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Hi everyone!
Old 07-24-2006, 05:33 PM   #1
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Hi everyone!

I just found this board - it's great.

I am researching retiring earlier (than we already planned). I am almost 50 and my husband is 52. We have put away about 1M, continuing to put away about 60K or more per year. We have no debt, but we do have a mortgage - luckily we refinanced at 4.875 for 15 years about 4 years ago, so that is going well.

We currently use a money manager for most of the funds, and yes I know we are giving up some money there, but previously we were so passive that our money was not working for us. When we get closer to retiring and can spend time managing it ourselves we will.

Our financial planner said it would be no problem to retire around 60, but I would like to retire earlier.

I look forward to reading more!
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Re: Hi everyone!
Old 07-24-2006, 06:28 PM   #2
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Re: Hi everyone!

Quote:
Originally Posted by Callie
I just found this board - it's great.

I am researching retiring earlier (than we already planned). I am almost 50 and my husband is 52. We have put away about 1M, continuing to put away about 60K or more per year. We have no debt, but we do have a mortgage - luckily we refinanced at 4.875 for 15 years about 4 years ago, so that is going well.

We currently use a money manager for most of the funds, and yes I know we are giving up some money there, but previously we were so passive that our money was not working for us. When we get closer to retiring and can spend time managing it ourselves we will.

Our financial planner said it would be no problem to retire around 60, but I would like to retire earlier.

I look forward to reading more!
So, the burning question is: when do you plan on retiring?
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Re: Hi everyone!
Old 07-24-2006, 07:00 PM   #3
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Re: Hi everyone!

Quote:
Originally Posted by Callie

Our financial planner said it would be no problem to retire around 60, but I would like to retire earlier.
Welcome! I would be cautious about what the planner said. I went to one of these planners years ago (company was paying for it), and was told same the same thing (55 in my case). In the mean time, I did a bunch of calculations and realized the planner really did not have the numbers they needed to do the job right. But they plug the numbers into their spreadsheet (garbage-in, garbage-out) and give you an answer and a nicely printed binder.

A few quick examples of what they missed:

1) No car payments - OK! Enter zero. [WRONG - I need to budget money to replace my cars in a few years!]

2) Medical Insurance: Just use my current contributions. [WRONG - I'm now paying 10x that amount]

3) Everything else was so 'back-of-the-envelope' as to be near worthless. They didn't question/review any numbers they got - just plugged and chugged.

But, I've got a binder with 100 pages of charts/graphs telling me what a great job I did in saving, and how they can help me to realize my dream.

A friend of mine just went through a similar experience. He bought it hook, line and sinker, and from what he has told me about his situation, I doubt he has enough for a 95% survival rate.

My concern is, that the planners will tell you what you want to hear, and they hope to lock you in to their annual fees to manage the portfolio. If they get 1% to 1.5% of your money each year, what do they care if you run out 25 years from now when you are 85? They will be retired. If they can get 20 accounts, averaging $1M - that's $200,000 a year! I'm sure they have expenses against that, but it gives you a ballpark.

I'm sure there are some good planners out there, but it is still best to do this yourself, IMO.

But this is a great place to learn how to do it on your own. It's not hard, and you do not have any conflicts of interest. That puts you way ahead of the game.

-ERD50

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Re: Hi everyone!
Old 07-24-2006, 07:01 PM   #4
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Re: Hi everyone!

Quote:
Originally Posted by Callie
We currently use a money manager for most of the funds, and yes I know we are giving up some money there, but previously we were so passive that our money was not working for us. When we get closer to retiring and can spend time managing it ourselves we will.

Our financial planner said it would be no problem to retire around 60, but I would like to retire earlier.
Hi, Callie. Welcome aboard.

If you haven't yet done it, you should spend some time with firecalc (link at the bottom of the page). That should be a great headstart on estimating when to retire.

Also, if you give a little more detail about your situation, you'll get some great advice here. For example, what do you estimate your annual expenses will be in retirement, how do you plan to handle health insurance, do you have any pensions waiting for you, do you plan to do any part-time work, etc.
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As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Re: Hi everyone!
Old 07-24-2006, 07:02 PM   #5
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Re: Hi everyone!

Hi Alex

I need to develop a plan to convince my hub that we can. *He is very conserative in making sure we are all set. *I think we can in 5 years, and we're both willing to work part time (we are both consultants anyway). *We are not big spenders either.

I play with numbers on this all the time, and they always look good. *We will have much less expense.

For example we pay 2K per month child support - that will be done in 4 years. *We have his 2 kids to put through college, but we already put away 3/4 of what is needed for private college and can pay as they go for the rest. *We can also pay off the house easily enough, though I doubt we will sell - we are in an average house.

It's hard to see how we can't. *the only wild card is of course medical, but thankfully we live in Mass where it is easy to keep insured. *We would go with a high deductible plan.

Another wild card is my mom has a large estate (>1.5M)and is doing very poorly (wish she wasn't) that would split between my sis and I. *Though we don't count that at all.

I need to develop a plan so we can work towards this. :-)

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Re: Hi everyone!
Old 07-24-2006, 07:11 PM   #6
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Re: Hi everyone!

Hi ERD

Yes, I hear you on planners, but trust me, my husband went through everything with a fine tooth comb. Any engine I use says we are in good shape.

I am still skeptical about planners in general also, to be honest, but I trust my husband and he is tracking everything and is very happy (easy to be when we were so neglectful before). We both have 12 hour a day jobs, until I quit mine a few weeks ago, which is why you see me here now.

I have done some work on expenses, but not enough. This is really the area I need to focus on. We really don't spend much though. We travel, but are pretty frugal about it in general. We drive our cars into the ground, no plasma TVs in the house...about the only thing I spend on is fixing the house (replacing things that need to be replaced).

Does FireCalc have a spreadsheet for this?
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Re: Hi everyone!
Old 07-25-2006, 05:48 AM   #7
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Re: Hi everyone!

Quote:
Originally Posted by Callie
I am still skeptical about planners in general also, to be honest, but I trust my husband and he is tracking everything and is very happy (easy to be when we were so neglectful before). We both have 12 hour a day jobs, until I quit mine a few weeks ago, which is why you see me here now.
This is where I was shortly before I stumbled on this board. We had most of the taxable funds with a manager with Ferris Baker. Before that we were both working 12 hours days and paying little attention to finance -- other than to save about 33% of gross income 8)

I still like the FB manager - she kept us in a well diversified portfolio and helped us avoid the worst of 2000-2002. As I got close to ER I started reading and running monte carlos, carefully calculating expenses etc. Just before RE I paid an hourly CFP to go over my calculations/plans just to see if I was missing something. We were careful to avoid someone who would just prepare an expense coffe table binder. The CFP was reassuring.

Then I found this board and realized I could have skipped all the paid help -- better late than never.
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Re: Hi everyone!
Old 07-25-2006, 08:58 AM   #8
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Re: Hi everyone!

Here are my three recommendations:

1. Wean yourself away from the financial planner. You are smart enough to do a much better job yourself.

2. Find a way to track your expenses comprehensively for at least a year (you'll probably want to continue once you start), so you'll know for sure how much you need.

3. Do some research and thinking about whether a public college will be just as good for your kids as a private college.
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Re: Hi everyone!
Old 07-25-2006, 11:34 AM   #9
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Re: Hi everyone!

Thanks Donheff.

I don't think we will be with the money mgr forever, but it's clear that she has done a much better job than us in the past year. My husband compares what would have happened if we did not do anything, vs her results, and they are so much better. In fact, she goes over this with us quarterly.

I know we will ease off eventually, but she has given us great advice on lots of things, plus doens't try to sell us anything. (life ins, etc)
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Re: Hi everyone!
Old 07-25-2006, 11:38 AM   #10
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Re: Hi everyone!

Great name TomboneAl :-)

Ugh, I would love to send the girls to public college, we are paying 45K per year for the first one. But my husband will not hear of it. He came from a family where they all went ivy league and parents paid for it all.

If she was going to be a doctor or lawyer it might make sense, but she is an English major.

I lost that battle. His ex-wife is the same, insists on the best. She wanted to enroll the younger girl in the most prestigious private HS in New England, 30K per year. But he put an end to that!
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Re: Hi everyone!
Old 07-25-2006, 11:43 AM   #11
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Re: Hi everyone!

We are saving about 40% or more of our gross income even with paying for college so it is not as bad as could be for other families.

Even before I quit my last job, I front loaded by 401K with 20K before I left incase I didn't take a job with a 401K (self employed consulting) before the end of the year.

Point well taken about tracking expenses. I think he sees retirement so far off that he is not into anything too time consuming right now.
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Re: Hi everyone!
Old 07-25-2006, 11:52 AM   #12
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Re: Hi everyone!

Quote:
Originally Posted by Callie
Ugh, I would love to send the girls to public college, we are paying 45K per year for the first one.* But my husband will not hear of it.* He came from a family where they all went ivy league and parents paid for it all.
$45K/y? So you are keeping a financial planner and a college employee in business!*

Quote:
His ex-wife is the same, insists on the best.* She wanted to enroll the younger girl in the most prestigious private HS in New England, 30K per year.
"The best" or "the most prestigious"?*
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Re: Hi everyone!
Old 07-25-2006, 04:47 PM   #13
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Re: Hi everyone!

Quote:
Originally Posted by Callie
Hi Alex

I need to develop a plan to convince my hub that we can. He is very conserative in making sure we are all set. I think we can in 5 years, and we're both willing to work part time (we are both consultants anyway). We are not big spenders either.

I play with numbers on this all the time, and they always look good. We will have much less expense.

For example we pay 2K per month child support - that will be done in 4 years. We have his 2 kids to put through college, but we already put away 3/4 of what is needed for private college and can pay as they go for the rest. We can also pay off the house easily enough, though I doubt we will sell - we are in an average house.

It's hard to see how we can't. the only wild card is of course medical, but thankfully we live in Mass where it is easy to keep insured. We would go with a high deductible plan.

Another wild card is my mom has a large estate (>1.5M)and is doing very poorly (wish she wasn't) that would split between my sis and I. Though we don't count that at all.

I need to develop a plan so we can work towards this. :-)

Sounds like you are in pretty good shape, overall. The first thing I would do is read Bob Clyatt's (he posts here as ESRBob) book - Work less, Live more - it is an excellent primer and will get you started by asking yourself the right questions. It also has some very sound financial advice. He also writes in a style that I personally enjoyed. Then you can go to FIRECALC and run some numbers there and see how things stack up. Lastly, there are lots of folks on this forum that can answer specific questions, so don't be shy and ask. Good luck!
PS - where in Mass are you located? I have family all over the Boston area...
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Re: Hi everyone!
Old 07-25-2006, 09:09 PM   #14
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Re: Hi everyone!

Hi Alex

Thanks for the advice. I will check out that book and work on more numbers.

We live in Reading, about 15 miles north of Boston.

Another wild card is that the company my husband has been consulting with (> 2 years) is trying to hire him permanently. It's a large financial services co. - the salary would be lower, but apparently the retirement benefits are to die for. I told him to make sure he wouldn't have to be there 10 years to take advantage of them.

I would like that, we are on cobra now, but it's not too bad yet in terms of cost.
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Re: Hi everyone!
Old 07-25-2006, 09:39 PM   #15
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Re: Hi everyone!

Quote:
Originally Posted by Callie
Hi Alex

Thanks for the advice. I will check out that book and work on more numbers.

We live in Reading, about 15 miles north of Boston.

Another wild card is that the company my husband has been consulting with (> 2 years) is trying to hire him permanently. It's a large financial services co. - the salary would be lower, but apparently the retirement benefits are to die for. I told him to make sure he wouldn't have to be there 10 years to take advantage of them.

I would like that, we are on cobra now, but it's not too bad yet in terms of cost.
Sounds like you are in good shape!

BTW, Our family is mainly located on the South Shore - Milton, Braintree, Marshfield etc. The family started out in Southie 75 years ago, and they seem to be migrating further down the cape - we now have a few moving to Kingsford! I figure give 'em a few more years and they'll be down to Falmouth....or further!
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