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Hello! Want To Retire in 1 Year Or Less
Old 07-08-2012, 09:21 PM   #1
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Hello! Want To Retire in 1 Year Or Less

Hi all,

Been lurking here the last week or so. Great site, a lot of useful information, my head is swimming a little bit.

I am single and turning 49 next month, I own a business that is on a slow downhill trend (we are still profitable but the glory days are gone due to changes in my industry). Lately I have been thinking enough is enough, I want to do something else (e.g., basically live my life rather than just work all the time).

I have been living below my means for years, I am an exceptional saver. Asset wise I seem to be in pretty good shape with investments (good size portfolio) and real estate (I have a house and a condo, both with good equity).

I could really use some help migrating out of Merrill Lynch personal and retirement accounts that have gone basically nowhere for years. I already have a money market account at Vanguard but no stock or bond accounts. I have concerns about buying these while the market is so high already. Thoughts? Good places to start reading? Any investments that might be good for a newbie DIY to look at, Dogs of the Dow or similar?

TIA.
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Old 07-08-2012, 09:43 PM   #2
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Talk with Vanguard about their financial planning service. If you move a significant amount of assets to Vanguard it would be complimentary. I've used the service a few times over the years and while it has its warts, it would likely be a good first step for you.
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Old 07-08-2012, 10:40 PM   #3
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Bogleheads

Have you discovered the Bogleheads website and wiki yet? Lots of great info about Vanguard and investing in general.

Forum:
Bogleheads Investing Advice and Info

Wiki:
Bogleheads
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Old 07-09-2012, 12:01 AM   #4
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I have concerns about buying these while the market is so high
The market isn't high. On second thought, maybe it is. Hang on, no it's not. Wait ...

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Originally Posted by Daniel J View Post
Good places to start reading?





You'll also want to check out this forum's recommended reading list. Welcome and good luck.
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Old 07-09-2012, 04:36 AM   #5
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Welcome, Daniel.
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Old 07-09-2012, 09:40 AM   #6
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Take a look at these real life results of different strategies. Harry Browne's Permanent Portfolio did pretty well so far.

http://www.retireearlyhomepage.com/reallife12.html
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Old 07-09-2012, 01:17 PM   #7
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Good places to start reading?
Welcome to the forum.

Basics: Bogleheads
More detailed: Investment Books

No better resources IMO than the above. Though you have to realize this forum is largely bogleheadesque to begin with, self included...
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Old 07-09-2012, 09:03 PM   #8
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Hello all,

Thanks for the helpful suggestions. I will start with this site and bogleheads and then look at books.

Today I cancelled an annuity contract that my Merrill FA pushed me into last week. I am getting out early so I'm told there should be no penalties other than excise tax on the gains, if any. This was a huge step in the right direction for me. It was the annuity shenanigans that got me thinking there must be another way than Merrill in the first place. Truth be told I'm not quite sure where I'm going yet but I'm excited to be on the path!

Thank you.
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Old 07-09-2012, 09:11 PM   #9
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Walking away from Merrill is the correct path, just keep going and reading.
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Old 07-09-2012, 09:22 PM   #10
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Take a look at these real life results of different strategies. Harry Browne's Permanent Portfolio did pretty well so far.

2011 Update: Real-Life Retiree Investment Returns
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Hello! Want To Retire in 1 Year Or Less
Old 06-29-2014, 02:29 PM   #11
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Hello! Want To Retire in 1 Year Or Less

Hi Everyone,

Just wanted to check in here again as it has been almost 2 years since I first posted on the site.

Based on the posts above, I checked out the Bogleheads site, became an active member there and read a dozen or so personal finance books. I managed to escape Merrill Lynch and started managing my own investments at Vanguard following Boglehead principles. All of that has gone very well and I am very grateful for the advice given here, thank you.

Currently I am in the throes of the OMY Syndrome. I made some changes in my business which have turned it around some and it has been consistently profitable. That said, I am still tired of it. As one Boglehead recently posted, "You know it is time to retire when you have enough and you had enough." That is where I am really.

In a nutshell I know I have a good thing going on but it is very hard to walk away. For the past year or so, I have been working steadily, saving as much as possible and mulling about which direction to take. I keep going back and forth and am getting nowhere. I will outline the issues below in hopes of trying to sort out this difficult choice. I appreciate any feedback.

I currently own a house and a condo and run my service business out of a rented office, all in the San Francisco Bay Area. Aside from these complexities I generally follow a LBYM lifestyle.

Financials are:
  1. $3M in investment accounts, about 1/2 tax deferred.
  2. House market value as it is now $1.5M, loans $600k at 3.375% fixed and 2.49% floating. The house needs about $100k in work to get top dollar on resale (estimate $1.7M). The local housing market is insane, growth is anticipated 10% for the coming year. Currently vacant and it is much more house than I need. My inclination is to sell the house in this seller's market, diversify my risk and simplify my life.
  3. Condo market value $450k no loan. Nice place but the neighborhood is very urban and frankly, not great. Bought at the bottom of the market in 2011 as a possible retirement home and I like it most of the time. Currently living here as it is walking distance to work. All that said, if I decide to close the business I may not want to live here anymore. All fixed up and ready to sell or rent (estimated $2300 per month).
The many work endgame options I have been wresting with are:
  1. Keep on keeping on, make no changes at all. Currently netting $20k-$25k per month, almost all of it tax deferred.
  2. Sell the business (might be hard, although it cash flows nicely, most of the success is ME). This is likely the most logical option.
  3. Downsize the business to a smaller office, be more selective about clients, work part time if possible.
  4. Move the business back to the house, be more selective about clients, work part time if possible.
  5. Walk away from the business altogether. Life is short.
The housing/life choice options I have been wresting with are:
  1. Live in the condo, sell the house.
  2. Sell the condo, live in the house.
  3. Rent the condo, live in the house.
  4. Rent the condo and the house.
  5. Sell the condo and the house.

I have been a landlord in the past. While I am a handy guy and it is nice to get checks every month, I generally find dealing with tenants to be a headache. My inclination would be to sell one of the properties unless choosing to rent one out is simply deferring the housing/lifestyle decision pending outcome of the work decision.

As you can see there are a lot of pieces to this puzzle! Appreciate any feedback. Thank you.
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Old 06-29-2014, 03:22 PM   #12
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Originally Posted by Daniel J View Post
Hi Everyone,

Just wanted to check in here again as it has been almost 2 years since I first posted on the site.

Based on the posts above, I checked out the Bogleheads site, became an active member there and read a dozen or so personal finance books. I managed to escape Merrill Lynch and started managing my own investments at Vanguard following Boglehead principles. All of that has gone very well and I am very grateful for the advice given here, thank you.

Currently I am in the throes of the OMY Syndrome. I made some changes in my business which have turned it around some and it has been consistently profitable. That said, I am still tired of it. As one Boglehead recently posted, "You know it is time to retire when you have enough and you had enough." That is where I am really.

In a nutshell know I have a good thing going on but it is very hard to walk away. For the past year or so, I have been working steadily, saving as much as possible and mulling about which direction to take. I keep going back and forth and am getting nowhere. I will outline the issues below in hopes of trying to sort out this difficult choice. I appreciate any feedback.

I currently own a house and a condo and run my service business out of a rented office, all in the San Francisco Bay Area. Aside from these complexities I generally follow a LBYM lifestyle.

Financials are:
  1. $3M in investment accounts, about 1/2 tax deferred.
  2. House market value as it is now $1.5M, loans $600k at 3.375% fixed and 2.49% floating. The house needs about $100k in work to get top dollar on resale (estimate $1.7M). The local housing market is insane, growth is anticipated 10% for the coming year. Currently vacant and it is much more house than I need. My inclination is to sell the house in this seller's market, diversify my risk and simplify my life.
  3. Condo market value $450k no loan. Nice place but the neighborhood is very urban and frankly, not great. Bought at the bottom of the market in 2011 as a possible retirement home and I like it most of the time. Currently living here as it is walking distance to work. All that said, if I decide to close the business I may not want to live here anymore. All fixed up and ready to sell or rent (estimated $2300 per month).
The many work endgame options I have been wresting with are:
  1. Keep on keeping on, make no changes at all. Currently netting $20k-$25k per month, almost all of it tax deferred.
  2. Sell the business (might be hard, although it cash flows nicely, most of the success is ME). This is likely the most logical option.
  3. Downsize the business to smaller office, be more selective about clients, work part time if possible.
  4. Move business back to house, be more selective about clients, work part time if possible.
  5. Walk away from business altogether. Life is short.
The housing/life choice options I have been wresting with are:
  1. Live in the condo, sell the house.
  2. Sell the condo, live in the house.
  3. Rent the condo, live in the house.
  4. Rent the condo and the house.
  5. Sell the condo and the house.

As you can see there are a lot of pieces to this puzzle! Appreciate any feedback. Thank you.
We decided to keep our businesses, scale back the hours to part-time and when the last kiddo is out, eventually sell the house and move to a condo with low expenses. We already work from home. If we are not too lazy and a bit lucky the part-time income might still cover our post kid expenses in retirement with minimal work.

I get buy out offers now and then but it is never for a life changing amount, and I don't want work more myself nor end up with potential seller's remorse like the people who sold Bill Gate a PC operating system for $50K. So I am just going to let things taper off.

Good luck with your decision.
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Old 06-29-2014, 03:51 PM   #13
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I find being a landlord more unpleasant than going to the dentist. I'd only rent it out if you can't sell it & feel like you absolutely need the cash. Sounds like you're in good shape otherwise.

Life is short, eat dessert first and retire early.
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Old 06-29-2014, 04:09 PM   #14
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For a frugal guy like me, reading someone has 3MM plus and making 20-25k per month is insane. Why didn't you retire MUCH sooner? Why even ask? Are you bragging?

Looks like a case of velvet handcuffs to me. Handcuffs are still handcuffs, time to get the scissors and snip.
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Old 06-29-2014, 04:36 PM   #15
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[QUOTE=Daniel J;1465606]Hi Everyone,

Just wanted to check in here again as it has been almost 2 years since I first posted on the site.

Based on the posts above, I checked out the Bogleheads site, became an active member there and read a dozen or so personal finance books. I managed to escape Merrill Lynch and started managing my own investments at Vanguard following Boglehead principles. All of that has gone very well and I am very grateful for the advice given here, thank you.

Currently I am in the throes of the OMY Syndrome. I made some changes in my business which have turned it around some and it has been consistently profitable. That said, I am still tired of it. As one Boglehead recently posted, "You know it is time to retire when you have enough and you had enough." That is where I am really.

In a nutshell I know I have a good thing going on but it is very hard to walk away. For the past year or so, I have been working steadily, saving as much as possible and mulling about which direction to take. I keep going back and forth and am getting nowhere. I will outline the issues below in hopes of trying to sort out this difficult choice. I appreciate any feedback.

I currently own a house and a condo and run my service business out of a rented office, all in the San Francisco Bay Area. Aside from these complexities I generally follow a LBYM lifestyle.

Financials are:
  1. $3M in investment accounts, about 1/2 tax deferred.
  2. House market value as it is now $1.5M, loans $600k at 3.375% fixed and 2.49% floating. The house needs about $100k in work to get top dollar on resale (estimate $1.7M). The local housing market is insane, growth is anticipated 10% for the coming year. Currently vacant and it is much more house than I need. My inclination is to sell the house in this seller's market, diversify my risk and simplify my life.
  3. Condo market value $450k no loan. Nice place but the neighborhood is very urban and frankly, not great. Bought at the bottom of the market in 2011 as a possible retirement home and I like it most of the time. Currently living here as it is walking distance to work. All that said, if I decide to close the business I may not want to live here anymore. All fixed up and ready to sell or rent (estimated $2300 per month).
The many work endgame options I have been wresting with are:
[LIST=1][*]Keep on keeping on, make no changes at all. Currently netting $20k-$25k per month, almost all of it tax deferred./[QUOTE]


This puzzles me. How can you own a business netting $20-$25K per month and have it tax deferred? I'm really curious about this.

Thanks. I'm just a doctor. We're notoriously bad with money.


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Old 06-29-2014, 04:36 PM   #16
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And by the way I'm jealous you have done so well in the Bay Area.


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Old 06-29-2014, 04:49 PM   #17
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This puzzles me. How can you own a business netting $20-$25K per month and have it tax deferred? I'm really curious about this.

Thanks. I'm just a doctor. We're notoriously bad with money.


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I don't know exactly the tool the OP is using, but here is an example of a defined benefit plan.

http://www.nytimes.com/2012/12/01/yo...pagewanted=all
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Old 06-29-2014, 08:13 PM   #18
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Originally Posted by Daniel J View Post
....The many work endgame options I have been wresting with are:
  1. Keep on keeping on, make no changes at all. Currently netting $20k-$25k per month, almost all of it tax deferred.
  2. Sell the business (might be hard, although it cash flows nicely, most of the success is ME). This is likely the most logical option.
  3. Downsize the business to a smaller office, be more selective about clients, work part time if possible.
  4. Move the business back to the house, be more selective about clients, work part time if possible.
  5. Walk away from the business altogether. Life is short.
The housing/life choice options I have been wresting with are:
  1. Live in the condo, sell the house.
  2. Sell the condo, live in the house.
  3. Rent the condo, live in the house.
  4. Rent the condo and the house.
  5. Sell the condo and the house.
....
2 and 1

I assume that there are no key employees who are interested in the business. Given your importance to the business might you be able to sell it and take a role as a part-time employee for some transition period.

I would lean towards selling the house and living in the condo until you are no longer involved in the business.
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Old 06-29-2014, 08:29 PM   #19
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I think before you decide what to do in the next year, you have to begin with the end in mind. What do you see yourself doing in 5, 10 and 20 years? What would your ideal day be? Where would you be living? Then work backward from there. No sense in selling your business if you don't have anything you'd rather be doing.
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Old 06-29-2014, 08:39 PM   #20
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I don't see a reference to what your annual expenses are.

I also wouldn't mess w/ being a landlord. Your guesstimate on rent of $2,300/mo sounds like it's gross, and less than 7% yield. Take out condo fees, insurance, and real estate taxes, and your Net Cash Flow isn't really all that impressive. And that's before any budgeting allowance for repairs, appliance replacement, vacancy, tenant damage, etc.

With 3MM in investments, and being a little conservative on selling your 2 residences, you'd be able to add another $1.2MM to the stash (after paying off the mortgage, realtor's fees, etc.).

What kind of a place would you want to live in? Assuming $800k is enough, that would leave your portfolio at $3.4MM, which should be able to spin off at least $100,000/year pre-tax.
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