Nuts - going back to work

[willowbeezer]

Been out sick for 2mths with pneumonia, then job got eliminated while on leave. Fortunately, I was pretty close to FIRE and wanted to give it a shot. I'm 40 and have 3 kids (9,2, 6mo), paid off house, no debt, liquid assets (ex house) of $2mm.

Initially, I thought I can manage my finances better and started swing trading. Had some great homeruns with ags, visa, international stocks - sold out high values locking into fantastic gains (+100k) over a couple of months. Then, the markets went haywire and I gave back some of those gains. Still up for the year but I was counting on generating steady income from trading. Clearly the investing / trading was not giving me a consistent returns. As a result I found myself really scrimping on all sorts of stuff - we were LBYM before, but with income not steady, really felt stressed drawing down.

Realized that i needed to get a more reg income stream. Just landed a job and will return to corp america (finance). My income will now jump back up to about $250k / year and with that I hope to hang on for say 5 more years then scale back out to retirement. Also felt guilty that there was an opportunity cost by not working (these are my peak earning years). Anyways, back to the rat race .

I've gotten used to managing my own investments and will need to reassess now that I won't have as much time. Still about 90% cash and waiting out the downward momentum before going back to a long term equity allocation.

At least this 5 month experiment with ER has given me an idea of what to expect in the near future. I can tell you that, its stressful thinking about financial security when you're drawing down AND if the market is going against you. Its clear that I will need a MUCH bigger cushion than I currently have.

Anyone feeling the same?

 

[harley]

Realized that i needed to get a more reg income stream. Just landed a job and will return to corp america (finance).

I hope it's not with waMu.

Good luck. With a 1/4 mil income you should be able to try again in a couple of years.

 

[REWahoo]

Anyone feeling the same?

Nope. Obviously there is something seriously wrong with you.

 

[73ss454]

I always thougt that you work to get enough $ so you don't have to. I must be missing something!

2M not enough, I should be really worried because I did it with a lot less than that.

 

[REWahoo]

2M not enough, I should be really worried because I did it with a lot less than that.

At age 40 with 3 small kids? Hey, I know you're good, but you aren't that good!

 

[Dawg52]

For $250k a year? Yeah I could be talked into going back to work.

 

[aaronc879]

At age 40 with 3 small kids? Hey, I know you're good, but you aren't that good!

2MM, even at age 40 with 3 kids would be far more than enough for me but some people are used to living on a lot more and therefore "need" a lot more. As someone else stated, I could be persuaded to return to work for $250K/yr. That's more than 5X the largest income I will ever make in today's dollars.

 

[Bestwifeever]

$250K with no mortgage or any other debt.... nice. Your $2 million at your age and with a young family might not generate enough imho over the long run, so you probably are smart to get back into the game. Also the amount of active money management you were doing seems a lot like work anyway.

 

[dex]

True story here - I knew a guy that had it all - 700K house paid for
No debt
2 kinds college saved up
Wife working for the hell of it
I don't know how much money in the bank.

He started day trading.
Then got a day trading coach.

He lost it all - house, kids $, savings
Got divorced.
He had to go back to work.

 

[harley]

True story here - I knew a guy that had it all - 700K house paid for
No debt
2 kinds college saved up
Wife working for the hell of it
I don't know how much money in the bank.

He started day trading.
Then got a day trading coach.

He lost it all - house, kids $, savings
Got divorced.
He had to go back to work.

I can always count on you to cheer me up Dex.

If I went through all that I'd be lookimg forward to work. A chance to think about something else. Otherwise I might be talking to my gun.

 

[dex]

I can always count on you to cheer me up Dex.

If I went through all that I'd be lookimg forward to work. A chance to think about something else. Otherwise I might be talking to my gun.

Appreciate what you have and learn from other's mistakes.

Another true story - Recenty, I had a position in Forex; I planned to sell in AUG. I got greedy and didn't pay attention - I left 95K on the table.
Don't get greedy.

 

[willowbeezer]

True story here - I knew a guy that had it all - 700K house paid for
No debt
2 kinds college saved up
Wife working for the hell of it
I don't know how much money in the bank.

He started day trading.
Then got a day trading coach.

He lost it all - house, kids $, savings
Got divorced.
He had to go back to work.

Dex...

I concur, trading is not for everyone.. I was much too conservative and got stopped out of many trades. I was lucky with my swing trades early on then got really conservative, when I tried to make trading a source of regular income (too much pressure to perform).

As bestwifeever suggested, this hobby turned into a fairly stressful "job". Once again, I failed to find that free lunch.

Hope I will survive the 60+hours / week again... I will miss the short trading hours and the time I had with the kids over the summer.

Although I have a sense of FI, I still feel a tremendous relief knowing that returning to corp america will increase the kitty vs withdrawing. It is really sad to know that $2mm with no debt would probably not make it - especially in this market.

Hope others are hanging in there.

 

[Rambler]

I'm betting we couldn't make it with 2m either, and our youngest flies the coop in June next year. By my estimates, prop tax and insurance plus medical insurance by themselve will require nearly a million at my relatively conservative target SWR of 3%. Then there is my uncle sam and the governator who want some bucks, DW enjoys a few "nicer" things, and I want to travel a bit with a travel trailer or hopefully a moderate level class C RV (sometimes I snore, and need to put some space between me and DW during the "sleeping part" of sleeping, thius the class C with a bed in the cabover).

All of this said, if worse came to worst, I figure our bare minimum to be about 2.4m if we keep the big house, and about 3.6m to do the things we really want to do in FIRE. If we sold the big house and kept the small one (or sold both and bought at a size between the two in another location we are considering) bare minimum goes to about 2m, ideal goes to 3.2m, and we could probably FIRE in June at even better than the ideal level (if Mr Market cooperates)....problem is that we really like our current dream home, and it probably wouldn't sell given current conditions anyway...so away I plug...

R

 

[citrine]

Wow.....I don't think I will ever see 2M!!! I guess it comes down to your sense of enough...I would be out with $500K-$750K. It senon-fems to me that despite the money, part of you does not want to go back to the corporate hell hole.....have you considered other options such as part time, non-profit, consulting? Does your spouse work? If not, why does she not get a job?

 

[jIMOh]

2M not enough, I should be really worried because I did it with a lot less than that.

This was my thought. I am 35 and $2 M with no mortgage payment can provide a passive 60k per year before taxes and grow the principal to boot.

 

[haha]

This was my thought. I am 35 and $2 M with no mortgage payment can provide a passive 60k per year before taxes and grow the principal to boot.

While you are likely correct on the income, there are not many places in the USA where a family with 3 young children can have even a semblance of a middle class lifestyle on $60,000. Not nice to be unable to fix junior's teeth, or to buy health insurance, or, or...

I am single, live a frugal lifestyle of almost no toys, have Medicare but do pay apartment rent on a 500 SQ FT apartment -and before income tax I spent ca. $41,000 last year. There were no special purchases and very little travel.

I hope the Heavenly Father would help the wife and kiddies on this budget, because Earth-Daddy would not be helping much.

Ha

 

[Calgary_Girl]

This was my thought. I am 35 and $2 M with no mortgage payment can provide a passive 60k per year before taxes and grow the principal to boot.

It's easy to live on $60K if you're single. Raising 3 small kids on this is a different story.

 

[DJRR]

While you are likely correct on the income, there are not many places in the USA where a family with 3 young children can have even a semblance of a middle class lifestyle on $60,000. Not nice to be unable to fix junior's teeth, or to buy health insurance, or, or...

Sometimes I am amazed how disconnected from reality this board is

The median US household income in 2007 was ~ $50,000 and most of those people still have to pay a mortgage/rent.

Most Americans won't earn $2M in 40 years, much less save $2M.

Personally live in Northern VA (re:expensive) with 2 kids and spend about $4,000 a month + mortgage for a very middle class lifestyle - eat out 2x a week, 2 x $2,500 vacations year, kids do gymnastics, etc.

If I had $2M and no mortgage I would quit today and could increase my lifestyle with a 4% withdrawal.

Only real issue to me is health care. A reasonable HSA would be required or some kind of national solution or my costs would go up here.

I appreciate the OP desire to work and am fine with that, but don't kid yourself that you can't make it. You choose not to. Most Americans make do with far less. If you really value the time then use it how you want, but you have no need to work if you don't want to. Certainly no need to step on the treadmill for 60 hours. If someone is willing to pay you $250k then presumably you are talented and creative enough to make $50k working 20 hrs week or less.

 

[jIMOh]

It's easy to live on $60K if you're single. Raising 3 small kids on this is a different story.

If our mortgage was paid off we would be living on less than 60k easy. Ohio isn't exactly the cheapest place tax wise to live either.

Maybe my 60k comment was out of line, but considering the OP had a paid for house, I still stand by most places 60k gets you a comfortable lifestyle.

 

[Bestwifeever]

My feeling that 2MM might not be enough is based on how long that has to last for someone in the OP's age bracket and with a young family. That $60,000 it might generate today won't seem like a lot 40 or 50 years from now.

 

[DJRR]

My feeling that 2MM might not be enough is based on how long that has to last for someone in the OP's age bracket and with a young family. That $60,000 it might generate today won't seem like a lot 40 or 50 years from now.

SWR theory allows for a 4% withdrawal, adjusted annually for inflation, for 30 years with a 95% success probability. Lowering it to $60k (3%) presumably will help it last 40 - 50 years, plus social security will help at some point. The theory being that your lifestyle would stay the same as today on an inflation adjusted basis. Working longer increases the pot and lowers the required time for an opportunity cost of the hours you will never get back. Hence the term "one more year syndrome". Everyone has to deal with the issue. I would rather scale back my lifestyle and have that year for myself YMMV

 

[sailor]

While you are likely correct on the income, there are not many places in the USA where a family with 3 young children can have even a semblance of a middle class lifestyle on $60,000. Not nice to be unable to fix junior's teeth, or to buy health insurance, or, or...

I am single, live a frugal lifestyle of almost no toys, have Medicare but do pay apartment rent on a 500 SQ FT apartment -and before income tax I spent ca. $41,000 last year. There were no special purchases and very little travel.

I hope the Heavenly Father would help the wife and kiddies on this budget, because Earth-Daddy would not be helping much.

Mike,
I think there are more places that you suspect. They might not be on the coast, but surely it's possible.
I offer Sailors family as anecdotal evidence - we are a family with soon to be 3 kids (new one coming in December) and we manage just fine on a similar amount in Atlanta suburbs. And we could cut down plenty if we needed (for example sell the airplane, sell sailboat, no Montessori school for Little Sailor, less international travel or visiting Nords in Hawaii)

 

[bongo2]

Sometimes I am amazed how disconnected from reality this board is

The median US household income in 2007 was ~ $50,000 and most of those people still have to pay a mortgage/rent.

The median household income is for all households - single teenagers and widows on social security included. The median income for married families with children is $77k. The govt stats stop at $100k, which only gets you to the 66%-tile. On the coasts it is higher, in the metro areas it is higher, for families with college degrees it is higher. Middle class these days for a family of 5 is over $100k in most of the country.

I agree that you can live on less, but you can't say most people are doing it.

 

[haha]

Mike,
I think there are more places that you suspect. They might not be on the coast, but surely it's possible.
I offer Sailors family as anecdotal evidence - we are a family with soon to be 3 kids (new one coming in December) and we manage just fine on a similar amount in Atlanta suburbs. And we could cut down plenty if we needed (for example sell the airplane, sell sailboat, no Montessori school for Little Sailor, less international travel or visiting Nords in Hawaii)

Well, I stand corrected. If you are doing it, you are doing it. But I read sailboat, airplane, Montessori School and international travel and I wonder "How do they do it?"

Ha

 

[bow-tie]

The median household income is for all households - single teenagers and widows on social security included. The median income for married families with children is $77k. The govt stats stop at $100k, which only gets you to the 66%-tile. On the coasts it is higher, in the metro areas it is higher, for families with college degrees it is higher. Middle class these days for a family of 5 is over $100k in most of the country.

I agree that you can live on less, but you can't say most people are doing it.

I would certainly like to give it a shot. That is a huge nestegg.