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Hi, I turn 55 tomorrow (21 March), and am retiring June...
Old 03-20-2012, 09:52 PM   #1
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Hi, I turn 55 tomorrow (21 March), and am retiring June...

And am so excited! So initially, I just have a couple of questions...

1. Any advice as to how to get through these final three months at work? I'm an engineer and manager, and it is very difficult to concentrate and take my job seriously anymore. People have said this time is going to fly by, but it has been dragging. I need to get my brain back into it somehow, but I keep dreaming up plans of things to do and places to go. I've already got the rest of 2012 and much of 2013 planned. A six week road trip of western U.S. to visit family and friends, backpacking the grand canyon and canoeing the Colorado, kayaking off the California coast, and then about a three month journey to Asia. And then in 2013, remodeling and landscaping my place here in Tucson.

2. My second concern may be easier to address. About 75% of my funds are in Apple stock, and the rest I recently moved from s&p index to fixed. I know I should be more diversified, but, what can I say... It's paid off to be bullish on AAPL. So, I guess it would be prudent to sell some of that and put it into an income fund (although Apple will be paying a modest dividend starting in July). I read a thread suggesting Wellesley income fund, would there be any others that anyone could suggest looking at?

I feel lucky to have discovered this forum, thanks.

Rob
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Old 03-20-2012, 10:13 PM   #2
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Originally Posted by wander luster View Post
I've already got the rest of 2012 and much of 2013 planned. A six week road trip of western U.S. to visit family and friends, backpacking the grand canyon and canoeing the Colorado, kayaking off the California coast, and then about a three month journey to Asia. And then in 2013, remodeling and landscaping my place here in Tucson.
Congratulations, but it sounds like you may need to go back to work for a bit of rest after getting through that list.

75% of your "funds" in one stock is too high - many of the people on this forum don't have that much in stocks even through a low cost index fund. as you shift into retirement (IMHO) risk reduction becomes more important than reaching for better returns.
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Old 03-20-2012, 10:59 PM   #3
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Congratulations!

On #1, although I had only a bit over 2 months to go from when I decided to RE until I (happily) handed over my badge and laptop, I found it also very distracting. So I used some of the good old-fashioned time management tricks to stay productive. What worked best for me was to pick one significant task that I made myself complete each day. Sometimes it was normal business, other times it was something that I wanted to pass along to my successor to make their life easier.

On #2, you know from looking at this board that you are in dangerous territory. There's plenty of advice to be found but doing something rather than nothing is certainly prudent. And that doesn't necessarily mean selling a bunch of AAPL and parking it in cash.

Good luck with your journey to ER!
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Old 03-21-2012, 08:07 AM   #4
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Ditto on the diversify. Sh*t happens. Apple sounds safe but who knows what the future holds.
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Old 03-21-2012, 08:16 AM   #5
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I can understand your trouble focusing during those last months, I was working part time on a flexible schedule when I ER'd so it was easier. However, remember that your employer is paying you good money for your services and the employees you manage need your leadership so you need to just bear down and persevere and do the job.

I agree that your lack of diversification scares me. Perhaps you can diversify but retain some exposure to AAPL through buying some calls on AAPL (but I suspect that AAPL calls are probably expensive it may be better than being so concentrated).
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Old 03-21-2012, 08:38 AM   #6
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Hi WL and welcome to the forum. Congratulations on making it to early retirement! Sorry your last days seem to be dragging along, but with your list of stuff to do, it is easy to see why. No real advice, just stay the course.

As to your portfolio, what could go wrong with 75% of one's portfolio in just one stock? If your cost is low and appreciation large, it could be difficult to change that. The question you need to answer, however, is what asset allocation is right for you. Do you have enough cash and low risk assets to withstand a sharp downturn in equity markets? First set your allocation targets, then look at how best to get there.
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Old 03-21-2012, 10:24 AM   #7
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You are obviously a person who knows how to be successful. I would think that among the people you manage there are at least a few who need some help in that area. They may have the education and smarts to make okay employees but maybe they come up short in the area of responsibility or they lack focus and this is holding them back from being great employees and getting the promotions. You could try to help one or two of those people to learn how to be successful. If you could just get one of those people on the path to being a better employee you would be doing them and your employer a lasting favor.

As has already been mentioned you might want to consider selling some of that Apple.
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Old 03-21-2012, 11:07 AM   #8
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Hi, wander luster, and welcome to the Early Retirement Forum.

Quote:
Originally Posted by wander luster View Post
1. Any advice as to how to get through these final three months at work? I'm an engineer and manager, and it is very difficult to concentrate and take my job seriously anymore. People have said this time is going to fly by, but it has been dragging. I need to get my brain back into it somehow, but I keep dreaming up plans of things to do and places to go.
OK, I can address this one. During my last few months at w*rk, I found it helpful to try to finish any projects that I could and to make sure that each of the rest made a seamless transition to someone else. Then, when asked I was there to consult or help on these projects as they got up to speed.

One of my ongoing job tasks was pretty complex and political, and somewhat opaque due to its political aspects. To make a long story short, nobody else knew how to do it. For that task I even wrote a manual for my successor explaining what needed to be done, with whom, and why.

I made sure any confidential materials were dealt with appropriately. I went through my file cabinets of paper files and through my 20,000 saved emails and forwarded just a few to those who would need them. I trashed the rest.

This sort of activity not only smoothed the transition, but also once I retired it was wonderful to know that everything was in good hands and that I had done all that was humanly possible to make sure no problems arose after I left.

Sure, none of this was required. After I retired, it was nice to know that I had done it, though.
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Old 03-21-2012, 11:08 AM   #9
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Someone once requested that I watch the movie Office Space to help me understand how to get through the last few weeks at work. It did help.
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Old 03-21-2012, 11:11 AM   #10
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Apple's been a great play for the last few years, but I don't think I could sleep at night with 75% of my portfolio concentrated in *any* company's stock.
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Old 03-21-2012, 11:15 AM   #11
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As far as how to get through the work day, I wouldn't worry about it too much. If it needs to get done, I'm sure you'll do it. If it doesn't, let it slide. Personal pride was the only thing that got me through the last few months. I hated to leaev something undone. But I sure didn't kill myself getting anything new assigned to me. Just do your best.

Regarding the stock issue, way back in the late 90s I was often on the Motley Fool's Early Retirement forum. My hero at the time was a guy who had retired in his 30s based on working for a company whose stock and options had put him in an incredible position, worth a few million. He got a lot of advice telling him to diversify, but he was sure he had it made. His screen name was AAPL. Sometime in 2001 he came into the forum and told us all he was leaving, because he had to go back to work. I never heard from him again. Just saying.
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Old 03-21-2012, 11:17 AM   #12
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1. Not much help, but it gets better based on my experience. Work really started to drag about 3 months out for me too, and that continued for about 2 months. Like W2R I focused on closing projects and tying up loose ends so I didn't leave anyone hanging. But my work was mostly long term projects & initiatives, so I could not start anything that I wasn't sure I'd be able to see through. That left a big hole in my calendar. But the last 4 weeks or so just flew by. Not sure why, but hopefully you'll have the same experience.

2. The risk of overloading on one company stock is the same risk smart investors try to avoid in any portfolio: Too much of any single stock magnifies a loss in that portfolio should that stock's fortunes sag. The average defined-benefit pension plan, funded by the employer and professionally managed, maintains only 2 percent in its own company stock. Generally, the advice for individuals is that it should never exceed 5 to 10 percent of your entire investment holdings.
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Old 03-21-2012, 12:24 PM   #13
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Congrats on your pending retirement!

1. The last few months are tough. I spent most of my last few months of full time work getting people up to speed on doing my job. My remaining time was spent planning retirement activities. Even though you have 2 years mapped out, there could be a lot of retirement plan fine tuning that you could do. This could make the last few months of work go by easier.

2. Even though it looks like Apple is on top of its game, I agree with the others that have recommended diversification.
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Old 03-21-2012, 04:22 PM   #14
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Cause I am a nice guy, I will take that apple off your hands for a hundred bucks a share
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Old 03-21-2012, 07:28 PM   #15
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Happy Birthday. Congrats on early Retirement. Reading from all the posters, Im learning. Lots of good info. here.
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Old 03-21-2012, 10:06 PM   #16
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Apple is a great company and is doing fantastic. Remember that years ago Apple almost bit the dust. I too own AAPL but only about 5-10% of my total Port. You need to limit your risk.
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Old 03-21-2012, 10:47 PM   #17
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I thought we were bad with 10% in Apple! But I still don't see them going the way of Enron etc. I would run your plans with what would happen if Apple pulled back to $400 (where it was at last fall) and then see how you feel. I'd start by cutting it back to 50% over the next few weeks; the new iPad glow won't last forever.

To balance out Apple, Google etc., we are putting a lot of new money into Vanguard Wellesley and Wellington, but I don't expect them to be as good as they have been the past 10 years. (I prefer them to total bond funds though.) Also look at boring Vanguard Utilities.
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Old 03-22-2012, 01:03 AM   #18
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Great call on AAPL. Don't let anyone criticize your success. Yes, you broke all the rules on diversification - but it worked.
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Old 03-22-2012, 01:05 AM   #19
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Hello everyone. Thanks so much, appreciate and value your thoughts.

Just had a few birthday drinks at happy hour with friends, so forgive me if this post isn't as cogent as it could be, or a bit wordy.

A couple weeks ago (when i was sober) I worked out a spreadsheet budget that was as all-inclusive as I could make it, including things like increasing health premiums after COBRA, travel and emergency money, and bills that I pay for my mother, as well as planning for future expenditures like house renovation and car replacement in the next few years. I came up with desired net income, inflated it for taxes to a corresponding gross.

The result is an income that is well padded, but realistic (I hope) for me, a single guy. Call this income value X. Now X, for some, could be as low as $40k, or maybe as high as $100k, or maybe much more I suppose if you needed to pay a mortgage or rent in a place like Manhattan or San Francisco, or if one had alimony or child support obligations like others at work ( I managed to stay sober enough over the years to avoid that thank goodness) My X falls between those extremes.

I then added my retirement income from my modest pension with 72(t) distributions from my primary IRA. Lo and behold, my pension and IRA distributions work out to be almost exactly X, with about $100 a month to spare. That was when I made the ER decision.

My primary IRA has 7X in aapl stock plus about 2.5X in cash. I have three other accounts, a 401k with about 4X in cash and s&p index, a Roth IRA with 3X in stock, and personal savings currently with 1.5X in stock and cash. All my stock positions (except for s&p index) have trailing stop-losses in case of a black swan event, or if Apple goes the way of Enron, as someone had mentioned.

Given that I always have X, and I use the stop-loss for all stock positions that, by the way, you cannot use for a mutual or income fund, doesn't it make sense to just hold on to the stock?

Thanks to everyone for the great response. it was helpful. Will be training my replacement in April and that should keep me focused and pass the time well.
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Old 03-22-2012, 09:06 AM   #20
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Hello everyone. Thanks so much, appreciate and value your thoughts.

Thanks to everyone for the great response. it was helpful. Will be training my replacement in April and that should keep me focused and pass the time well.
So you spend $X/yr and will have $X/yr retirement income from a "modest pension with 72(t) distributions from my primary IRA" (though I didn't see if COLA is factored in at all). You have 18X in assets, 9.5X in your primary IRA and 8.5X other. FIRECALC results:
  • Success rate of 80.2%**, end of plan worst case $ -38X, best case 206X, average 40X - if no COLAd retirement income.
    • **20 of 101 cycles failed.
  • Success rate of 100%, end of plan worst case $ 8.5X, best case 181X, average 70X - all retirement income inflation adjusted.
  • Both without Soc Sec, which would improve the FIRECALC results significantly.
Congratulations, looks like you're in pretty good shape.

But I still wouldn't risk having that much in any individual stock, especially in your primary IRA, evidently your largest source of 72(t) retirement income. YMMV

It's also interesting you hold 7X in AAPL (pretty risky) and approaching 8X in cash (very risk averse, and losing ground to inflation currently?).
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