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Old 03-10-2011, 06:02 PM   #21
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Welcome , I love New York and think it is a great place to live but it is expensive . So you either have to work longer or find a place that is not New York that you could live happily in.
Or figure out how the Russians and Chinese and Colombians and Albanians and Puerto Ricans and Dominicans manage to struggle along without moving to Oklahoma?

Ha
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Old 03-10-2011, 06:18 PM   #22
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Or figure out how the Russians and Chinese and Colombians and Albanians and Puerto Ricans and Dominicans manage to struggle along without moving to Oklahoma?

Ha
Well, with them all sharing that two bedroom walkup with the efficiency kitchen, the cost per person isn't so bad...

(DD moved from a building on the upper upper west side last year where one of the apartments qualified for 'all of the above'. )
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Old 03-10-2011, 06:25 PM   #23
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There has been some excellent advice so far in this thread, so I'll just toss out a tidbit.

I was born and raised in NYC (Brooklyn, actually), and I honestly feel that it's mostly wasted on kids. I wasn't really able to appreciate the city until I was in college (which was in NYC). So I don't think you would really be doing your kids such a huge favor by not wanting to move them. They can always go back later on their own if they want to.

When I left the city after college, I never looked back. I still have friends there, and I visit them every year or two, but I could never live there again, and cost has absolutely nothing to do with it.
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Old 03-10-2011, 06:25 PM   #24
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Well, with them all sharing that two bedroom walkup with the efficiency kitchen, the cost per person isn't so bad...

(DD moved from a building on the upper upper west side last year where one of the apartments qualified for 'all of the above'. )
True. Here, depending on neighborhood it is Mexican workers, often young well paid Indian software workers, Indian families, or Somali and other African extended families.

Ha
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Old 03-10-2011, 07:05 PM   #25
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Thanks for all the helpful replies. Yeah, I didn't expect a magic answer. I know I could/should move. The problem is I don't want to move the kids, at least right now, and my youngest is 10 so a few more years before they're all off to college.

As to college costs, someone above said: " $1mil is unbelievably pessimistic unless you are including funding their masters/phd/md and they get no financial aid. I'd guess it's more like $500k for 3 bachelors and possibly masters even at expensive private schools."

Well, I'm not sure how you're saying that. Tuition and costs at good private schools for 2011 have already been announced. At UPenn for example (on the expensive side I know), 2011-12 tuition, fees and costs are 57K. 3 kids X 12 years of college, including avg. increases of 5-6% or so adds up to around a million (given my kids' ages). And given my assets described above, I don't see any possibility of financial aid.
So at 57*12 I get 684k. That's assuming absolutely no private/partial scholarships for any of your kids at one of the most expensive colleges around.

The increase in tuition over the years in the future should also be roughly equivalent to the earnings on the savings set aside for college. So right now you have $684k set aside for college but when they actually go, the 684k would grow by roughly the same amount as the tuition increase grows. I know college is going up by more than inflation, but so should your savings.

Really it comes down to what's more important to you: Living in New York and working the next 10+ years or not living in New York and being retired/semi-retired right now.
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Old 03-10-2011, 07:23 PM   #26
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... And given my assets described above, I don't see any possibility of financial aid.
Merit Scholarships are based on test scores, grade point averages, etc. Most private schools award them regardless of financial need. The higher the scores, the more $$. The better schools want the better students; and competition being what it is, schools use merit scholarships as incentives for the best and the brightest to attend their institution.
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Old 03-10-2011, 08:14 PM   #27
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Living in SF Bay Area, I do have some sympathy... we like it here, we would not want to move our kids... again and we pay for those choices.

If you are expecting Ivy league then football lineman is about the best way I have heard to get $ :-) However, if they are even near Ivy league caliber they would certainly get half tuition if not a full ride at one tier down... and so it goes down the chain of 3500 colleges.

I suspect very few people pay full tuition sticker price at private colleges (other than Ivy).

If you stuff 529 accounts... Vanguard has lots of options (non-stock) that will save you a chunk, particularly for the 10 year old.

I am stunned you can accumulate $4mm by hating stocks, but then I am 100% stock sorta person... probably means you don't like REITS or floating rate bonds either :-)

I think there is also a big gap between working lots of hours in a job you dislike to being completely retired. Options such as part-time consulting may have a big impact on cash requirements
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Old 03-10-2011, 09:13 PM   #28
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It is all about choices. With safe investments you are guaranteed a lower rate or return. Living in NY you are pretty much guaranteed a high cost of living.

Do some searching of your inner self and try to find some balance. Don't look for immediate answers.
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Old 03-10-2011, 10:07 PM   #29
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Hey Lucky

I think you know what you have to do. The question is "are you willing to do it"? The answer is, yes you are...either willing to work longer, or you are willing to retire and move somewhere cheaper.

Personally I could never live in NYC. I really don't like it. (That's coming from a country boy who now lives in Tokyo). I can't hardly wait to get out of the big crowded city.

I'm in a very similar situation to you in terms of the amount of assets accumulated and age, and I have 2 kids who are both in university, but my home (worth about a million in California) is mortgage free. I live in Tokyo. I have a couple points/questions:

Do you expect to pay for your kids' entire education? If so, why? I believe, as do my two kids, that working is part of their education. I pay tuition, books and rent. They pay for food and play money, by taking part time and summer jobs.

Do you think that NYC is the best place to raise kids? Would it be better to raise them in a smaller, more friendly community, with you around, rather than at work to pay for the $1.8M home and the accompanying $50k in taxes?

What does your spouse think? Does she want to stay in NYC? Is she employed outside the home? If so, does she want to continue to be employed or does she share the desire to retire early? Would she be satisfied to live/work elsewhere and visit NYC on occasion?

Pulling the plug early is not an easy decision for everyone...for some it is a simple thing, others will fret over it for a long time. I'm still in for a few reasons, one is succession planning in a business that I have been with since it had a big fat zero on the revenue line, and which I run with a couple billion in revenues. Its like my child...can't to just tell the global CEO "I'm outta here", without making appropriate preparations.

Good luck on your decision. Stick around and let us know how it goes.

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Old 03-10-2011, 10:15 PM   #30
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Any other NYC'ers on this board? I see alot of people talking about retiring with annual incomes way lower than you need to afford living in the NYC area. I get the feeling most people on this board are living in another universe.
I know I'm fortunate--I'm 50, have about 4M in total assets, not including a 1.8M house, with 750K in principal left. (No, in nice NYC suburb that's not a mansion). As my handle suggests, I know I'm lucky compared to 99% of Americans. But stay with me:

Would love to retire *now*, but:
1. 3 kids not yet college age. No way will I get financial aid. If they all go to decent private schools I calculate $1M cash after tax.
2. Would like to stay in NYC area, at least until kids are gone and probably thereafter.
3. House has gone down in value. Not sure how much. So some of my home equity has disappeared.
4. But my local taxes (property and school) are almost 50K a year!
5. Very, very, (very) conservative investor. Hate stocks. With interest rates this crazy low, can't find a safe investment to generate income necessary to live in this area with 3 kids, particularly after inflation.
6. Health insurance.

Any advice (other than "you greedy bastard, 4M is plenty" or "move")?
i am surprised that no one asked what your yearly expenses are. that is the starting point to figure out how big a nest egg you need to retire. have you tracked your expenses for an extended period of time?
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Old 03-10-2011, 10:51 PM   #31
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Ya I got that. As Ha said though you seem to be a pretty smart guy and looks like you are going to have to compromise on something. I would just keep working for a while until you can relax one of your other constraints? PS I don't think $4mm(less the mortgage) is enough for you to retire on given your lifestyle. I live in a less expensive city (Toronto) and had quite a bit more plus a large pension before I retired at 56.
Well said.

If you want your situation to change, it seems to me that perhaps you need to do some introspection and soul searching to determine what you really do want in life, and to determine your priorities. Then realize your priorities from the top one on down, to the extent that you can afford to do so. That means that choices must be made, based on your own priorities.

From where I sit (a low cost of living area), it's kind of sad. It appears that you are throwing away your retirement, the few precious moments that you have left on earth, so that your kids can go to an expensive private college when a state school could give them amazing opportunities for much less money. Well, and also to continue living in a $1.8M house that you say is not a mansion. These choices are not at all consistent with my own priorities, which is why this seems so sad to me. But if those really are your priorities, then you would be happy, not sad.
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Old 03-11-2011, 07:22 AM   #32
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Personally I could never live in NYC. I really don't like it. (That's coming from a country boy who now lives in Tokyo). I can't hardly wait to get out of the big crowded city.
I hope you are OK Rambler. I hear Tokyo got hit pretty hard by the earthquake.
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Old 03-11-2011, 08:29 AM   #33
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Personally I could never live in NYC. I really don't like it.
Neither can I nor DW. However, being in an area with easy access to the city, we do enjoy what it brings to us, e.g. shows, shopping, sites - especially during the holidays, and major transportation hubs, such as the cruise ship terminal and EWR - Newark airport, for our international trips.

I guess we have the best of both. The "magic/culture" of NYC and the lifestyle of a "country bumpkin" ...
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Old 03-11-2011, 09:51 AM   #34
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The OP implied that he lived in an NYC suburb, not in NYC itself. There is a significant cost difference between the two. One way to make ER work in this situation is to move slightly outside commuting distance from the city. The cost of living a bit outside commuting range is significantly lower than it is within commuting range. Bucks County, Pennsylvania, for example -- too far to "commute" to NYC, but not too far to drive occasionally for cultural and other amenities once you're retired. Also, you can telecommute from there, or from central Connecticut, and in either case you can avoid the dreadful NY and NJ income taxes.
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Old 03-13-2011, 10:13 PM   #35
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Merit Scholarships are based on test scores, grade point averages, etc. Most private schools award them regardless of financial need. The higher the scores, the more $$. The better schools want the better students; and competition being what it is, schools use merit scholarships as incentives for the best and the brightest to attend their institution.
Uh, as an alumni of Carneige Mellon University....while I was pretty bright and did well in high school, do you really think a white male from an upper-middle-class family like me had any chance of landing one of the ~12 scholarships they award annually (a few full-rides, a few half-rides), out of a (at the time) freshman class of 1,200? Not to mention the tidal wave of 10,000+ applicants...

Top universities do have large endowments, but they also hand out large need-based and/or loan packages. The bulk of their financial resources for students are NOT handed out as merit scholarships for a large percentage of the freshman class. The top students are already clamoring to get into the top schools without merit scholarships - that's why they get 10x/20x applicants (or sometimes even more) than they have spots for.

If you have a top-notch student, they only really have any significant chance of scoring a significant merit-based scholarship by applying to a sub-30 or sub-40 ranked school (most of the top 40 schools are the same regardless of which ranking you use - they just shift ranks by a few places). The "sub-30" are the institutions that don't have nearly as many students with an ACT of 34+, so you aren't competing with many other students to get some decent scholarship money.
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Old 03-14-2011, 10:13 AM   #36
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Thanks for all the comments. I'll answer some of the questions when I get a little time. Saw this article today, which is kind of how I feel. It's all relative I know.
U.S. millionaires say $7 million not enough to be rich - Yahoo! News

As far as college costs, I've seen this referred to as another hidden "tax" on the rich. i.e. they're the only ones who pay full cost.
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Old 03-14-2011, 02:43 PM   #37
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If you would like to heed my advice, I would recommend adding some risk to your portfolio.

The segment I work for caters to UNW families(5M+ in investable assets). Even our most conservative recommendation has about 30% in Equities with 10-15% bond portfolio in High Yield.

Other than that, you need to figure out what income you need including taxes and reverse calculate the SWR. You're almost there based on the information provided.
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Old 03-14-2011, 04:04 PM   #38
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If you're serious about ER, you need to start doing some detailed fact gathering. How much will college actually cost? Will all your kids get into UPenn? How much do you spend a year now, what expenses will go away when the kids leave for college, when they leave the nest. Etc. etc. etc. Get a financial package like Quicken or an online one or fire up a spreadsheet.

Look up ESPlanner at ESPlanner.com. It will allow you to model how much you can live on given your stash & the return on your investments. Since you have fixed income, you may get a pretty good estimate. Give it a try.

Read the 4 pillars of investment by William Bernstein to really understand the risks of equities & the risks of have no equities. There are other books recommended here too.

ER isn't the stuff of rocket science, but it is work - study, detailed planning and tracking. And yes, compromises.
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Old 03-15-2011, 09:59 AM   #39
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I credit my student loans for the success I have had to date.

I went to a private university. My parents got me low interest student loans, and told me "we'll make the payments till you graduate."

Faced with the real cost of my education, I figured out how to use AP credits earned during high school to graduate in 3 years instead of 4. I got a part time job during the school year, a full time job during the summer.

I moved into a studio apartment that was cheaper then the dorms. I passed on pizza and beer every night.

Getting out of school, understanding what the debt meant, I continued living like I had in college. I took an internship that started the week of finals when I couldn't find a job. I paid the loans off in a few years.

The discipline I learned has been more valuable than anything else I gained from college. I learned to embraced hard work and a LBYM lifestyle.

Make the kids pay for it. It's good for them.
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Old 03-15-2011, 01:37 PM   #40
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As far as college costs, I've seen this referred to as another hidden "tax" on the rich. i.e. they're the only ones who pay full cost.
As a parent who has gone through a very similar process - twice in the last 3 years, I urge you to take a proactive approach to merit $... can easily save you hundreds of thousands.

Another poster mentioned experience with CMU, even an institution as prestigious nowadays has very significant non-need based $:http://www.cmu.edu/ira/CDS/pdf/cds_2...2010_final.pdf
This data is available for all schools.

It is buried down toward the end... $63million Need vs $13million non-need with average $10k per student non-need ie obviously for best merit aid your kid needs to be top quartile for school... but again if they are anywhere near Ivy - they will be! IMHO: Sticker price definitely seems to be a bit of game for all non-Ivy colleges.
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