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One final check with fine folks here
Old 11-13-2014, 10:55 AM   #1
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One final check with fine folks here

With target ER date, summer/2015, fast approaching, one final check with fine folks here:
  1. Ages = 53 (DW & I). Total asset = 2.1M (350k in house equity), SS in 10 years at 63 = $38k
  2. Yearly expense = $100k and room for reduction if needed, Firecalc = 100% using Bernicke spending model. Fails poorly otherwise.
  3. Parents in late 70s who may need LTC, DS (only child) - a starving artist but independent
  4. Current income = 250k/year, current yearly asset increase = $180k/year (60/40 investment portfolio, saving from income)
  5. Pressure points to quit = desire to goof off rest of my life, and my psycho boss (otherwise, my job is ideal)
  6. Conflict = 2 - 4 of OMY can add 350k - 800k to my ER fund which means I don't have to LBYM in ER, can travel the world, assist family members/relatives in financial need
I know I can RE now and maintain our lifestyle. But concern over item 3 is nagging me. It's also hard to ignore items 4 & 6 which keeps me at OMY.

Any suggestions, advices, shared experiences?
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Old 11-13-2014, 11:11 AM   #2
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It's not clear how OMY can add 350k - 800k to your funds, but if that's the case in your situation I think OMY makes sense.
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Old 11-13-2014, 11:30 AM   #3
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Originally Posted by GrayHare View Post
It's not clear how OMY can add 350k - 800k to your funds, but if that's the case in your situation I think OMY makes sense.
I save about 100k (401k, company tax deferred savings, cash savings, stock option selling) + 75k in investment. 75k figure can fluctuate based on how stock/bond market does.
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Old 11-13-2014, 11:32 AM   #4
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Just a couple of random thoughts...

Do you have any siblings (for #3a)? I've got six, so, yeah, we just bought dad a treadmill and I paid 1/7th of it.

Are you in a field where you can skip a few years and come back if you get tired of goofing off and traveling the world? I code on my own and open source projects to keep-up my skills. I like to do it! I don't intend to go back the the corporate grind, but it's a nice option to have.

One way to look at the OMY is that it adds, what, less than 5% to your NW?

You're healthy (now), if that's not solid for the future, that's a consideration.
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Old 11-13-2014, 11:37 AM   #5
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Just a couple of random thoughts...

Do you have any siblings (for #3a)? I've got six, so, yeah, we just bought dad a treadmill and I paid 1/7th of it.

Are you in a field where you can skip a few years and come back if you get tired of goofing off and traveling the world? I code on my own and open source projects to keep-up my skills. I like to do it! I don't intend to go back the the corporate grind, but it's a nice option to have.
I have one sibling who can share cost of parents LTC if it comes to that.

Nope, my job is very specific and I don't see how I can come back after a break. My megacorp (and others) HR will not admit it but they don't like to hire people who have been out of job at least for 6 months. So, no coming back for me which makes the OMY decision a little tougher.
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Old 11-13-2014, 11:54 AM   #6
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Re no. 2., how much room for reduction of expenses do you have? Would you want to?

Personally I would stay til no. 6. came true. It might be hard to live the lbym lifestyle after enjoying the benefits of high compensation (you mentioned on another thread that you would have to leave your current golf club, for example). If you did stay, the tenure might be easier knowing you are FI at this point and your omy is for the gravy.
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Old 11-13-2014, 12:07 PM   #7
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If your parents need LTC and run out of assets, don't they get to go on medicaid?

The "travel the world" is key to me. If that is important to you, you should stay on. Or you may regret it later. I assume you're in good health and 2-4 years isn't going to make a difference.
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Old 11-13-2014, 12:15 PM   #8
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Re no. 2., how much room for reduction of expenses do you have? Would you want to?

Personally I would stay til no. 6. came true. It might be hard to live the lbym lifestyle after enjoying the benefits of high compensation (you mentioned on another thread that you would have to leave your current golf club, for example). If you did stay, the tenure might be easier knowing you are FI at this point and your omy is for the gravy.
My expense can go down to 75k/year by moving out of the Bay Area. But I want to avoid that, and keep it as an option in case there is a prolonged market downturn.

I have been living it up a little in anticipation that I can't freely spend once I RE. Doing one or two more year of work means I can continue to live it up a little in ER if I choose to.
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Old 11-13-2014, 12:21 PM   #9
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If your parents need LTC and run out of assets, don't they get to go on medicaid?

The "travel the world" is key to me. If that is important to you, you should stay on. Or you may regret it later. I assume you're in good health and 2-4 years isn't going to make a difference.
Good point about medicaid. Perhaps, I can remove it from my "concern" list.

We are in good health. Traveling is going to be one of my rewards for living LBYM hitherto. My 100k expense includes traveling budget (1 - 2 a year via budget traveling route). OMY can add more traveling to my ER routine.
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Old 11-13-2014, 12:22 PM   #10
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I think that OMY is sensible in this situation. You'd start retirement with a high WR, which heightens your sequence of return risk. Then you'd be locked into systematic budget cuts for the next 20 years (Bernicke), which would be all the more painful if you want to stay in the mighty expensive Bay Area. I don't see a lot of room to help relatives in financial need down the road. And are you (and your wife) willing to give up on world travel?

An other option would be to work part time to minimize pressure on the portfolio until SS kicks in.
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Old 11-13-2014, 12:37 PM   #11
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I was a mid-range nervous nellie on the OMY front. I waited till I had 100% from firecalc - but *did* include SS - which some people discount or drop.

As far as LTC for your parents... I've dealt with this a lot in my life between my parents, my in-laws, next door neighbors, and my sister's in-laws. What is the health and age of your parents? Do they have any assets of their own that can be applied (home? savings? pension income that can offset the nursing home costs?) Do they live close to you?

My parents were both able to stay at home until a few days before they died. So no long term care issues. My MIL was able to take care of my FIL at home... until she wasn't. He'd been wheelchair bound and had aphasia & dementia - and the dementia progressed to a point he was bed-ridden. They lived in a granny flat we built in our backyard and in a home they owned near my sister in law. My FIL spent his last 7 months in a nursing home. It was paid for out of their savings - but since the stay was only a few months, it left some savings. MIL is nearing the point of a memory care unit. Right now she lives at home - but gets daily visits from my SIL and her husband and my husband manages all of her finances. If she sells her house she has enough savings to cover more than three years in a nursing home. After that is gone, medicaid would pick up the costs.

Our family has honored my MILs wishes to stay at home as long as possible - even though it means a lot more work for us. That has worked out financially as well - preserving her assets for the more expensive care she'll soon need.

Our next door neighbors were determined to stay in their home long term as well... but a series of medical incidents forced an intervention by the kids. Their home equity will fund MANY years in their assisted living.

My point is - don't assume your parents won't have any assets to pay for LTC - especially if they own a home. Also, they might not want to go into LTC - and may be more open to the (often) less expensive option of in-home help.
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Old 11-13-2014, 01:18 PM   #12
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Have you tried running this through the Fidelity RIP? Have you looked at what would happen with a poor sequence of returns? My gut reaction is if it were me (very risk adverse) I'd work longer, work part-time or work on getting those expenses down more.
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Old 11-13-2014, 01:23 PM   #13
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Quote:
Originally Posted by robnplunder View Post
With target ER date, summer/2015, fast approaching, one final check with fine folks here:
  1. Ages = 53 (DW & I). Total asset = 2.1M (350k in equity), SS in 10 years at 63 = $38k
  2. Yearly expense = $100k and room for reduction if needed, Firecalc = 100% using Bernicke spending model. Fails poorly otherwise.
  3. Parents in late 70s who may need LTC, DS (only child) - a starving artist but independent
  4. Current income = 250k/year, current yearly asset increase = $180k/year (60/40 investment portfolio, saving from income)
  5. Pressure points to quit = desire to goof off rest of my life, and my psycho boss (otherwise, my job is ideal)
  6. Conflict = 2 - 4 of OMY can add 350k - 800k to my ER fund which means I don't have to LBYM in ER, can travel the world, assist family members/relatives in financial need
I know I can RE now and maintain our lifestyle. But concern over item 3 is nagging me. It's also hard to ignore items 4 & 6 which keeps me at OMY.

Any suggestions, advices, shared experiences?
I declared myself FI in 2005 but kept doing OMY so I might not be the best person to ask about being a OMY-er.

You have only $350k in equities? I thought you were a 60/40 kind of guy. What are your assets? Does it include your house? What are your investable assets?

Only you can define your expenses. Moving out of the Bay Area would be on the top of my list so to each his own.

You need to see what your parents have in the way of assets to cover their LTC needs. Neither of my parents spent a dime on LTC but my MIL/FIL were into it big time. My MIL lasted 2 years and my FIL lasted 5. The one truth is that once LTC begins that is just about your only expense. If they have a house it needs to be sold. Nobody is doing trips to Europe when in assisted living and spouses typically don't either. We found that my FILs pension just about covered his nursing care. They only bled money when both were in and that was only 2 years. The real financial mistake I see is where people spend outrageous amounts of money to keep them "in their home." BTW - the Medicaid facilities I looked at for my in-laws were pretty bleak in comparison to a full pay.

I would suggest you either lower your expenses or be a OMY-er. You are FI if necessary but you can take some fabulous vacations with the big bucks rolling in.

I've got 16 "in-office" days after today until my resignation/retirement on 5 January 2015. I figure my nominal 9 OMYs have added about a $1MM to my portfolio, paid for a house and let me take all the vacations I could drag DW on after her father died 3 years ago. I won't be on a tight retirement budget like I would have been back in 2005. It's a good feeling.
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Old 11-13-2014, 01:44 PM   #14
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My point is - don't assume your parents won't have any assets to pay for LTC - especially if they own a home. Also, they might not want to go into LTC - and may be more open to the (often) less expensive option of in-home help.
Thanks for your input. My parents are separated and have no asset. In fact, I supplement their SS income on monthly basis. My current yearly expense includes my financial support to them. DM may end up with Alzheimer. I think I am good to assume that medicaid will take care of their LTC fully?
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Old 11-13-2014, 01:52 PM   #15
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You have only $350k in equities? I thought you were a 60/40 kind of guy. What are your assets? Does it include your house? What are your investable assets?
Oops. I've meant I have $350k in home equity (fixed now). The rest is in 60/40 portfolio. Their combined total average yearly return in the last 10 years is about 7.5%. This has given me a lot of confidence to call it quits next year.
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Old 11-13-2014, 01:57 PM   #16
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You say 2.1M in assets ($350K of which is your home) and $100K spending. i.e. 4.7%-5.7% withdrawal rate for first 10 years until SS kicks in? Seems a bit high to me unless you are planning to reduce spending later.
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Old 11-13-2014, 02:05 PM   #17
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You say 2.1M in assets ($350K of which is your home) and $100K spending. i.e. 4.7%-5.7% withdrawal rate for first 10 years until SS kicks in? Seems a bit high to me unless you are planning to reduce spending later.
I suspect it as much which drove me to post this thread for input from others.

My spending level will definitely come down as I supplement my parents income now. If they live long, well, that's a good problem to have. I can also cut down on "entertainment" budget significantly if I need to (quit golf, start playing tennis ).
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Old 11-13-2014, 02:19 PM   #18
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If you were at SS age right now it would be easy (+/- 3% WR at 100k, 1.8% with reduced budget).

In line with 2B I can't square your asset distribution, care to make it a bit more explicit?

The $75k spend level also seems fine to get you until SS age (3.6% WR). Sustainability of $100k depends as you say on what the market will do.

So in essence it comes down to how willing you are to work for the luxuries on top. $170k extra for one more work year can pay for alot of travel and a nice sports car (if so inclined). Alternatively, one year extra takes you down to 100k / 2280k = 4.4%, two years to 4.1%.

Then again, you and DW statistically have 25 years that you'll both be alive (never mind healthy!). So every year of work is 4% of your time together. Averages don't apply for a specific situation, but still something to consider. It could also be 15 years.

If I were in your shoes I'd consider anything from quitting now up to maximum 2 years extra, but certainly not more.

Or more likely, I'd go hunt for painless ways to cut +/- 20k out of that 100k budget, reserve 100k for travel splurging in the first year and quit asap.

Judging from your other posts you however already know all that stuff It seems to me you are dealing with the emotional point-of-no-return kind of decision, and that's what's bothering you? There is no going back after the jump ..

It's a kind of black and white going from 100% employed & well-paid to 0%.

Maybe there is something to do done there? Make the transition feel lees abrupt. I know it helped me get out of a high pressure job early. Would have never jumped to unemployment straight away so instead shifted to lower pressure job first, then self-employed, then semi-FIRE (where I am now).
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Old 11-13-2014, 02:22 PM   #19
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Oops. I've meant I have $350k in home equity (fixed now). The rest is in 60/40 portfolio. Their combined total average yearly return in the last 10 years is about 7.5%. This has given me a lot of confidence to call it quits next year.
If I take the equity out of your assets, you have to live on $1.75 MM. That includes supporting your parents indefinitely with the possibility of footing their LTC. Retiring now gives you a real long likely retirement so it's hard to see where you could safely take out more than $60-70K/yr at this point. It's a long way to go before SS kicks in so it's hard to count on it too much in your first decade of retirement.

I think you could retire but you would be on the edge for the rest of your life. It also looks like you can't count on help from your son and it might become the other way. I say you should definitely go OMY and possibly another five.
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Old 11-13-2014, 02:23 PM   #20
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Also, you won't be sure if comments are directed to you or the original poster.
My comment was directed to OP.

omysteve: best indeed start another thread. Apart from that: first glance looks good to go now. I don't see the point in continuing to work for money in your situation. As always, assuming healthcare is taken care of.
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