Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
New here. Help me start my retirement planning.
Old 06-27-2007, 08:35 PM   #1
Confused about dryer sheets
 
Join Date: Jun 2007
Posts: 5
New here. Help me start my retirement planning.

Hello, I am a 35 year old working for a large corporation. I am married with two young children. I was enthusiastic about my job early in my career, enjoyed my job, couldn't believe I was getting paid to do what I loved, etc. I was looked forward to working pretty much till I was eligible for SS but the recent changes in, not only my company, but in the entire US economy (globalization) has changed my outlook. Greed and self-preservation seems to be the order of the day.

So I've gone online reading articles and using calculators. I've also just recently found this forum, which looks like a great resource.

I am now seriously thinking about what it would take for FI (not necessarily ER. I'll cross that bridge when I get there.) I'm thinking that, based on my wife and I's current spending habits, one million will do the trick. The catch of course, would be inflation and health insurance since we won't have any sort of pension or health insurance from our current megacorp job.

I never thought much about investments but my wife is very thrifty and she, god bless her, influenced me to cut down on my spending habits since we were married 10 years ago. As a result, without any planning, we paid off our mortgage and have ~150k in aftertax savings and 70k in the beforetax savings. No credit cards or loans.

Her thriftiness also makes her very adverse to any sort of risk. She grew up in poverty and knows the value of money. It didn't help that we dabbled in stocks at the wrong time (99-00) and without any real skill or patient. So about 95% of our money is in CDs. I never understood why treasury bonds which have lower interest would be preferable.

We've been saving ~30k a year since we married but I'm thinking we can up that to 40k or even 50k on years we don't take that big vacation. Our goal is to reach that million by the time we're 45. To reach that goal, based on some of the online calculators I've used I'll need 7-8% annual interest. So obviously CDs won't cut it, and based on what I've been reading isn't a good idea anyway due to inflation.

So my first question for the forum is how should I balance my portifolio to have a high probability of getting that 8% goal without adding too much risk? Specific fund

My second question is about health insurance. What are my options at 45 and beyond if I do decide to retire?

Third question. Is there a resource out there on the web that can help a newbie start my retirement planning. For example I have no idea what an ETF or numerous other acronyms that are used in this forum are.

Thanks in advance for any help you can provide,
John
__________________

__________________
GoRed 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 06-27-2007, 08:51 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,198
Here's a good resource: www.fundadvice.com
__________________

__________________
TromboneAl is offline   Reply With Quote
Old 06-27-2007, 09:08 PM   #3
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
The health insurance marketplace has been in turmoil for a number of years now, with insurance costs and general health care costs far out pacing inflation. Therefore, it is hard to predict what the market is going to look like 5 or 10 years from now.

Currently, if you are in very good health, health insurance on the individual market is pretty affordable. However, individual states are the primary regulators of the health insurance market so there is considerable variety in what is available in different states. If you have any health issues, insurance can be very very expensive or even unavailable, depending on your individual situation. If you do have health issues, you will have the most rights when you are coming off of a group plan and federal law requires states to have a plan available for you to purchase at that time. However, that plan may not be affordable.

Georgetown University has a guide which provides information on your health insurance rights in your state at Health Insurance Consumer Guides. It also has a booklet on shopping for individual health insurance: http://www.healthinsuranceinfo.net/n..._Insurance.pdf
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 06-27-2007, 09:26 PM   #4
Confused about dryer sheets
 
Join Date: Jun 2007
Posts: 5
Thank you TromboneAl and Martha. Those links will be very helpful.

Martha,
Once I get into a healthcare plan are they guaranteed will I be covered until I die. My wife and I are healthy right now but if in the future I get cancer, for example, would the healthcare company be able to drop coverage on me? Are the rates fixed or do they go up as I get older?
__________________
GoRed is offline   Reply With Quote
Old 06-27-2007, 09:33 PM   #5
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
GoRed, currently under federal law health insurance purchased on the individual market (except temporary insurance) is guaranteed renewable so the insurance company can't cut you off just because you have big claims. However, the insurance company can drop the particular plan for everyone. They can also raise the rates for everyone. Most states allow rates to increase based on age. Some states allow (or more specifically, don't disallow) rates to increase based on your health status. However, currently this does not seem to be a common occurance but may be an increasing practice.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 06-27-2007, 09:43 PM   #6
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,146
A very simple solution would be the following

50% Vanguard Total Stock Market Index - VTSMX
25% Vanguard Total International Index - VGTSX
20% Vanguard Total Bond Market Index - VBMFX
5% Vanguard REIT Index - VFINX

This should put you on the efficient frontier, with low expenses and the ability to sleep at night. No need to follow the "market". The bond exposure dampens volatility. As you know, inflation is the stealthy portfolio killer. You need exposure to the stock market to keep up.

Just my $0.02
__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Old 06-27-2007, 09:44 PM   #7
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by GoRed View Post
Third question. Is there a resource out there on the web that can help a newbie start my retirement planning. For example I have no idea what an ETF or numerous other acronyms that are used in this forum are.
For specific vocabulary & acronyms there's Investopedia.com and its dictionary of investing terms.

For the actual concepts I'd recommend starting with "The Boglehead's Guide to Investing" and if you're still hungry then upping the ante to William Bernstein's "The Four Pillars of Investing"... if you have to have a website then you could try the CoffeeHouse Investor or Bernstein's EfficientFrontier.com.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 06-27-2007, 11:32 PM   #8
Dryer sheet wannabe
Doubledoc's Avatar
 
Join Date: Jun 2007
Posts: 13
GoRed,

Welcome to the forum. I spend a lot of time on Morningstar.com - check out their courses (numbered like college courses) for a really solid foundation in investing and asset allocation. Once you've completed the courses they have a very nice asset allocator that allows you to bin things by asset class and style depending on your objectives.

Once you know the asset classes and allocations, you can use their fund/etf screener to find low expense ratio funds and etfs.

I personally focus on etfs that meet a particular need (core holding for large cap value for example) with at least average or above average performance and expense ratios below .5%. Everything I've read says that asset allocation (diversification) and expense control determine most of the success of a portfolio, and I've been pretty successful so far with relatively little volatility.

I'm still a year or two away from ER but my wife's planning to retire this summer (she's 45 and I'm 40), so I've just started looking at the health insurance issue. Check out ehealthinsurance.com for a great first look at the options and estimated costs of private health care.
__________________
Doubledoc is offline   Reply With Quote
Old 06-27-2007, 11:46 PM   #9
Confused about dryer sheets
 
Join Date: Jun 2007
Posts: 5
Thank you all. Great information. Looks like I have some reading to do. I'll go back to lurking and once I am better informed I'll be back.
__________________
GoRed is offline   Reply With Quote
Old 06-28-2007, 01:22 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,293
(Psst! Gumby! VFINX is the S&P500 index fund. VGSIX is the REIT index fund. Down a whole bunch lately. I would rate it a good buy!)

GoRed, T-Al's link to fundadvice is a very good one. it has a LOT of good articles. Just don't go for the market-timing idea.

You are indeed fortunate to have such a disciplined wife.

You both need to understand that the biggest risk is inflation, not market risk. See also The Coffeehouse Investor

Go for it!
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 06-28-2007, 09:12 AM   #11
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,146
Ed:

Right you are. Mea culpa. I should know better, since I own it.

Gumby
__________________

__________________
Living an analog life in the Digital Age.
Gumby 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
Vanguard Retirement Study REWahoo Other topics 4 03-02-2007 10:19 AM
Predictors of a Happy Retirement Rich_by_the_Bay Life after FIRE 24 07-13-2006 09:59 PM
Social Security Spousal Benefit Elderdude FIRE and Money 52 06-30-2006 08:55 AM
Planning for retirement mizzou22 Young Dreamers 14 04-07-2006 11:52 AM

 

 
All times are GMT -6. The time now is 10:50 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.