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Northwoods Mary
Old 04-30-2013, 11:49 AM   #1
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Northwoods Mary

My husband and I are in the process of selling our home after which we plan to full time RV until we are tired of it (could be months or years). When we are tired of traveling, we can sell land we own to pay for a smaller hobby farm where we will raise most of our food as long as we are healthy.

We should net about $800,000 (non taxable) from our home sale and have about $900,000 (taxable) in IRAs with Fidelity. We are 56 now. My husband's's career was as a route salesman for a national food chain (selling to stores and driving truck) but after big company #1 sold to big company #2, pay and benefits are going in the wrong direction. I still have an active law license, but have not been practicing for a few years because of a diversion into politics (cured of that now!).

We are both capable of working part time, but prefer not to worry about a pay check while traveling. We can get expensive ($1,000\month) retiree health insurance through John's employer, but the Affordable Care Act may be a better option?

We would like a retirement income of around $90,000, but could get by with less, especially in the early stages while we are RVing. We will get around $3,000 combined (today's dollars) in SS once we hit 62, if we retire now.

Do we dare retire now or do we need to work a couple more years?

Any advice appreciated!
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Old 04-30-2013, 11:56 AM   #2
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Forgot to say we have no debt. And where did the "dryer sheets" tag come from? I'm obviously new at this!
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Old 04-30-2013, 11:59 AM   #3
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Welcome aboard, Mary.

I'd suggest running your numbers through FIRECalc: A different kind of retirement calculator

If you have any questions, there are lots of helpful and knowledgeable posters here.

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Old 04-30-2013, 12:04 PM   #4
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Welcome Mary, would love to be in your shoes today. We retired 8 years ago age 54/51, but we went right to the ranch life, now we have so many critters it is hard to just take off and go. Getting help to keep things here rolling and the hikers at bay, heck ,it is just easier to stay home and do it all ourselves.
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Old 04-30-2013, 12:08 PM   #5
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BTW, Mary, here's the answer to your question on dryer sheets..."What's the deal with the dryer sheets?!?"

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Old 04-30-2013, 12:11 PM   #6
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You have roughly $1.5MM in assets after the house sale, after buying the RV and after paying tax liabilities on your 401K accounts.

At 4% drawdown that is $60000 per year at best - 4% would be considered fairly aggressive considering an age 56 retirement.

Social security will kick in at age 62 - six years out.

No mention of how your assets are invested. Most of the retirement calculators assume 6% return per year and the only way you'll get that is with a healthy dose of equities, which is fine as long as you are prepared for the crazy, wild swings in your net worth.

All in all, it just looks too close to me. You'll need to either A) work a few years more, possibly with dual contributing incomes B) accept a lower standard of retirement income C) go into retirement with full knowledge that you are in a high risk zone.
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Old 04-30-2013, 12:55 PM   #7
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Wow, I'm amazed and grateful for responses already. I will check out FireCalc. I've used lots of online tools, but the results vary so much and don't allow for many variables.

I should say that our RV cost is already covered, so that won't be a deduction, although I realize that's not a huge difference. I'd also rather develop part time options and reduce our initial living expenses (rv forums generally say $50,000/yr is enough to live on while full timing; some do it for a lot less), than to stay wedded to our present circumstances for several more years.

Our risk tolerance is moderate: our IRAs are about 50% equities, 40% bonds, etc., 10% cash. We will be more conservative with a year or two at a time of our house proceeds.

On e we are in our 80s, if we make it that far, we would sell our hobby farm (probably for $400,000 in today's $) and move into a condo. Does any of that info change your advise, Wingfooted, or still not enough?

Thanks again!
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Old 04-30-2013, 01:16 PM   #8
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Quote:
Originally Posted by Northwoods Mary View Post
. Does any of that info change your advise, Wingfooted, or still not enough?

!

What you'll see with both the calculators and FireCalc is working even one more year makes a tremendous amount of difference as a withdrawal debit is replaced with a positive savings / asset appreciation entry..

At some point it is likely that living in a RV will become stale and you'll need to invest back into a home, which will reduce your available liquid assets.

I would still say not enough, hang on for a while longer while you have a steady income source.

Your investment mix is conservative although you are taking a much higher risk on the 40% bond portion than what you think.

At the end of the day --- it is a personal decision.
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Old 04-30-2013, 01:24 PM   #9
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Thanks Wingfooted,

You advice may not be what I want to hear but is appreciated. As far as a hose, we will buy another one eventually, but will use our land sale proceeds - not a part of our retirement funds.

I'm curious about your bonds comment. I'm no expert, but have been trying to get smarter on investing with time presently on my hands. I've read that because interest rates are being kept artificially low right now and no doubt will rise, the typical wisdom of an inverse relationship between bond and equities performance likely will not apply. Is that what you meant? Any suggested alternatives, or is that beyond this thread?

Thanks again!
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Old 04-30-2013, 01:31 PM   #10
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Mary: RV Living Expenses : These guys are doing it with 1-1.3K/month....way less than 50K you mentioned.

Travel with Kevin and Ruth: Living Expenses
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Old 04-30-2013, 01:46 PM   #11
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Originally Posted by Northwoods Mary View Post
Thanks Wingfooted,

I'm curious about your bonds comment. I'm no expert, but have been trying to get smarter on investing with time presently on my hands. I've read that because interest rates are being kept artificially low right now and no doubt will rise, the typical wisdom of an inverse relationship between bond and equities performance likely will not apply. Is that what you meant? Any suggested alternatives, or is that beyond this thread?

Thanks again!

As you point out, interest rates are being kept artificially low by central bank money printing, aka qualitative easing. As soon as that stimulus is removed, it is likely that interest rates will return to historical norms or above. Your bond portfolio, particularly anything with a maturity out past five years, will then decrease rather markedly in value, maybe even 30 or 40 percent.

Equities will presumably be better able to withstand higher interest rates and inflation pressures as they are able to pass on their costs to the end user.


I have no magic bullet to offer. Personally I am 99% equities and 1% physical precious metals.
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Old 04-30-2013, 01:53 PM   #12
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40K year expenses X 30 years = $1.2M total retirement expenses

90K a year expenses X 30 years = $2.7M total retirement expenses

(90K a year expenses - 30K part time work for 2 people) = 60K a year net expenses X 30 = $1.8M total retirement expenses

You would have a much higher probability of success if you can cut your expenses, work part time or some combination of the two. 90K is almost double the average expenses for a household in your age bracket in the U.S., so maybe you could work on reducing that, especially during the time you are living in an RV.

The link below goes to a video of how an extreme saver lives in an RV on a fraction of 90K. He isn't traveling around so it isn't the same situation as yours, but he has tips on keeping his RV energy and water costs pretty low.
Living small: when home is a 150-square-foot RV - videos - *faircompanies

If you do a search for workamping jobs, there are job boards with temp and seasonal jobs for RVers.
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Old 04-30-2013, 01:57 PM   #13
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Wingfooted....I am going to share your comment with DH; it's the same as I've read elsewhere and it makes sense to me. Just wish there was something less risky than all equities that paid better than 2%.....me and everyone else! But I suppose the upside is that when the "easing" is over, CD rates, etc. will rise too. I remember the good old days when you could lock in 10% .... but inflation was high too. No easy way without a crystal ball!
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Old 04-30-2013, 02:02 PM   #14
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Welcome to the board.

If you haven't already, I suggest you read some investment books like The Four Pillars of Investment by William Bernstein (my favorite by far) or books by Bogle or Swedroe. If you're going to manage your own portfolio (I do mine and don't think it is difficult) you need to feel very comfortable with what you're doing - and not stray from your plan.

You need to have a good handle on your expenses. Have you tracked your current expenses in detail? If you have, you should be able to estimate your expenses on the road. Look at eHealthInsurance.com to see what health insurance will cost today & speak to an agent (it will not affect your cost). Having a detailed understanding of your expenses is absolutely essential.

There are various methods to safely withdraw money from your portfolio. Plenty of threads on this topic.

I think only after you've looked at all the above can you make an educated decision on whether YOU can ER or not.

It may seem daunting at first, but tackle it one at a time & you'll get through it with no trouble. This board is incredibly encouraging and helped me a lot when I was first starting to figure it all out..

All the best.
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Old 04-30-2013, 02:15 PM   #15
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Welcome to the forum to you and your husband. First, I am surprised to know a man that drives a route truck for a living wants to drive even more in an RV. (Not that there's anything wrong with that). So let's say y'all retire and do the RV thingie and then find you don't have the money for the hobby farm, but you do have the money for a condo. How disappointed would you be? Does this help with your decision tree?
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Old 04-30-2013, 02:17 PM   #16
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I am with what most are saying here. I do agree that you can live pretty cheaply full timing in an RV. (If you choose) We were considering that as an option for sometime.

While you are receiving all of this advice....what kind of RV? are you going to pull a toad?
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Old 04-30-2013, 03:01 PM   #17
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Thanks to all for the great advice. Looks like I have some reading and more investigating to do.

DH actually likes driving, as long as he can do it at his pace in a comfortable vehicle. Otherwise, he says, it is too much like work.

When we start, we will use the truck and RV we already own (F250 diesel and LQ trailer - we have a couple horses). We want to attend some rallies to learn more before we buy something else, it think we will want a 5th wheel, but not so big that we can't get into some wilderness areas when we choose.

We are pretty invested in a hobby farm eventually, but we want to travel first before deciding on a location....and who knows? Life changes. As I said, I'm not really worried about our ability to earn some income if necessary or if we need something to do once we're done moving around. We don't want to be dumb about this and end up old and poor, it we also don't want to continue 60+ hour work weeks until we're too old to enjoy traveling, etc. because we were too worried about security. We're looking for a reasonable balance, I guess, and feeling fortunate to have a choice. Of course, in our rural neck of the woods, it could take a couple years to sell our house and then our dilemma would solve itself.
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Old 04-30-2013, 03:03 PM   #18
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At some point it is likely that living in a RV will become stale
For what it's worth, the average for full timers is betwen 3 and 5 years. Then the need to settle down kicks in.
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Old 04-30-2013, 05:31 PM   #19
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You have roughly $1.5MM in assets after the house sale, after buying the RV and after paying tax liabilities on your 401K accounts.....
I'm not sure anyone here would voluntarily convert the 401k to taxable funds and pay the taxes all at once, if that is what wingfooted is suggesting. The typical play is to either rollover the 401k to a tIRA or just keep the 401k, neither of which results in taxable income (if done correctly).

In most cases your tax rate just after ER will be very low (mine went from 25% to 0%) so you may have closer to the $1.7 million. You can get a good idea by taking a copy of last year's tax return and taking out your earnings and making other adjustments for changes in retirement. Many of us ER plan to do 401k/tIRA to Roth conversions up to the top of the 10 or 15% bracket (pre Obamacare anyway).

Quicken's Lifetime Planner (part of Quicken Deluxe and higher) is an intuitive, easy to use planner that may fit well with your needs.

I think you should be fine but I don't see $90k of spending being prudent based on what you have unless you each are near the max on SS.
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Old 04-30-2013, 05:54 PM   #20
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Welcome to the forum, Mary.
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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