Long time lurker who is getting close to ER so thought I’d post a summary to introduce myself and update it from time to time to hold myself accountable. This forum has been very valuable to see how others have prepared for their ER.
I’m currently an expat living in SE Asia. It looks like I’ll stay in my current job for another year and then either go to another expat gig for ~3 years or will be asked to move back to the states (choice is not entirely up to me). Since I don’t want to stay long-term in the US area where the j*b is (TX, no offence to texans on the board, it’s just too far from the beach for me J) I’d like to minimize the kids’ school moves and possibly pull the trigger on ER. This means ER at 44 if I go back to the US or ~47 if I stick around on the expat circuit. It does feel early at 44 so my preference is definitely to get another 3 years of expat compensation uplift. I’m doing research on mid-size cities near the water with excellent schools and the current lead is Mt. Pleasant, SC.
Age: me - 43, stay at home DW – 40, 3 kids – 3-9 yrs old
Target ER: 44-47 for me
Assets: total $4.9M; taxable $2.8M, 401k $1.6M, real estate loans $85k, cash $250k, 529 accts $240k
Asset allocation: taxable is 100% in dividend paying stocks, 401k and 529 are mostly in stock index funds (and company stock in 401k). Cash will be used for down payment on a house when we move back to the US.
Passive income: taxable account is generating $95k per year in dividends (majority qualified) and I continue to add ~$200k in savings per year to it while living overseas. Dividends from existing taxable portfolio are conservatively projected to grow 4-6% per year on average.
Real estate interest ~8k per year, plan to maintain my exposure <$100k in principal so expect $8-10k per year in interest.
I can grab more dividend income from the company stock in 401k if needed (blue chip, conservative). It’s currently reinvested but I can get it distributed to me without penalties (although it would be ordinary income, not qualified).
Expenses: ~$100k per year now (use Mint to track), expect to spend ~$100-120k back in the US as kids get older (read: more expensive) and depending on the mortgage size.
Questions I’m pondering:
- My plan is to preserve principal and live off passive income so it feels like I don’t have a sufficient margin of safety to ER in a year? It’s subjective of course but my current thinking is that $150k in passive income that grows with inflation should be enough to sleep like a baby in ER.
- Should I stick around for 1-3 years even if we return to the US just to build up that safety cushion and then move to our desired area? I’m afraid it will be difficult to move again after the family settles down (they are looking forward to getting back to good olde USA and stop moving around every 2-3 years) and I’ll get sucked into OMY.
- I need to gradually allocate some funds to bonds – obviously not thrilled with the current interest rates and also don’t like the fact the bond interest income is not qualified. It would be good to hear from others who chose to stick with near 100% allocation to dividend paying equities during ER and their lessons learned. I do realize we haven’t had a bear market for a while and I’m sure my sensitivity to such an event will be a lot higher in ER vs. now but I also don’t expect my dividend income to get hit badly in a bear market.
- Any other critique of my asset allocation?
- If ACA gets gutted we could face a much higher than expected health insurance costs – watching what happens in 2017 as it will probably be as bad as it is going to get
- Any other cities I should consider if the only criteria are: warm climate, ~15min from sea/ocean (bonus points for frequent windy days) and excellent school district (with a real estate market I can afford!)?
- I’ve lined up a bunch of things to keep me busy in ER and continuing to add to my ‘life tree’ but there is an element of fear that would only go away once I pull the trigger on ER. Trying to stay rational about those fears of being bored in ER.
Thanks to everyone for any advice on the above! Happy New Year!
I’m currently an expat living in SE Asia. It looks like I’ll stay in my current job for another year and then either go to another expat gig for ~3 years or will be asked to move back to the states (choice is not entirely up to me). Since I don’t want to stay long-term in the US area where the j*b is (TX, no offence to texans on the board, it’s just too far from the beach for me J) I’d like to minimize the kids’ school moves and possibly pull the trigger on ER. This means ER at 44 if I go back to the US or ~47 if I stick around on the expat circuit. It does feel early at 44 so my preference is definitely to get another 3 years of expat compensation uplift. I’m doing research on mid-size cities near the water with excellent schools and the current lead is Mt. Pleasant, SC.
Age: me - 43, stay at home DW – 40, 3 kids – 3-9 yrs old
Target ER: 44-47 for me
Assets: total $4.9M; taxable $2.8M, 401k $1.6M, real estate loans $85k, cash $250k, 529 accts $240k
Asset allocation: taxable is 100% in dividend paying stocks, 401k and 529 are mostly in stock index funds (and company stock in 401k). Cash will be used for down payment on a house when we move back to the US.
Passive income: taxable account is generating $95k per year in dividends (majority qualified) and I continue to add ~$200k in savings per year to it while living overseas. Dividends from existing taxable portfolio are conservatively projected to grow 4-6% per year on average.
Real estate interest ~8k per year, plan to maintain my exposure <$100k in principal so expect $8-10k per year in interest.
I can grab more dividend income from the company stock in 401k if needed (blue chip, conservative). It’s currently reinvested but I can get it distributed to me without penalties (although it would be ordinary income, not qualified).
Expenses: ~$100k per year now (use Mint to track), expect to spend ~$100-120k back in the US as kids get older (read: more expensive) and depending on the mortgage size.
Questions I’m pondering:
- My plan is to preserve principal and live off passive income so it feels like I don’t have a sufficient margin of safety to ER in a year? It’s subjective of course but my current thinking is that $150k in passive income that grows with inflation should be enough to sleep like a baby in ER.
- Should I stick around for 1-3 years even if we return to the US just to build up that safety cushion and then move to our desired area? I’m afraid it will be difficult to move again after the family settles down (they are looking forward to getting back to good olde USA and stop moving around every 2-3 years) and I’ll get sucked into OMY.
- I need to gradually allocate some funds to bonds – obviously not thrilled with the current interest rates and also don’t like the fact the bond interest income is not qualified. It would be good to hear from others who chose to stick with near 100% allocation to dividend paying equities during ER and their lessons learned. I do realize we haven’t had a bear market for a while and I’m sure my sensitivity to such an event will be a lot higher in ER vs. now but I also don’t expect my dividend income to get hit badly in a bear market.
- Any other critique of my asset allocation?
- If ACA gets gutted we could face a much higher than expected health insurance costs – watching what happens in 2017 as it will probably be as bad as it is going to get
- Any other cities I should consider if the only criteria are: warm climate, ~15min from sea/ocean (bonus points for frequent windy days) and excellent school district (with a real estate market I can afford!)?
- I’ve lined up a bunch of things to keep me busy in ER and continuing to add to my ‘life tree’ but there is an element of fear that would only go away once I pull the trigger on ER. Trying to stay rational about those fears of being bored in ER.
Thanks to everyone for any advice on the above! Happy New Year!
