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What do you think?
Old 10-12-2006, 07:44 AM   #1
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What do you think?

I have run the numbers but would like some thoughts. My wife and I have no children, I am 50, she is 53, and we have no debt (no mortgage, no car loans, and no credit card debt). We have $2.4M is investments, about 85% in equities. We will have to pay for health insurance but we are both in good health. Can I call it quits in the next year? My wife will continue to earn some money (about $20K teaching yoga). We have expenses (excluding future health insurance costs) of about $50K/year. We would draw from non-IRA and non-401(k) investments for the next 10 years or so and then start drawing from IRA and 401(k) investments. Thoughts.
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Re: What do you think?
Old 10-12-2006, 07:51 AM   #2
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Re: What do you think?

Are you sure about the expense number? If so, I would say that with a little portfolio repositioning, t sounds a lot like a no-brainer if you want to stop working.
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Re: What do you think?
Old 10-12-2006, 07:55 AM   #3
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Re: What do you think?

That is our real expenses per year but does not include taxes on dividends, interest, capital gain or the costs of health insurance. We live pretty frugally. I dont have an exact figure on how much we would need to draw from out investments - probably more like $80K year.

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Originally Posted by brewer12345
Are you sure about the expense number? If so, I would say that with a little portfolio repositioning, t sounds a lot like a no-brainer if you want to stop working.
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Re: What do you think?
Old 10-12-2006, 08:05 AM   #4
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Re: What do you think?

I would try to get a real, solid handle on your expenses, especially healthcare. Healthcare costs can be a real wildcard.

But even so, you are looking at expenses of about $80k, with income of $20k. You'd need to draw $60k net from a $2.4MM portfolio, or well under 3%. Most of us consider anything at 4% or less to be pretty darned safe, so you should be in good shape. Depending on the structure of your portfolio, you might well get $60k just from interest and dividends.
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Re: What do you think?
Old 10-12-2006, 08:08 AM   #5
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Re: What do you think?

Quote:
Originally Posted by leyland
That is our real expenses per year but does not include taxes on dividends, interest, capital gain or the costs of health insurance. We live pretty frugally. I dont have an exact figure on how much we would need to draw from out investments - probably more like $80K year.
An 80k withdrawal is 3.3% on 2.4 mil. Go for it! I would feel uncomfortable with that much in equities though. But thats just me. Good luck.
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Re: What do you think?
Old 10-12-2006, 08:15 AM   #6
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Re: What do you think?

Quote:
Originally Posted by DOG52
An 80k withdrawal is 3.3% on 2.4 mil. Go for it! I would feel uncomfortable with that much in equities though. But thats just me. Good luck.
What Dog said.

Any particular reason for waiting until next year? Since there's always a slight possibility some ML ballplayer will crash his Cessna into your house,...

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Re: What do you think?
Old 10-12-2006, 08:20 AM   #7
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Re: What do you think?

I will be rebalancing our IRA/401(k) money within the next week or so - want to get more like 60% in equities. The problem is our non-IRA/non-401(k) funds are painful to rebalance because it will create capital gains.

Quote:
Originally Posted by DOG52
An 80k withdrawal is 3.3% on 2.4 mil. Go for it! I would feel uncomfortable with that much in equities though. But thats just me. Good luck.
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Re: What do you think?
Old 10-12-2006, 08:23 AM   #8
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Re: What do you think?

Probably the biggest reason is resolving an injury that my require surgery - not sure how that works with starting new health insurance and a pre-existing condition.

Where we live, a bigger problem is someone crashing an old pickup truck into our house ;-)

Quote:
Originally Posted by REWahoo!
What Dog said.

Any particular reason for waiting until next year? Since there's always a slight possibility some ML ballplayer will crash his Cessna into your house,...

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Re: What do you think?
Old 10-12-2006, 08:29 AM   #9
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Re: What do you think?

The rules of the game with health insurance vary considerably by state. Good info here: www.healthinsuranceinfo.net
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Re: What do you think?
Old 10-12-2006, 10:31 AM   #10
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Re: What do you think?

With a port north of 2 mil, I'd retire yesterday... :P

Of course, this is based on my expenses, I'll have (knock on wood) subsidized health insurance, and I'll undoubtedly retire with MUCH less than 2 mil...
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Re: What do you think?
Old 10-12-2006, 11:39 AM   #11
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Re: What do you think?

Quote:
Originally Posted by leyland
I have run the numbers but would like some thoughts. My wife and I have no children, I am 50, she is 53, and we have no debt (no mortgage, no car loans, and no credit card debt). We have $2.4M is investments, about 85% in equities. We will have to pay for health insurance but we are both in good health. Can I call it quits in the next year? My wife will continue to earn some money (about $20K teaching yoga). We have expenses (excluding future health insurance costs) of about $50K/year. We would draw from non-IRA and non-401(k) investments for the next 10 years or so and then start drawing from IRA and 401(k) investments. Thoughts.
Here's one..........I quit at 49. Married with net worth around 500K
and one child at home. Divorced and split the 500K with spouse.
Yes, I did return to full time work for 2 years, which helped.
13 years later, easily one of the best decisions of my life and I do not
feel deprived in any way.

Please TH/cfb...if you are out there, I know well your opinion on this story.

JG
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Re: What do you think?
Old 10-12-2006, 03:17 PM   #12
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Re: What do you think?

Quote:
Originally Posted by Mr._johngalt
Yes, I did return to full time work for 2 years, which helped.
13 years later, easily one of the best decisions of my life and I do not
feel deprived in any way.
Please TH/cfb...if you are out there, I know well your opinion on this story.
TH doesn't care but I'm happy to fill in.

For full disclosure let's not forget to mention to the rest of the forum all those years of "ER income" from your working spouse, spouse #2, subsequently followed by divorcing her as well...
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Re: What do you think?
Old 02-03-2007, 02:04 AM   #13
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Re: What do you think?

you are more than done.

Congrats!
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Re: What do you think?
Old 02-03-2007, 02:50 PM   #14
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Re: What do you think?

Quote:
Originally Posted by leyland
I have run the numbers but would like some thoughts. My wife and I have no children, I am 50, she is 53, and we have no debt (no mortgage, no car loans, and no credit card debt). We have $2.4M is investments, about 85% in equities. We will have to pay for health insurance but we are both in good health. Can I call it quits in the next year? My wife will continue to earn some money (about $20K teaching yoga). We have expenses (excluding future health insurance costs) of about $50K/year. We would draw from non-IRA and non-401(k) investments for the next 10 years or so and then start drawing from IRA and 401(k) investments. Thoughts.
Your financial situation is not unlike mine, except that I don't need to worry about health insurance, and that I don't have a spouse. IMHO, if you are psychologically ready, you should not hesitate to RE.
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Re: What do you think?
Old 02-03-2007, 05:36 PM   #15
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Re: What do you think?

leyland,

You are in a great position. Your taxes will be low while you are living off of capital gains and dividends. You definitely need to price health insurance. But a high deductible policy is probably the way to go.

Assuming expenses of 70K (50K + 8K health average + 7K taxes + 5K fudge factor) you are looking at a SWR of about 2.9%. And that is not even counting your wife's work income (which puts SWR under 2%). But wait, it gets better. You and your wife probably have some Social Security coming, right? This may lop over 20K per year off your needed portfolio draw. And then medicare will kicking in, too.

Yes, you need to rebalance equities and bonds. In fact, in your situation you do not have much *need* to take risk (just to make a point, even 30/70 would work), since you could have retired some time ago. I think going down to 60% equities is enough (assuming you can't go lower for tax reasons), and then you can start living off divvies and start selling equities up to the top of the 15% bracket each year (0% cap gains tax 2008/9/10).

Kramer

ps: You should be able to compute almost your exact income tax costs now. If you really want to reduce risk, do all of your (non-taxable) portfolio rebalancing before quitting, and apply for and start your new health insurance, and then give notice.
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Re: What do you think?
Old 02-03-2007, 10:23 PM   #16
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Re: What do you think?

Quote:
Thoughts.
I think it would be great if one of you folks who've posted that they have millions in net worth and can't decide whether to retire or not would ADOPT ME!!!!!!

Please! I'm not kidding here! No... really!
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Re: What do you think?
Old 02-03-2007, 10:50 PM   #17
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Re: What do you think?

Get Martha to work up the legal papers and show up at Rich's for the big Superbowl party. I'm sure you'll be able to find appropriate new parents there.
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Re: What do you think?
Old 02-04-2007, 08:43 AM   #18
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Re: What do you think?

Quote:
Originally Posted by leyland
I will be rebalancing our IRA/401(k) money within the next week or so - want to get more like 60% in equities. The problem is our non-IRA/non-401(k) funds are painful to rebalance because it will create capital gains.
If the non-ira/non 401k stuff is not in mutual funds (i.e. in individual stocks or etfs) why not go short what you would sell to rebalance against what you hold. Use the proceeds to do the rebalance and then close out over whatever timeframe you want to spread out your CG's.

job
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Re: What do you think?
Old 02-08-2007, 02:40 PM   #19
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Re: What do you think?

I did not have much as you, about $1.8M, and pulled the plug when I had a buy out proposal six months ago.

I could have done it 7 years ago when I was 48, if I had not be so stuck on not seling equities due to tax consequences. Yeah I saved on taxes but lost a bundle when the market tanked in 2000. If only, I had taken the hit on capital gains than I would have more today and been retired 6 years earlier. Agree it you are going to retire soon to balance back to 60%, set fixed to generate a good income and enjoy doing what you want with the day. Just can't put a price on it once you enjoy it for awhile

At any rate, also on health insurance we thought it would be a no brainer to get insurance because we are both in good shape during the first attempt at RE. However Blue Cross turned us down because of one high blood pressure reading above 120. Learning: That is the hardest part of the planning and would have that totally buttoned up if you can before RE.

Good luck on your decision

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