Not sure what to do at 48

[daylatedollarshort]

Thedaily, if your all inclusive budget is $12K a year just for you and you have $1.1M saved up, you have 91 years of living expenses saved up as it stands, more or less, assuming you invested in assets that simply kept up with inflation. Plus I assume you will have SS or some kind of retirement income coming in later on for additional income.

I would suggest running a spreadsheet out 50 years just investing in inflation indexed assets with a small real return, and include post job medical expenses, reserves for LTC or LTC insurance, and reserves for new cars and home repairs and anything else major that might pop up, and see how that comes out.

Maybe I am missing something, but I agree with Aaronc879. I don't see why you need to work at all as long as you keep your living expenses so low in relation to your savings.

 

[thedaily]

My concern with hanging it up is the cost of health insurance and care. I was looking at some policies and they were 100 dollars a month with a high deductible of 10K. I assume because of ObamaCare you can no longer find these types of policies. The lowest now is 220 per month for 6K deductible. Fortunately, I'm very healthy but you never know. A few years of paying 6K or 10K could hurt my plans plus both the premiums and deductibles could rise on me.

The other concerns are most of my family members have lived to the high 90s.

 

[daylatedollarshort]

My concern with hanging it up is the cost of health insurance and care. I was looking at some policies and they were 100 dollars a month with a high deductible of 10K. I assume because of ObamaCare you can no longer find these types of policies. The lowest now is 220 per month for 6K deductible. Fortunately, I'm very healthy but you never know. A few years of paying 6K or 10K could hurt my plans plus both the premiums and deductibles could rise on me.

The other concerns are most of my family members have lived to the high 90s.

Have you looked at subsidized insurance prices on the exchange based on what your post ER modified adjusted gross income would be? You also have to have an idea of what your post Medicare expenses will be to do a long term spreadsheet or retirement calculator.

 

[thedaily]

I didn't even think of that. This would bring my insurance down to around 85 a month. Not so bad.

 

[daylatedollarshort]

I didn't even think of that. This would bring my insurance down to around 85 a month. Not so bad.

You might also want to look at how much your income and SS taxes would decrease. One possible downside is your SS benefits may be less than if you worked longer. You can calculate what they will be on the SS web site either way and see what the difference it.

After you subtract out taxes, add in subsidies, subtract out work and commute costs, subtract out reduced expenses from being home more and maybe add in any pensions if you have them, the bottom line financial impact between working and not working at your age may be less than it would seem at first glance.

 

[Markola]

You are indeed good at shopping for groceries, clothes, etc. Maybe if you thought of index funds the same way: "Stock up" when they are cheap and don't buy when they are expensive.

 

[Sun456]

I'm no longer a high risk person so here is where I have my money. I'm 46.

30% in annuities that I will start drawing on when 65. Had to find ones that would compound for 20 yrs. Most that I've got money in aren't available right now. Are hard to purchase. Require a large amount of time to research and learn about. Not for those who are not detail oriented. Average appreciation per year is 7% guaranteed. Not considered a return because I will never have access to the principal again. But with no pension I felt better buying one for myself. At 65 can start to withdraw 5% per year per life with some income doubling for nursing home or losing 2 daily life functions.

20% laddered into low paying near to medium term bonds. Have about 6 yrs left in this 10 yr ladder (originally put almost 50% in but due to maturing, calls and my selling it is down to 20%). Not a good decision on my part as the idea was that I would have money coming out and being redeployed at higher rates. Higher rates have not materialized so I suffered low rates and continue to suffer them. Average return is 2.45%. Some have been called early. Some I've sold because they appreciated so much that there was almost no return left in them.

20% in preferred shares of insurance companies and utilities. Tried to avoid corporates but have one. Tried to avoid financial but have one. Tried to avoid real estate mortgage preferred but have two. Have started to pick up some PFXF to diversify. Currently have too large of positions in individual preferred. Average return on these is about 6%. When rates go up principal value will go down and may be locked into these for life or risk loss. But given nature of guaranteed payment I'm OK with that.

14% in ridiculously bad performing mutual fund. Should have diversified this more but was nervous nellie. Average return negative.

Small amounts in I-bonds and EE bonds. Max out what they will let me buy every year. No appreciation to speak of.

10% in cash earning next to nothing but at least 4 years of expenses. No real point to having 4 yrs of expenses in cash. Just don't know where to put the money.

Overall return is 4.47% based on investments. Nothing to brag about but these were the safest options I could find although CDs are noticeably absent. If I include new funds then I gained 6.3% last year.

We live below our means so we can put in new money each year. House is paid off. Everything bought can be paid for such as cars. Aren't really worried about inflation as we don't have much in terms of needs to buy. Of course we have to keep the house up and replace cars every 15 to 20 yrs. Real estate taxes are going up as house appreciates. Utilities go up. Like you biggest worry is health insurance. Currently have high deductible plan. Dental plan doesn't pay much. Hardly worth having.

Was worried about outliving money. Annuities mean I won't. SS should help with that function but not sure it will be around in 20-50 yrs. Paid off house is also potential to provide income through reverse mortgage or chunk of change if sold to downsize. We both have LTC insurance so if big health problem comes up it will not deplete our assets.

Have hopefully reduced manager risk by keeping us both as managers of our own savings. We share and discuss ideas so there is some overlap but the above reflects my own plan. My husband does his own thing.

I don't suggest anyone should follow in our footsteps but I put it out there to give you some ideas of what other conservative folks have done. Everyone's situation is different. Your in a good position with your low expenses but your a little bit too much on the edge of success for me to be comfortable. I personally would need more of a cushion. Also I would want to be sure that all the money was invested the way I needed it to be and have several years experience managing it for income so I knew what was coming in before pulling the trigger.

If your girlfriend is frugal and on the same page financially you should marry her and lock her in. One of the biggest financial disasters is to marry someone who doesn't value a dollar the way you do. As you can see sharing expenses allows both parties to save more.

It is important to consider whether $12K is your expenses or the household expenses. If it is just yours and your girlfriend owns the house and you split up you could have much higher expenses. If it is the house hold expenses then could the two of you earn $12K per year and let your investments ride, similar to what I'm doing? I started with 2.1 million when I pulled out of the market and went conservative. Based on my spreadsheet if I let it ride for 20 yrs I will have the following.

Percent to take out of investments = 4.0%
Investment income (4% of principal) = $199,472
Annuity income Income per year = $150,467
Total income per year = $349,939
In today's dollars = $182,804
Inflation rate assumed 3.30%

Since your starting with half that then I assume you could get to half my above numbers in 20 yrs. But that means covering the $12K or $24K (whichever is the household expense) some other way. It seems to me that your expenses are low enough that they could be covered by a part time or hobby job that you really enjoy.

$.02

 

[thedaily]

You are indeed good at shopping for groceries, clothes, etc. Maybe if you thought of index funds the same way: "Stock up" when they are cheap and don't buy when they are expensive.

The problem is I don't know when they're cheap and when they're expensive -- i.e., I don't know if they will fall or rise once I buy them.

 

[thedaily]

Thanks Sun456, yes I feel the same I'm right on the edge of success. A little too young to quit based on the amount of money I have but I sure do want to give it up. My expenses are really that minimal: I pay 350 for the HOA and property taxes about another 50 in car insurance and probably another 350 for food going out etc. Yes, if we went our separate ways I would see an increase in cost. She's more frugal then me.

I ran into the same problem. I had a nice stream of money coming in from interest and then over time they all got called away when interest rates dropped.

I tried the annuity route but it didn't turn out very well. Probably due to high costs. I moved it to Vanguard and it finally went even this year plus a little more. The original one I had was from 2000. Looking back at the policy, the payout wasn't very good anyways. I see why they pay for life since the payout was the pits.

I may try to ride it out a bit longer. If I could get 6%, I could probably pull it off.

 

[Sun456]

If I could get 6%, I could probably pull it off.

You can get 6%. But no one investment does everything.

To get 6% and get your principal back at the end you will need to do long term bonds like 30+ yrs. In the mean time your bond principal will probably go down as rates rise. For me Schwab has a nice platform for individual bond buying.

Another 6% possibility is preferred stocks. But again if rates rise you won't get the principal back out unless the preferred is called. If rates are high they have no reason to call it. Check out these symbols as examples. Pick the ones with 15% tax status for a taxable portfolio and the ones without in your tax sheltered. I always try to pick ones that are cumulative.

IVR/PRA
ISF
PRE/PRD
AEF
AED
AEV
AGNCP
PSW/PRW

Potential preferred fund (best in tax sheltered) that excludes financials = PFXF. I stay away from financials.

Go to quantum on-line to get info on cumulative, call dates, 15% status. They will also tell you how the symbols are formated for different platforms. For instance Morningstar, Fidelity, Schwab and Quantum all format them differently. Can be frustrating. Research the underlying companies on Morningstar. Buy below the par amount and if called you make a profit. However, don't forget the value can go down to so principal protection isn't guaranteed.

You might find your job is tolerable as you work to set up your finances to support you. Sometimes having an out is all it takes to let things roll off your back.

You also have to decide of your willing to accept the lack of a stomach flipping roller coaster ride that fixed income provides. No fabulous returns are coming your way. Just nice slow steady income that can be spent or reinvested.

 

[thedaily]

Well I've decided to hang it up. I just turned 50 and I've had enough. Our company changed insurance to a high deductible making it less desirable to stay. In the three years I added another 300K to the savings and about another 100K to the 401K. I'm glad I toughed it out for another 3 years as my run of making good money is coming to an end.

The health insurance is what worries me the most. I'm in good shape but you never know. I was playing soccer with 20 and 30 year olds and they couldn't believe i was 50. Had to stop since I knew I was going to hang it up and didn't want to risk getting hurt.

I had a tough work history. I'm glad it's coming to an end.

 

[Davis65]

Congratulations. I have three days to go, and have no doubts. Every retired person I've talked to is happy to have quit work. Good luck to you.

 

[thedaily]

Thanks! Good luck to you as well. Looks like we're about the same age. I'm really looking forward to it. I have plenty of low cost hobbies. I know I won't be bored.

 

[Golden sunsets]

Good luck Daily. Did you finally diversify your investments or are you still all in Cash?

 

[EastWest Gal]

If you are in cash, your income will be low. So when you apply for insurance, you are either going to pay through the nose and ignore the ACA exchanges, or use the exchanges and likely be eligible for Medicaid, unless you meet the income levels for other ACA insurance. Medicaid is lousy. Many doctors don't accept it. If you get out of Medicaid range and into other insurance, your premiums and out of pocket costs will be low, so that may work out well.

At least you have no concerns about estate recovery if you are Medicaid eligible!

I hope you enjoy the freedom as much as most of us here.


Sent from my iPhone using Early Retirement Forum

 

[aida2003]

If you haven't changed your AA yet, it's a bit concerning when you do start paying for your own insurance. Your annual expense will almost double. Medicare isn't cheap either when you're eligible for it. Have you thought of moving abroad?

 

[thedaily]

If you are in cash, your income will be low. So when you apply for insurance, you are either going to pay through the nose and ignore the ACA exchanges, or use the exchanges and likely be eligible for Medicaid, unless you meet the income levels for other ACA insurance. Medicaid is lousy. Many doctors don't accept it. If you get out of Medicaid range and into other insurance, your premiums and out of pocket costs will be low, so that may work out well.

At least you have no concerns about estate recovery if you are Medicaid eligible!

I hope you enjoy the freedom as much as most of us here.


Sent from my iPhone using Early Retirement Forum

Yes, still heavy into cash. This year I'm looking to go outside ACA. Policy has a very high deductible but it's not real expensive or this year I didn't make a ton of money so I'll see what my subs are on ACA. I'll do one or the other. I have a few months to float cobra. Luckily I don't have any health problems. Only go to the doctor once a year for physical for the last 10 years. Next year I can put my cash in some CD ladders and make enough to qualify for ACA.

 

[thedaily]

If you haven't changed your AA yet, it's a bit concerning when you do start paying for your own insurance. Your annual expense will almost double. Medicare isn't cheap either when you're eligible for it. Have you thought of moving abroad?

This is what I would like to do. I've looked into Panama. I hate to think what Medicare will be when I'm 65.

 

[aida2003]

If you still want to concentrate on CD's only, do at least 5-year ladders at AllyBank. It offers 2% APY , maybe other banks/CU's give more, I don't know. Don't move more than $250k though, just up to the Fed insured limit.

 

[thedaily]

I pulled the plug a couple months ago. It was one of the happiest days of my life as I despised my job and I couldn't take it anymore. Life is great

Never bored. Between lifting weights, kickboxing classes, soccer, cleaning, cooking, and I took up a foreign language I stay very busy. I am surprised how much less I spend each month in food and how much healthier I'm eating. Life is too short to do something you can't stand.

 

[DrRoy]

Investment grade corporate bonds will pay a couple percent and return the principal at maturity.

 

[target2019]

I pulled the plug a couple months ago. It was one of the happiest days of my life as I despised my job and I couldn't take it anymore. Life is great

Never bored. Between lifting weights, kickboxing classes, soccer, cleaning, cooking, and I took up a foreign language I stay very busy. I am surprised how much less I spend each month in food and how much healthier I'm eating. Life is too short to do something you can't stand.

Having left the workforce (kicked to the curb), I became more active, and much healthier.
Returning to the workforce (all positives on the job), I have become less active, and therefore less healthy.

I'm looking forward to pulling the plug in a year or two. Not that I have OMY syndrome or anything.

 

[thedaily]

I didn't stay retired for long as a good opportunity came up and I took it. I didn't feel like I was going to run out of money. They made me an offer I can't refuse. Unfortunately, I despise it. I don't know how people can go to a job they can't stomach.

Luckily, they have a short vesting period and during the time I've been working there I haven't spent any of my paychecks as I've been living off of my interest. My NW is up to 2M with 1.4M in interest bearing accounts and 600K in retirement accounts.

I'm going to pull the plug again at the beginning of the year. I am counting the days.