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Ready to set sail!
Old 04-04-2013, 10:56 AM   #1
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Ready to set sail!

I’m not sure that at 61, I can boast of ER later this year (hopefully, August), but being that my DW is 54, and will be retiring along with me, perhaps that combination will qualify for consideration! I have followed this forum for some time, and have been both informed and inspired by others who, regardless of age or circumstance, dismiss their trepidation and move forward with their dreams in retirement. Thank you all for your candor in sharing personal information, and offering your insights to others seeking to follow in your path.

So, here’s the numbers and our plan. We currently have $1.45MM ($875K/$575K) in our TSP/401(k)s (AA way too aggressive in equities); $625K in cash/MMAs (contemplating a large purchase in the imminent future); $635K in home equity; my $56K annual pension (with COLA/50% survivor benefit); no debt, no children, and no heirs to consider at the end of our lives (other than charities, for what little we hope remains in our estate). By the end of April, DW and I will roll over our TSP/401(k)s into low-cost, conservatively allocated mutual funds (e.g., Admiral Shares in VG VMINX/VWELX; TRP PRSIX/TRRIX, and other funds upon their guidance). Having lost a substantial portion of our retirement funds in 2008 due to my equity-heavy AA (me so dumb), the one smart thing I did was to do nothing at that time with respect to changing our AA; hence, our retirement accounts have recaptured their losses, and grown a considerable sum. As I prefer not to spend my time in retirement dwelling over the vagaries of the market, parking our retirement savings in low cost, conservative allocation funds mitigates my need to rebalance (which, obviously, I’ve been remiss in doing previously), and provides an annualized rate of return acceptable for our needs in retirement, at a risk tolerance we are willing to assume. We plan to take SS at ages 70 and 62, respectively, which will provide a combined monthly benefit of $4900 (based on current SSA policy). We have employer-provided health care insurance throughout retirement; each have an affordable $500K term life insurance policy (will maintain in force through ages 72/65); and plan to self-fund any long-term health care needs. We are fortunate to be in very good health, and expect ER to enable us to live an even healthier lifestyle.

We are avid sailors (having owned a monohull for the past 16 years). Our plan is to sell our home (currently in a HCLA), store a few possessions in a small storage unit, and retire on a catamaran in the Caribbean. (We will establish residency in Florida, through a well-respected mail-forwarding service.) Initially, we plan to cruise the Caribbean extensively for a year or so, exploring islands we have not been able to visit over the many years we have bareboat chartered in the Caribbean during our vacations from w*ork. Thereafter (and already having the requisite USCG licensure), our plan is to share our passion for sailing, cooking (DW is an obsessed foodie) and entertaining by operating a crewed term charter business in the USVI, BVI and Grenadines for at least 4-5 years. Having our own business, in a pursuit we really enjoy, has been a dream of ours for many years. (We have formed a Delaware-based LLC in which to title the yacht, and will form a Florida-based LLC for the charter business.) Having done considerable research over the past two years, including meeting with accountants and speaking to others currently engaged in operating USVI/BVI term charter businesses, our pro-forma calculations, beginning in our first full year of operation, reflect a conservative annual net profit of $75K-$85K. While living aboard, our monthly expenses are conservatively budgeted at $7000; once the business is operational, approximately half of these expenses will qualify as business expenses, as will additional expenses not incurred prior to start-up.

The catamaran will cost approximately $800K, which will be paid with the proceeds from the sale of our home and cash on hand. Our $84K annual budget will be funded, initially, from my pension and quarterly withdrawals from our MMAs (balance of @ $450K, after paying for the yacht), which will be replaced within a year or so with income derived through the business. We may decide to take semi-annual distributions (SWR <3%) from my IRAs, as it would be advantageous to do so while operating the business. Other than that, we plan to let our IRAs grow until our individual mandatory RMDs kick in, at which time, I conservatively estimate (at 5% annual growth), my IRA balances to be $1.25MM when I am 70 ˝, and my DW’s to be $1.2MM when she reaches that age, seven years later. (Having run RMD calculations using these estimated balances, our annual income when I turn 70˝ will be approximately $168K ($58.8K in combined SS, @$60K pension, $49.8K from my RMD). Time will tell how revised SS policy may affect DW’s benefit, means testing, etc.; however, even if DWs SS benefit is reduced to 75%, the reduction in our monthly income would only be approximately $400.

Our goals are to enjoy the live-aboard lifestyle while we have our health, be charitable to others while we are living, and to provide comfortably for the spouse who, at some point, will be left alone. When we return to a land-based life, perhaps in 6-7 years, we expect the net profit from our business to off-set most of the depreciation on the yacht, and will use some of the proceeds of its sale to pay for our next home. The remainder with be invested. At that time, our monthly income from just my pension and SS will more than cover anticipated monthly expenses. I have run the calculations through FIRECalc®, Otar, and other retirement tools, making adjustments to exclude the yacht and business income. Using a 30-year retirement term, I achieve a 100%.

This is the plan. Of course, we may drop anchor in the Exumas, and never leave. Then again, an unforeseen calamity may require our return to land much sooner than expected, for which we have both a plan and the funds to execute. I suspect the anxiety (and excitement) I feel with ER is typical for those who are, at least figuratively speaking, “casting off” on a new and uncharted course in life. I’d be interested in hearing your thoughts on my plan…and your plan for your dream! Cheers!
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Old 04-04-2013, 11:09 AM   #2
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Great plan and one heck of an adventure!

Hope everything works out for you - and even if it doesn't with your pension and future SS you have an excellent safety net in place.

One slight quibble:
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Originally Posted by carib bound View Post
Having lost a substantial portion of our retirement funds in 2008 due to my equity-heavy AA (me so dumb), the one smart thing I did was to do nothing at that time with respect to changing our AA; hence, our retirement accounts have recaptured their losses, and grown a considerable sum.
Since you stayed the course you didn't actually 'lose a substantial portion" of your retirement funds, you simply 'rode out the downturn'. That is both a notable difference and a significant achievement. Congrats!
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Old 04-04-2013, 11:19 AM   #3
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Thanks, REWahoo. And you are correct; its only a loss or gain when you sell. I was fortunate to have both the time horizon and income to withstand the market uncertainty throughout 2008.
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Old 04-04-2013, 11:21 AM   #4
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I was fortunate to have both the time horizon and income to withstand the market uncertainty throughout 2008.
And the guts...
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Old 04-04-2013, 11:33 AM   #5
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What an outstanding plan! After 40 years sailing, I only wish we had the _____ to commit to a similar adventure. Best of luck, and fair winds...
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Old 04-04-2013, 11:44 AM   #6
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Fair winds, it sounds like quite an adventure. Those big cats are awesome--you are going to have a great time!
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Old 04-04-2013, 11:54 AM   #7
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Thanks, Midpack. It was my DW who insisted many years ago that I buy a sailboat, being that we spent most vacations nearby marinas, just to walk the docks. Sailing has been an activity we've thoroughly enjoyed doing together; looking forward to our weekends on the Chesapeake is what gets us through the w*ork week. As a sailor,I know you can relate to that!
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Old 04-04-2013, 11:55 AM   #8
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Sounds like a great plan, but I wonder if you should really be considered retired as you will be running a small business with considerable investment and all the stress that goes with it.

I couldn't do it, but best of luck!
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Old 04-04-2013, 12:01 PM   #9
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Thanks Sarah. And we're looking forward to sailing to Charleston Harbor and Savannah, as we spend some time shaking down the boat on the Atlantic coast before heading to the Caribbean.
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Old 04-04-2013, 12:12 PM   #10
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You are right about that, NanoSour. We are tying up a lot of capital in our floating home, and operating a crewed term charter requires long hours and a lot of team work. But, we know the challenges that await us, and haven't been able to think of anything else we'd rather be doing after ER from our current careers.
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Old 04-04-2013, 12:30 PM   #11
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Sounds like a very good plan. If you find that it is not working out you have plenty of assets to make changes. Hope you have a great time. Sarah can tell you about things to do in Charleston and I can tell you about Savannah.
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Old 04-04-2013, 01:20 PM   #12
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Will you offer a three hour tour, a three hour tour....?
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Old 04-04-2013, 01:32 PM   #13
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Sounds good! We don't see many cats here, I guess because the dockage is high, but it is a sailing friendly town and lots to see and do along the coast. Holler when you get this way and need anything!

Oh, and jclark, if you hear any loud noises coming from the hearse tours this Saturday night, that'd be our bachelorette party taking care of business! And we're (of course) staying at the Thunderbird!
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Old 04-04-2013, 02:22 PM   #14
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Hi jclark. I hear lots of favorable comments from other boaters about Thunderbolt Marina, so we're looking forward to tying up there for a few days and visiting Savannah. Thanks for your comments on our plan.
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Old 04-04-2013, 02:31 PM   #15
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heeyy joe! I wish it were a 3-hour tour (but one with a happier ending)! The "term" in term charter is typically seven nights, eight days (or longer if guests' so desire). So, although most charterers are really nice folks, who have saved all year for their vacation on a luxury catamaran, there's always that chance you get someone who makes your week a long week....a REALLY long week! (You know, much like at w*rk!)
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Old 04-04-2013, 03:05 PM   #16
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Great plan! Well thought out. I would love to do something like this - problem is that DW can barely handle 2 hours in my pontoon boat in the lake behind our house.
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Old 04-04-2013, 03:31 PM   #17
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Well, Ronstar, if those two hours on your pontoon boat with your DW can include either a sunrise or a sunset, it can be as beautiful and romantic as being anchored in the Carib. Our earliest and fondest memories were made while sailing on Lake Monroe, in southern Indiana. We're fortunate to have DW's that trust us enough to step aboard, at all! Thanks for your comments on our plan!
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Old 04-04-2013, 03:41 PM   #18
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Quote:
Originally Posted by carib bound View Post
Thanks, Midpack. It was my DW who insisted many years ago that I buy a sailboat, being that we spent most vacations nearby marinas, just to walk the docks. Sailing has been an activity we've thoroughly enjoyed doing together; looking forward to our weekends on the Chesapeake is what gets us through the w*ork week. As a sailor,I know you can relate to that!
I've only sailed on really big cats twice (largest 57'), and a few Corsair/Farriers, but had a blast on all of them. I'm on Lake Michigan now but I've done my share of 3-4 day saltwater offshore sails on large boats - so if it's a big Gunboat you're buying and you want free crew with gear, I'm your man!
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Old 04-07-2013, 04:03 PM   #19
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That sounds like a great plan! Are you planning on crew just being the pair of you or bringing on live-aboard crew as well? I have a number of friends who crew the BVIs in the winters - there are good stories and bad certainly....

Post on the boards here when you get it started if you're looking for crew!
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Old 04-07-2013, 04:07 PM   #20
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What catamaran are you buying? Pictures?
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