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Now 52, working on a glide path out
Old 04-20-2016, 05:04 AM   #1
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Now 52, working on a glide path out

New to this board , but I enjoy it very much and am learning some things every time I read it.

I'm 52, am a highly paid professional, but have built an expensive lifestyle over the years that I need to unravel from to ultimately reach a stable retirement. We have two kids , both in college, which is covered by their 529"s, and most of their grad school costs will be as well if they choose to go that route.

I'm planning to pull the trigger at 60, but would like to taper down to 3/4 time at 58. Doing so and retiring successfully at 60 means getting expenses down to my estimated $15k per month. I know it sounds high...and I feel a little guilty even putting that number out there...

The home mortgage will finish at 60, the boat will still have balance at that point. Buy out from my business, will cover that and still put another $500k in the coffers, and a second business after tax should be another $400K. Plan is to build my commercial real estate portfolio to around $1M by then, (presently at $550k), which has been throwing off around 7-8% cash on cash pre tax. We will have a taxable account at an estimated $1.5M, now at $655, and a taxable account at roughly $2.3M, now at $1.1M, based on present funding levels and a hopefully decent rate of return. Add to that the above cash from the biz sales. In addition, and please don't attack ...I will have a whole life policy at around $1.4M. I know...it's a long story, but it is what it is. I fired my FA, but I still have the whole life. I am considering tapping that basis tax free for the first 10 years of retirement to allow the overall funds to grow??

I've run FIRE calc and my favorite the Ultimate Retirement Calc at financialmentor.com as well as others. Looks like we will be fine, but I am still dogged by high spend rates at present. If I could get those down, then my contributions could increase to the RE portfolio and the taxable acct., or I could just go sailing more. Trying to get my wife on the same page with monthly spending and it's not easy. I also worry about boredom in an early retirement , but have started reading Work Less, Live More and am hoping for some inspiration.

Thanks
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Now 52, working on a glide path out
Old 04-20-2016, 07:33 AM   #2
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Now 52, working on a glide path out

Welcome NJsail. I was wondering if you budget? A few years ago, I realized our long term savings were doing great but the monthly spending was too sloppy for comfort due to neglect. I started using You Need A Budget (YNAB) and in one year or less, voila, cut about $2,000 from our monthly expenses of waste that DW didn't mind cutting. DW had no concept of FIRE and assumed we'd work indefinitely but I'm finding that as we get into our 50s and work gets tedious and health issues pop up, she is saying, "So when did you say we could retire again?", which opens a door to get in better alignment together.
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Old 04-20-2016, 07:45 AM   #3
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Guilty as charged..
No, we don't really budget on the daily living expenses. I do when it comes to figuring out long term savings, and big purchases like vacations, but that comes out of my bonus, not my monthly draw.
I will check out YNAB, I think the wife is finally seeing the light that we need to trim expenses. Thanks for the input!

( Ok - lastly , since I'm a newbie what is the abbreviation DW)
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Old 04-20-2016, 07:54 AM   #4
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"Dear Wife". There is a list of acronyms on the "Early Retirement FAQs" forum. Enjoy!
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Old 04-20-2016, 08:12 AM   #5
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Originally Posted by NJSail View Post
Guilty as charged..
No, we don't really budget on the daily living expenses. I do when it comes to figuring out long term savings, and big purchases like vacations, but that comes out of my bonus, not my monthly draw.
I will check out YNAB, I think the wife is finally seeing the light that we need to trim expenses. Thanks for the input!

( Ok - lastly , since I'm a newbie what is the abbreviation DW)
NJ Sail, one suggestion would to be to try something a bit different that costs less in your field of interest. Now, don't think I'm crazy... But ... if you are into sailing, why not instead try adventure kayaking?

I know, I know. You can keep it private: but if you are member of a yacht club, that adds up. Try living on the wild side and just see what happens.

I like to hike. Most of my hiking group is actually country club drop aways. They found that roughing it for nothing still gave them the social interaction, without the incredible expense.

None of this may apply to your situation. If it does, think in parallel ways to still fill the time, fill the social need, but at 1/10th the cost. You may still like it.
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Old 04-20-2016, 09:35 AM   #6
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NJSail, it is great that you are thinking this all through now, some 8 years ahead of implementation, because there are indeed a lot of moving pieces to work through, many of them mental rather than financial.

As has already been stated, it is essential to understand your spend as it exists today, not as you 'think' it is. Start tracking and identifying, even if it is painful to do so. By seeing where the money is flying out the door, you can begin to assess which items provide adequate quality of life ROI and which do not. Once you identify those items that are not returning adequate quality of life ROI, you can begin the process of either cutting them out altogether, or swapping them out for more efficient alternatives. Once you get started with this, I think you'll be amazed at how much money you can take off the spending table without impacting the quality of your day-to-day lives.

Based on your target monthly spend, I would guess we are fairly on pair financially, however, we have made a conscious choice in FIRE to spend at a rate considerably lower than your targeted spend. Although we could ratchet up our spend at any point should we so wish, we find that we are so happily engaged with fairly low cost physical pursuits we don't have the energy to go out and spend more . . . which is a good thing!

Re: Boredom. I am convinced only boring people are bored. A great, great read on how to structure an exciting, meaningful post-working life I'd recommend is The Joy of Not Working by Ernie Zelinsky.

Good luck, and look forward to hearing here how it all unfolds for you in the months/years ahead.
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Old 04-20-2016, 10:11 AM   #7
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Welcome to the forum. You already know what you need to do: get a handle on your expenses and stop the high spending. You have done well in savings in spite of your spending. I am sure high COL NJ does not help. Don't worry about keeping up images or your social circle. Yes it is nice to have stuff/toys and be able to experience things. But at what cost? You could stop working sooner if you decrease spending and increase savings.
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Old 04-20-2016, 11:14 AM   #8
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Markola, I'd love to see a separate thread on what spending you eliminated with YNAB. $2000 is a lot!


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Old 04-20-2016, 12:36 PM   #9
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Markola, I'd love to see a separate thread on what spending you eliminated with YNAB. $2000 is a lot!


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With apologies to NJsail, I thought about it and it doesn't seem worth a whole post. I can't say enough about YNAB, which I genuinely enjoy using.

Our take home pay in 2013 averaged $12,338/month, and we were spending it all. We were maxing our 403Bs so were at least doing that part right. I resolved to get hold of the monthly spending and bought YNAB for $60 and attended their basic webinar. That was January 2013 and by December we'd opened up the following daylight in our monthly budget:

$866 - Refinanced mortgage from 20 year to 30 year.
$130 - cut cable and went Apple TV and digital antenna. We don't miss cable.
$100 - joined COSTCO and shopped for bulk staples there every 2-3 months, filling up on gas while there.
$200 - we were eating out a lot and cut that in half. Always having food in the house from better grocery shopping helped.
$63 - YMCA dues we weren't using
$1,000 - got serious about knocking out $10,000 HELOC debt accumulated in during a 2011 move.

2013 Subtotal = $2,359/mo or $28,308/year. Whoa!. One could argue that some of these larger "cuts" were actually shifts, but my personal priority was to generate a lot more monthly cash, which the above did. Establishing a clear monthly budget was fundamental to seeing where every dollar was going and making informed decisions.

We have since continued this process of big and small wins. The biggest win was during another job-related move from the tony Buckhead neighborhood of Atlanta to a nice but more modest Midwestern city neighborhood. It is a lower COL here but super-pleasant and more walkable/bikeable. We reduced our mortgage by another 25% or 800/mo., for example, by buying a smaller house. We also increased our salaries. The $3,000/mo+ and increased income from new jobs is going into retirement or taxable savings, so we probably have $5,000/month more discretionary than January 2013. None of these changes have felt like losses of lifestyle. Even the smaller house suits us better and is cheaper to run. Further, this budgeting habit has the happy corollary benefit of reducing the retirement nut required to eventually FIRE, so the effects compound in both directions.

It is also easy to do: I wake up my brain each day with coffee and 5 minutes of entry into the YNAB app of the transactions that have cleared overnight in the bank; and at each month end, I take 15 minutes to plan what we'll spend in the coming month across our 34 budget categories, as I have been doing for 3 years now. Having all of this budget control is priceless and I enjoy using the software, which synchs across all my devices. I could easily cut a lot more from today's $8,500/mo spending and FIRE even earlier but marital harmony is important, too, so I'll keep quietly chipping away, getting "permission" on each step. Temporary hijack of NJsail's post complete!
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Old 04-20-2016, 04:32 PM   #10
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Originally Posted by 38Chevy454 View Post
Welcome to the forum. You already know what you need to do: get a handle on your expenses and stop the high spending. You have done well in savings in spite of your spending. I am sure high COL NJ does not help. Don't worry about keeping up images or your social circle. Yes it is nice to have stuff/toys and be able to experience things. But at what cost? You could stop working sooner if you decrease spending and increase savings.

Very true - not a cheap State to live in, or retire in. At this point, it appears we may retire here , according to the DW, either that or I get divorced which is not chap either...lol
Agree on all points, getting out of the habit of having high end vehicles was a first step for me and now I need to back it down all across the board from lawn care, pool care, etc.. Lots of fat that can be trimmed.

BTW - Thank you all for the good points and suggestions, esp. book ideas. This is an unusually amicable and respectful bunch of folks on this site and I greatly appreciate it.
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Old 04-21-2016, 06:40 AM   #11
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I use MINT and love it. It is free, but full of ads, and is run by the same company who owns turbo tax and quicken so I trust the security. It pulls information from my brokerage accounts, bank accounts and credit cards and keeps a detailed account of what I'm spending. Charges at Exxon, it codes it as gas, charges at Shoe Station get coded clothing. You can pull up any merchant and see how much money you spent there. Something occasionally gets mis categorized, and thats easy to fix, as well as checks you have to classify yourself. You can make your own categories which makes it awesome for keeping up with work expenses. I wanted that particular feature so I know what i WONT be spending on when I retire. You can set a budget and Mint will tell you when you are getting close to exceeding it in any area. It can even keep track of financial goals. I loathe budgeting but Mint is fun!
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Old 04-21-2016, 07:49 AM   #12
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Thanks, Markola. Interesting that it was mostly refinancing/downsizing.


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Now 52, working on a glide path out
Old 04-21-2016, 08:59 AM   #13
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Now 52, working on a glide path out

Yes, it's the big wins that make the real difference. The trope about cutting Starbucks, investing the savings and you'll be a millionaire is baloney. I was a millionaire at 48 and I know what it really takes
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