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Hi, looking to ER as soon as possible.
Old 08-08-2005, 11:15 PM   #1
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Hi, looking to ER as soon as possible.

Will be turning fifty this year and have worked since I was 15. Like most of you I've decided that I am more interested in my hobbies than the corporate life. I had planned to work three more years, but it looks like my current job is going to end in 90 days. I don't really want to do the job hunt thing... So its time to retire early!

Here's my plan:
Have $500K cash and 700K in home equity. (Holding a 200k mortgage with 12 years to go)
No other debt. Wife will continue to work (bless her heart) part time. Her salary will pay all but $500 a month of our bills even after she puts 15k per year into her 401k. The $500 difference will be the only drain on the retirement savings unless we get way ahead and start taking vacations.

She can cover both of us under her health plan.

We live in the high tax state of California but my wife loves it here and won't move. That's OK with me too.

I think I've got it covered.
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Re: Hi, looking to ER as soon as possible.
Old 08-08-2005, 11:22 PM   #2
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Re: Hi, looking to ER as soon as possible.

Quote:
Originally Posted by DogsBark

I think I've got it covered.
Probably. Does that medical coverage include after retirement? If so looks pretty good. The other major issue is your spending level. But several folks here could live under the outline you provided.
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Re: Hi, looking to ER as soon as possible.
Old 08-09-2005, 01:28 AM   #3
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Re: Hi, looking to ER as soon as possible.

Quote:
Originally Posted by DogsBark
Will be turning fifty this year and have worked since I was 15.* Like most of you I've decided that I am more interested in my hobbies than the corporate life.* I had planned to work three more years, but it looks like my current job is going to end in 90 days.* I don't really want to do the job hunt thing... So its time to retire early!

Here's my plan:
Have $500K cash and 700K in home equity.* (Holding a 200k mortgage with 12 years to go)
No other debt.* Wife will continue to work (bless her heart) part time.* Her salary will pay all but $500 a month of our bills even after she puts 15k per year into her 401k.* The $500 difference will be the only drain on the retirement savings unless we get way ahead and start taking vacations.*

She can cover both of us under her health plan.

We live in the high tax state of California but my wife loves it here and won't move.* That's OK with me too.

I think I've got it covered.
Welcome to the board, DB!

You're spending about $6000/year on a $500K portfolio, or a 1.2% withdrawal rate. You're well within the limits of the 4% conventional wisdom, but you may still want to run your portfolio through FIRECalc (see the links at the bottom of the page) and make sure you're not too heavily allocated to cash or bonds... you'll have many years of contending with inflation ahead of you.

That spending includes all taxes, too, right? You'll probably be tracking your expenses for the first year or so of ER to see how/if your spending changes.
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Re: Hi, looking to ER as soon as possible.
Old 08-09-2005, 08:57 PM   #4
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Re: Hi, looking to ER as soon as possible.

Quote:
Probably. Does that medical coverage include after retirement? If so looks pretty good. The other major issue is your spending level. But several folks here could live under the outline you provided.
Doesn't include medical. What's a good number to plug in for that? I am planning to have 90K a year after my wife's retirement in my Firecalc simulation so we should be able to afford insurance.
Quote:
You're spending about $6000/year on a $500K portfolio, or a 1.2% withdrawal rate. You're well within the limits of the 4% conventional wisdom, but you may still want to run your portfolio through FIRECalc (see the links at the bottom of the page) and make sure you're not too heavily allocated to cash or bonds... you'll have many years of contending with inflation ahead of you.
When I use Firecalc, I plugged in a 20K per year withdrawal rate, not 6K, until my wife retires and then I kicked it up to 50K per year. I still get to 100% with an avg mean portfolio of 2,590,000 after 30 years. I assumed we would downsize the house and pocket 200K in 20 years, I also assumed social security would still be around when we turn 62.
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Re: Hi, looking to ER as soon as possible.
Old 08-09-2005, 09:12 PM   #5
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Re: Hi, looking to ER as soon as possible.

Quote:
Originally Posted by DogsBark
Doesn't include medical. What's a good number to plug in for that?
Costs for individual health coverage can vary widely based on pre-existing conditions, deductibles, etc. What you may consider a minor health problem may be something an insuance carrier will exclude or even deny you coverage on entirely.

Have you done some research on individual health insurance costs on ehealthinsurance.com or other online insurance sites? That will give you some idea of the costs you might expect today. In three years after your spouse retires and you actually apply for coverage, expect premiums to be 25-35% higher.

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Re: Hi, looking to ER as soon as possible.
Old 08-14-2005, 04:32 AM   #6
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Re: Hi, looking to ER as soon as possible.

I assume you have health insurance now and can COBRA for 6 months from your employer. Does DW's job offer HI? If not start looking. Its much easier to get coverage if you're already covered under another plan. If you let that lapse then insurance companies will take a harder look at you (and DW).

Dont let it get you down. This is one of the biggies when transitioning into ER.


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Re: Hi, looking to ER as soon as possible.
Old 08-14-2005, 08:59 AM   #7
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Re: Hi, looking to ER as soon as possible.

How long is your DW planning on working? I take it she has a pension. Up until she retires, it looks like you can easily take care of expenses.
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Re: Hi, looking to ER as soon as possible.
Old 08-14-2005, 09:27 AM   #8
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Re: Hi, looking to ER as soon as possible.


If you havent already, I have learned from this board to create a budget before and after FIRE. You will not be paying s.s. and medicare taxes and income taxes should come down as well. You may even be able to do with 1 car, etc. Cash flow from not having a mortgage is huge, also, although you arent quite there yet.
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Re: Hi, looking to ER as soon as possible.
Old 08-15-2005, 08:14 PM   #9
Confused about dryer sheets
 
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Re: Hi, looking to ER as soon as possible.

Quote:
I assume you have health insurance now and can COBRA for 6 months from your employer. Does DW's job offer HI? If not start looking. Its much easier to get coverage if you're already covered under another plan. If you let that lapse then insurance companies will take a harder look at you (and DW).
My plan was to have my wife add me to her employer's plan. It will cost us about $100/month to add me to her plan.
Quote:
How long is your DW planning on working? I take it she has a pension. Up until she retires, it looks like you can easily take care of expenses.
She will work until she can get social security benefits, maybe longer as she only works 30 hours/week now and likes her job. But no pension. She contributes 15% to her 401k and buys company stock ($150 month)
Quote:
If you havent already, I have learned from this board to create a budget before and after FIRE. You will not be paying s.s. and medicare taxes and income taxes should come down as well. You may even be able to do with 1 car, etc. Cash flow from not having a mortgage is huge, also, although you arent quite there yet.
That was one of the first things. Took DW's net take home pay, after 401k, stock investments, taxes etc... and compared it to current expenses less some reasonable cuts in taxes, fuel, clothing, cell phone, extra car and extra car insurance. We have 4 cars now which is a huge expense. Once the kids are through college we'll cut back to two.
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