Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Hitting the 40s... and planning for the last decade of work
Old 09-22-2017, 09:18 PM   #1
Confused about dryer sheets
 
Join Date: Jun 2014
Location: San Francisco
Posts: 4
Hitting the 40s... and planning for the last decade of work

DW and I are both 40 and like many on this board desire a life free of work stress and ability to travel more... and if we work, it's doing something we want to do vs. have to do. After lurking here for a few years, what I've gathered is that the FI part is most important then RE can come when the timing is right.

We're both in jobs doing well and feel like we still have more to accomplish for at least a few years before pulling the plug... which may be in 3, 4, 5 or 10 years. However, we don't see ourselves working past 50 in the corporate world - family members have died young, and we have seen people in their 60s work to make ends meet which we really don't want to be us.

That being said, we've seen two major recessions since we got out of college in the late 90s and the financial crisis and understand that times change quickly... and other TBD crises can and do come up.

Our situation:
No kids, no school/car debt... credit cards paid off monthly, etc. etc.

1mm+ in house equity with still a sizable mortgage (500K) as we're in a pricey West Coast area.
1.62mm in post tax investment accounts
990K in retirement accounts

The plan the next few years will be to continue to build the nest egg by deferring our max amounts yearly to 401k and attaining matches, HSAs, etc.,
and push what we can to brokerage and add a bit each month to pay down the house.

We also plan on getting a handle on spending the next couple years but the challenge is with work/ the house is to truly determine what will not be needed in the future - i.e. work clothes and commute spending, house upgrades/fixes, commute/entertaining costs vs. what we would reasonably project along with what healthcare costs are going to be since that is a moving target.

I think after pulling the plug on work we would downsize the house to a cheaper area (though not the boonies) and stash the equity.

The goal will be to get to a <3% WR but still have a lifestyle that we want without major sacrifices - travel, events, dining, etc. Fortunately, both my wife and I come from blue collar family backgrounds and were brought up with a mindset of not living beyond our means, buying used cars, not going into debt... not staying in five star hotels or buying first class plane tix, etc.

Any thoughts or advice from those in similar positions?
__________________

SF94111 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-23-2017, 06:57 AM   #2
Recycles dryer sheets
Lagniappe's Avatar
 
Join Date: Mar 2006
Posts: 281
I was in a very similar position at your age. When I turned 40, I was single and had just moved to the Bay Area (almost 13 years ago). I had investable assets of about $1M, and a crazy expensive house.

Two things that kept my planning on track - finding my next location and determining how much I would need to live.

I made a point of visiting a potential early retirement destination at least once a year. I went to Portland, Austin, Thailand, Seattle, Hawaii, Chicago, San Diego, Healdsburg, etc. I talked to locals, looked at home prices and rents, stayed in regular neighborhoods. I was trying to get a sense of whether I wanted to live in this place.

I also built two budgets - one based on the Bay area, subtracting out expenses I would no longer need. Daylatedollarshort on this forum has many great posts on how to do this in the BA. The key for me was to NOT assume that I had to spend like everyone around me to have great experiences - all the same things could be done without plopping down $300 for dinner, or $250 for concert tickets, etc. The other budget was based on moving to my (potentially) desired location, filling in as best I could based on what I learned from the internet and from my trips.

I ended up retiring and moving to Austin at 47. Was able to sell my California house, buy a lock and leave condo for cash, and pocket several hundred thousand of my home equity. Loved my time in Austin, but after 2 years took a job that sounded great in the midwest. It won't be long before I re-retire, this time to another area that I already spend many weekends (and as much of the winter as possible) in.

You are on a great path. A few things to remember:
- Save as much as is practical outside of retirement accounts. You are going to need something to live on until you can access your 401K/IRA's. You seem to have a good balance now.
- Get the receipts. You need to know your current spending as a starting point. Putting this off for two years won't help you, and its not a lot of effort.
- Keep yourself motivated. For me motivation came from visiting potential retirement locations. For others, it could be tracking spending minutely. Find something that keeps you focused on saving.
__________________

Lagniappe is offline   Reply With Quote
Old 09-23-2017, 07:15 AM   #3
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 11,560
Quote:
Originally Posted by Lagniappe View Post
- Get the receipts. You need to know your current spending as a starting point. Putting this off for two years won't help you, and its not a lot of effort.

A few suggestions to make this easier.

1. Create a simple Excel spreadsheet divided into as many categories as seems right to you. I have about 50 rows in mine with specific expenses (say, electric and natural gas bill) lumped under more general headings (utilities). It took me a few months to settle on the categories. The key is not to let too much stuff go to "miscellaneous". I have columns for actual spending each month, my estimated amount for the year and for each month (just 1/12th of the yearly), which I calculated at the beginning of the year, and a running YTD total actual spending for each category.

2. Keep a shortcut to the spreadsheet on your desktop.

3. In the evening, if you have spent any cash, enter the number in the right category. For example, that might be lunch at work. Just add the amount for that to whatever is already in the cell for that month. I usually can't remember what I spent cash on for more than a day, so this is important to do daily.

4. Whenever you write a check, take an extra 30 seconds to add the amount in the proper category in your spreadsheet.

5. Pay for as much as humanly possible with your credit card (assuming you have the discipline to pay it off every month). When the monthly bill comes in, take 10 to 15 minutes to categorize and sum up the spending. E.g."restaurants", "clothing", "groceries" etc. I do it by hand on a scrap of paper and then put it in my spreadsheet.

6. I also track our income. Every payday, I enter the net pay into the spreadsheet. I don't worry about the taxes or health insurance premiums or the 401k contributions -- just the net.

7. I keep a running tally of the excess of income over expenses. It helps motivate me.
__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Old 09-23-2017, 08:22 AM   #4
Recycles dryer sheets
 
Join Date: May 2014
Posts: 444
If you have sufficient money and an exit plan, working for the next 3, 4, 5, or 10 years will be tough.
flyingaway is offline   Reply With Quote
Old 09-23-2017, 01:28 PM   #5
Full time employment: Posting here.
 
Join Date: Jul 2015
Posts: 692
Quote:
Originally Posted by SF94111 View Post
we don't see ourselves working past 50 in the corporate world - family members have died young, and we have seen people in their 60s work to make ends meet which we really don't want to be us.
We're also DINKS (dual income, no kids), and this was a huge contributor towards our FIRE a few years ago. I also wanted out by my early 50's at the latest since the corporate world was devouring my soul.

Sounds like you have a good handle on your assets, but I agree with the others that a good understanding of expenses is critical. Before we FIRE'd, I loaded the last 2-3 years in bank statements and credit card expenses into a spreadsheet to determine where all the money was going. Then I tried to project what would change into retirement.

I suggest formulating 3 different retirement budgets: minimum, "normal" and luxury and determine impact on withdrawal rate at different levels of savings. Are you familiar with Firecalc, the online retirement financial simulator? It's very useful for running such simulations.

It's great that you are planning now in your 40's. Things can take a very nasty turn at w*rk within the next 10 years, but at least you'll have an exit plan. We originally had a 3 years-and-out plan, but this was pulled into less than a year due to unpleasant w*rk realities. Our withdrawal rate is less than ideal, especially before drawing social security, but I was at the end of my rope.

After almost 3 year of retirement, I'm glad I didn't w*rk longer. Speaking from personal experience, I doubt our health and energy level will get better as we grow older. I feel like we are in a race against time to live the active outdoors lifestyle that is so important to us both.

Added: also suggest checking out healthcare.gov in order to look at what's available, assuming you don't have corporate retiree healthcare. The costs, deductibles and limitations are sobering. Note that often plans that are called "PPO" may not cover the providers you may be accustomed to on decent company sponsored PPO's. Although it can't stop fears about future escalating costs, at least it gives you real data for today.

FB
__________________
Living the dream...
FreeBear is online now   Reply With Quote
Old 09-25-2017, 05:50 PM   #6
Confused about dryer sheets
 
Join Date: Jun 2014
Location: San Francisco
Posts: 4
Many thanks for the replies here and things to think about...

Lagniappe - great list of targets there and many we had talked about (Austin, Portland, Scottsdale, etc.). Surprisingly, Healdsburg is the one town we actually talk about specifically... but it still comes with CA taxes, but also the weather, wine, not too far from SF, etc.

Gumby - good insight. I had created a spreadsheet a few years ago and update every few months with assets, and I was planning on doing something this year for expenses... your thoughts certainly get me off on the right foot.

FlyingAway - the challenge is that in SF, it's a bit of a warped reality with costs/incomes. We certainly understand that almost everywhere else in the world we'd be set with modest spending and no major health issues over time. However, we're in jobs that we're not necessarily running away from yet, and also jobs that really just don't translate to other areas. So, as long as we're working, we're here... and we'll look to maximize savings/net worth.

FreeBear - Thanks - agreed re:health. I've certainly seen it takes me a bit longer to recoup after pulling muscles, injuries, etc. There is also some family history of ailments on one side of my family, so I'm hoping the other side wins out, but genetics is a tough war to win. Zero corporate/govt healthcare other than simple HSA accounts which I've been maxing out... but unfortunately, that's only a tiny drop in the bucket of what things cost.
SF94111 is offline   Reply With Quote
Old 09-25-2017, 07:20 PM   #7
Full time employment: Posting here.
FlaGator's Avatar
 
Join Date: Aug 2008
Location: The 850
Posts: 502
Quote:
Originally Posted by Gumby View Post
A few suggestions to make this easier.

1. Create a simple Excel spreadsheet divided into as many categories as seems right to you. I have about 50 rows in mine with specific expenses (say, electric and natural gas bill) lumped under more general headings (utilities). It took me a few months to settle on the categories. The key is not to let too much stuff go to "miscellaneous". I have columns for actual spending each month, my estimated amount for the year and for each month (just 1/12th of the yearly), which I calculated at the beginning of the year, and a running YTD total actual spending for each category.

2. Keep a shortcut to the spreadsheet on your desktop.

3. In the evening, if you have spent any cash, enter the number in the right category. For example, that might be lunch at work. Just add the amount for that to whatever is already in the cell for that month. I usually can't remember what I spent cash on for more than a day, so this is important to do daily.

4. Whenever you write a check, take an extra 30 seconds to add the amount in the proper category in your spreadsheet.

5. Pay for as much as humanly possible with your credit card (assuming you have the discipline to pay it off every month). When the monthly bill comes in, take 10 to 15 minutes to categorize and sum up the spending. E.g."restaurants", "clothing", "groceries" etc. I do it by hand on a scrap of paper and then put it in my spreadsheet.

6. I also track our income. Every payday, I enter the net pay into the spreadsheet. I don't worry about the taxes or health insurance premiums or the 401k contributions -- just the net.

7. I keep a running tally of the excess of income over expenses. It helps motivate me.
This is good advice, if you're a spreadsheet person. If not, spend $50-ish for Quicken, and log everything in there.

I ignored the Quicken recommendation until a few years ago and then took the plunge to prepare for ER. Glad I did. Like the convenience, the history, reports and consolidation of the spending and the key investment accounts.

Like all desktop apps, YMMV.
__________________

__________________
Stay at home slacker dad since 2015
FlaGator is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
More photovoltaic solar installed on Oahu in 2012 than in the last decade... combined Nords FIRE and Money 35 12-30-2012 03:59 PM
poor economy hitting close to home simple girl FIRE and Money 23 08-24-2009 10:34 AM
hard times hitting home-less lazygood4nothinbum Other topics 38 11-17-2008 06:42 AM
Real Estate Bust hitting hard! W2R Other topics 31 06-26-2007 03:45 PM
See @ Last, See @ Last, Thank God I Can See @ Last Beachbumz Other topics 24 02-18-2005 07:16 PM

» Quick Links

 
All times are GMT -6. The time now is 10:43 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.