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First time....First Post...Am I seeing the Forest through the Trees
Old 09-09-2010, 01:26 AM   #1
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First time....First Post...Am I seeing the Forest through the Trees

Greetings to all!!

After following closely these last couple of months, I decided to join the fray.....

THEN....divorced at 34 with two daughters, financially decimated with 50K in short term debt, renting, child support/ care, just getting by...

NOW...age 54, with 26 years at megacorp considering ER next summer. Like many I only began to seriously effect retirement planning in my early 40's but, also unlike many, I have been blessed with good pay and benefits, along with some, hopefully, good planning.

DB, no-cola, at 64K/ year at 55 with an additional 7K supplement until 62. In addition, retired USAR after 20 years to collect 13K, cola'd at age 60.

I plan to wait until full SS benefits at 66.4 yrs.

I purchased 3 modest homes a few years ago and have paid them off. They are currently generating 38K/ year in rental income. Since they were all built in 2004, I have very few maintenance expenses. I plan to live in one of them for a few years until I decide whether to move somewhere else.

Megacorp and military support health care expenses. I purchased a LTC policy through the gov't at a Vet with an inflation option. I purchased this age 50 and currently pay $112/ month with a $300/ day coverage, unlmited.

I have $175K in stock and options I plan to use for the girls college expenses and a $50K emergency cash cushion.

Finally, I have $700K in my 401K and planning to fill it out to $750K by retirement. It is all in an interest income fund so I will need to figure out a suitable asset allocation.

Since I have a good income at present, I plan to complete purchasing the material things I need before FIRE so that I will not 'need' 'things' for some time...new truck, car, a new Harley (why not?), and a few other things.

I think I have it all figured out but, you know how it is....When you plan these things on your own, you are very likely not able to see the forest for the trees....

I am sure I have forgotten something??

The advice I've read these past months has been a Godsend...

Lovinglife1.....
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Old 09-09-2010, 02:33 AM   #2
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Welcome!

Your numbers look good at first glance but all depends on how much you would actually spend in ER. Have you run Firecalc yet and what does it say?

Some here, like myself, are also promoting to track expenses in detail for some time before actually making the jump. It is so helpful to KNOW where your money goes to instead of just guessing. And estimation of future needs is much easier then.
Even if you might feel right now that, given your future income, tracking is not necessary, it might help you to overcome the "one more year" syndrom.
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Old 09-09-2010, 03:35 AM   #3
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Thanks, Chris.

Yes, that makes sense. I've been living and working overseas with megacorp for so long, frankly, I dont know what my living expenses will be in retirement. I've taken mental estimates based on other singles of around 45-55K but, somehow I need to get more detailed.

I have no idea the costs of food, restaurants or entertainment in Michigan anymore but I can get a view from others.

And, yeah, that's the question in my mind; a good income in a good working culture; I want to jettison worklife right at 55 but I'll see if I have that 'work a little longer' syndrome. I hope not...I'm counting on this forum to help ease me/ or push me out gently...hah.
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Old 09-09-2010, 12:33 PM   #4
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I also agree that as of right now your financial picture looks nice, but then will really depend on what you do in ER...is there a SO to support with no egg nest of her own?
Just reading your aspirations...new truck, a car, a Harley (also maybe LCD's in a family, BR, and kitchen??) sounded like you'll go easily through your nest egg if three vehicles are needed for one person.
When you move back to MI, will you buy a house? If so, have you $$ alloted aside from your nest egg?
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Old 09-09-2010, 11:58 PM   #5
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Thanks you.

My original plan some years ago was to purchase three homes in the area where my daughters live, hire an agent to manage them, and use the rental income as a partial offset to the mortgages. When I retire, I plan to live in one of them which is quite reasonable at 1900 sq ft and in a nice neighborhood until the girls are off to college in the next couple of years. I will then search out a place in California or Florida, sell the homes and purchase a retirement property. These rentals are about $200K each so this allows me to find quality tenants. The person I use as a management company was recommended by a friend. Her family has been in the apartment rental business for two generations. She has been wonderful. In almost 6 years, I think I have been wiithout a renter a total about about 12-14 months. This includes all properties.

I plan on using current income to buy the truck, car etc, and not touch the 401K or stock options. Anything I cant afford with cash between now and retirement, I dont need. I will likely give the car, to one of the girls, and help the other as well.

Based on your comments, I plan to look more closely at my likely expensees post RE. For a few years, two rental properties will pay the tax, insurance, and maintenance for all 3 homes, as well as, the utilities for the one I will live in.

I have no other debt so I think I am fine there....

I found a website on estimating living expenses. I'll give it a shot.....
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Old 09-10-2010, 02:38 AM   #6
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Sounds like you are doing great! It looks like you have made quite a few really smart financial moves over the years.

We have been frugal with money but when we were young and choosing jobs we never understood the importance of defined benefit pensions as well as I do now. In hindsight that was thing we should have really paid closer attention to. Good work on choosing jobs with such great pension plans.
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Old 09-10-2010, 10:45 PM   #7
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My father worked in megacorp and was quite conservative...saving, insurance and relatively frugal.

I think this influenced my in the career I chose vis a vis benefits.

He took early retirement at 55 and passed away at 59 from cancer, so these two things have influenced my desire to leave at 55.

The fact that you are on the board says alot about your own determination.

Take care.
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Old 09-11-2010, 12:38 AM   #8
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Welcome to the board.

I'll pile on with the suggestion that you track your expenses and maybe spreadsheet out your anticipated post-retirement expenses for your new lifestyle (if different from the way you are living now).

If you haven't already tried it out, you might want to play with FIRECalc a bit. You can see how your various pensions/SS plans flow out over time and how different asset allocations for your nest egg would have performed historically. Which is no guarantee about the future, but it's a good reference point.

LTC insurance--It's something we discuss here frequently, you might gain some info from the FAQ section of the board. I'm assuming from your comments that you bought the federal (OPM) plan with the inflation adjustment. I looked at it too, and like the idea of being part of a large pool of government clients in the same "pot" and with OPM to go to bat for the whole group. As you may be aware, those in good health can often find a significantly lower price by going with an individual policy, but I think the risks (in this already risky product) are greater.

Of course, one of the bigger things outside your control is the ability of Megacorp to keep those checks coming for a few more decades. That's a big portion of your monthly "take." Will they offer a lump sum? Would you take it?

IMO you've done a good job of building multiple streams of reliable income. I probably wouldn't own as much RE as a portion of my net worth, but there are some very good arguments for doing things as you've dome them.

Again, welcome.
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Old 09-11-2010, 09:53 PM   #9
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Thank you for the insight, Sam.

Yes, it's the Federal Long Term Care program with the inflation option which, as many do, I consider it as insurance in the same way I do life insurance or accident or home owners insurance. I hope I never have to use it and I dont consider it a an option.

My siblings and I are trying to figure out how we will manage my 78 year old mother's care when and if she requires it. I dont what to put my children in that position.

Yes, there are no guarantees with megacorp pensions but, by all accounts, i think it is unlikely there will be bankruptcy in at least the near term; 5-10 years. By that time, the PBGC will cover the majority of what I will recieve near age 65. At age 55, it is, oc course, less than 50% but that is very unlkely to occur....If it does, I can make it.

My message to others is this....I have lived much below my means since I was 35 years old preparing for retirement. Yes, I have a pretty significant income now but it has really only been the last 5 -6 years. I purchased those 3 homes in 2005 values at about $575K with 15 year fixed mortgages and paid them all off in 5 1/2 years. Using rental income as a supplement, I paid $8500 a month for those 5 1/2 years plus max'd my 401K, and saved for my daughter's college. It is not the amount of income or savings here that is important. It is the desire to commit to a future lifestyle. Most people can do it....IMO.

Thanks for your advice on FIRECalc.
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Old 09-12-2010, 10:18 AM   #10
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Originally Posted by lovinglife1 View Post

My siblings and I are trying to figure out how we will manage my 78 year old mother's care when and if she requires it. I dont what to put my children in that position.

Wecome , We managed my Mom's care for many years with home help . If you find the right agency they are a god send . Our home health aide shopped , took my mother to her doctor's appointments & the hairdresser & did whatever my Mom needed at a reasonable cost . Between the health aide & a cleaning lady & all of us visiting my Mom was able to live alone until 92.
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Old 09-12-2010, 10:57 PM   #11
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Dear Moeng,

Interesting idea, home health aide. I'll google it and see where it takes me. Some LTC contracts provide for financial support to an aide on an outpatient basis, even family members. I think we would have family spend time with someone in helping out before making a decision of course...It's one more thing that has to be considered in ER planning....I feel like I'm planning my own funeral with all of this preparation...ahh
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Old 09-13-2010, 12:57 PM   #12
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Since I have a good income at present, I plan to complete purchasing the material things I need before FIRE so that I will not 'need' 'things' for some time...new truck, car, a new Harley (why not?), and a few other things.
Nothing wrong with putting money aside for big-ticket discretionary items while you're still employed ... but you may want to defer the actual purchases until after you're retired and have the time to really enjoy using them.
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Old 09-13-2010, 05:28 PM   #13
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Nothing wrong with putting money aside for big-ticket discretionary items while you're still employed ... but you may want to defer the actual purchases until after you're retired and have the time to really enjoy using them.
I agree with the waiting idea- you may find that your wants and tastes change after a year or so of retirement. I find that some things that I hungered for while working just seem like hassles now.

Ha
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Old 09-13-2010, 06:08 PM   #14
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Someone here tipped me off to Mint.com as an easy way to track and analyze expenses. It pulls data directly from my checking, debit card, and/or credit card accounts, and it auto-categorizes many of the items. All I have to do is review the categorizations and correct them as needed. The tool is saving me a lot of time, and the price is right ($0).
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Old 09-13-2010, 09:33 PM   #15
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Good thought, Ha. I've considered that. If I buy while working I may very well end up giving away the big ticket toys after a little joy, or chalk it up to male-menapause, and my second childhood for even longer. hah. Good thought though.
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Old 09-13-2010, 09:34 PM   #16
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Great site, Marc. Thanks for sharing. I'm going to give a go.
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Old 09-13-2010, 10:36 PM   #17
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Quote:
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Someone here tipped me off to Mint.com as an easy way to track and analyze expenses. It pulls data directly from my checking, debit card, and/or credit card accounts, and it auto-categorizes many of the items. All I have to do is review the categorizations and correct them as needed. The tool is saving me a lot of time, and the price is right ($0).
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Old 09-14-2010, 08:19 AM   #18
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Not really, no. Mint.com is no fly-by-night operation. It is owned by Intuit.
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Old 12-19-2010, 01:38 PM   #19
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I'm just confused by something... You were divorced at 34 with 2 daughters. Now you are 54, so presumably your daughters are at least 20 years old. You have $175K in stock and options that you "plan" to use for the girls' college expenses. Are the girls in college yet? Or, planning to go some time in the future?
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Old 12-25-2010, 10:18 PM   #20
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You've got a nice assortment of assets to draw on. DB pensions, nice sized 401k, rental properties, etc. Have you done a budget? Think taxes, medical care, travel, rental reserves, replacing the car, and other long-term major expenditures. Once you've answered these questions, take the leap. You sound ready...and able.
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