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Help. I am 56 and have about 850k
Old 09-24-2007, 02:28 AM   #1
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Help. I am 56 and have about 850k

in retirement funds and a home worth about 375k aand still owe about 300k on the house.. The question is will I ever be able to retire? BTW I hate my job but it puts food on the table.
All the best, Sunny
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Old 09-24-2007, 02:48 AM   #2
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Welcome Sonny.

You need to do a detail study of your expenses. One big consideration is medical cost. Don't forget extraordinary expenses like house repair and car purchases over time.

Then take inventory of your sources of income.

Do you have any pensions coming to you? Does you company provide health care when you retire?

Based on the 4% guide, $550k (net after house is paid) would give you $22k/year (if invested properly).

Basic Math:
The yearly income you can safely generate - Your yearly expenses (with Health Care) + periodic extraordinary expense (e.g. car purchase) should = or > 0

You can answer the question yourself.

Medical expenses alone sometime put people in a situation to have to wait till 65. Some can afford to pay for the 3 years until Medicare kicks in.

$550k net with 10 years before SS and Medicare is a pretty good position to be in, but I do not know if it is enough to FIRE. Congratulations on the saving discipline.


All I can share with you is my personal opinion. I would not FIRE at 56 if my net worth was $550k and I had no other assets. Our basic lifestyle costs us around $40k/year (without extraordinary expenses).


About your job... I think we all hate our jobs.

Look forward to seeing your posts in the forum.
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Thanks Chinaco
Old 09-24-2007, 02:59 AM   #3
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Thanks Chinaco

Thanks for your input. I had to laugh when you said don't worry" everybody hates their job".I am trying to stick it out for another 2 years( seems doable but excruciating long) to help payoff a bit more on the house by then I could have it down to about 200K. and the retirement up to about 900k. I really appreciate your input. thanks
Sunny
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Old 09-24-2007, 03:48 AM   #4
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I had to laugh when you said don't worry" everybody hates their job".
Yea... Job bashing is a popular sport in the forum.
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Old 09-24-2007, 06:00 AM   #5
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Assuming your $850 K is in an ira you could do a 72t withdrawal using the amortization method which would produce $63 K per year. (72t.net)You would have to continue the withdrawals for 5 years then you would be over 591/2 so you could adjust as necessary. Age 62 you would be able to draw Social Security and perhaps reduce your withdrawal rate.

It looks like the house is what is standing between you and retirement.

I could retire on what you have at your age.
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Old 09-24-2007, 09:11 AM   #6
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Sunny, check out FIRECalc -- there's a link at the lower right edge of the page.

And welcome to the forum!

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Old 09-24-2007, 10:31 AM   #7
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Welcome to the forum. Keep you head up and everything will work itself out.
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Old 09-24-2007, 01:29 PM   #8
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Quote:
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in retirement funds and a home worth about 375k aand still owe about 300k on the house.. The question is will I ever be able to retire? BTW I hate my job but it puts food on the table.
All the best, Sunny
850k saved for retirement is abnout 34k of income using a 4% withdraw rate. If you can live off 34k, you have potential.

If 2 years of paying down mortgage is 100k of "disposable income", then maybe you want to think about this:

What is interest rate on mortgage?

If adjustable, but below 5%, set the money aside in a conservative investment earning around 6% post tax (40-60 balanced fund works).

If fixed, and below 6%, set the money aside in a conservative investment earning around 7% post tax.

If fixed, but above 6%, pay down mortgage with 100k.
If adjustable and above 5%, pay down mortgage with 100k.

The goal is to have the highest amount of mortgage paid down in 2 years, so if you can invest and earn more than the interest rate, something to consider (this has risks associated with it).

If 4 years of working can pay off 200k of mortgage, then the picture becomes clearer... while the 850k grows (I assume this is growing around 8%?).
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Old 09-24-2007, 02:42 PM   #9
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If fixed, and below 6%, set the money aside in a conservative investment earning around 7% post tax.
Any suggestions what that investment might be
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Old 09-24-2007, 03:01 PM   #10
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Any suggestions what that investment might be
I think 70-30 should get 8% pre-tax returns. 60-40 would if first year's returns were higher than expected.

Obviously this has much volatility to it, so OP would need to think about this. If first year got 12% return, moving to a more bond heavy position would make sense (with the goal to beat 7% return over time, not each year).
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Old 09-24-2007, 09:24 PM   #11
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Welcome to the forums Sunny. As you have already seen, there are a lot of folks here with a lot of ideas about how and where you can invest your stash to get the "best" return. Knowlege is a key element in any choice as is your tolerance for risk and your timetable for when you are going to need to start spending it.

Many of us disliked our jobs and that was a large contributor in the final decision to retire early. The ability to retire early is the challenge. Some do it on far less than their pre-retirement income and accept the more frugal life style while others either wait longer or have been able to build a larger nest egg ( or have a fat pension) to be able to live higher on the hog while still being able to leave the job early.

As has been said, expenses are the key to knowing how much you need in your nest egg and consequently how long it will take to gather the required $$$$. If you can live cheaper you need less $$$ and can retire earlier, etc.

There are folks here with over $10MM and others with less than $500K but are happily retired and living a new life without the daily structure and shackles of w*rk.

Use the Search feature and do some research on prior discussions on any number of topics that you wish to know more about. Chances are it has already been discussed in depth already. If you can't find what you are looking for then feel free to post in the appropriate areas.

Good luck and again, welcome to the forums.
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Old 09-25-2007, 02:09 PM   #12
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Welcome Sunny, Not much more I can add except for you to go to the "Best of the Boards" forum on this site and check out the thread for "Handling the just one more year" Syndrome. I just joined the board a few days ago and a lot of the posts on that thread are inspirational as to how to view early retirement. I'm still just one more year away but I got a lot closer after reading those threads.
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Old 09-26-2007, 12:05 AM   #13
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Thanks to all . I really appreciate all the great answers and thoughts and efforts put into yours answers. I am putting ever effort possible to pay off the house before I leave my present job. If I could do that I would feel I could retire with a reasonable and finacially comfortable life style for myself and my wife.(not great but not cat food and cheetos either).
2 more years at my job is about the maximum time period I can work as mangement is trying to find cheaper foreign labor to replace my position and job skills. In the meanwhile, in 2 years, I probrably can knock off about 50k a year on the house mortgage.
I have made about 10 to 12% retrun on my retirement fund investment mix for the last 5 years and expect about 6 to 8% for the next 2 year plus my additional contributions. My wife is asking my why don't we have our house paid for at our age when many of her friends have their homes paid for. I tell her that her friends bought their home about 20 years ago or more.( we started very late so it is our fault) Where as we just bought our first home this august so we are trying to play catch up as quickly as we can but it is really seems to be quite a daunting task . I just wish there was some way to increase my income to get this 300k mortgagte debt out of the way quicker. As both my wife and I would love to retire or more accurately (not have so much work stress in my life) But Bills must be paid so it is still hi ho ho its still off to work I go.
Thanks All
Sunny
PS I also know that I am luckier then some in my retirement saving and worse off then others, just trying to find a formula that help us live ok in our "golden years", which seem more like tin or zinc. or styrafoam years as we approach them. Scarry stuff but must go foward. Good luck and God bless us everyone.
Sunny
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Old 09-26-2007, 01:12 AM   #14
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As has been stated before, there are numerous ways to approach this issue. However, almost all ultimately deal with what is the minimum amount of money you need annually to support your lifestyle(either that to which you've become accustomed or that with which you can reasonably tolerate). Put another way, can you reduce your expenditures to meet the income generated from your current nest egg?

Most everyone has a little different situation. I retired 1 month ago at 55. I have a small pension which just covers medical insurance for my wife and me-med ins is virtually tied with housing as our largest expense. We sold our townhouse and leased a smaller home. With the TH sale, our available funds increased to about what you stated. In an effort to maintain full disclosure, my wife has a part-time job (she checked out of corporate America 6 years ago) working from home that brings in less than 15K...but it does keep her off the streets !

Rather than rely on the oft-referred 4% withdrwal rate we took a little less than 1/3 of our nest egg, currently bringing in 7.5% invested in various ways. Interest and principle will supplement our requirements for ~10 years. That allows the remaining 2/3 + 10 years to grow before we should need it. We currently plan SS beginning at 62 for her and 65 for me.

If our situation becomes untenable in the next 7 years well, there are opportunities in my field to go back and work on a part-time or (shudder) full time basis.

So, congratulations on the 850K! As my meditation teacher says, "Its simply the art of what's possible."
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Old 09-26-2007, 03:01 AM   #15
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Next time your wife asks, sit down with her on your books and start making a plan to max out savings untill retirement start.
Keep track of each $ in writing, every day. This alone reduced our expenses by 10% p.m. when we started - years ago.
Analyse your spending habits: how much eating out our buying prepared food could be avoided if you (both) cook from scratch or learn how to prepare your favorite food at home? Check out copykat.com for recipe lookalikes.
Could you bring your own food to work and eat in a pleasant environment like a park?
Do not underestimate the power of small regular savings.

Check out web info on how to change spending habits like www.slnet.com. MSN money authors Liz Pulliam Weston and MP Dunleavy offer some brain food on this, too.

Your golden years must not be tin or zinc if you find out how to afford what really matters to you and how to get this at low cost.
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Old 09-26-2007, 03:41 AM   #16
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I amy have missed it, but I don't see anything about pensions or SS for you or your wife. What is your mortgage payment and house taxes? I think you said you have a $300.000 loan, so your payment shouldn't be too bad. If your entitlements are OK, and you have a way to bridge medical insurance until Medicare kicks in, you may be in better shape than you realize.

America is full of people who will retire with much less than you have.

BTW, is your wife serious with her "Why isn't our house paid off?" How could it be paid off if you just started payments? Or is this just another way of saying,

"Why don't you do right, like some other men do?
Get out of here, get me some money too..."

Netphotography Journal » “Why don’t you do right”

Ha
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Old 09-26-2007, 04:43 AM   #17
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I

"Why don't you do right, like some other men do?
Get out of here, get me some money too..."

Netphotography Journal » “Why don’t you do right”

Ha

Great music.
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Old 09-26-2007, 08:28 AM   #18
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Why not consider establishing a secondary income source before you FIRE? You can do some internet advertising or affiliate marketing and when that recurring revenue builds up enough to give you the added security, then FIRE. You more J O B, but with a little added security and no boss to deal with.
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