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Hi there-- I'm scared
Old 04-09-2006, 06:47 AM   #1
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Hi there-- I'm scared

I am glad this site is here. I am 50 with about 700K in assets, 54K in debt. My house is about 180, 30 of debt is on the house. 80 K of what i ahve I can touch. i figure I can live on 30/yr.

I hate my job AND my boss, and i will leave in June (gets me to my 30 K for the year). I want to take off six months and then look again. But oes the collective wisdom out there think I can retire NOW?

I am so used to gettign a paycheck and saving that teh thought of spending anything scare the bejesus out of me.

Thansk for any comments out there!
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Re: Hi there-- I'm scared
Old 04-09-2006, 06:57 AM   #2
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Re: Hi there-- I'm scared

You're close and could go for it now.

From a traditional ER standpoint, you can pay off your debt and have $650K left.* That has the potential of generating about $26K annually (inflation protected).* You can look at supplementing this with part time work or other forms of income.* IMHO this is cutting it too close.* I like to think I would only do part time work if the portfolio tanked but others will have different perspectives.

The other more aggressive approach is to calculate how much you need to simulate SS which can kick in at 62. The remainder of the portfolio X 0.04 would be how much you could add to your simulated SS. You can get an idea of how much SS you would qualify for from the annual statement they send you. From what little I know about you, I am guessing SS will be around 18K. Finding that $18K for 12 years would cost about $170K (laddered CD's or something real safe). The remaining $480K could generate $19K. Adding that to your SS you would have $37K/yr. That's doable but I don't know about your tax situation. Yadda. Yadda.

Personally, look for a better job, lower stress position even if it pays less.* Make sure you have a well diversified portfolio and let things grow a couple of years and evaluate your situation again.* Do some serious reading and planning in the interim. When you understand the economics, go for it.

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Re: Hi there-- I'm scared
Old 04-09-2006, 08:19 AM   #3
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Re: Hi there-- I'm scared

A number of people are able to live quite frugally, but health insurance can be a big expense. Do you have an inexpensive source of healthcare coverage?
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Re: Hi there-- I'm scared
Old 04-09-2006, 09:22 AM   #4
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Re: Hi there-- I'm scared

Welcome to the board, OHjosh.

The first issue you need to consider is health insurance. If you won't have it from your company then you're going to have to buy your own, and many FIRE portfolios aren't big enough to handle that expense. Martha and others have a number of threads with the keywords "health insurance" that you can search for more information.

If you're not totally averse to work, then take a break and take it a few months at a time. You probably have your expenses figured out but you'll have more time in the next six months to tweak the numbers and see how your FIRE budget is shaping up in practice.

If you haven't already, you need to read "Work Less, Live More"...
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Re: Hi there-- I'm scared
Old 04-10-2006, 03:09 AM   #5
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Re: Hi there-- I'm scared

Quote:
i figure I can live on 30/yr.
Where do you live? Also you shouldn't be scared, if you have the will and the know how, you can make it work. You have developed a decent nest egg... that isn't scary, there are a lot of people your age who are not even close to that. Invested properly, and living in an inexpensive area can hep out dramatically. You can always find PT work you enjoy doing to help supplement your income. If you play golf, work at the golf course club house. You probably can sneak in a few free rounds as well, whatever, find something you enjoy doing and do it. Life is too short not to live it a little.

Good luck!
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Re: Hi there-- I'm scared
Old 04-10-2006, 05:49 AM   #6
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Re: Hi there-- I'm scared

Thanks to all who wrote so far. I do have the ability to get health insurance from my partner at only $113 a month. I will take COBRA for six months to get to 1/07 on that score.

I know rationally that I have enough money. And I do intend to work again, although my friends tell me that with my personality and skills I will need to be take a chief job, not an "indian" . But inside I feel this terror of taking control of my own financial life. I have been a wage slave so long, and even if I hated it, it was safe and I though I knew how the game is played!!!

I am beginning to realize that no matter if I did this at 55, 60 or even 66 and 2 months I would be feeling this insecurity. After counseling (I know I need to work this out somehow!), how did some of you handle the idea that the money was not going to roll in anymore and it would be okay to use what you stored up?

I hope this touches a similar chord in someone. I'm not crazy-- just a child of a child of the depression (and a tad neurotic) :!
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Re: Hi there-- I'm scared
Old 04-10-2006, 06:21 AM   #7
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Re: Hi there-- I'm scared

OHJosh

Take the following with a grain of salt - since I retired into a lucky decade(90's) and went without health insurance for 12 years(big gamble!). 1993 - 300k plus duplex. Single. Age 49.

Strongly influenced by parents - Great Depression experience, my mental view of the whole deal went like this early on: aka the Norwegian widow - live paycheck to paycheck( being now div's plus interest) - or put another way current yield of portfolio(what I own).

Just now at 62 (13th year of ER) trying to get comfortable with the SWR at higher than current yield(5% this year).

Since you often have the most control over expenses - I always tryed to bring/keep them under current portfolio yield.
Now letting go a little I mentally divded into core(living) and frivolous(fun stuff).

Sooo - pick a benchmark - like er ah the ole trusty - pssst! Wellesley.

Current yield 4.37% times say 700k gives 30.59k benchmark.

Benchmark to play mental games around with what you have.

I do - knowing current yield of what I own covers 'da core- shelter, food, transportation, utilities, etc - reinforces my mental comfort zone. As good as the my old regular paycheck of the now distant past.

I harp on the Norwegian widow a lot.

heh heh heh heh heh
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Re: Hi there-- I'm scared
Old 04-10-2006, 06:57 AM   #8
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Re: Hi there-- I'm scared

$630,000 invested @ 7%, withdraw $30,000 Annually, Indexed @ 2%

for 30 Years, you will have $1,155,000 left.

Withdraw for 40 years, you will have $1,237,000 left

Take $35,000, 30 years at 2% Index, $450,851 left.
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Re: Hi there-- I'm scared
Old 04-10-2006, 07:56 AM   #9
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Re: Hi there-- I'm scared

Quote:
Originally Posted by Maximillion
$630,000 invested @ 7%, withdraw* $30,000 Annually, Indexed @ 2%
for 30 Years, you will have* * * * * * * * *$1,155,000 left.
Withdraw* for 40 years, you will have $1,237,000 left
Take $35,000, 30 years at 2% Index, $450,851* *left.*
So, Max, what's your point?

Are you trying to say that inflation will stay at 2% for the next 30 years, even though it hasn't done so for any 30-year periods in the last century?

Are you suggesting that OHJ can retire fully, or are you suggesting that it's better to seek part-time employment?
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Re: Hi there-- I'm scared
Old 04-10-2006, 08:11 AM   #10
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Re: Hi there-- I'm scared

Nords,my point is that he can retire, he has lots of cash.

INFLATION is defined by a Basket of Goods, MOST of which are Non Relevant to a Retired Person with Mortgage free House who is DEBT FREE.

INFLATION is a Pensioners Friend, Yields go up on Bonds, CD's , and Indexed Pensions, Savings.

Most of us are immune from the ravages of inflation, we ain't buying many clothes, we don't spend a whole lot of money on gas to commute, our kids are through school, we ain't renting etc

Governments would rather understate CPI, that means they have to pay less to those who are receiving Indexed Payments.
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Re: Hi there-- I'm scared
Old 04-10-2006, 08:47 AM   #11
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Re: Hi there-- I'm scared

Quote:
Originally Posted by Maximillion
Nords,my point is that he can retire, he has lots of cash.
INFLATION is defined by a Basket of Goods, MOST of which are Non Relevant to a Retired Person with Mortgage free House who is DEBT FREE.
INFLATION is a Pensioners Friend, Yields go up on Bonds, CD's , and Indexed Pensions, Savings.
Most of us are immune from the ravages of inflation, we ain't buying many clothes, we don't spend a whole lot of money on gas to commute, our kids are through school, we ain't renting etc
Governments would rather understate CPI, that means they have to pay less to those who are receiving Indexed Payments.
Thanks for that lecture, Max, without it I wouldn't have understood the concept of inflation or my COLA pension.

OHJ must be relieved to learn that he's immune from inflation on groceries, utility bills, medical insurance, home/car insurance, replacement vehicles & appliances, new roofs, restaurants, vacations, & other entertainment expenses. Or else he'd have to worry about running out of money!

While inflation may raise the yield on some investments, I think that its adverse effects on the economy (and the rest of one's portfolio) may outweigh the benefits of a high-yielding CD. I'm not eager to live with the consequences of having a checking account paying 10% interest.

BTW I've been ER'd for five years and will have a kid in school/college until at least 2014. You have no freakin' idea what OHJ's child-raising expenses are because you haven't even bothered to ask him before pontificating on his lifestyle.

OHJosh, I think you're getting pretty good advice (from a majority of the posters) that you're able to pull the plug. You need to take your spending budget through FIRECalc to see how your portfolio would survive, and you might want to think about part-time employment if a bear market savages your portfolio for more than a year or two.

The best thing to do now is to get out of the toxic employment situation, take a breather, and figure out where you want to go next!
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Re: Hi there-- I'm scared
Old 04-10-2006, 09:11 AM   #12
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Re: Hi there-- I'm scared

nords ER 16 years and I had two kids in School both of whom worked to pay their own way through.

I know what it is like to live in Retirement and also how dramatically your living costs should go down.

Our Grocery Bill is less than $100 a week, we share a steak because we physically cannot eat one each.

We split a Baked Potato, because that is how much we are comfortably eating.

I rarely go to movies, but i do hike and bike a lot, the trails are free, the companionship priceless.

Not sure of your education, but I have a Pre Med/ Economics Undegraduate, Graduate studies at 5 Universities, all Business related, including the University of Chicago and USC.

take it as a lecture, ignore it, frankly I don't care, i just know I ER'd at 51, went back under a 2 year Contract at 57, this year I am 62.

One thing I had not planned on is the dramatic escalation of the value of the House I built, if necessary, I could release several hundred thousands in Equity and move a few miles down the Highway to a smaller Village.

FA's for years have been scaring the hell out of people about how much money they need, to save,more in the interest of selling more Mutual Funds.

Canadians may be in adifferant position, we get almost $30,000 a year as a Couple from the Governmnet, add in our Comapnmy pensions and our contributed Private Pensions, plus free available Health Care, we are able to handle things quite easily.

Tuition to an Undergraduate University that is as good as Yale etc is about $4,000 US a year.(loans are available, Interest free to those who qualify, plus Bursaries, plus Scholarships, plus part time jobs).

Liquor is twice as much in Canada, all Government stores, so most of us don't drink alcohol very much.
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Re: Hi there-- I'm scared
Old 04-10-2006, 09:28 AM   #13
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Re: Hi there-- I'm scared

Quote:
Originally Posted by Maximillion
Not sure of your education, but I have* a Pre Med/ Economics Undegraduate, Graduate studies at 5 Universities, all Business related, including the University of Chicago and USC.
take it as a lecture, ignore it, frankly I don't care, i just know I ER'd at 51, went back under a 2 year Contract at 57, this year I am 62.
My point is that you seem to fire off a cryptic series of phrases without making your meaning clear while presumably expecting the other posters to understand whatever you meant.* When you do make your meaning clear, it's even more frequently a patronizing & condescending lecture on the subject followed by an admonishment to do things a certain way.* You don't ask for more information, you don't offer alternatives, and you quote your credentials as though they make your advice worth more than the poster is already paying for it.* I don't think it encourages the new posters to share their information and I certainly don't think it makes the new posters feel welcome.

Is it all your education a resource that enables you to communicate so effectively?* I don't have anywhere near your length level of schooling and I never had to make a profit in my profession, but I suspect that I've learned to communicate better than you have.* No one on this discussion board cares how many diplomas you have-- only what you're capable of doing compared to how well you're doing it.*

We ER'd and it's working for us.* Big deal.* Our experience is useless to others unless we can explain what worked for us and perhaps suggest ways that it might work for them.* We could discuss what basic process has been followed by others on this board.* We could even ask for more information from the poster and then link books, articles, or studies that seem to pertain to their situation.*

Your lecture of "I'm a highly educated economist, here's how the economy works, here's what you should do" is a semantic null at best and misleading at worst.* Throw in that Canadian chip on your shoulder, which I feel misrepresents the rest of your country's population, and your contributions are of little value.* But you keep hammering away at the piano key you like best.

Ladies & gentlemen, I fear that we've found our successor to JG.
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Re: Hi there-- I'm scared
Old 04-10-2006, 11:59 AM   #14
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Re: Hi there-- I'm scared

Nords, you must be a Politician because all of a sudden your view is everybody's view.?

You speak for this Board??

How do you know what the majority of Canadians think, have you ever met any , talked to any, taken an independant census with meaningful numbers??

Tell yourself, every day in every way I'm getting better and better and better, take a coated Aspirin and a deep breath because you are on your way to a Heart Attack
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Re: Hi there-- I'm scared
Old 04-10-2006, 12:12 PM   #15
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Re: Hi there-- I'm scared

Once again, DON'T FEED THE TROLL.
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Re: Hi there-- I'm scared
Old 04-10-2006, 01:01 PM   #16
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Re: Hi there-- I'm scared

In the event anyone would like a little further insight into the thinking of Maximillion/Howard, here are a couple of quotes from his recent posts on a Canadian discussion board:

December 29, 2005: "The US is an Orwellian society, frequent and constant propoganda convinces them of their moral superiority, meanwhile their Fiscal policy is a train wreck about to happen.

Who else could take a Traitor like Washington and make him a hero, elevate Tax Evaders from Boston as Patriots, and denigrate Bendict Arnold who remained loyal to the Crown??"


http://boomer.invisionzone.com/index...40&#entry24140

January 18, 2006: "...I long ago learned to ignore what Americans think of us, it really does not matter.

I frequent another Board which is mainly US and I frequently lock horns with them,the thing that always astonishes me is that some other Canadian will jump in, apologising, assuring them that Canadians love Americans??

The most frequent concern of these would be Retirees is Health Care Coverage, something I remind them is not a concern North of the Border.

The US is subject to such an ongoing wave of Propoganda reminding them how wonderful they are, they need to watch Fahrenheit 911 for a reality check."


http://boomer.invisionzone.com/index...ndpost&p=24980

I'm really curious to see if the posts will be deleted or modified once Max sees his name in lights.

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Re: Hi there-- I'm scared
Old 04-10-2006, 01:07 PM   #17
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Re: Hi there-- I'm scared

Rewahoo,

Time for an ignore button.
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Re: Hi there-- I'm scared
Old 04-10-2006, 01:23 PM   #18
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Re: Hi there-- I'm scared

Quote:
Originally Posted by Nords
So, Max, what's your point?*

Are you trying to say that inflation will stay at 2% for the next 30 years, even though it hasn't done so for any 30-year periods in the last century?

Nords: It's a shame that our friend Max comes across as such a pompous ass. (That's hard to take at any age, but more so when you've got as many rings around your trunk as I do.)

Fact of the matter, though, I have to agree with him re: retiring after the heavy lifting is over, and the effect of inflation, or recession, for that matter, have on a retired couple.

I raised two kids and was helping out my parents during the 1966 to 1982 period (with a stay at home wife). That wasn't easy.
Hence the 100 hour weeks, between my career and a side business.

In any case, we survived, and with no pension and no health ins., and a somewhat under-funded net worth, at age 50 (With a goal in mind of reaching 60) , decided enough was enough.

With just the two of us to financially worry about, (you'll have to take my word on this), it's been relatively pain-less. (And a whole lot of fun).

Common sense, and a little experience doesn't hurt though.
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Re: Hi there-- I'm scared
Old 04-10-2006, 03:07 PM   #19
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Re: Hi there-- I'm scared

I believe Max/Howard was raised in England.

As a multi-generational Canadian I just felt I would like to add this. None of my friends or family are anti-american.
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Re: Hi there-- I'm scared
Old 04-10-2006, 03:30 PM   #20
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Re: Hi there-- I'm scared

OHJ -

Sorry for the 4th degree hijack of your thread. A question in addition to the other posters. You mentioned you can touch only 80k of your egg, how is that or where is the rest? If you have health insurance covered, why not take for a spin? Just a thought - I think some of the other posters - UM, JarH, Billy/AK - have taken far more risk to ER than you will be taking and it has worked out nicely for them.
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