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Retire Next Year at 57
Old 11-02-2013, 10:50 PM   #1
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Retire Next Year at 57

Hi, Im Deb and I dont suffer from One More Year Syndrome. Im the opposite. I am so ready to retire! My DH and I own a business and in order to retire, we have to sell our business. Getting valuations now and its going to be close.

I have six years until SS and he has twelve!

All of the financial calculators have my head spinning. Im tring to determine our magic number, using 75K after taxes (we earn substantially more now, but are downscaling and plan to buy home outright so health insurance dining and travel prob biggest expense.)

Im almost completely out of the market after losing 40 - 50 percent of investments two or three times in past twenty years. And being so close to retirement, Im afraid to go back all in - but I know I have to or inflation will eat away at our savings.

So my plan is to find a some good index funds and invest half of the nestegg and put half in something guaranteed, even if under 2 percent. Is that crazy?

So glad I found this site and can tell Im going to learn alot.
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Old 11-02-2013, 11:40 PM   #2
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So my plan is to find a some good index funds and invest half of the nestegg and put half in something guaranteed, even if under 2 percent. Is that crazy?
Welcome. If you are okay with ~ 2%, you might want to check into TIPS, I bonds, CDs that can be cashed in if rate rise, high yield checking accounts, and, if you have any in your 401Ks, stable value funds.

I think many people here might think that is crazy but I do not. Our retirement plan works okay with mostly TIPS and stable value kinds of returns because our expenses are very low in relation to our savings and other retirement income sources. We do have some stocks for diversity among asset classes.
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Old 11-03-2013, 11:43 AM   #3
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I don't think it is crazy. I was/am in a similar boat. I lost a ton so had gotten completely out of the stock market. A little over a year ago, I started to get back in by doing index funds as you suggest in your post and am happy I did. I am doing about half stock and half bond index funds. I am also starting to move the stock index funds into the same fund in an exchange traded fund (etf). For example, Vanguard Total Stock Market Index VTSAX is the same as Vanguard VTI Total Stock Market ETF. This allows me to set stop limits so if the market does take a big dip then I will get out (and at sometime I would need to decide when to get back in). I know people say you cannot time the market - but if it lets you sleep at night - it is something to consider.
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Old 11-03-2013, 12:51 PM   #4
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Welcome aboard, Debinnov a. Sounds like you'll fit right in here.

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Old 11-03-2013, 12:52 PM   #5
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I am also starting to move the stock index funds into the same fund in an exchange traded fund (etf). For example, Vanguard Total Stock Market Index VTSAX is the same as Vanguard VTI Total Stock Market ETF. This allows me to set stop limits so if the market does take a big dip then I will get out (and at sometime I would need to decide when to get back in).
I like that idea. Thanks for the suggestion. I think we will look at doing something similar.

We have enough for a pleasant retirement without taking much risk, so I would rather be content with the life we have planned than risk losing half our portfolio in any given year.
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Old 11-03-2013, 05:35 PM   #6
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Thanks for the responses. I'm going to look into Vanguard Retirement and/or Index Funds. What is a stop limit? I need to do alot more research.

I think I have a handle on what we will need to live monthly, but it is much less than we have been earning for the past ten years. But we are not in "buying mode" for electronics, clothing, entertainment as much as we have in the past. We are thinking of The Villages in Florida, so if we purchase our home, we are thinking we can live pretty comfortably on $75,000 after taxes, especially with all of the free amenities, activities and entertainment.

So thinking property taxes, amenities fees, health insurance, homeowners insurance, food, dining out and entertainment, utilities and cell phones, termite and lawn, gas (limited due to going everywhere on golf carts) and probably long term care insurance. Travel at least once or twice a year.

Does that sound doable?
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Old 11-03-2013, 05:59 PM   #7
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Im almost completely out of the market after losing 40 - 50 percent of investments two or three times in past twenty years. And being so close to retirement, Im afraid to go back all in - but I know I have to or inflation will eat away at our savings.
What do you mean? Did you not stay in and wait for the market to recover?
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Old 11-03-2013, 06:06 PM   #8
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Thanks for the responses. I'm going to look into Vanguard Retirement and/or Index Funds. What is a stop limit? I need to do alot more research.

I think I have a handle on what we will need to live monthly, but it is much less than we have been earning for the past ten years. But we are not in "buying mode" for electronics, clothing, entertainment as much as we have in the past. We are thinking of The Villages in Florida, so if we purchase our home, we are thinking we can live pretty comfortably on $75,000 after taxes, especially with all of the free amenities, activities and entertainment.

So thinking property taxes, amenities fees, health insurance, homeowners insurance, food, dining out and entertainment, utilities and cell phones, termite and lawn, gas (limited due to going everywhere on golf carts) and probably long term care insurance. Travel at least once or twice a year.

Does that sound doable?
You can compare your budget to the Consumer Expenditure Tables here for a benchmark -

CE Expenditure Tables

The median household income in the U.S. is $50K, so it is certainly doable, but really only you will know if $75K is enough for you to be happy, especially if you are used to spending much more.

You might want to try living on your retirement budget as much as possible before you actually retire to see if that number works for you. One thing we have found is that with working less we have a lot of time to review our expenses, cook from scratch, comparison shop, declutter, etc.

We've cut our grocery bill in half and our energy bill is down 2/3 of what it used to be.
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Old 11-03-2013, 07:22 PM   #9
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We travel in our RV and eat out a lot for about that amount. Don't have to count pennies or anything, and we tend to spend about $4500 a month. Could do more, we just don't ...

"..I track my expenses for curiosity sake. Most we spent in one month was $5100, and we spent over a week travelling through Michigan, plus some hotel costs visiting our son, and made a couple of additional unplanned donations to causes.

$75k a year sounds definitely doable.
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Old 11-03-2013, 08:56 PM   #10
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I really feel that it is freeing to have less stuff, so I think we want to live fairly simply. I also know how to coupon so that I can stock up on personal care items, paper products, etc. when they are on sale, which will save some money.

My goal is to retire next year. After selling our business, we are thinking that $2M is our number and are hoping our portfolio hits that mark. Also, we are fairly risk adverse - so very low interest, except for a portion I will have in some index funds.

I still have six years until social security and spouse has twelve. I also think we will spend less after we hit 70 - slow down on travel, etc. My main concern is to not lose too much to inflation and to keep expenses down until social security kicks in. Kids are grown and mostly through school, although I am funding my grandson's college.

Debinnova
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Old 11-04-2013, 12:44 PM   #11
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Regarding your question, "What is a stop limit?" ... essentially you can set an automatic trigger that if a stock drops to a certain price then it will sell. I am certainly no expert so you should read up on your own. But I will explain at a high level as I understand it.

If you buy an index fund then when you place an order to sell, your order will be fulfilled at whatever the fund closes at the end of the day. You have no control over that. And by selling, you will likely be limited to buy back in to the fund since the fund company wants to discourage day trading of index mutual funds.

Conversely, if you buy the same index fund as an ETF then the whole fund trades similar to a stock. Therefore, you can set a stop limit which says that for the next 60 days, if the price of the fund drops to the price you set, then it will automatically sell. You are more in control of the price it will sell. And, you do not have to watch it as closely since it will sell for you based on the trigger. You can cancel, or readjust the stop limit price whenever you want.

That is a high level explanation. But again, if you google, you will see lots of more detailed explanations. Of course, like anything else, there are pros/cons to your approach. Only you can decide what you want to do.
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Old 11-04-2013, 05:16 PM   #12
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Just want to welcome you. Sounds like you've gotten some good advice. Keep us posted.
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