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Semi-ER @ 41 with young kids. Crazy?
Old 05-22-2008, 11:15 PM   #1
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Semi-ER @ 41 with young kids. Crazy?

Hi everyone. Long time lurker here and now I finally have a good excuse to jump in.

It looks like I'm about to sell some private stock for a decent chunk of change, and I'm looking at taking the opportunity to downsize my life, relocate, and generally try to enjoy life more than I have for a while. My wife and I have both jumped off the consumer bandwagon, and want to raise our kids (5 & 7) without so much consumer emphasis, and more quality of life.

I'll end up with about 1.7m in my investment portfolio, not counting the equity in my house (250-300k) which I plan on using to buy something smaller outright after renting for a few years. Current spending is about 77k per year, but I plan to reduce that to around 60k moving to a cheaper house in a lower-cost area. On top of that, I also plan to w**k part time at something, to keep from going insane and particularly to pay for health insurance (my biggest concern). I'm thinking (and Firecalc concurs) that I can take 50k / year from the portfolio (plus taxes), and w**k to supplement however much is necessary. Kids college is already taken care of (as much as I plan to) in a fully-funded state pre-paid plan.

I'm planning on an all Vanguard portfolio, about 55% stock (25% intl), 35% bonds, 5% REIT, 5% cash. I'm actually mostly out of the market now, having just moved most of my cash there from a "full-service" i.e. high-cost broker. I've played with a few portfolios and am working on picking between a 10-fund slice-and-dice or a simpler 3-4 fund one using the total-* funds. The big question I have is what assets to put where, since I'll have about 80% in taxable funds, 20% in mine and wife's IRA's.

Love this forum, and hopefully I'll have plenty more time to spend here soon.

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Old 05-23-2008, 06:39 AM   #2
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Wow Congrats. I am in a similar situation. I am 44 and have a 7 and 5 year old also. Our investments are at 1.1m but I continue to work. I can't seem to pull the trigger like you did. I figure I've got 6 more years to go and the assets will be close to 2.0m.

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Old 05-23-2008, 06:53 AM   #3
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Welcome to the board.

Your plan sounds thoughtful and do-able to me from a bird's eye view. A couple of thoughts: while $1.7mm sounds like (and is) a lot of money, while kids are still home for a long time, college a possible future expense, etc. and health insurance specifics still unclear but possibly out of pocket for a while, it may not be enough for a slam dunk

But your willingness to continue working, awareness of the dangers of finding health insurance (there are many who struggle for just the "privilege" of paying $12k a year premiums). Then there's the housing market...

So if I were in your shoes I would forge ahead, but probably get the house sold, health insurance signed up, and expenses reduced before I cut the cord; that way you won't be sabotaged early by a house that sits unsold for a while, inability to find decent health insurance while jobless, a 2 year bear market, etc.

Just a cautionary perspective in uncertain times.
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Old 05-23-2008, 08:37 AM   #4
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DW and I ESR'd last year at 43 with two kids 9 and 2. We tracked expenses for several years and really always lived on a budget. This gave us a clear picture of what our cost would be. We also where completely debt free including the house for several years before making the move. We had always planned for 45 but fortunately the numbers worked out a little sooner.

We dropped the Mega Corp Health insurance over a year before we left after we purchased private insurance. We wanted to have it in place over a year and see a premium increase before making the jump. It is an HSA plan and it has worked out very good for us. Our budget plan calls for spending the full government HSA contribution limit every year (5800 for a family) which is more than our out of pocket max for the family each year. We also plan on 15% per year premium increases in health care although they are running around 10% now.

I had a small consulting business on the side for five years before the jump also so that I knew how my future part time work might go. We also have three paid for rental houses that provide income and we have been running rentals for fifteen years. Since SER our business has done better than expected. We are actually turning down some new business to make sure that we do not get back to full time work. It seems that if you do something you like you do better at it.

To cover dental expenses I bartered with our dentist for dental care for the family in exchange for my services. I did the same thing with an optometrist friend for eye care. I am looking into this with a couple of doctor friends but have not finalized that since we have health ins.

Our withdrawal rate would be 3.5% of our portfolio with no work and with my part time work it is well below 2%. We could drop the business but for now we really enjoy it and like not having to withdraw much from our portfolio. We each have pensions that we can draw at 55 so the plan is we will continue the business till 55 if possible and we continue to enjoy it.

We live in a low cost area of the southeast within walking distance to great schools. I work 5 to 10 hours a week on average but I can pick the time so I usually do it when the oldest is at school and the youngest is napping so that I can maximize my family time.

We have separate savings not included in our portfolio for our kids college and it is enough for four years at a state school. We used after tax accounts in our name that we just identified as for them so that we can decide how the money is spent. It is not the most tax advantaged method but since our state has a lottery scholarship for anyone with a GPA of 2.75 or better for a 90% free ride in college we wanted to take that into account and be able to use the money for other things if the scholarship program is still available when we could use it.

We made this move from MEga Corp after twenty two years of working 60 - 70 hours per week between our jobs and our business. It so far has been even better than we had dreamed it would be during the 22 years we prepared for it.

I hope this helps you in making your decision., It can certainly be done and the family rewards are tremendous but you really need to plan and have all your bases covered well.
Worked the plan and now living the Dream!
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Old 05-23-2008, 10:05 AM   #5
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Just do your kids feel about relocation?
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Old 05-23-2008, 11:59 AM   #6
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The younger one is a little sad about leaving her friends, but they're mostly excited about it. They've definitely picked up on the vibe from my wife and I about how much we dislike where we are, and are looking forward to living somewhere new.
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Old 05-23-2008, 01:18 PM   #7
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We are planning in similar fashion to you. We are 41/38 with kids 9 and 2. Hoping to get close to FI in the next 3-5 yrs and then work p/t and not touch the nest egg for 5-10 yrs.

We are hoping to relocate out of the midwest as the winters do get to us.

Are you moving out of state as well? If so how are you planning to get health ins coverage?

Also would you need to get any disability ins as you are planning to work to cover some of your expenses? I think it is difficult to get disability ins when working p/t.

Worry about our older one making the transition in middle school yrs!

good luck and keep us posted
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Old 05-23-2008, 06:16 PM   #8
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Fisherman - is your side business IT related? I'm not, but I really liked the idea of bartering with the dentist and eye doc for services.

LeavinEarly - if you can swing it with the figures, I think doing what you are planning is great. I wish I could have given my kids more time like that. Right now it looks like we will bail sometime between the time our last leaves the nest and maybe a year or two after that (1-3 years).

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Old 05-23-2008, 08:07 PM   #9
Confused about dryer sheets
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Thanks for all the feedback everyone. I've certainly dreamed about this move for a while, but I'll be very interesting to see how the reality of it works out. It's always easy to stick with the same old routine, but I think I'm ready for some new adventures.

Rich, I plan to stick with my COBRA while I investigate HDHP / HSA plans. I think they're pretty much the way of the future, and I'm content not insuring against every little sniffle as long as I can be backed up if something really bad happens.

Fisherman, I like your idea of barter, but I'll have to find something useful to bargain with first, as I have no intention of doing any more IT work unless it's that or starve. Funny how much I loved that stuff 20 years ago, but I'm ready to be out from behind a desk.

My oldest has some learning disabilities, and we're planning to homeschool for the foreseeable future, that's one of my primary motivations to get some more time at home and be more involved in that.
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Old 05-23-2008, 09:09 PM   #10
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My work is Ecommerce and web related. Have laptop will travel. The last year before leaving Mega Corp I entertained the idea of not doing IT type work but that is my main skill set and since I have made the move I really like the new opportunities. When you are the boss other than DW, it really helps. Also knowing that you could quit completely if needed is a big help also. It really is a good opportunity to consider. I get my fishing fix the same way by trading with a full time fishing guide.

It takes some time to setup and get the right clients but the freedom is priceless and the new people you can meet helps with the social interaction plus at 44 Iam not ready to stop completely. Once you get a couple of good clients and have provided something missing now days called good customer service you will get more opportunities by word of mouth and can then pick and choose and do just enough to meet your needs.

If you have not already purchased the book by ESRBob who posts on this forum "Work less live More" you really need too. It is a plan that fits exactly what you are looking to do.

Good luck and keep us posted!

Worked the plan and now living the Dream!
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