45 years old - 2.5% SWR - retire or not?

[MichaelB]

Quote:

Originally Posted by tomc5179 She's 46 and has been "fixed".

What was broken?

[teejayevans]

I would assume inflation rate on health Insurance of at least 10%, then redo your
numbers.

[Koolau]

RE: Vanguard and help moving funds. If you plan to move 100K or more, they will "hand hold" you up to a point using a single VG person. You still do most of the "work", but they'll help you know "what" to do. I found them helpful and friendly. Still, if you feel totally clueless about the process, you may have to keep calling or emailing your particular (forget what they call him/her) "personal guide?" for more help. Most of the folks on this forum (besides me) wouldn't need any help, but I'm not proud. If I need help, I'll ask.

I do think VG is a good choice because of their low cost and reasonably good customer service. Still, YMMV, so make your own choices on this one.

Good luck and I'd vote to go for it.

[obgyn65]

Hi Tom - I am also 45. There seems to be a consensus that 2.5% SWR is OK. The real question is: are you ready to quit your job (that what I ask myself every morning).

Quote:

Originally Posted by tomc5179 A quick poll - I'm 45 years old and figuring all expenses (basic living, health insurance, 10K replacement / repair fund) I'd have a 2.5% SWR on my 55/45 portfolio. Darned sick of my own business that I've been in for 25 years and would likely take a year or two or maybe more off and then either go to work part time for someone or start my own one man business. My quick question - Do it or don't?

[chinaco]

Quote:

Originally Posted by tomc5179 A quick poll - I'm 45 years old and figuring all expenses (basic living, health insurance, 10K replacement / repair fund) I'd have a 2.5% SWR on my 55/45 portfolio. Darned sick of my own business that I've been in for 25 years and would likely take a year or two or maybe more off and then either go to work part time for someone or start my own one man business. My quick question - Do it or don't?

I would recommend that you carefully study your expense needs (i.e., projections). Make sure you did not miss any major items. IOW will 2.5% cover it for the next 40+ years.


Depending on my mood over the years... I toyed with the idea of going earlier... but to do it I would balance the equation by adjusting lifestyle assumptions..... Bad days at w*rk.... do I really need that much? Good days at w*rk... I want to make sure we maintain lifestyle!


Frustrations aside.... I intend to maintain our lifestyle. We are not spendthrifts.... but I don't want to venture into possible "cat food" territory either...

[Rambler]

Tom, you're probably OK.

BTW, this thread is 2 months old, what did you decide to do?

R

[rescueme]

Maybe I'm a bit of a PIA, but why are you asking folks (including me) what you should do about your future?

If you have planned your "escape" and it is logical for your situation - your life, why do you need some unknown folks to give you "permission" to live your life in the way you want?

Heck, I didn't retire early (age 59) but I did retire earlier than those I "shared a cubicle" with.

However, I was aware of general "guidance" (such as 4%, although it doesn’t mean much in early retirement - see my other posts). The only person I discussed my options with was my DW. Her input and acceptance of my retirement was all that mattered.

Just my POV on your question.

[kyounge1956]

Quote:

Originally Posted by rescueme Maybe I'm a bit of a PIA, but why are you asking folks (including me) what you should do about your future? If you have planned your "escape" and it is logical for your situation - your life, why do you need some unknown folks to give you "permission" to live your life in the way you want? Heck, I didn't retire early (age 59) but I did retire earlier than those I "shared a cubicle" with. However, I was aware of general "guidance" (such as 4%, although it doesn’t mean much in early retirement - see my other posts). The only person I discussed my options with was my DW. Her input and acceptance of my retirement was all that mattered. Just my POV on your question.

I don't think that's necessarily what tomc is doing. Bouncing a question off a group of people will bring out related matters which the inquirer may not have taken into account. That's happening on this thread: did you remember health insurance? what if you get married/have children? is your budget realistic? and so on. I also find that asking questions like this can help clarify in my own mind what really is "the way I want". I ask a question and get a number of answers—I find myself agreeing with some of these, and disagreeing with others. People give reasons for their answers, which I find convincing—or not. And eventually, it becomes clear to me which way I want to go. That's not asking anyone's permission, it's just another way of gathering information about a decision.

I notice too that despite your POV, you don't hesitate to suggest very strongly to tomc that what he should do is make up his own mind without asking input from anyone else but his spouse. Fortunately, he doesn't need your permission to ask the rest of us what we think!

[haha]

Quote:

Originally Posted by tomc5179 My quick question - Do it or don't?

If you want to quit, you are in as good or better position to do it than most. I am almost 25 years older than you are, but I feel that I too am exposed to most or all of the things I will mention, as well as those that I won't. The only difference is you will be re-rolling for more years, while I already have 25 very benevolent years in my bag.

But one thing to know, we are not dealing here with risk, we are dealing with uncertainty. And these are two very different animals. With risk, we have some pretty good estimate of the mean and variability of whatever we are depending on. With uncertainty, who really knows? I believe that because we want very much to quit working, we over-rely on tools that may well be inadequate.

You are 45, that means you have 55 more years to what is likely your maximum age of 100. Your wife may have even more. The US could fall apart somewhere along the way. There could be a terrorist nuclear explosian in some US city. There could be a nuclear war between Israel and Iran. And there could be a whole lot of other bad surprises that I didn't mention, as well as a number of almost certainties that are not contained in FireCalc or any of the rest of the data based tools to estimate survivability. In order that I don't get people telling me "that couldn't happen...", I'll let you fill in your own favorite set of very likely negative changes that will be new for US investors, retirees, medical care consumers, etc.

Some of these things would bite you even if you were working. But I don't think it should be a big surprise to be told that an earned income stream is a great portfolio diversifier.

Ha

[ERD50]

Quote:

Originally Posted by haha But one thing to know, we are not dealing here with risk, we are dealing with uncertainty. .... Some of these things would bite you even if you were working. Ha

Good point. I've thought about that a few times. So, if some really, really bad thing happens to me, would it make any material difference if I had worked another 5 or 10 years? Probably not.

-ERD50

[tomc5179]

Quote:

Originally Posted by obgyn65 Hi Tom - I am also 45. There seems to be a consensus that 2.5% SWR is OK. The real question is: are you ready to quit your job (that what I ask myself every morning).

Hi Doc - You are exactly right. Since my original post, I have found that I've been left with some commercial real estate and farmland in a trust from a relative that has recently passed away. The tenants have been long term and appear to be pretty stable. Allowing for repairs, taxes, etc., on the properties, the net added income to me will drop my swr to under 2% now.

So, while I am extremely happy about this recent development and I think that this pretty well positions me to be as safe as safe can be before quitting my job, It does really boil down to familiarity and routine bring comfort to us. Not having the same daily routine will be a HUGE change.

I am still struggling with this. On the one hand, after 25+ years in construction, I have lost my passion for it and just don't enjoy it anymore. There have been so many changes in governmental / legal / insurance regulations that it has gotten downright ugly. It's like I heard someone else say - The terrorists really don't need to worry about killing us, we are doing a pretty fine job of that ourselves.

On the other hand, I will miss a few of the people I deal with routinely. But, I will have plenty of personal projects that have been sidelined that will keep me busy for a year or two. And, I'm physically healthy so there's no reason I couldn't go back to work if I do become bored eventually. I don't think I've felt this way since my first day of first grade at school. Just the fear of the unknown.

The bottom line is that I am going to try the retirement thing. I am currently wrapping up jobs now and not bidding any new ones. So, if everything goes according to schedule, I should be done with everything in a month or so.

Somewhat scary to think about the change, but I can't really imagine myself going on with the job when it just feels like beating my head against a brick wall everyday.

[obgyn65]

Thank you for your post Tom and for explaining why you are struggling with this decision. Although we do not work in the same fields, we are exactly the same age and it seems we have reached the same stage in our thinking and decision making process. Good luck to you.

Quote:

Originally Posted by tomc5179 I don't think I've felt this way since my first day of first grade at school. Just the fear of the unknown.

[explanade]

What is replacement/repair fund?

[ziggy29]

Quote:

Originally Posted by explanade What is replacement/repair fund?

Setting aside enough cash to pay for repairs and replacements -- new roof, new A/C unit, new car, major engine overhaul, that sort of thing.

In that sense, it could be really just a part of an overall "emergency fund," though these aren't really emergencies but inevitable financial hits ever few years that some choose to budget for.