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Would love some advice
Old 10-16-2016, 03:58 PM   #1
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Would love some advice

Hi All - I've been on the forum for some time reading a whole bunch of threads. It seems like a great site. I'm 46 and DW is 45. We have about $4.6mm liquid split 35% equity/65% bonds/cash/cd's. We also have about $850k in home equity. We have no debt. We have no children.

I sold my company a few years back (4) and we relocated about a year ago to a more prosperous economic environment for the opportunities available. What I've found is a very different environment for entrepreneurs since going back to work. Since trying to go back into business about a year ago there is much more regulation, cost and unrealistic banking expectations that limit what true opportunities actually are. It just seems to me it is very hard to get compensated appropriately for the risk you'd have to take given the current environment. In addition, there's way too much cash chasing very few true opportunities.

Our projected annual expenses over the next 10 years are about $95/k per year. Some years less and some years more. $95k is the average including inflation and large purchases such as cars and home maintenance dollars set aside for roof, furnace, etc. It also includes ins premiums. Any HSA/deductible contributions come from some part time stuff my wife and I do.

Given that our WD Rate is about 2% and the economic realities of the environment today, I'm starting to think that our life should take a different path. We earned that money busting our humps and taking risks and somehow it worked out. We lived frugally compared to our incomes and managed to put ourselves in a comfortable spot.

Would we be crazy to just go enjoy life and keep up with the part-time stuff realizing that we wouldn't be making large amounts of money going forward? Or would we be better off trying to break through a very thick wall of what we see as a new paradigm in American economics?

We love where we live now and don't see ourselves moving anytime soon - so no large costs involved with that.

Thanks so much in advance for any advice.
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Old 10-16-2016, 04:21 PM   #2
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Originally Posted by j.dave View Post
Hi All - I've been on the forum for some time reading a whole bunch of threads. It seems like a great site. I'm 46 and DW is 45. We have about $4.6mm liquid split 35% equity/65% bonds/cash/cd's. We also have about $850k in home equity. We have no debt. We have no children.

If you put your entire portfolio in simply an index fund yielding 2%, you'd have your annual expenses covered by dividends. That large % in bonds/cash/CDs is likely going to be a drag on your portfolio going forward.
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Old 10-16-2016, 04:33 PM   #3
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You'd be smart to just go enjoy life. If I were you I'd only work if I wanted to increase my retirement yearly spending or found something enjoyable to do part time.
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Old 10-16-2016, 05:14 PM   #4
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Welcome j.dave! If you haven't seen them yet, there are two excellent resources here that might help you decide if it's time:

Some Important Questions to Answer Before Asking - Can I Retire?

and

Early Retirement FAQs - Early Retirement & Financial Independence Community

But based on the info you shared above, if your expense numbers are sound then it seems very doable. While I know some people who really thrive on being in the business world just for the sake of doing it, not for the $$, for most of us, life on the other side is oh so much nicer.
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Old 10-16-2016, 05:29 PM   #5
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You look real good. Retire anytime you want -
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Old 10-16-2016, 06:39 PM   #6
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Originally Posted by j.dave View Post
Hi All - I've been on the forum for some time reading a whole bunch of threads. It seems like a great site. I'm 46 and DW is 45. We have about $4.6mm liquid split 35% equity/65% bonds/cash/cd's. We also have about $850k in home equity. We have no debt. We have no children.

I sold my company a few years back (4) and we relocated about a year ago to a more prosperous economic environment for the opportunities available. What I've found is a very different environment for entrepreneurs since going back to work. Since trying to go back into business about a year ago there is much more regulation, cost and unrealistic banking expectations that limit what true opportunities actually are. It just seems to me it is very hard to get compensated appropriately for the risk you'd have to take given the current environment. In addition, there's way too much cash chasing very few true opportunities.

Our projected annual expenses over the next 10 years are about $95/k per year. Some years less and some years more. $95k is the average including inflation and large purchases such as cars and home maintenance dollars set aside for roof, furnace, etc. It also includes ins premiums. Any HSA/deductible contributions come from some part time stuff my wife and I do.

Given that our WD Rate is about 2% and the economic realities of the environment today, I'm starting to think that our life should take a different path. We earned that money busting our humps and taking risks and somehow it worked out. We lived frugally compared to our incomes and managed to put ourselves in a comfortable spot.

Would we be crazy to just go enjoy life and keep up with the part-time stuff realizing that we wouldn't be making large amounts of money going forward? Or would we be better off trying to break through a very thick wall of what we see as a new paradigm in American economics?

We love where we live now and don't see ourselves moving anytime soon - so no large costs involved with that.

Thanks so much in advance for any advice.

My stats are almost identical to yours , but I am 10 years older. Still work my DW FIREed. I found that your thoughts before you achieved "the critical mass" (e.g. able to FIRE) and after are different.

To me when you are in that land of "can stop working" state, it's much easier to work and do all what you want knowing that you can stop at any time. It gives me lots of comfort and self-confidence .

But the question you are asking is to be answered only by you
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Old 10-16-2016, 07:02 PM   #7
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....Would we be crazy to just go enjoy life and keep up with the part-time stuff realizing that we wouldn't be making large amounts of money going forward? ....
No, it would not be crazy. I think the reality is that you have enough money to live comfortably for the rest of your lives. The real question is if you worked rather than played, would your life be better? If you had another million or two how would it change your life? If the answer is that it would not change your life, then why bother?
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Old 10-16-2016, 07:07 PM   #8
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You've got your freedom. Be free.

If free means it's rewarding to you to go start another company with all that entails, go for it.

If free means sleeping until noon and reading books the rest of the day, go for it.

My only suggestion would be to avoid jeopardizing your freedom by risking your wealth starting a new company. Time to play with other people's money or not at all.

Congrats.
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Old 10-16-2016, 07:43 PM   #9
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I would be gone...

Take the next year (or week) and mentally prepare. Once you have the mental preparation figured out, enjoy.
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Old 10-16-2016, 08:36 PM   #10
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You have essentially zero risk to just fully retire. Your savings and assets will cover all of your living expenses without much concern. The only decision is can you mentally handle being retired. It seems you want to work. That is OK, but you certainly do not have to by any measure. It is an emotional choice, not a financial choice for you to make.

I would be fully retired and doing whatever I want if I were in your shoes. I second the recommendation to maybe switch your allocation to be 65% equities and 35% bonds/fixed income. You need the extra inflation protection of higher equities given your age and projected 40+ years retirement.
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Old 10-16-2016, 09:23 PM   #11
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If your expenses are a good estimate, then you seem well positioned to do whatever you choose. You won't find many people on this forum who think someone shouldn't retire when they have the resources and want to retire. The freedom to pursue whatever interests you and work on only things you find rewarding is fantastic. But only you can decide if that is what you want. Some people love the thrill of building a business or the engagement that comes with work. But if the current environment is more frustrating than enjoyable, that may be your answer.

And welcome to the posting side of the forum!
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Old 10-16-2016, 09:53 PM   #12
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Retire while you can...meaning if you start another business you won't retire for a long time. Good luck with your decision.
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Old 10-17-2016, 07:53 AM   #13
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Since you have already won the life game, financially speaking, I would be concerned about you risking any significant portion of your personal capital to start another venture.

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Old 10-17-2016, 08:10 AM   #14
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What would be crazy is to not take advantage of the fine situation you have built for yourself. Pull the plug and move on to something new and enjoyable.
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Old 10-17-2016, 09:42 AM   #15
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Free advice is worth twice what you paid for it

As someone who is still in the sweatshop for about TMYs, my advice is that you would NOT be crazy to just go and enjoy life. You have enough resources to support ER.

That said, I agree with some of other posts which suggest it sounds as if what you enjoy in life is w*rking. Chacun a son gout.

You can estimate how much you enjoy w*rk by considering whether you would do it for free. (I'm not recommending you refuse the paycheck! Just go through the mental exercise.) If not, then there's your answer.

And welcome to the forum. You can see from my post count that I'm a newbie here myself.
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Old 10-17-2016, 11:43 AM   #16
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Originally Posted by j.dave View Post
Hi All - I've been on the forum for some time reading a whole bunch of threads. It seems like a great site. I'm 46 and DW is 45. We have about $4.6mm liquid split 35% equity/65% bonds/cash/cd's. We also have about $850k in home equity. We have no debt. We have no children.

I sold my company a few years back (4) and we relocated about a year ago to a more prosperous economic environment for the opportunities available. What I've found is a very different environment for entrepreneurs since going back to work. Since trying to go back into business about a year ago there is much more regulation, cost and unrealistic banking expectations that limit what true opportunities actually are. It just seems to me it is very hard to get compensated appropriately for the risk you'd have to take given the current environment. In addition, there's way too much cash chasing very few true opportunities.

Our projected annual expenses over the next 10 years are about $95/k per year. Some years less and some years more. $95k is the average including inflation and large purchases such as cars and home maintenance dollars set aside for roof, furnace, etc. It also includes ins premiums. Any HSA/deductible contributions come from some part time stuff my wife and I do.

Given that our WD Rate is about 2% and the economic realities of the environment today, I'm starting to think that our life should take a different path. We earned that money busting our humps and taking risks and somehow it worked out. We lived frugally compared to our incomes and managed to put ourselves in a comfortable spot.

Would we be crazy to just go enjoy life and keep up with the part-time stuff realizing that we wouldn't be making large amounts of money going forward? Or would we be better off trying to break through a very thick wall of what we see as a new paradigm in American economics?

We love where we live now and don't see ourselves moving anytime soon - so no large costs involved with that.

Thanks so much in advance for any advice.
I assume you have looked around this site, so you know what advice you will receive. You have essentially chosen your advice by picking where you ask.

That said, you don't sound eager to keep on keeping on, so if anyone is clear to retire you should be.

Ha
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Old 10-20-2016, 09:25 PM   #17
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You are set, a 2.5% withdrawal rate will get you through any financial crisis in modern history. I even think 3% is bullet proof if you are in low cost index funds. I'm at 3.39% with pure income but admit I worry some as well. I can always cut expenses though, like the country club, so I don't worry tremendously about it. Enjoy and don't worry would be my advice as long as you are invested properly.

Also, you do have too little in equities, I would be at least 65% equities, a total market index fund is good. I am 80% equities but at times 85%. You may actually be taking more risk being so heavily invested in bonds than a 50/50 bond stock portfolio due to interest rate and inflation risk.
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Old 10-20-2016, 10:21 PM   #18
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I'd suggest drilling into that 35% equities since that provides all of your inflation fighting power. Do you have only a few stocks, or actively managed funds (higher costs) or lower cost passively managed funds? A higher expense ratio can matter, especially when you're using the low end of equity exposure.

According to nest egg calculators I've used, about 1/3rd stocks provides enough inflation fighting power. Your allocation seems a bit close to the edge, but with a 2% withdrawal rate it has less significance. Consider boosting equities up just a little, if you can, in case your withdrawal rate is higher than planned.

It might be a good time to borrow or buy the book "Work Less, Live More" by Nolo Press. It covers some of the ideas you're mentioning about retiring versus working part time, and what's involved. And if you're reading forums but your wife isn't, a book can get you on the same page.
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