures, indexed for inflation. House/Maintenance 200 Health insurance 1000 Car Ins 300 Electric 100 Natural Gas 200 Water 50 Satellite/Cable TV 50 Food/Clothes/Ent 1200 Prop Tax - 150 Homeonwers Insur 210 Gasoline 450 Internet 50 Cellphone 120 TOTAL EXP: 4100/mth What do you think? this puts me at approx $50K/year living in USA on a minimalist budget. How are we doing?

Biker,

Not sure if this is helpful, but You seem to be missing a few items in your planned budget:
Out of pocket health care ( I think silver plans have a $3000 deductible and a $6850 max per person, and dental may be out of pocket)
Auto depreciation (at some point cars have to be replaced)
Personal care ( hair cuts, etc)
Misc (a little padding for the unexpected)

These could easily add another 10-15% to your budget, but some of your items are so high ( you must do a lot of driving, I spend less on gasoline in a year than you plan in two months, and $350 a month in utilities seems high but might be right for your area), that you may end up back where you started.

[Lucantes]

Figured I should provide some information regarding how my assets are currently distributed/invested etc.:
$1.855M total not including Florida house which we will live in.
$282k (15%) in Cash (earning 1%).
$796k (43%) in Stocks ($208k in individual growth/dividend stocks (about 30 stocks) with Schwab (managed by a FA) and $588k in Vanguard funds in 401k (VHCOX (20%), VEXPX (20%), VWIGX (20%) and VWELX (40%))).
$96k (5%) in Bonds (from Vanguard Wellington fund in 401K).
$200k (11%) in Real Estate (undeveloped waterfront property, not primary house).
$481k (26%) in Lump Sum Pension.

[jclarksnakes]

As you may already know, on this forum saying that you have assets managed by a FI is like waving a red flag in front of a bull. I am curious to know if you have compared the performance of your assets under financial management at Schwab to your assets at Vanguard?

[Lucantes]

jclarksnakes: I am aware of the overall feelings here regarding FA's and such but I am comfortable with the host of services they provide me currently and will continue to use them for the foreseeable future in conjunction with the Vanguard ones.
I currently have a return, after fees, which is comparable with my Vanguard account.

[FIREdToBeExpat]

We have just moved to Istanbul, Turkey for a few years and I am really interested in this topic. I had budgeted $35k for relocation costs but we ended up spending a little more, about $40k including a used car. We are a little younger, 38 & 34, and don't have 7-figure portfolio yet but a paid off house on Long Island, NY. This is our first expat life and we are planning to live/visit a few more countries.

[supernova72]

Quote:

Originally Posted by biker4life I am in a somewhat similar situation. Been an expat off and on for a long time. Ages 44 and 46 respectively, but 2 kids in high school bound for college in a couple years. They each have approx $100K in their college savings plans. I currently have a nut of about $1.85M in cash accounts, another $0.4M in a private profit sharing fund that gets distributed immediately (and taxed upon termination) and another $0.5M in 401K/IRA's. We own a modest home, value approx $0.2M in the midwest, fully paid for, and it will be furnished with the stuff that's in various storage units that have accumulated over the years. I bought a couple of beater cars ($3000 each) used when we are on home leave to avoid renting cars from AVIS/Hertz etc. Anyway, we are sitting on a net worth of approx $3M today (including home but excluding kids college funds) and thinking of pulling the ER trigger in 22 months --eldest son started junior year of high school today.... will graduate in 22 months .... Aside the net worth, I will get approx $1000/month tiny pension at age 65. Social security has been maxed for a lot of years for me but not for DW. I dont have a social security estimate -I'd guess I will see $1500/month assuming we get about 2/3 of what SS promises. We've lived abroad off and on for a long time -- I now need to estimate a USA based budget for the midwest. We are modest people. I anticipate I can get by on about $50K/year (without travel) or approx $65K/year with lot of travel. We plan to spend a good chunk of our early years of time in retirement abroad (call it snow birding) which will help offset travel expenses by being in lower cost of living environs. Maintaining 2 households is not yet factored in - unlcear if that will be a huge expense or not - lower living cost offsets the dual household (short term rent in overseas location most likely). This assumes no incremental money needed for the kids to complete college...hope but no guarantee. Ideally, they self-fund with their college savings that has accumulated and a job or both (no loans, preferably). I need some assistance estimating an annual cost of living in the USA (midwest). My current budget is as follows (best guess) - last time living in USA was 2006-2007 and so am out of touch .... The broad categories of health insurance (estimated based on pre-obama quote from e-surance) is an unknown, as is the category of Food/Clothing/Entertainment/Travel which is basically a discretionary bucket... Other expenses are based on some old 2007 figures, indexed for inflation. House/Maintenance 200 Health insurance 1000 Car Ins 300 Electric 100 Natural Gas 200 Water 50 Satellite/Cable TV 50 Food/Clothes/Ent 1200 Prop Tax - 150 Homeonwers Insur 210 Gasoline 450 Internet 50 Cellphone 120 TOTAL EXP: 4100/mth What do you think? this puts me at approx $50K/year living in USA on a minimalist budget. How are we doing?

___
A couple of thoughts:

Your auto insurance might be high at $300 for two cars? I pay $110 for a 3 series BMW and an older truck through travelers ins.

It could be a Seattle WA thing but my property taxes are ~ $300 a month for a $400K property.

It's all good stuff and all other expense estimates are very close to what I have in my "plan". I do have a separate entry called "Travel" but you might be done with that given being an ex-pat.

[papadad111]

Quote:

Originally Posted by Lagniappe Biker, Not sure if this is helpful, but You seem to be missing a few items in your planned budget: Out of pocket health care ( I think silver plans have a $3000 deductible and a $6850 max per person, and dental may be out of pocket) Auto depreciation (at some point cars have to be replaced) Personal care ( hair cuts, etc) Misc (a little padding for the unexpected) These could easily add another 10-15% to your budget, but some of your items are so high ( you must do a lot of driving, I spend less on gasoline in a year than you plan in two months, and $350 a month in utilities seems high but might be right for your area), that you may end up back where you started.

Health insurance coverage is a crap shoot - I based it on esurance online quote not considering Obamacare costs or benefits. The policies that i am looking at are relatively low deductibles so there should be relatively low out of pocket.

Autos - good point, this budget does not include major incremental capital spending -- significant house repairs / car repairs/replacments.

I have tried to include personal care items in the food budget

Misc - again, tried to have this covered in the food budget

[papadad111]

Quote:

Originally Posted by supernova72 ___ A couple of thoughts: Your auto insurance might be high at $300 for two cars? I pay $110 for a 3 series BMW and an older truck through travelers ins. It could be a Seattle WA thing but my property taxes are ~ $300 a month for a $400K property. It's all good stuff and all other expense estimates are very close to what I have in my "plan". I do have a separate entry called "Travel" but you might be done with that given being an ex-pat.

Auto insurance includes other toys - motorcycle, camper, etc. plus a couple of inexperienced, teenager drivers...

Yea, seattle property tax is like rest of west cost - rediculously high in my opinion . Where I am living, I pay approx $1500/year for around 10 acres and a 2000 sq foot house.

[Lucantes]

Thought I would post an annual update on our status:
Still on target for ER at 50 in the 3Q of 2017 and return to the USA (3 more years to go!).

Assets are currently distributed/invested as follows:
$2.246M total not including Florida house which we will live in.
$502k (22.4%) in Cash.
$995k (44.3%) in Stocks ($278k in individual stocks with Schwab and $717k in Vanguard funds in 401k (VHCAX (20%), VEXRX (20%), VWILX (20%) and VWENX (40%))).
$117k (5.2%) in Bonds (from Vanguard Wellington fund in 401K).
$70k (3.1%) in investment Real Estate (not primary house which is valued at $730K but not included in assets as we will live in it in retirement).
$562k (25%) in Lump Sum Pension.
Current goal is to have $3.3M (not including primary home) in 2017 with annual expenses of $100K including everything.

[Lucantes]

Another year has passed and here is our annual update on our status:
Still on target for ER at 50 in the 2Q of 2017 (April 2017) and return to the USA (20 months to go!).

Assets are currently distributed/invested as follows:
$2.726M total not including Florida house which we will live in.
$733k (26.9%) in Cash.
$1138k (41.7%) in Stocks ($337k in individual stocks with Schwab and $801k in Vanguard funds in 401k (VHCAX (15%), VEXRX (15%), VWILX (15%), VGSNX (15%) and VWENX (40%))).
$130k (4.8%) in Bonds (from Vanguard Wellington fund in 401K).
$70k (2.6%) in investment Real Estate (not primary house which is valued at $800K but not included in assets as we will live in it in retirement).
$655k (24%) in Lump Sum Pension.
Current goal is to have at least $3.3M (not including primary home) in 2017 with annual expenses of $100K including everything.
We have been making very good progress on our goals and can see the light at the end of the tunnel!

[wingfooted]

All nice gains to your accounts for a one year period.

Was this investment capital gains or additions from your w*rk related salaries and benefits ?