Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Finally FIRE’d @55 in Silicon Valley
Old 05-18-2015, 11:51 AM   #1
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Finally FIRE’d @55 in Silicon Valley

This forum has been a wealth of information. Too bad I didn’t come across it earlier. I spent my career in engineering and marketing. I’ve been working part time the last couple of years. My last assignment ended in December. Various retirement calculators show I should be ok so I’ve lost the motivation to look for more work My main concern with ER was health insurance premiums but now with Obamacare I’m more confident that it’ll be manageable. I am thinking of converting $250k of 401k money into a SPIA at 65 to hedge against longevity since I am in pretty good health. I have always enjoyed traveling and would like to do more of it while I’m still healthy. My situation:

Age 55, single, no kids
Cash - $ 450k
IRA - $730k
ROTH - $650k
401k/403B – $295k
Pension @ 60 y.o. – $8k/yr (w/ COLA) or $105k cash out
SS @ 70 y.o. - $32k /yr
Net rental income – approx. $21k/yr
Mortgage – approx. 2.5 yrs left with $60k balance on primary residence
Real Estate equity – rental + primary residence approx. $2 million (Bay Area housing prices are crazy)

Avg. expenses over past 15 yrs – approx. $60k/yr but will drop by $27k/yr once mortgage is paid off.
I’m estimating I’ll have additional $10-15k/yr in travel expenses going forward.

Any thoughts, comments or suggestions?
__________________

__________________
FIREd_2015 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-18-2015, 12:08 PM   #2
Full time employment: Posting here.
 
Join Date: Jul 2014
Posts: 616
I don't know how your portfolio is invested, but from that info, it certainly looks like you'll be fine. Welcome to the forum, I look forward to hearing from you in the future.
__________________

__________________
Katiek is offline   Reply With Quote
Old 05-18-2015, 01:17 PM   #3
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by Katiek View Post
I don't know how your portfolio is invested, but from that info, it certainly looks like you'll be fine. Welcome to the forum, I look forward to hearing from you in the future.
Mostly cash at the moment. I am a market timer and value investor. I spent a lot of time reading various financial blogs to help me time the markets. I saw a posting recently though (I believe it was on this forum) titled something like "If you have won the game why keep playing..." so my strategy might be a bit more conservative going forward...just in case my luck has run out.
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-18-2015, 05:12 PM   #4
Moderator
MBAustin's Avatar
 
Join Date: Jul 2010
Posts: 4,154
Welcome! If you've run FIRECALC and it says you're good and you're comfortable with that, then doesn't seem like you have any reason to look for more w*rk.

You probably already know that most of us here are low-cost mutual fund investors, but there are a few folks who are more active in the market who will appreciate the company.
__________________
"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
----------------------------------
ER'd Oct. 2010 at 53. Life is good.
MBAustin is online now   Reply With Quote
Finally FIRE’d @55 in Silicon Valley
Old 05-18-2015, 10:07 PM   #5
Recycles dryer sheets
wingfooted's Avatar
 
Join Date: Jul 2011
Location: Oregon - Dry Side
Posts: 218
Finally FIRE’d @55 in Silicon Valley

So $2.2MM investable net worth that should support a SWR of 3.5% or $75K per year. A caveat is that having that $2.2MM all in cash at 1% interest probably won't support a 3.5% SWR and perhaps you would be better served with a conservative portfolio mix with some stock exposure.

Real estate nets $20K per year plus pension of $8K starting up in another 5 years.

You don't mention medical, so say it's ACA and your expenses, including travel and tax liabilities stay at $80K per year - which sounds conservative for the Bay Area but offset by being single / LBYM.

It sounds like you are OK to go with even a backstop plan of cashing in your Bay Area real estate equity and moving to a lower cost of living area if you had to monetize assets.
__________________
wingfooted is offline   Reply With Quote
Old 05-18-2015, 11:32 PM   #6
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by wingfooted View Post
So $2.2MM investable net worth that should support a SWR of 3.5% or $75K per year. A caveat is that having that $2.2MM all in cash at 1% interest probably won't support a 3.5% SWR and perhaps you would be better served with a conservative portfolio mix with some stock exposure.

Real estate nets $20K per year plus pension of $8K starting up in another 5 years.

You don't mention medical, so say it's ACA and your expenses, including travel and tax liabilities stay at $80K per year - which sounds conservative for the Bay Area but offset by being single / LBYM.

It sounds like you are OK to go with even a backstop plan of cashing in your Bay Area real estate equity and moving to a lower cost of living area if you had to monetize assets.
Yes, I do plan on getting back into the market at some point and I am on ACA so the medical expenses are pretty reasonable.

My backup plan is to rent out my primary residence which should net me another $30-35k/yr (in 2.5 yrs) and head overseas or move out of the Bay Area. Cashing out the RE is another option but given how hot the RE market has been here I'd hang onto it for as long as possible. Market valuations in some areas are now 30-40% above the peak of the 2008 bubble.
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-19-2015, 12:17 AM   #7
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by MBAustin View Post
...You probably already know that most of us here are low-cost mutual fund investors, but there are a few folks who are more active in the market who will appreciate the company.
I've found this forum to have a more diverse group of people with differing opinions which makes it more interesting and thought provoking.
__________________
FIREd_2015 is offline   Reply With Quote
Finally FIRE’d @55 in Silicon Valley
Old 05-19-2015, 03:46 AM   #8
Recycles dryer sheets
wingfooted's Avatar
 
Join Date: Jul 2011
Location: Oregon - Dry Side
Posts: 218
Finally FIRE’d @55 in Silicon Valley

Quote:
Originally Posted by FIREd_2015 View Post
Yes, I do plan on getting back into the market at some point .

A dangerous statement.

How long have you been out of equities and how much have you left on the table as this market continues to make new highs ? Sure there will be a correction - someday - but the right move for the last five years has been to buy on each and every dip. This could go on for quite some time.....until you finally capitulate and decide to commit... at a much higher price point.
__________________
wingfooted is offline   Reply With Quote
Old 05-19-2015, 10:10 AM   #9
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by wingfooted View Post
A dangerous statement.

How long have you been out of equities and how much have you left on the table as this market continues to make new highs ? Sure there will be a correction - someday - but the right move for the last five years has been to buy on each and every dip. This could go on for quite some time.....until you finally capitulate and decide to commit... at a much higher price point.
My Fidelity advisor said pretty much the same thing when I met with him recently. My response to him was, yes, I mistimed my exit. I got out 4-5 years ago which was way too early but I am planning to get back in. My 10 yr and 20 yr returns are still greater than the S&P 500. Of all the money in the various retirement accounts, less than $250k is from contributions, the rest are market gains so my strategy has worked pretty well up until recently. I know past performance isn’t a guarantee of future performance but I think I’ll stick with my strategy a little bit longer.
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-19-2015, 12:52 PM   #10
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
Your real estate gains to total net worth seem to more than make up for being out of the market for extended periods. I guess I would stick to your current plan.

4+mm net worth along with approx 30K income with no kids or wife seems good to go to me ...

Are you originally from somewhere overseas or just have a desire to go somewhere ? Where are you considering ?
__________________
papadad111 is offline   Reply With Quote
Old 05-19-2015, 01:55 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Good work. I'd say you are in great shape financially. I'm personally not a risk taker and in the won the game, time to stop playing camp. We live in the Bay Area and other than housing find it is actually not too expensive to retire here. Housing is always a roll of the dice, but between older friends who moved and cashed out when they retired and friends that stayed, the ones that stayed have not done too shabby because of the increase in property values.

If I were you I'd focus now on travel, self actualization or whatever else you want to do with the rest of your life.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 05-19-2015, 02:31 PM   #12
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by papadad111 View Post
Your real estate gains to total net worth seem to more than make up for being out of the market for extended periods. I guess I would stick to your current plan.

4+mm net worth along with approx 30K income with no kids or wife seems good to go to me ...

Are you originally from somewhere overseas or just have a desire to go somewhere ? Where are you considering ?
Diversification into real estate has definitely been a life saver. I don't think I would have ER'd without the extra RE equity. It's funny because I just saw a post either here or on bogleheads advising a new investor to avoid real estate. Don't know what part of the country they were in but real estate has been a pretty good investment in the Bay Area for at least the past 45 years unless one got sucked into the NINJA loan craze.

I was born in Asia but grew up in the Bay Area. I've been to every continent except Antarctica and I'm hoping to get there in the next 2 years.
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-19-2015, 02:52 PM   #13
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by daylatedollarshort View Post
Good work. I'd say you are in great shape financially. I'm personally not a risk taker and in the won the game, time to stop playing camp. We live in the Bay Area and other than housing find it is actually not too expensive to retire here. Housing is always a roll of the dice, but between older friends who moved and cashed out when they retired and friends that stayed, the ones that stayed have not done too shabby because of the increase in property values.

If I were you I'd focus now on travel, self actualization or whatever else you want to do with the rest of your life.
Thanks for the link to the Bernstein article, I'd hadn't seen that before. I also have friends that are talking about moving out of the area to retire but have told them if their mortgage is paid off, it really isn't that bad here. A couple who's both maxed out on SS benefits could live a comfortable lifestyle in the Bay Area without a mortgage and that's not including retirement savings.
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-19-2015, 03:53 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Quote:
Originally Posted by FIREd_2015 View Post
Thanks for the link to the Bernstein article, I'd hadn't seen that before. I also have friends that are talking about moving out of the area to retire but have told them if their mortgage is paid off, it really isn't that bad here. A couple who's both maxed out on SS benefits could live a comfortable lifestyle in the Bay Area without a mortgage and that's not including retirement savings.
I got invited to a group lunch a few years back and a couple of the women there were retired widows living in the Bay Area. They each had Prop 13 for taxes with a baseline of maybe 40 years ago and mortgage free homes they fixed up before they retired. They told me they had a hard time spending more than $30K a year on themselves so they ended up spoiling the grandkids.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 05-19-2015, 04:00 PM   #15
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
I live in the Bay Area and if I owned a house I would be dancing in the street! Unfortunately, I didn't buy when I should have and am now unable to purchase here. Looking to move away.
__________________
LinCella is offline   Reply With Quote
Old 05-19-2015, 04:02 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Quote:
Originally Posted by LinCella View Post
I live in the Bay Area and if I owned a house I would be dancing in the street! Unfortunately, I didn't buy when I should have and am now unable to purchase here. Looking to move away.
If you are 55+, have you considered Rossmoor? The prices are much lower there than surrounding areas.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 05-19-2015, 04:13 PM   #17
Recycles dryer sheets
 
Join Date: Feb 2013
Posts: 377
daylate - I have looked at Rossmoor but I think I am still a bit too young for it. The average age is a bit higher than my 55. Nothing against anyone older than 55 but I've read too many things about ambulances coming everyday.

Also, HOA fees are stiff, hundreds of dollars
__________________
LinCella is offline   Reply With Quote
Old 05-19-2015, 11:49 PM   #18
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by daylatedollarshort View Post
If you are 55+, have you considered Rossmoor? The prices are much lower there than surrounding areas.

Yeah. Properties are always coming onto the market there, without regard to overall state of the market elsewhere. It's a peculiar area, though. The community is broken into a bunch of smaller HOAs, with different rules in each area. Some are pretty loose, some require board approval to replace a kitchen appliance (seriously).

It's a fairly weird neighborhood. Effectively one road in or out, and the inside has a very odd feel to it.


Sent from my iPad using Early Retirement Forum
__________________
M Paquette is offline   Reply With Quote
Old 05-20-2015, 10:28 AM   #19
Recycles dryer sheets
 
Join Date: May 2015
Location: NorCal
Posts: 74
Quote:
Originally Posted by M Paquette View Post
Yeah. Properties are always coming onto the market there, without regard to overall state of the market elsewhere. It's a peculiar area, though. The community is broken into a bunch of smaller HOAs, with different rules in each area. Some are pretty loose, some require board approval to replace a kitchen appliance (seriously).

It's a fairly weird neighborhood. Effectively one road in or out, and the inside has a very odd feel to it.

I'll have to check the place out the next time I'm over that way. Maybe something my aging parents would consider.
__________________
FIREd_2015 is offline   Reply With Quote
Old 05-20-2015, 03:29 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Quote:
Originally Posted by FIREd_2015 View Post
I'll have to check the place out the next time I'm over that way. Maybe something my aging parents would consider.
I think for sure when we are older we will want to live in a place like this with no lawn to take care of, lots of on site clubs and activities, and bus service into town and to BART. We were originally thinking of having a lock and go condo and traveling more in the near term so we have considered Rossmoor or a couple of places down south that also started out as Leisureworld (Laguna Woods and Seal Beach).

Here is a write up on Rossmoor and the area -

Best Healthy Places to Retire: Walnut Creek, California - US News

For now we decided the adult kids still need a home base for at least a few more years and there are a lot of local attractions and weekend places we either have never been to or not been to in years so we'll probably be doing that and staying put for awhile.
__________________

__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Where's the next Silicon Valley (for the U.S.)? Midpack Other topics 45 11-07-2014 03:46 PM
ER beta test in silicon valley dunkelblau Hi, I am... 17 02-12-2013 12:15 PM
Mostly Clueless in Silicon Valley SVHoper Hi, I am... 9 04-19-2010 07:19 PM
Silicon Valley Rich_by_the_Bay Life after FIRE 32 03-14-2007 02:59 PM
Finally, finally out of lurkerdom.... panhead Hi, I am... 1 06-26-2002 11:18 AM

 

 
All times are GMT -6. The time now is 11:02 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.