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Retire early vs work to leave for kids
Old 12-16-2017, 10:53 PM   #1
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Retire early vs work to leave for kids

I am 37 yr old with below numbers

Investments (Vanguard total stock market index): 350K
401K: 130K
Cash: 70K
Total Assets: 550K

I make 280K salary (Silicon Valley / Bay area) and save about 100K including the money that goes into 401K. My wife doesn't work. I rent and plan to continue to rent. I have two kids 8 and 4 yr old.

In 10 years, I should have 1.5 to 2 million total networth to retire by moving to a low cost of living area. I can retire then or work for another 10 years where I would be able to leave each kid a million and still have enough for my retirement.

I am finding it hard to decide what to do. I hated the concept of working and always wanted to retire and have that financial freedom. So retiring in 10 years would really give that to me. But at the same time, I won't be able to leave the kids anything if I retire then. I am sure many of you have been in similar situations. Please advise
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Old 12-16-2017, 10:57 PM   #2
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I'd wait for 10 years to pass by and then decide.

So much can happen that there is no sense in trying to plan it now as in both cases you need to work for the next 10 years.
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Old 12-16-2017, 11:02 PM   #3
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No decision to make now, so don't mentally and emotionally commit yourself to one path or another. There could well be a third, fourth, or fifth option emerge as you are saving and investing your way to the target. A lot of things can change in 10 years.

Keep doing what you have, and look at again when you approaching an amount that would let you step back.
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Old 12-16-2017, 11:51 PM   #4
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The answer depends on your beliefs and circumstances. How important is it to you and your wife to leave your children funds? Do any of your children have a condition that will necessitate funds after your death?

In our case, our child will likely inherit more (inflation adjusted dollars) than my DH and I had at retirement because we are most content with LBYM.But, if life takes an unexpected turn (markets, illness, etc.) and we have little or no funds to pass on to her we will be o.k. with that. We provide her with love, a very good college education, and life experiences (travel, etc). We value that stuff much more than leaving her an inheritance.
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Old 12-17-2017, 12:14 AM   #5
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10 years is a very long time, anything can happen between now and then.
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Old 12-17-2017, 04:04 AM   #6
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Unless you annuitize all of your retirement savings, or the market does poorly, you won't die with nothing. Run Firecalc, and see just how many times you wind up with substantial assets. If you want to give them help while your alive you may not have enough buffer to do so safely, at least for awhile, but inheritance is a different issue. If you're really concerned, take out some life insurance.


I also agree that you can worry about it in 9.9 years.
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Old 12-17-2017, 04:41 AM   #7
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Quote:
Unless you annuitize all of your retirement savings, or the market does poorly, you won't die with nothing. Run Firecalc, and see just how many times you wind up with substantial assets. If you want to give them help while your alive you may not have enough buffer to do so safely, at least for awhile, but inheritance is a different issue. If you're really concerned, take out some life insurance.


I also agree that you can worry about it in 9.9 years.
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Old 12-17-2017, 05:03 AM   #8
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How much money was ever left to you? I would say you should pass on that amount, plus any growth it should have had. That way, you got the money to use during your retirement, and passed a bit on for the next generation.

And do not worry about your kids taking care of you as you age. Certainly if there is no incentive, they won't.
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Old 12-17-2017, 06:07 AM   #9
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10 years ago, after being retired for 7 years, I gave each of the kids $50k, and I give them $5k each every year. I also give each grandchild $10k per year towards their college. I keep my equity stake at 50+% to build an inheritance for them and for charity.
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Old 12-17-2017, 06:32 AM   #10
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I don't have kids so not in your shoes, but I have never understood the thinking that one should work long enough to leave a pile of money to their kids. As others have said, odds are if you maintain a reasonable AA you will leave them a decent inheritance anyway. I would shoot for 10 years and evaluate at that time.
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Old 12-17-2017, 06:50 AM   #11
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I don't have kids so not in your shoes, but I have never understood the thinking that one should work long enough to leave a pile of money to their kids. As others have said, odds are if you maintain a reasonable AA you will leave them a decent inheritance anyway. I would shoot for 10 years and evaluate at that time.
I agree with that. I most likely WILL leave DS and DDIL with a nice amount of money but I have 3 objectives. First is not to outlive my savings and to be able to pay for whatever care I need after I can no longer live independently. I don't want DS and DDIL forced into caregiving or into propping me up financially in my old age. Second is to do whatever I can for the grandkids' education- I've already started 529s for my 2 granddaughters, aged 3 and one. They want at least one more child. Third is to leave them a legacy. They're hard-working, sensible people making it on one income and I want to help them to have a good retirement if I can.
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Old 12-17-2017, 06:55 AM   #12
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Sometimes the worst thing you can do for your kids is leave them a substantial inheritance.
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Old 12-17-2017, 07:00 AM   #13
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You don't have to decide now, and 10 years from now, at 47, retiring with 2M with pre-college kids might not seem like a smart idea (not enough). But so much will change for you along the way.

So lay out a loose roadmap, and revisit/update each year.

I was a lot older than your kids when my parents ER'd, but if they said "We can retire now, or keep working for several more years so you'll get a good inheritance" - I'd of course have told them to retire now!
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Old 12-17-2017, 08:09 AM   #14
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Why do you want to leave children money? This is not typical. You need insurance to provide for family while you are the source of there financial security. I would retire early to spend more time with each child, or support their passions and desires in life but not for money.
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Old 12-17-2017, 08:33 AM   #15
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Why do you want to leave children money? This is not typical. You need insurance to provide for family while you are the source of there financial security. I would retire early to spend more time with each child, or support their passions and desires in life but not for money.
I beg to differ. I plan and hope to leave money to my kids. My parents wanted to leave money to their kids (and did). My grandparents wanted to leave money to their kids (and did). All my friends and family are hoping and planning to leave money to their kids. I find it very atypical to plan otherwise. Not to say it is wrong, just that it is not what I find common among people I know.
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Old 12-17-2017, 10:53 AM   #16
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Thanks for all your replies. 2M with pre-college kids anyway seems to be little bit tricky. How much does the college cost? I believe 35K per year per each kid? So that's 300K total for both kids for 4 years.

How much should I put aside for health insurance plus deductibles? Is 1.5K per month a good estimate?

I get the feeling 15 years from now with 3 M would be an ideal time to retire. It is a big question whether giving money to kids is a good thing or not. I keep wondering about that a lot. If I give them early (like 25-30 age), they might spend it all and get used to that extra money and get into trouble later. Planning to give them later (40-50 age) sounds good unless they need it earlier. I worked hard all my life always not liking to work and wanting to retire. I am sure atleast one of my kids feel the same way and I want these few extra years to help them live my dream (retire early).
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Old 12-17-2017, 11:12 AM   #17
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I'd wait for 10 years to pass by and then decide.

So much can happen that there is no sense in trying to plan it now as in both cases you need to work for the next 10 years.
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Originally Posted by FlaGator View Post
No decision to make now, so don't mentally and emotionally commit yourself to one path or another. There could well be a third, fourth, or fifth option emerge as you are saving and investing your way to the target. A lot of things can change in 10 years.

Keep doing what you have, and look at again when you approaching an amount that would let you step back.
Just to illustrate the very smart people above. In the last 10 years
I lost my brother to cancer
I lost my husband to cancer
I lost my college roomate and bff to cancer.

Not trying to be Debbie downer but to just to reinforce that so much can change in 10 years. in a very short time my life path is totally different.


and look at it this way, you're on a great path to have choices. choices are always a great thing
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Old 12-17-2017, 11:19 AM   #18
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.

Whenever you retire, definitely move to a less expensive part of the country.

"A penny saved" is more than a "penny earned"... because of taxes.


FYI

The Dallas area is an up and coming IT hub that is both family and business friendly.

Real estate prices and the cost of living are lower here.

Property taxes are higher than the norm... but there is no state income tax.

.
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Old 12-17-2017, 11:20 AM   #19
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Now as far as leaving money to my kids. Once again way to early to tell.
One of my kids at 23 was ultra responsible, he would probably do the right thing. lol
One of my kids at 23 was more like Seth Rogan, if he got his mitts on a lot of money, he'd invest in a pole in the living room and finance a stripper named "cinnamon" and would swear she really was training to be lead ballerina with the Philadelphia ballet.

now my husband and I were not big proponents on inheritances only because we had 3 instances were money left someone turned real ugly. In one instance a sibling literally tried to hit the other sibling with her car.

right now my sons have had their college tuition paid for,(one is considering law school with no loans), they drive cars with never having a note (hand me downs) and have traveled to some really cool places on mom and dad's dime. so I'm not about to feel bad if they don't inherit a big wad and I'm not denying myself anything. I don't have grandkids yet and when I do I'll reevaluate
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Old 12-17-2017, 11:22 AM   #20
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In your situation I would not retire in 10 years. You will only be 47 and will likely have $2M max. With a 3% withdrawal that is $60K/yr. You will have 4 people to pay for and you are used to doing that on $200K/yr+. I also would not want to move my 14 year old kid to a new state. I would wait until your youngest graduates high school at least and possibly until they graduate college. You will be in better financial shape by then and still only in your mid 50's. A good time to retire IMO. Save as much as you reasonably can over the next 10 years then re-evaluate.
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