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Hello from Oregon
Old 04-04-2010, 01:40 PM   #1
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Hello from Oregon

Respected Early Retirement community,

I have been reading these boards for quite some time and have been impressed to say the least. I finally decided to register and introduce myself. More or less I will ask the same million dollar question that everyone does. Am I on track for early retirement or am I looking at my numbers dilusionally chasing a dream skewed by my own enthusiasm?

First a bit about me. At 14 began recieving Social Security and Supplemental Security for a disability diagnosed in my youth. I married at age 18. My wife had a son who was 8 at the time. Three years into our marriage it was necessary to provide for and raise 3 nieces/nephew age 13-16. Long story short by age 28 I took a deep breath having taken 4 teens to graduation then promptly declared bankruptcy. I wont make excuses. We lived beyond our means even though some of those situations were forced upon us. Though we used credit cards sparingly we paid minimum payments for those 10 years of child raising. In the end we declared bankruptcy on $18,000 of consumer debt.

Once the kids were out of the house I had time to actually think. The bankruptcy scared my pride more then wanted to admit. We had absolutely refused to even own a credit card. My Social Security/Supplemental Security Income hovered around $400 per mo. This was due to complexities regarding my lack of working and recieving at such a young age. My disability was not lost of limb, sight or hearing so I didnt qualify for full blown benefits. Around the time of my 29th birthday I decided a life of working with physical pain was better then a life of financial limitations. Social Security in its disability form was restricting any assets we could ever attain. I started working part time that year with special needs students at the local Middle School. The real skills I had were as a computer tech. After one year working in life skills I decided I could not do that another year. The following year I started volunteering for the schools technology department. I never missed a day and made sure I preformed better then the paid employees. After 10 months of working full time as a volunteer I was finally hired. This gave me a $11 per hour pay increase over the life skills position. Six months later I applied for a State of Oregon job working in technology and landed the job.

My goals along this trip have been to: (a) Get the highest wage my current skill set can earn. (b) Find an employer that has excellent retirement benefits. (c) Retire as early as possible with a portfolio that provides a stable income and hopefully grows over time.

Having a disability from a young age has made me extremely stubborn and quite the survivor. I don't buy into the theroy that a person must be happy with the work they are doing. For me any job is a sacrifice thus I expect my sacrifice to get the "best bang for the buck".

That is my story. Thanks for listening...now for the numbers.

Desired retirement year: 2022
Desired retirement age: 46/62

My age: 33
Spouse age: 50

Home
3bdr/2bath stick built home $50k owing. Paying extra, payoff date 2020.

Assets
457b - $35,593 (Donating the maximum $1375 per/mo until retirement date) 457b is in plan called Oregon Savings and Growth in the "LifePath 2050" fund. Fees for this fund are .022%. I chose the 2050 (perhaps wrongly) because it has a much higher agressive stock ratio being about 75% thinking I would need those gains to insure enough funds by my date.

Roth IRA - (Donating $6000 per year starting this year until retirement)

Pension

My pension: $17,000 per yr at age 60
Spouse pension: $12,000 per yr at age 60

I am hoping to have about $36,000 per year of investment income at retirement age.

Feel free to share your thoughts. Open to criticism. =) I know this is early in the game and many variables could change the outcome. One note, I am a bit more risk tollerent given the age difference with my wife. She WILL retire at age 62. I on the other hand could work an additional few years if necessary.

Thank you for your time.
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Old 04-04-2010, 03:47 PM   #2
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Kowala, welcome to the forum!

It certainly sounds like you're doing everything right, maximizing your retirement savings, minimizing debt and developing a plan. Retiring at 46 is a daunting goal, since you're trading earning years for spending years -- but lots of folks have done it.

If you haven't yet, spend some time with FIRECalc, a retirement calculator -- there's a link on the lower part of every page. This might give you a sense of how well you're doing, and will certainly help you think about some of the factors that affect retirement age.

Best wishes for success in meeting your retirement goal!

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Old 04-04-2010, 04:07 PM   #3
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Welcome to the forum

As Coach suggests, try putting your numbers into FIRECALC to see how well you are doing. To get $36,000 / year from investments by the time you retire you'll need about $900,000 to begin a 4% draw down.
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Old 04-04-2010, 04:31 PM   #4
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Welcome to the board!

Are your pension & spending estimates in today's $ or future $? Given that you're retiring 12 years into the future, the two values will be significantly different due to inflation.
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Old 04-04-2010, 04:32 PM   #5
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Welcome indeed. I am a Duck in Dog country, planning to fly south next month.

You have taken on more responsibilities than most.

Some times it is necessary to grit our teeth and make the best of the cards we are dealt, you are certainly doing that. I wouldn't put a lot of stock in the State defined benefit retirement program, they and a lot of other States over promised and underfunded reserves.
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Old 04-05-2010, 10:36 AM   #6
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Thank you for the comments.

Coach/Alan
I have played with FIRECalc a bit. The numbers come out decent with a 100% success rate. I have personally used the Flexible Retirement Calculator more then FIRECalc. I think what saves me in my scenario is that my wifes age. Social Security and Pension will be drawn at my retirement date thus lessening the total withdrawls on my portfolio. While I will not have a $900,000 portfolio to draw off of...potentially I will not be drawing 4% from said portfolio.

Walkinwood
You bring up good points about the dollar value. Basically I used the PERS calculation that looks at your Final Average Salary, Years of Service and a multiplier (FAS*YOS*multiplier). Final Average Salary is determined by taking your three highest gross years of pay and deviding by 36. Both of our jobs have a step based system that allows us to know for certain our pay increases over 8 years. The additional 4 years I calculated with a modest 2% COLA increase. To answer your question I think I calculated the pensions with todays dollar value in mind. One thing to note is both pensions have Cost of Living Increases added each year after retirement.

I think you bring up a valid point though. My plans hinge on the accuracy of my wifes pension and Social Security both of which I know are not set in stone or secure. While 46 is my target number I guess I wouldnt be totally disappointed if I found I had to work to 50 to make up for market volatility, a lower pension or lack of Social Security. Overall I want 46 bad and am willing to make the sacrifices...yet will count my blessings if I retire at 50.

I look at my parents and get sick physically. Within this year my portfolio will be larger then theirs. Having run basic numbers I see my father will have to work until 70...perhaps longer. Like I said I will count my blessings to retire at 50 if that must happen.

Brat
I use to have (up until his death) a friend that was a quadrapoligic. He helped me realize the cards I was dealt wern't all that bad. At least I can scratch my nose when I see fit. =)

I have to say I have a lot of my eggs are in the State defined benefit retirement plan basket. I guess I looked at these benefits as a stable "sure thing" once enrolled/vested. I am not sure how to really make anymore changes then I already have. 49% of my current wages and future wages will be going to tax beneficial accounts. I guess I will have take a hard look at what the realities are 12 years from now. I cant pretend that these pensions are not key in my retirement strategy.

I understand your concern, they are mine as well. I am just not sure how to combat the unsure future of Social Security/Pensions. Open to suggestions. =)

Something I forgot to mention. My wifes support in these goals has been priceless. Without her support we would be the average American family...up to our necks in consumeristic debt living for the day without a thought of tomorrow. I sincerly appreciate her support.

Kowala
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Old 04-05-2010, 11:38 AM   #7
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SS, PERS, CSRS are all in defined benefit plans that are subject to the ability of the promiser to pay. More secure than corporate plans but .. All any of us can do is to not be entirely dependent on one source. The wealthy who had all their IRAs managed by Madoff is a prime example.

The fact that you and your spouse are of one mind is a blessing.
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Old 04-05-2010, 11:58 AM   #8
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Thank you for sharing your story--getting four children through high school by the time you yourself turned 28 is just mindblowing. How are those young people doing today? Congratulations on facing and addressing the causes of your bankruptcy.

I can only add that you are still a young man--would formal education in computer technology result in raises within your school district or open other doors for you?

Also, welcome to the boards!
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Old 04-05-2010, 01:21 PM   #9
Confused about dryer sheets
 
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Bestwifeever

Honestly, the kids were a mixed success. Our stepson lives a drug filled lifestyle with wreckless financial abandon. Little is important in his life except his addictions. We DO NOT enable him financially or any other way. We let him know we love but he is on his own financially. My nephew is married with a son. He started as a very lazy individual but a few years of tough love changed that. He finished 1.5 years of trade school and has now worked in his trade of HVAC for 3+ years. He is working towards some of his refrigation certifications. Overall very financially stable given many of our conversations. The oldest niece is married to an electrictian and has been employeed as a loan officer. She has been a loan officer for 5+ years. I am encouraging her to reach out education wise or keep looking for a better job. She is currently maxing out her Roth. The younger niece went wayward. She has 2 children and is trying to suppor them alone in the big city. I cant seem to talk sense to her. She dosnt understand that the cost of living in her area is killing any chance at financial independance in her future. So it was a coin toss...

As far as futhering my education in technology. Currently I am in a small town where my family lives. Family responsibilities require I stay here. Currently I am making the highest wage ($3952 per/mo.) available in our town. In technology experience is key and certifications. I have kept my certifications active (they expire every 3 years). I am currently a Microsoft Certified Systems Engineer/Cisco Certified Network Professional. While college fits in many social ways...it is not a huge step up in a ever changing field. Frequently it takes 2-3 years to finish courses. By the time you graduate your tech skills are on three years agos technology. Potentially you are far behind the tech that kept abreast of technology on the job. I could definitely increase my earnings if I relocated but that would mean selling a dirt cheap house, leaving family etc. Personally the extra funds would not be worth the sacrifices. I have considered a secondary line of work to bring in more funds if necessary.

Kowala
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Old 04-05-2010, 02:27 PM   #10
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If I were you I would set my sights on retiring at 50 and start tracking my progress and continue learning as much as I could about retiring early. Here are some recommended links including reading material

Best of the Boards (Quality discussions you should read)

As you approach 50 you may find that you can RE earlier. When I first set my RE target at age 38, I was shooting for age 58, but things went better than I expected and I was able to RE at 55. (I still have that original spreadsheet with year by year target salary, 401(k) etc with the column at age 58 highlighted in Green as the target launch date).

It sounds like you have done wonderfully well so far
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Old 04-05-2010, 08:01 PM   #11
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whereabouts are you in oregon? we plan to move to cottage grove (18 miles south of eugene on I-5) when i retire. it sure is cheap to live up there. oh yeah, everyone speaks English as well!
good luck with your plan.
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Old 04-05-2010, 08:25 PM   #12
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Originally Posted by Kowala View Post
Honestly, the kids were a mixed success. ...
Thank goodness two turned out fine and the other niece might turn things around in time. I'm sorry about your stepson--a tough reality to deal with.

Quote:
As far as futhering my education in technology. Currently I am in a small town where my family lives. Family responsibilities require I stay here. Currently I am making the highest wage ($3952 per/mo.) available in our town. In technology experience is key and certifications. I have kept my certifications active (they expire every 3 years). I am currently a Microsoft Certified Systems Engineer/Cisco Certified Network Professional. ....
Ahh, that makes sense--your certifications are the qualifier for your profession rather than college courses per se.
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Old 04-05-2010, 09:57 PM   #13
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When it comes to kids we all do the best we can. As one who grew up and raised their children in Portland's west hills let me assure you that parental wealth is no assurance that kids will be safe from the temptations of drugs. Even in my current community drug and alcohol use by youth is a concern of parents and law enforcement.

Once I drove up SW Vista with my son as he narrated the issues in the households of his classmates as we passed. What an eye-opener for a parent who thought the era of Timothy Leary was ancient history.

[All this is 'inside Oregon' stuff, my apologies to others]
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Old 04-05-2010, 11:03 PM   #14
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Knucklehead 61

I live in Madras, Oregon land of juniper trees, sagebrush and LOTS OF SUNSHINE! As of late, you could also call it the land of the 50k house. I have been very tempted yet very hesitant to purchase a second home. I know flat out I dont want to be a landlord thus what seems $$ wise might hinder my efforts overall if I lose steam towards my goals. I dont think I could be a landlord and keep my current happiness factor. Overall where I live the Cost of Living is low. Bend is a great city but you will pay much more for property. Having been born and raised in this little town I am attached yet bursting at the seams...ready for something fresh. A warmer climate filled with sand and beaches cries out to me. Thus my motivation to work towards financial independance. While I have long balked at retirees taking the international living approach...it is seeming a lifestyle I could adapt too. I am bilingual Englsh/Spanish thus Central America has an appeal my wife and I. In my best case scenario I would love to do a 6 month in the Madras, Oregon/6 months in a lower cost of living country, perhaps Panama. Perhaps big dreams...but dreams that I am striving for. I will be satisifed with whatever I achieve.

Bestwifeever

You know I remember laying in bed the night my nieces and nephew came to live with us. The first day my nephew arrived from L.A. he tagged our small town school. I spent the afternooon with him cleaning the paint off. My oldest niece didnt speak to me for the first 2 weeks. The youngest niece was bawling her eyes out because her mean uncle wouldnt let her wear any of her trashy mini skirts to school the next day. I rolled over and looked at my wife and told her, "You know this is a recovery effort...we have to be satisified with just saving one". She noded and we tried to sleep. I have a few regrets but overall I am eternally grateful to have success with even just the two. I to have hope that their is yet time for the other two.

Brat

I have to agree wholeheartedly. Wealth does not assure avoidance of the tempations a youth confronts in life. Though my wife and I technically have an empty nest I find myself heavily vested in youths throughout our community. I have found it interesting that many books suggest contemplating what you will do with your time after retirement. I have always known...I will do what I have always done. Focus on the next generation...time is everything.
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Old 04-05-2010, 11:06 PM   #15
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Quote:
Originally Posted by Kowala View Post
(snip)
That is my story. Thanks for listening...now for the numbers.

Desired retirement year: 2022
Desired retirement age: 46/62

My age: 33
Spouse age: 50

Home
3bdr/2bath stick built home $50k owing. Paying extra, payoff date 2020.

Assets
457b - $35,593 (Donating the maximum $1375 per/mo until retirement date) 457b is in plan called Oregon Savings and Growth in the "LifePath 2050" fund. Fees for this fund are .022%. I chose the 2050 (perhaps wrongly) because it has a much higher agressive stock ratio being about 75% thinking I would need those gains to insure enough funds by my date.

Roth IRA - (Donating $6000 per year starting this year until retirement)

Pension

My pension: $17,000 per yr at age 60
Spouse pension: $12,000 per yr at age 60

I am hoping to have about $36,000 per year of investment income at retirement age.

Feel free to share your thoughts. Open to criticism. =) I know this is early in the game and many variables could change the outcome. One note, I am a bit more risk tollerent given the age difference with my wife. She WILL retire at age 62. I on the other hand could work an additional few years if necessary.

Thank you for your time.
(italics added) Hi Kowala,
Since you're under 50, your maximum IRA contribution for this year is $5000. Your wife can contribute $6000—$5000 regular contribution and $1000 "catch-up". (I'm assuming you and your wife each have a Roth IRA.) See this IRS web page for more particulars.
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Old 04-05-2010, 11:21 PM   #16
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Absolutely correct. I should have been more clear. We are donating all Roth funds to my wifes IRA for a total of $6000 for the simple fact that she will reach age 59.5 much earlier then I making those funds available to us should we choose to tap them. If and when I can swing it I am planning to open and contribute the maximum amount ($5000) to my Roth IRA as well.
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