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Reality or dead dream?
Old 04-21-2013, 08:14 PM   #1
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Reality or dead dream?

Hi. I have thought about retiring early but the other day I said to myself, I REALLY want early retirement. So time to check into this in reality.

I haven't looked into this much as of yet, but wife thinks I can't do it.

I think we can.

Here is the situation. regular old working joe. Age 52.

House is paid for.
I have 30 acres of other property I am not using, have no use for and no plans to use it and want to sell. estimated at $180,000-200,000 (have to talk with real estate people soon on this)


I have $350K in mutual funds
I have $300K in 401K
I have $40K set aside as a medical fund if required and allotted for that only
I have an 8 yr old daughter and have $30K set aside so far for higher schooling. ( will keep adding into that)
wife doesn't work (side job crafting at home and does make some spendable profit and it helps but nothing to count on for X income dollars)
One truck payment of $313 per month (but will pay it off and then have only normal living expenses) might need new vehicle for wife in future (currently for her 2006 with 70K mi)

Not counting on it but ya never know is that my parents have alot of land. some valued into the 2 million area (corner commercial acerage). Lowe's already looking into it---I will be inheriting that plus more land they own in the future. father passed last year and Mom is 72 and doing very well on pensions and such. So while I know I can't count on anything....I seem to think that alot of inheritance might come my way in the future from my mother)

plan on taking SS early (if truly needed) about 1200/mo

same with wife from past work (about 900/mo)


we live simple.
we live frugal.
we enjoy nice camping vacations and that is all we like basically.
we used to farm with my parents and I worked weekends at markets selling. made anywhere from 1000-1800 per weekend.

I plan on doing this again IF I CAN quit work and get some freedom.

so I plan on making some income.

I quoted insurance. high deductible. It came out for the 3 of us at $340 per month. I know I can make that monthly payment working 1-2 weekends per month plus more for spending. Basic type of catastrophic coverage.

I want about 1800 per month from my mutual funds. I would take out 25K from my $350K mutual fund and it should last about 14-15 years. that would put me at age 66/67 range.



can I do this? can I walk away now with the money I have saved and find some freedom?

I know we can't account for every single problem in life but I have to say at some point, for all that is saved, one must be able to give it a go, say forget it, jump in and just do it.


any suggestions, thoughts, advice would be appreciated.

It just seems like time for me. That dream. Time to make it a reality.

can it be done?
thanks
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Old 04-21-2013, 08:44 PM   #2
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I think you are short, and should wait until age 55. That is, unless you go talk to mom...
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Old 04-21-2013, 08:54 PM   #3
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I am a little doubtful. Have you tried our free retirement calculator, FIRECalc?
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Old 04-21-2013, 09:00 PM   #4
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Welcome to the forum. The important question is how much do you need to live in retirement. It is one thing to say that you are frugal and live simple b ut what you have posted makes me wonder. You do not say how much you have been making and how much you have been spending to live recently. The fact that you borrowed money to buy your truck tells me that you are likely not really frugal enough to live on the 25K per year you plan to take from your mutual funds. If, on the other hand you really are able to live on 25K per year now then with the SS coming in later you may actually be okay to retire. My advice would be to seriously look at how much you have been making and spending and saving in recent years to get an accurate idea of how much you will need to live in retirement.
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Old 04-21-2013, 09:07 PM   #5
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I wouldn't want to micro-analyze your entire situation but if I were in your shoes I would not want to quit working with what you have posted for assets.
I don't know what your expenses are exactly and if your DW is not on board with your plans, then that would add to your problems.

I will tell you this......I did not retire until I had all the answers I needed and was able to explain to my wife how it would work and get her on board with the plans.
I think that is very important in a critical decision that affects your family.

That might not be what you wanted to hear but I do wish you good luck going forward.
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Old 04-21-2013, 09:34 PM   #6
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Originally Posted by heeyy_joe View Post
I think you are short, and should wait until age 55. That is, unless you go talk to mom...
yea but I won't be talking to mom. I know it is something I can't count on and she has to live and do her own thing with the property.

when you say wait til 55, is that to bank up as much as I can for those next 3 years, also to make the money last?
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Old 04-21-2013, 09:37 PM   #7
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I will try the calculator. thanks for mentioning it.

jclarksnakes. you gave me alot to think about. am I done buying toys?
I bought in cash a 2013 5th wheel. wanted to upgrade the truck and I traded, put down alot but decided to payment the rest. owe $16K on it which I could pay off tho.

but I need to see if these assets can be increased and check the calculator and see what I am dealing with at this point.


thanks everyone for those great replies and now I have to think about this mess.
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Old 04-21-2013, 09:57 PM   #8
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As for as inheriting, I wouldn't count on that at all.

I think that things you would need to do before going too far with this is:

1. Talk to a real estate agent about the land you own and get a better idea on selling it. You would probably be safest, to sell the land and see what you get before you count that money. I don't know how you acquired the land, but remember that if you sell that land some of the proceeds may be taxable so you might want to talk to an accountant or attorney first about the taxes that may be due if you sell the land.

2. If you don't keep close tracking of your spending I would start doing that so you can be sure that your budget is accurate. I use a program called You Need A Budget at ynab.com but there are a variety of ways to do that or you can even keep track of it in your own spreadsheet. I would keep track of spending for awhile to see if my spending was what I expected to be. Then I would look at current expenses and project into future to see what they would be if you retire. Remember that expenses will change as time goes on.

3. Health insurance will be changing with the ACA come 2014. How it will affect your premiums may be uncertain until then given that the rates aren't out yet and it may not be clear yet as to exactly how the subsidies will work.

4. Kids get more expensive as they get older. For example, when our teenagers started driving our auto insurance rates went up by a lot. Higher education costs will depend on where you want to send your daughter to school and want she wants to study. For me, with my son who is now in college it has been cheap since he has gone to community college for the first couple of years of credit and will transfer to a state university within driving distance of our home. On the other hand, if I wanted to send him to a private university where he was going to live in a dorm the costs would be much greater.

5. Don't forget that a lot of yours and your wife's SS will be eaten up by medicare Part B, medicare supplement and medicare prescription plan.
Currently Part B basic premium cost is $104.90 (per person). My DH just went on medicare and pays for his supplement $149 a month. This will go up as he gets older. His Part D premium (prescriptions) is paid for by his former employer so I don't know exactly what that would cost, but have read that the average is about $30 a month. Of course, you and your wife are a long way from Medicare and it remains to be seen what Medicare will cost by that time and it is possible that the eligibility age will be raised or even that Medicare for people your age could go away and be replaced by something not known at this time.
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Old 04-21-2013, 10:14 PM   #9
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Quote:
Originally Posted by SoutheastSam View Post
I have thought about retiring early but the other day I said to myself, I REALLY want early retirement.... but wife thinks I can't do it.

wife doesn't work (side job crafting at home and does make some spendable profit and it helps but nothing to count on for X income dollars)
If this is very important to you - i.e., more than a pipe dream - then I suggest sitting down with your wife and planning out how you as a couple will achieve that objective. One obvious possibility is for her to go back to work at a real job, perhaps with you assuming more of the child care and housekeeping responsibilities.

Quote:
Originally Posted by SoutheastSam View Post
So time to check into this in reality. I haven't looked into this much as of yet ...

I know we can't account for every single problem in life but I have to say at some point, for all that is saved, one must be able to give it a go, say forget it, jump in and just do it.

It just seems like time for me. That dream. Time to make it a reality.
Fair enough. But unless you work in an occupation that would if necessary allow you to resume working at the same income level, I think you'd be better off doing at least some research and carefully considering your actual circumstances, rather than just quitting and hoping for the best.

Quote:
Originally Posted by SoutheastSam View Post
I have an 8 yr old daughter and have $30K set aside so far for higher schooling. ( will keep adding into that).
If you stop working, where will the money come from to allow you to add to the education savings?
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Old 04-21-2013, 10:36 PM   #10
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yea but I won't be talking to mom. I know it is something I can't count on and she has to live and do her own thing with the property.

when you say wait til 55, that to bank up as much as I can for those next 3 years, also to make the money last?
a few things:
Consider sharing your retirement idea with your mom, this might prompt her to do some estate planning. Leaving your job at 55+ entitles you to certain rights for drawing money from 401k without penalty. Adding another three years of income and savings while tracking spending will bring things into greater clarity for your decision.
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Old 04-22-2013, 07:34 AM   #11
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thank you all for the great replies again. you have got me thinking about this in a real way now.


read up on the age 55 withdrawl from the 401K but I was hoping not to touch it at all. but I do need this info for making a strategic plan of course.



little things I didn't post


my mom is selling 100 acres of the old farm. I have about $30K invested in a horse barn and other buildings. She is giving me that money back when the land sells.
So I do have another $30K coming in the nearer future cause she does want to sell that land now and get out from under the property taxes. once off agricultural property taxes, they skyrocket. I was going to use $15K for me and put $15K into daughters college fund.


also I made one small line in the original post that I would continue to work. just not at my 'tiring, annoying, 12 hr. work day, 4 days a week. getting too old for 4-12s now and with a back problem starting up I think walking away from this position is best. to save the back before it worsens.

I can't make my salary aruond here. I got into a good job younger and no way I could pull my salary. people around here are losing jobs etc.

But I have land at my home in which I could farm a bit, sell like I did before and I have a buddy who would let me work a few days at week at his business.

still thinking about the work situation but I know I would be aiming for about $1000 per month in under the table take home cash.

Plus I checked our social security. at 67 I get almost $1900, so if I can drag out til then I could collect alot more vs. the early draw of $1200. and hold off wife also and get more


well at least I am starting to plan. at least I am realizing the way I do need to make this work. in 3 years I can bank alot if I go hog wild and do just that which is what I am now planning. 3 years is not long cause as I get older it goes by in a flash.


health insurance. getting in the way of it all like for many of us. that bill will not be thrilling to handle. have to wait and see what happens on that front.
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Old 04-22-2013, 07:46 AM   #12
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I think anything is possible if you want it to happen bad enough. The only wild cards that I can see is your daughter and her ambitions and the health insurance. You mortgage is paid, you only have a truck payment, you have the ability to grow food, you also are able to bring in some income via selling and your wife's hobby. I would hold onto the land that you have...it will always go up in price. I do agree with others here....use firecalc, have a conversation with your wife, mom, and daughter and come up with a plan
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Old 04-22-2013, 10:13 AM   #13
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thanks citrine. that is encouraging hearing I am close and can make this possible with planning.

daughter being 8 I can't really judge what her career will hold or which way she will be drawn for work. So I am not sure if I am looking at a law or doctor degree or a technical school or what? but I know I gotta be banking toward it. in 10-11 years who knows what college costs will be...higher I know that.

I think anyone retiring early and paying for health insurance on their own is in a sticky situation. It will be that way for me.

Might ask a post about how people do it and how to plan for it and more. thanks
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Old 04-22-2013, 01:34 PM   #14
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Plus I checked our social security. at 67 I get almost $1900, so if I can drag out til then I could collect alot more vs. the early draw of $1200. and hold off wife also and get more
Welcome to the forum. Did you use the "other scenario" option from Social Security with a stop work age of 52 ? If not then the calculator assumes that you make your current income until Full Retirement Age (67).
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Old 04-22-2013, 01:52 PM   #15
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Something to think about for later: Medicare with supplemental coverage and drug plan.

We are in our late 60's and pay approximately the following per month (each):

Medicare premium: $105
Supplemental coverage (Plan F): $200
Part D drug plan: $30

Adds up to ~$8,000/year. But Plan F is the Holy Grail (at this time). No dental or eye coverage under Medicare.

Lesson: I don't know what the ACA will do for those under 65, but even under medicare if you want good coverage, this is what it costs (NOW).
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Old 04-22-2013, 06:47 PM   #16
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Live and Learn. no I didn't do that. but will run back to SS page and check it out.
good to know


aja--wow
my dad was military and used the VA hospitals. no bills at all.
healthcare is going to be a pain in the butt for me like everyone. can only hope it pans out well.
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Old 04-22-2013, 11:31 PM   #17
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I would hold onto the land that you have...it will always go up in price.
There are always exceptions, but historically raw land has not proven to be a money maker.

The taxes are likely modest, but they would not be zero. When combined with the opportunity cost attendant in foregoing the estimated $200,000 value that could otherwise be invested, he will be lucky to break even after inflation.

Things might be different if the OP was enjoying the land or planned to build on it, but he has been clear that he is "not using, have no use for and no plans to use it and want to sell". I think he would be well advised to follow through.
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Old 04-23-2013, 04:53 AM   #18
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hey Milton. yea I agree.
and this is not land that has great commercial value. it does have a possible sub-division value to someone. I say possible because of the hill/slope of it.
around me no one is building. subdivisions have basically stopped.
taxes are close to $1200 on it. Not much value with timber.

my home is just under 5 acres and 2100 sq ft modular rancher with 2 barns and taxes are just under $900. The 5 acres is all I want anymore as I get older. Land upkeep is getting harder.
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Old 04-26-2013, 06:18 PM   #19
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What do the results show?
Quote:
Originally Posted by SoutheastSam View Post
I will try the calculator. .
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