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Old 08-16-2013, 09:27 AM   #1
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Hello. I've been an occasional reader over the years and recently an active lurker. I'm 47 and DW is 49.

We currently have 15x (lavish) to 30x (sustenance) anticipated annual retirement expenses saved. Our portfolio is highly concentrated at this point.

For the last 20 years I've been paid very well working in the tech industry mostly with startup companies. We LBYM and caught a few breaks along the way. This year I finally realized I'm no longer 25. My risk tolerance has dropped considerably (both for work and investments.)

The goal in the next 6-12 months is to divest from our highly concentrated positions into a low cost portfolio of index funds with a 65/35 mix.

For the last decade I've been working mostly from home (kind of semi-retired) but the gig has ended and I am starting a new job at a large company in a couple of weeks. I don't know what qualifies as a mega-corp, but this is an international company with 15K+ employees and over $5B in annual revenue.

I don't plan to FIRE until we have 45x+ expenses at the sustenance level. DW has been a career homemaker. Kids are 17 and 19.

I want to give a thank you to all of you who have made this forum what it is. I told my wife yesterday (and shared on another thread) that it is a free Harvard education in personal finance and top notch financial counsel to go along with it.
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Old 08-16-2013, 12:53 PM   #2
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...

I want to give a thank you to all of you who have made this forum what it is. I told my wife yesterday (and shared on another thread) that it is a free Harvard education in personal finance and top notch financial counsel to go along with it.
Sounds like your strategy will work out well for you, and welcome to the boards!

A good friend referred me to the boards many years ago, and I was blown away by the wealth of experience, the different perspectives, the honest feedback, the smarts, and of course the sense of humor (sometimes more Animal House than Harvard ).
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Old 08-16-2013, 02:16 PM   #3
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I also appreciate the collective wisdom of this board. It's more civil than most, most of the time, which I find a very attractive feature. And people actually put some thought into what they post (again, most of the time).

As to waiting for 45x at > 50 wow, that's some sticking to it! But I guess if you like where you are working, or you want to leave some $ behind, it can be the best thing for you.
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Old 08-16-2013, 02:35 PM   #4
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I also appreciate the collective wisdom of this board. It's more civil than most, most of the time, which I find a very attractive feature. And people actually put some thought into what they post (again, most of the time).

As to waiting for 45x at > 50 wow, that's some sticking to it! But I guess if you like where you are working, or you want to leave some $ behind, it can be the best thing for you.
I think part of my reasoning is that I've become quite risk averse / down on the overall markets (bond and stock.) Much of it is probably recency bias, but I don't see much real return available in the future.

Am I too jaded?
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Old 08-16-2013, 04:08 PM   #5
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Well a few years at tech megacorp my have you rethink your need to go the full 45x.

Actually I can certainly see a retirement in 5 years when the kids are out of college. Once you are an empty nester I would think you'd be able to get a good feel for exactly how much lavish vs bare bones retirement cost. Of course this assumes the kids don't boomerang.
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Old 08-16-2013, 04:17 PM   #6
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Yes, this is one of the nicest boards I have seen. Most of the perceived insults are usually just a result of the limitations of this method of communicating, rather than outright rudeness. And, I have learned a ton about ER. I probably would have ER'd even without this site, but it certainly has made me feel more secure with my decision.
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Old 08-16-2013, 04:37 PM   #7
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Well a few years at tech megacorp my have you rethink your need to go the full 45x.

Actually I can certainly see a retirement in 5 years when the kids are out of college. Once you are an empty nester I would think you'd be able to get a good feel for exactly how much lavish vs bare bones retirement cost. Of course this assumes the kids don't boomerang.
DW and I have talked about the 5 year mark in seeing both of them out of college and making sure they are making it on their own before downsizing a bit . . . so the boomerang is a consideration. :-)

We live in one of those "high cost of living areas". It's likely the kids will want to stay in this area. We're ok with staying here for a little while to ensure they get off to a decent start. But eventually, a change in scenery could reduce our living expenses by 10 - 20%. I'd rather put money into the things I enjoy doing than into real estate taxes, home owner associations, high energy bills, etc.
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Old 08-17-2013, 05:58 PM   #8
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I think part of my reasoning is that I've become quite risk averse / down on the overall markets (bond and stock.) Much of it is probably recency bias, but I don't see much real return available in the future.

Am I too jaded?
I read the book "Spent till the end" by the guy who wrote ESPlanner. He was big into the idea that if you had enough savings to take you through to 100, you simply take it out of risk by buying inflation protected treasuries. You give up the upside potential, he argues, but that's something you don't really need. He says you really just want to avoid running out. The book was published quite a while back, when treasuries actually paid something, so I'm not sure his tune would be quite the same anymore. I wasn't completely sold on the idea, but it did convince me to switch to the age 50 something asset allocation from the 40, and put my bond allocation into a guaranteed income instrument (bonds wrapped in an insurance package). I would have put the bonds allocation into TIPS, but that wasn't available in the account where the money was. So although I'm not optimistic about bonds, I still hold out hope there will be a boom before I cash-in. Super capacitors? Something unpredictable, probably, so I'm still keeping a good percent in equities.
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Old 08-17-2013, 06:09 PM   #9
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So although I'm not optimistic about bonds, I still hold out hope there will be a boom before I cash-in. Super capacitors? Something unpredictable, probably, so I'm still keeping a good percent in equities.
I don't see how a boom could do much for your bonds, more likely knock down their value if they are pretty long term. A 3.625% coupon treasury bond, due 8/15/2043 and selling at 3.83% ytm has a duration just short of 18 years. I like to look at these things as if I am going to buy and hold, so no fancy trading. So what this tells me is that if I buy this bond this week, I will not get help rather than harm from rising interest rates for 18 years. Up until then, my only hope for this to be a possibly satisfactory investment is falling or stable rates. And once that turn comes, most of us will be too old to figure out what to do with the increased cash flow.

I went through this exercise in another thread, and a very savvy investor sees it differently. But all I can do is share the way I think about today's rates, or keep quiet.

Or did you just mean a real equity boom with just 50% of you assets exposed is all you need?

Ha
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Old 08-17-2013, 08:12 PM   #10
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I don't see how a boom could do much for your bonds, more likely knock down their value if they are pretty long term.
....
Or did you just mean a real equity boom with just 50% of you assets exposed is all you need?
Yeah, I see now how it reads (I never do very well typing on that tablet). I should have said "hold out for a boom in equities before I cash in"

I changed my allocation to favor "bonds" a little bit more due to the conservative talk by Dr. Kotlikoff, I'm still allocated to both foreign and domistic equities (65%). I've got a hard assets component too, which might do something different than bonds (or not). The safe component is just the part that shouldn't go down, which is why I put "bonds" in quotes... it's really a guaranteed income fund, which is only supposed to go down if the insurance company fails, hehe.
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Old 08-17-2013, 08:12 PM   #11
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I went through this exercise in another thread, and a very savvy investor sees it differently. But all I can do is share the way I think about today's rates, or keep quiet.
How did said very savvy investor see it?
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Old 08-18-2013, 08:45 AM   #12
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I think part of my reasoning is that I've become quite risk averse / down on the overall markets (bond and stock.) Much of it is probably recency bias, but I don't see much real return available in the future.

Am I too jaded?
I'm actually very optimistic about equities in the long run since the recovery has been so gradual I am bullish on equities long term. I'm concerned about bonds near term and neutral long term. Not that my view matters much because I have an AA target and just stick to it.

Anyhow, with respect to your OP I think a retirement analysis using Quicken Lifetime Planner, MS Money's Planner, Firecalc or one of the other good retirement planning analysis tools would be much better than using a multiple of spending as a target. No sense working longer than you need to.
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