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Old 03-15-2011, 02:59 PM   #41
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Originally Posted by luckyiknow View Post
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.
As someone close to FIRE with school age kids living in the NY metropolitan area, I suggest the following:

1. You said your youngest is 10 YO now. You should put together a estimated budget which loads all of the school costs (assume all three kids go to private colleges with no financial aid), among your other expenses, and goes through the next 12-15 years until they are out of school and in the real world. It should assume that you stay in your current house, with currently local taxes (with inflation adjustments) until then.
2. Assume that you obtain a 3.5% after-tax return on your taxable investments and a 5% return on your tax-deferred investments. This should allow you to invest conservatively enough for your taste and see if the budget works. Assume your home will neither increase nor decrease in value (although your home equity will of course go up as you pay down your mortgage).
3. Assume you stop working immediately. Add some number for health insurance in your retirement budget. See what that leaves you at age 65 (obviously, you can and should run out the retirement budget to age 90) and then determine whether you have enough to FIRE now.

Until you do the work to run the numbers, you won't really know if you can FIRE now. So, do the work and report back.

I'm going to guess that your expenses run approx. $275k/yr, with $50k for taxes, $40k mortgage, $75k school and $110k health/other/inflation. If that is the case, a 3.5%/5% portfolio return is only going to pay a portion of this, and you will start eating into principal immediately. Assuming you can generate $150k in after tax income per year, you are eating $125k in net worth. Once your kids are in college, it will be higher (figure $25k times 12 year or $300k). So, in 15 years, you've eaten through $2.175mm of net worth. That would leave you with $1.8mm of net assets plus $1.5mm net equity on your house. Sell the house at age 65, and you have $3.3mm of net worth, with your expenses dropping significantly going forward and SS possibly available to provide additional income.

Seems doable, but you need to crunch the numbers to confirm that they work and really have a handle on expenses.

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Old 03-15-2011, 03:38 PM   #42
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I hate to say it, but these numbers are laughable. Get out of Westchester for 5 minutes and perhaps you will see how silly this whole quandry is.

"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."

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Old 03-17-2011, 01:06 PM   #43
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Originally Posted by brewer12345
I hate to say it, but these numbers are laughable. Get out of Westchester for 5 minutes and perhaps you will see how silly this whole quandry is.
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Old 03-19-2011, 07:41 AM   #44
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Originally Posted by pimpmyretirement View Post
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.
I think this is spot on.

To the original poster, please try and think outside of the box and don't assume your have to shoulder the full ($1mm!!) expense for your kids' education. It is their education, have them take ownership of it.

I am one of 4 kids in my family. I estimate that my parents spent a total of $25,000 for our educations (total, not per sibling). 3 of us received advanced degrees. Other than that minimal help (divide it by 4 kids, and divide that by 4 years of schooling), my siblings and I all financed the rest. Sure, we all have student loans. However, it forced us to seek out merit based scholarships (b/c we didn't qualify for any need-based), work study programs, etc. It also influenced our choice of schools. 3 of us went to public schools, and none of us regret that choice. Right now, we are all doing exceptionally well, and I credit much of our success to the fact that we each took ownership of our education.

It's funny, my parents were not burdened by funding their kids' education, and they retired early. My siblings and I are all very good with money and we're all well on our ways to an early retirement -- if we want it. I think there's a correlation. Had they decided to fund our educations, I can't help but wonder where we'd be at now. I also suspect my parents would still be working.

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Old 03-19-2011, 08:29 AM   #45
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Originally Posted by Erik View Post
Welcome to the forum and congratulations on your first post. You will be pleased to know that the forum no longer charges posters by the word.
Yes, I have achieved work / life balance.
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Old 03-19-2011, 01:22 PM   #46
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How do you get 3.5% return after taxes? I want to be safe, safe, safe.
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Old 03-31-2011, 03:42 PM   #47
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I live and work in New York and consider it to be a very long business trip. I don't know why anyone would ever want to retire here.
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Old 03-31-2011, 03:55 PM   #48
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Originally Posted by midlifeguy View Post
I live and work in New York and consider it to be a very long business trip. I don't know why anyone would ever want to retire here.
Yet, clearly many people do! God's glory reflectd in the richness of individual differences and preferences right here on earth.

"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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Old 03-31-2011, 04:21 PM   #49
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Originally Posted by haha View Post
Yet, clearly many people do! God's glory reflectd in the richness of individual differences and preferences right here on earth.

Rent 'My dinner with Andre'

And when I was at Findhorn, I met this extraordinary English tree expert, who had devoted his life to saving trees. He just got back from Washington, lobbying to save the redwoods? He's eighty-four years old and he always travels with a back-pack 'cause he never knows where he's gonna be tomorrow! And when I met him at Findhorn he said to me: "Where are you from?" And I said: "New York." He said: "Ah, New York! Yes, that's a very interesting place. Do you know a lot of New Yorkers who keep talking about the fact that they want to leave but never do?" And I said: "Oh, yes!" And he said: "Why do you think they don't leave?" I gave him different banal theories. He said: "Oh, I don't think it's that way at all." He said: "I think that New York is the new model for the new concentration camp, where the camp has been built by the inmates themselves, and the inmates are the guards, and they have this pride in this thing they've built, they've built their own prison. And so they exist in a state of schizophrenia, where they are both guards and prisoners. And as a result they no longer have, having been lobotomized, the capacity to leave the prison they've made, or to even see it as a prison. And then he went into his pocket and he took out a seed for a tree, and he said: "This is a pine tree." He put it in my hand and he said: "Escape, before it's too late."

Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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