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New Member: ER Musings and Analysis Paralysis
Old 12-20-2014, 03:10 PM   #1
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New Member: ER Musings and Analysis Paralysis

Greetings, fellow "personal CFO's"! After all, isn't the financial analysis we're each performing of similar complexity and importance to that a CFO would undertake for a small business? Since I'm a new posting member here, I thought I should stop in and introduce myself. I'm in my early 50's, and have been mostly following the low E.R. (Expense Ratio, not Early Retirement) philosophy espoused on the Bogleheads site for the past 25 or so years (more so over the past decade+). Somewhere around 2002, I switched from a "get rich quick" game plan (tech startup, high-risk investments, etc.), to a "get rich slowly" plan (solid position, investing 35% pre-tax income in low-expense index funds). Along the way, we've paid off our house, eliminated all debt, and managed to accumulate ~20X my annual salary in savings and investments, or between 27X-33X of our projected living expenses. Which leads me to why I finally joined.

I've been lurking and reading various threads here for quite a few years now, but this thread by Senator finally got me to create a profile and become official:

What is ‘good enough’ when it comes to Planner success rates?

You see, I've run just about every tool available out there, and spent literally hundreds of hours pouring over the results. I've used the Fidelity Retirement Income Planner, FIRECalc, the Otar Retirement Calculator, the Bogleheads Variable Percentage Withdrawal spreadsheet, as well as several Excel spreadsheets of my own creation. And all of them, under all assumption methods, tell me I'm either 95% or 100% assured of successfully funding my retirement throughout my wife and my lifetime (assuming a lifespan of 97 years). But, because of life experience and my overly cautious nature, I'm not sure I can believe the results generated by these various tools. So, I continue to work, save, plan and defer.

About two months ago, I came to the realization that I'm either "there" or pretty darn close, and that has really taken a lot of stress off me at work. Not that I don't like my job - I do...a lot. But there had always been a fair amount of related pressure associated with the fact that I am the primary household breadwinner. Now, with that burden removed, the balance of power at work has slightly shifted. Enough so that, when a recent rumor that an early retirement package was making the rounds at work, I pinged my management chain with a request for more details where normally, I would have been worrying "what if they don't hit their target" and "am I next on the chopping block". Apparently, that must have triggered some reaction because, just yesterday, I was asked if I would consider stepping into a higher position (where I won't have to travel as much for extended periods).

But that doesn't answer the next question: "If I retire, what will I do next?" You see, I've literally thrown 100% into my work the past few decades, while most of my hobbies have withered and died on the vine. I used to ski, play tennis, mountain bike, fly fish, go to concerts, read (recreational, not work-related) etc. but most of these have gone away. If I were to retire today, I would most certainly be bored. So, for the next 2-5 years before I actually retire, I've set a personal goal to re-introduce more work-life balance in my life and become active again in some of my previous hobbies. And it turns out that my management is supportive of this!

So, back to the real point of why I am here. I'm here to learn from like-minded people who either have walked or are walking a similar path. I'm here to understand holes in my assumptions and to discover what Donald Rumsfeld described as "unknown unknowns." So, hello to all of you. I hope I can begin to give back as much as I've already gotten from both the contributions here as well as the FIRECalc tool.
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Old 12-20-2014, 03:17 PM   #2
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Welcome to the forum!

One of the issues that many people had with retirement have less to to with money and more to do with going from full throttle to idle in one day.

The longest running thread here is this one: http://www.early-retirement.org/foru...day-37868.html

Most of us manage to find a way.
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Old 12-20-2014, 04:07 PM   #3
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I think it's a good idea to have an idea of what you *might* do when you retire.
For some it's time to devote to neglected hobbies. For others its volunteer work. For others its extended decompression time, then they fall into a pattern of what works for them.

But - if you're someone who needs to get the feedback and accolades in the workplace - it might not be a happy retirement... unless you replace that with volunteer work or something similar.

For me - I found a nice mix of taking one jr. college course (Italian) and leaving the rest of my time unstructured.... So nice not to have deadlines (except for school) and being able to set my own pace.
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Old 12-20-2014, 07:46 PM   #4
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If you retire you will have time to ski, play tennis, mountain bike, fly fish, and read.


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Old 12-20-2014, 07:56 PM   #5
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Now, that's the initial introduction thread I like. Welcome to the forum, T-Minus.
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Old 12-21-2014, 09:00 AM   #6
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Welcome T-Minus !

Its great that you know where the risks are in ER. For you it's not financial, but a question of how will you spend your time. Working another year or two will only give you more options (more leisurely international travel where you can actually get to know the place you are visiting, rather than a quick work-related fly through ?). Since you actually like your job I think you've taken the right approach for yourself.

As for me, I decided that as soon as I hit a 3%WR (and 100% in FIRECalc using only 80% of my portfolio) that I would ER. I moved into a 55+ community last year specifically because of the long list of community activities available. I'm chomping at the bit to start getting involved in them.

All the best
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Old 12-21-2014, 09:13 AM   #7
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Sounds like a catch 22. Too busy working to think about what to do when retired. So you keep working to avoid the problem of doing something other than work.

Sometimes you have to smash the hamster wheel and see how things will pan out.
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Old 12-21-2014, 09:28 AM   #8
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Thanks for the kind welcomes. I think L&L hit the nail on the head in Post #6 above: every additional year worked will provide more options...but where do you draw the line? What I'm getting at is that my mother passed at age 81 and my father at age 80. Both enjoyed active retirements until their last three to five years, where things really slowed down. Since longevity is largely influenced by hereditary factors, that gives me about twenty good years (+/-) of post-retirement "me-time", so every additional year worked subtracts roughly 5% from the time bank.

I realize nobody can give me answers to the above - it's more of a philosophical trade-off that's occupying some of my thoughts lately. Until I discover where the balance point for me personally is, I'll keep working and saving...and reading every thread I can around here.

BTW - the "what did you do today" thread referenced above by Walt was very entertaining. I look forward to a time where my first activity of the day isn't check e-mail and review calendar/to-do's, and instead, make coffee and find and read the paper (old-school style). Sometimes, just finding the paper is a five-minute challenge!
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Old 12-21-2014, 09:38 AM   #9
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There comes a tipping point when you realize that more time is more valuable than more money.

Since retiring 13 years ago, that has been impressed on me more and more every year, and I'm more and more glad that I pulled the plug when I did.

I participate in three times the number of hobbies now compared to when I was w*rking, and it just keeps getting better.
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Old 12-21-2014, 09:49 AM   #10
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Thanks for the shout out on my post from a while back... And Welcome!

I have since decided on a retirement date. I could probably go sooner, but it will allow my DGF to leave close to my date.

I finally determined that I made plenty of money without work, and 2014 has confirmed it. That's two years in a row, and my situation gets better by the day. I am now making travel arrangements for my future years.

Good luck in your FIRE!
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Old 12-21-2014, 10:20 AM   #11
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Welcome...
One of the lessons I am slowly learning, is to try not to give advice, especially when most of the members here are far more savvy about finance than me.
We all have dreams, and are looking for the best path to happiness.

For my DW and me, the decision came down to comfort level. We looked at the financial end as a plan for our expected lifespan, which was age 80, back in 1989. Based on our lifestyle wants and needs, we took a chance at age 53, thinking that for three or four years, if anything went wrong, going back would be possible. Jobs were still available in my profession and a return to the workforce would be relatively easy... at close to my end salary. So... in effect, an age safety net. As I watch the jobs picture in many industries, and see many older persons being forced into McDonalds-type jobs, it appears the risk factor may be increased. Making a mistake during the wealth accumulation years would leave too much on the table.

We were lucky, and for the past 25 years, have been safe, and even now, though in a spend down mode, feel secure and can project another 10 years at our current spending rate.

Our plan was really three spending plans... Optimum, Nominal and Austerity. A few times we did a little belt tightening, but have never felt stressed about financial security.

Our final decision to retire was based on a health scare. At the time, I was involved in my own business and would likely have continued. I was comfortable and happy and continued employment would not have been a problem. Our path and planning is detailed here:
Sharing 23 years of Frugal Retirement
Naturally, not a plan for everyone. DW and I are relatively poor, compared to most who post here. One size does not fit all, but if happiness is a factor, for us, retirement worked out very well.
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Old 12-21-2014, 11:59 AM   #12
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Ideally, once the kids are launched we will just live off SS, pensions, interest / dividends and maybe some continued hobby job income. We can do that in a spreadsheet. The goal is 100% success to whatever age we live to with our post college years net worth not declining in real dollars. We are more into the liability matching strategy than a mutual fund approach, though we do have some mutual funds because for some of our 401ks those are our only investment options:

Matching strategy - Bogleheads

We might have to dip into principal to pay RMD taxes. I use the Fido RIP set to our current AA or their conservative options to estimate future taxes, especially when RMDs kick in.
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Old 12-22-2014, 09:12 AM   #13
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Originally Posted by daylatedollarshort View Post
Ideally, once the kids are launched...
And the other shoe drops. Our son is still in college - about 1-1/2 years remaining. Once he goes out into the world and becomes self-sufficient, our expenses drop somewhat:
  • Car Insurance
  • Umbrella Insurance (higher because he's on our policy)
  • Cell Phone
  • Car Maintenance
  • School Expenses
  • etc.
It's not a deal-breaker either way, but it's one step closer to freedom...
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Old 12-22-2014, 09:44 AM   #14
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Originally Posted by T-Minus View Post
Thanks for the kind welcomes. I think L&L hit the nail on the head in Post #6 above: every additional year worked will provide more options...but where do you draw the line?
That is exactly why I drew the line at 100% in FIRECalc using 80% of my portfolio and a 3% WR. Up until I did that I kept shifting the line (increasing my budget, decreasing the % portfolio I would include in my analysis, etc).

I think your plan of reintroducing more work/life balance and rekindling hobby interests for 2 years is great. Beware of OMY syndrome. Draw your line.
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Old 12-22-2014, 09:57 AM   #15
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You are in a wonderful position. Can continue to work and be happy. Or could retire and explore a whole new adventure in life. I wish you the best in making your decision.

For me, I've been considering retirement occasionally over the years and could have easily retired 4-5 yrs ago from a financial viewpoint. However, the question in my head was always "when is a good time for me to retire?" I found no great answer, no single driver that made me want to make that leap....so I continued to work at a job I enjoyed. This last time I pondered retirement was a month or two ago, I found myself quickly asking a totally different question..."why am I continuing to work when I could be doing...(insert your own desires here)...". This was quite a change for me, a "tipping point" as others call it. I let it sit for several weeks but couldn't get that new question answered in a way that made me comfortable. In addition, the old question of "when is a good time for me to retire" was always easily answered in recent years with "anytime". So I made the decision and put in my notice. I have a few more weeks to close out this job and couldn't be more excited about living in retirement with a wonderful wife and re-exploring many interests that have been put on hold by work. Good luck to you.
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Old 12-22-2014, 03:36 PM   #16
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It seems you need to back off on work for couple years so you can get those hobbies or new interests rekindled. Is part-time at your work a possibility? Maybe that new position the bosses hinted at for you with less travel is a good thing to have more time at home.

At some point you just have to make the transition. Being aware of that is good. I am in similar position to you, getting close to that transition from working to retired. I have more than enough to keep busy with, so there is no concern with boredom for my case. Work gets in the way of life for me.

As the saying goes, you have a job to retire from, but you need something to retire to. Work on that something so when you do retire, it will not be a shock to your system.
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Old 12-22-2014, 04:23 PM   #17
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One of the most eye-opening things about retiring is how content I can be doing not much of anything. I seem to be able to keep busy enough most days, particularly in the summer. To some degree it is a simple leap of faith that you will find enough fun things to do.

If your situation is such that 3 or 4 days a week of part-time is feasible, then that can be a nice bridge to retirement as you can use the extra time off to rekindle those lon-lost hobbies.
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Old 12-22-2014, 04:29 PM   #18
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One of the most eye-opening things about retiring is how content I can be doing not much of anything.
+1

It was only after retiring that I learned my true calling in life - piddling around. I'm a real pro.
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Old 12-22-2014, 05:11 PM   #19
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I used to feel bad about wasting the day then I realized - why not? Cooking from scratch, reading, yoga, binge watching Firefly, walking the dog, catching up on filing, posting here, it can all fill a day in a pleasant, low stress way.
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Old 12-22-2014, 05:23 PM   #20
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+1

It was only after retiring that I learned my true calling in life - piddling around. I'm a real pro.
Reminds me of what Dean Martin's second wife said about him.:

Nobody does "nothing" better than than Dean.
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