Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Just turned 49...Looking to Retire at 59 1/2
Old 11-08-2018, 12:53 PM   #1
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
Just turned 49...Looking to Retire at 59 1/2

Hello forum from Oklahoma!

I just turned 49 and am hoping to retire at 59 1/2. I currently have about $1.4 million in my ESOP and 401(k) plus I receive about $6000.00 a month in mineral royalties. I have been with the same company since I was 20 and earn about $60,000 a year in salary and quarterly compensation. My company is employee-owned and we are all very involved in the financials of our company (there are about 155 of us) and business is good.

I just finished building the last house I will ever live in outside of Oklahoma City, my daughter is one her own (23) and my son (17) will be moving on to college soon so it will eventually be just me and Mrs. George (she doesn't work outside the home). We do not live extravagantly by any stretch, both our families grew up here and were mostly farmers. Our plans for retirement are to travel occasionally, collect firearms, and do a bit of farming and landscape the 20 acres we live on. Our only real liability is our house payment which we are doing our best to pay off in 15 years.

Neither of us having significant health issues though we help our daughter with her Crohn's Disease medical bills and we expect to pay for our son's college expenses (he will probably get into one of the construction trades if I had to guess).

I've been using several "retirement calculators" including the one from our ESOP managing firm (The Principal), and everything indicates we are more than on track for my retirement goals, but I am thinking more and more about what lies ahead and need to make absolutely sure we are prepared financially, thus my posting here.

Feel free to ask me questions to "fill in the blanks" that I'm sure I've left, thank you for anything you might suggest.
__________________

Cusingeorge 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 11-08-2018, 01:06 PM   #2
Full time employment: Posting here.
 
Join Date: Jan 2013
Posts: 702
ESOP
Are you holding $1.4M in company stock ? ? ? ?

WOW!
__________________

broadway is offline   Reply With Quote
Old 11-08-2018, 01:15 PM   #3
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
Yes, I am.

No one holds more than 5%.
Cusingeorge is offline   Reply With Quote
Old 11-08-2018, 01:18 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 2,057
Diversification possible?
Enron from the past?
__________________
TGIM
Dtail is offline   Reply With Quote
Old 11-08-2018, 01:23 PM   #5
Full time employment: Posting here.
 
Join Date: Jan 2013
Posts: 702
How much of that $1.4M is in ESOP and how much in the 401(k)?

And what is in that 401(k)?

mineral royalties?!?!?

yikes

all of it is way more risky than I would be holding
broadway is offline   Reply With Quote
Old 11-08-2018, 01:35 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Location: North
Posts: 1,406
I would leave quietly. Owning 5% of the company and calling it quits will surely cause some distraction.


And then I would immediately rollover my ESOP and diversify into an appropriate asset allocation.



Getting rid of that mortgage would help me sleep at night. Maybe take the $72k you get in minerals next year and then another 72k (36k from ESOP and 36k from 401k) and paydown $145k on that mortgage to lower the payment...then I would take the savings and plow it back into equities.


My .02
__________________
AA (Stock/Bond/Cash ): 99/0/1% MIX (Small/Mid/Large): 50/25/25% BLEND(US/Foreign): 100/0%, REIT (Real Estate Equity): 50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
kgtest is offline   Reply With Quote
Old 11-08-2018, 01:45 PM   #7
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
Dtail,

I can't diversify till I'm 55.

My company is solid.

Broadway,

I have about $150k in the 401(k), the rest is company stock. This is how it is set up.

I don't understand your comments about it being "risky"

kgtest,

We are a small company, and leaving quietly simply would not happen, and what difference would it make about me leaving that would hurt anything? I can diversify up to 50% when I turn 55, and can't take retirement without a significant IRS penalty until I am 59 1/2.
Cusingeorge is offline   Reply With Quote
Old 11-08-2018, 01:48 PM   #8
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
Also, when it comes to mineral royalties, we hold back 50% for taxes so my $72,000 becomes more like $36,000
Cusingeorge is offline   Reply With Quote
Old 11-08-2018, 02:16 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 2,057
Quote:
Originally Posted by Cusingeorge View Post
Dtail,

I can't diversify till I'm 55.

My company is solid.

Broadway,

I have about $150k in the 401(k), the rest is company stock. This is how it is set up.

I don't understand your comments about it being "risky"

kgtest,

We are a small company, and leaving quietly simply would not happen, and what difference would it make about me leaving that would hurt anything? I can diversify up to 50% when I turn 55, and can't take retirement without a significant IRS penalty until I am 59 1/2.
Bolded - Some companies' 401k's are set up whereby if you are separated from service or leave on your own at 55 or later, you can withdraw from the 401k before 59.5 without penalty.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 11-08-2018, 02:21 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 10,762
Quote:
Originally Posted by Dtail View Post
Bolded - Some companies' 401k's are set up whereby if you are separated from service or leave on your own at 55 or later, you can withdraw from the 401k before 59.5 without penalty.
And there is also the option of taking a 72T earlier.
__________________
Yes, I have achieved work / life balance.
travelover is online now   Reply With Quote
Old 11-08-2018, 03:04 PM   #11
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 454
I think that what most people are concerned about is the $1.4M in your ESOP - which I take to mean is your share of the company. I understand if you can't sell that before parting with the company. Though it seems solid, you don't have much outside investments other than what is in your 410(k). If your company was to tank somehow, you don't have much left over to live on. And to top it off, you might also lose your job at the same time.

You need to diversify and invest outside of the industry where you are employed in order to safely retire in 10 years. If your company keeps churning out profits you'll be in great shape, if not you could be in trouble by not having much to show outside of your ESOP.
NgineER is offline   Reply With Quote
Old 11-08-2018, 03:38 PM   #12
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
I know it appears risky, and I agree to an extent, but this is how it is set up and there is no way to change it. In case I haven't been completely clear, ESOP is "Employee Stock Ownership Plan". Each of us as employee owners are responsible for making good decisions that impact the bottom line, and we hold each other accountable (including the Prez, CEO and Board) for anything that can affect our profitability. Our CFO just retired (he started the year after I did) and I can tell you with absolute certainty that he set the company up for financial success, I've never met anyone so frugal, or picky about financial health in my life.

So let's set my ESOP aside guys and assume that when I reach 59 1/2 and I have ~$2.7 mil or so in my retirement account. My main concerns are paying off the house and health care, If I can swing these and have money for basic living expenses, a little for making a road trip 1-2 times a year, plus those dozen or so other expenses that go along with home ownership, am I even in the ballpark?
Cusingeorge is offline   Reply With Quote
Old 11-08-2018, 03:55 PM   #13
Full time employment: Posting here.
 
Join Date: Jan 2013
Posts: 702
Quote:
Originally Posted by Cusingeorge View Post
So let's set my ESOP aside guys and assume that when I reach 59 1/2
The point is that you can't set it aside.

You've got 89% of your retirement assets tied up in one entity.
Some retirees are highly dependent on a company pension but at least some pension are guaranteed.
If anything happens to your company, you are toast except for Social Security.

I don't know of anyone here who is as un-diversified as you are except for business owners.



.
broadway is offline   Reply With Quote
Old 11-08-2018, 05:42 PM   #14
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
What I meant is let’s set everyone on this board’s concerns about my ESOP aside, not that I want to try to retire without it.
Cusingeorge is offline   Reply With Quote
Old 11-08-2018, 05:43 PM   #15
Dryer sheet wannabe
 
Join Date: Nov 2018
Location: Calumet
Posts: 10
And I never said that my ESOP wasn’t mine to keep, if I leave for any reason I can roll it into an IRA.
Cusingeorge is offline   Reply With Quote
Old 11-08-2018, 06:16 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 10,762
Quote:
Originally Posted by Cusingeorge View Post
..........when I reach 59 1/2 and I have ~$2.7 mil or so in my retirement account. My main concerns are paying off the house and health care, If I can swing these and have money for basic living expenses, a little for making a road trip 1-2 times a year, plus those dozen or so other expenses that go along with home ownership, am I even in the ballpark?
Have you done a good analysis to see what your minimum and desired spending will be per year? Once you know that, including health care and taxes, just turn the crank on FIRECalc or similar planners to get your answer.
__________________
Yes, I have achieved work / life balance.
travelover is online now   Reply With Quote
Old 11-08-2018, 09:15 PM   #17
Dryer sheet wannabe
 
Join Date: Oct 2018
Posts: 17
Sounds like you’ve done a great job with your finances the biggest liability as you said is the mortgage, make it a priority and pay it off in the next 5 years and be completely debt free we’ll before retirement. How much is the mortgage and your payment.
SmallCityDave is online now   Reply With Quote
Old 11-09-2018, 07:25 AM   #18
Thinks s/he gets paid by the post
Golden sunsets's Avatar
 
Join Date: Jun 2013
Posts: 1,068
If this is a small privately owned company, how do you know what the value of your shares is? And is the company set up to liquidate your shares when you have the ability to sell 50% at age 55? Is the company set up to buy back the shares of the other 154 people as they retire?


Sent from my iPad using Early Retirement Forum
__________________
"Luck favors the prepared mind"
Pasteur
Golden sunsets is offline   Reply With Quote
Old 11-09-2018, 08:59 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2013
Posts: 7,103
I was in a similar situation with an ESOP account, however it was a public company. Had 75 % of our assets in company stock. Around the recession they started allowing people to roll out to an IRA. It was heartbreaking to watch those shares drop from $80 -> $20. However it did come back.

I took the opportunity to start cashing out of Megacorp, into funds. Made me sleep much better.

A guy I worked for in the 80s was in a similar situation to yours. However the company wasn't run well, and went under. That said it was obvious that idiots were in control, partly the reason I left.

I think you're ok financially if things work the way you expect them to..
MRG is offline   Reply With Quote
Old 11-09-2018, 09:13 AM   #20
Full time employment: Posting here.
 
Join Date: Jan 2013
Posts: 702
Quote:
Originally Posted by Golden sunsets View Post
If this is a small privately owned company, how do you know what the value of your shares is? And is the company set up to liquidate your shares when you have the ability to sell 50% at age 55? Is the company set up to buy back the shares of the other 154 people as they retire?

+1
You articulated it better than I ever could.
I don't doubt that the OP owns a share of the company and that the present value of that share is $1.3M (taking out the 401k).



Are there others who could also retire?
What about people who leave the company? Are they allowed to cash out their shares?
What does the company do to pay out those who retire or leave the company? Can that be strain on company resources $ ?
__________________

broadway is offline   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
Just Turned 60, Feeling REALLY Ready to Retire SoReadyToRetire Hi, I am... 36 09-09-2018 05:34 PM
Hi, I just turned 60 and will retire the end of 2017 Jackz Hi, I am... 33 04-20-2018 10:45 PM
Just turned 30, retire in 40s? 30RetireIn40s Hi, I am... 5 10-29-2010 07:59 PM
Oh how my world has turned upside down - looking for advise Tom52 FIRE and Money 57 01-20-2009 11:50 AM
Just turned 30, hope I'm doing ok nicedream Hi, I am... 12 10-15-2007 09:38 PM

» Quick Links

 
All times are GMT -6. The time now is 11:02 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.