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Old 07-19-2010, 08:57 PM   #21
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Having been in a situation where my job was very stale and unstimulating, I concluded that I wasn't (financially) ready for retirement and opted to switch jobs. While the job hasn't changed that much and I still have no desire to extend my working career any longer than I have to, the change was a good thing - a new environment, new colleagues etc have all combined to give me a bit more stimulation.

If you are not quite there in terms of finances, think about a change in job.

Some companies offer sabaticals for long serving employees which may provide a welcome respite from the daily grind.

For OP's husband, is telecommuting (for even one day a week) an option?
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Old 07-19-2010, 09:13 PM   #22
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Thanks for all the advice, except for TSTurbo, obviously he or she has issues that are beyond this board to solve.

I actually have private insurance (my small employer buys policies for each employee) and my child is on it so I can continue to pay for it after I leave (and it covers my son until he is 30 if I keep paying, it's BC/BS). However, I have seen projections that show an increase of 80% for private insurance. So my payments would go way north of the $300 a month I'm paying now.

My husband is stuck with downtown unless he wants to quit. That is why we are giving it serious consideration. But we could probably suck it up for the $2 mil if that would do it. If we pay off the mortgage the budget would drop about $12K a year.

The toughest part as a parent is the child factor. My son is the joy of my life and the best decision we ever made. With that being said, if it was my husband and I we could retire today and make ends meet, no doubt. Time for coupon clipping, happy hours for dinner out, board games (our favorite hobby), netflix, etc. But with a child you have alot of knowable and unknowable expenses (trumpet lesson, golf lessons, swimming lesson, soccer annual fees, eventually weddings, grad school, etc.). That puts extra pressure on to build the nest egg.
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4% rule
Old 07-19-2010, 09:27 PM   #23
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4% rule

I'm amazed at how so many on this board adhere to this rule of dumb (as Kotlikoff calls it). Taking 5% or less will take care of your needs. If inflation is high you will lose out. But, won't people who work lose out? The data I've seen from the 1970s do not indicate that wages increased 10% in one year when we had 10% inflation. One must adjust to the situation. According to Stanley from the Millionaire books, fewer than 5 out of 100 households in the US have $1,000,000 of investable assets. Congratulations on accumulating such a large sum at such an early age! Of course you can retire with this sum and live a good life.
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Old 07-19-2010, 09:47 PM   #24
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The rule of thumb is 4%, and that is for someone in their late 50s-late 60s. 5% has a very low chance of sustainability, even 4% is somewhat borderline, for someone in their late 40s. That is why they are not quite there yet.

As for wage income growth not keeping up with inflation, perhaps that may occur, but how is that relevant to the OP. There has been deflation for the past couple years and there is still some deflation even now. In addition, the OP only has 4-5 years of work left, so inflation outpacing wage increases will make a negligible difference. Hyperinflation would need to occur, right now, and for the next few years, for there to be a significant impact.
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Old 07-19-2010, 09:49 PM   #25
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I'm amazed at how so many on this board adhere to this rule of dumb (as Kotlikoff calls it). Taking 5% or less will take care of your needs. If inflation is high you will lose out. But, won't people who work lose out? The data I've seen from the 1970s do not indicate that wages increased 10% in one year when we had 10% inflation. One must adjust to the situation. According to Stanley from the Millionaire books, fewer than 5 out of 100 households in the US have $1,000,000 of investable assets. Congratulations on accumulating such a large sum at such an early age! Of course you can retire with this sum and live a good life.
Yes, absolutely a lot (most) people do retire with a lot less than than OP has managed to save BUT:

1. many of them rely on SS, pensions or similar to support themselves. Without these you need a lot more; and

2. how much you need depends on (primarily) life expectancy and expenses. The younger you retire and the higher your expenses the more you need;

3. the longer your time horizon, the greater the uncertainty - which is another way of saying that more is needed to give an adequate margin of safety.
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Old 07-19-2010, 09:51 PM   #26
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Would you say that if there were perhaps liability attached to being wrong? Or if this couple were responsible for raising your child?

Just wondering, as there is obviously no way that you or anyone else could know this. A couple this young with a child should see what FireCalc says- my guess is that there will be many failures, and this is just with the known knowns factored in.

You sound like a famous early poster who I have heard flamed out.

Ha
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Old 07-19-2010, 10:24 PM   #27
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The toughest part as a parent is the child factor. My son is the joy of my life and the best decision we ever made. With that being said, if it was my husband and I we could retire today and make ends meet, no doubt. Time for coupon clipping, happy hours for dinner out, board games (our favorite hobby), netflix, etc. But with a child you have alot of knowable and unknowable expenses (trumpet lesson, golf lessons, swimming lesson, soccer annual fees, eventually weddings, grad school, etc.). That puts extra pressure on to build the nest egg.
This IMO is key. If it were just you and DH I would say go for it and be prepared to be flexible along the way. But with your current situation I would err on the side of safety. I would be comfortable with 1.75 to 2 mil and a paid off home. I would invest at a basic 50/50 allocation and fine tune as needed. With this plan you can see light at the end, and feel good about your responsibility as a parent. Good luck.
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Old 07-20-2010, 07:17 AM   #28
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But with a child you have alot of knowable and unknowable expenses (trumpet lesson, golf lessons, swimming lesson, soccer annual fees, eventually weddings, grad school, etc.).
Wow, talk about rising expectations! Neither I nor DW had any of that growing up, nor did we expect it. My parents paid my tuition for two years of community college, I paid the rest for the B.S.. DW didn't even get that, she paid for all of her own tuition. Both of us paid for our own cars to commute to school with.

Trumpet and golf lessons? I was told I could have something like that if I earned the money to pay for it myself.

I paid for my own weddings (yes, plural) and didn't expect anyone else to.

I don't mean to come across as a curmudgeon, but with my background I don't understand where the sense of entitlement comes from. Compared to some others on this board DW and I had it good because we had indoor plumbing and never dumpster-dove for food.
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Old 07-20-2010, 07:19 AM   #29
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Harsh-no, reality-yes. Did you all play on sports teams growing up where they didn't keep score?
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Old 07-20-2010, 07:59 AM   #30
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Queen,
I have a slightly different take on your SWR. I believe that Social Security will be available for the forseeable future and should be factored into the income stream (maybe 100% of what SS Admin says now, maybe 90%? Let's say $30k. Additionally Medicare will kick in at 65). Based on your projected spending of $75k, I'd say your average withdrawl rate from now until you are 90 years old would be 4%. That is $75k until you are 67, then $45k until you are 90. (Then zero). That is 5% for the first half of freedom and 3% for the second half.
I believe that your success rate from Firecalc would be in the 80% range. For me that is a bit tight. I'd probably target a savings amount, say $1.7M and pull the cord then. However, if you can't stand it any longer... part time work or reduced spending can also fill the gap for safety.

Good luck!
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Old 07-20-2010, 08:04 AM   #31
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Wow, talk about rising expectations! Neither I nor DW had any of that growing up, nor did we expect it. My parents paid my tuition for two years of community college, I paid the rest for the B.S.. DW didn't even get that, she paid for all of her own tuition. Both of us paid for our own cars to commute to school with.

Trumpet and golf lessons? I was told I could have something like that if I earned the money to pay for it myself.

I paid for my own weddings (yes, plural) and didn't expect anyone else to.

I don't mean to come across as a curmudgeon, but with my background I don't understand where the sense of entitlement comes from. Compared to some others on this board DW and I had it good because we had indoor plumbing and never dumpster-dove for food.
It's quite a different world today--and yes your curmudgeon certificate has been stamped and updated for two more years

Like probably most others who post here we never had the above luxuries growing up, but nobody else did either--the upper class luxuries hadn't filtered down to what is the middle class today and I don't know that my family would have been considered middle class anyway. My older sister and I dropped out of Girl Scouts because the 10 cents a week dues were an outspoken issue in our slightly dysfunctional and financially strapped family. Our kids, on the other hand?

I think QueenM's beloved 12-year-old is a lucky child, and doubt that she and her DH begrudge one penny they spend on him.
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Old 07-20-2010, 08:04 AM   #32
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QueenM,

No matter what else you do, I suggest that you pay off the house right now.

Then, you might consider partial steps.
A) Suppose one of you stopped working. It sounds as if you would be the best candidate. Consider that this might be stressful to your DH, though. You might be able to get a lesser job (or make your own), perhaps part-time.
B) You both could quit and get lesser jobs closer in (get the jobs first, then quit).

Anything you do is going to require major readjustment in your lives. Are you prepared for the impact? Talk it through, all the details. Make a list of pros and cons for each scenario and agree on them together. Make it real.

Considering how young you are, the 3.5% SWR should be an absolute. Add that to 72T withdrawals from the 401k's and see how you could live on that.

My wife and I could easily live on your assets, but we are comfortable with major relocation if necessary. It does not sound as if you are ready for that.

Once you have done your homework, you would be in an ideal position to negotiate with your present employer for a less stressful situation, if that is possible. If not, you know you can walk away.

Best of luck.
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Old 07-20-2010, 09:32 AM   #33
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QueenM,
FYI. I ran Firecalc based on the inputs you discussed and a $60k average withdrawl rate (includes SS). Result 87% success rate. Not bad. You are definitely close!
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Old 07-20-2010, 12:18 PM   #34
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A couple of thoughts:

Do it! Pay off the house and retire. Even if you need to work part time to make ends meet while the rugrat is at home, do it. Better than killing yourselves slowly doing what you are doing now. Life is short.

Consider that when your child leaves, your expenses will be significantly reduced. Aso consider the money you spend to go to work. I had an hour commute (all highway) and a car that got 32 MPG and I was spending $200 a month in fuel!! Not to mention lunches, clothing, whatever. I don't know where you got the $75,000 number, but I bet you could find plenty of way to whittle that down with out really sacrificing.

Even if you have to work for a time to build you nest egg or supplement your income, you could be doing it part-time doing something less stressful and maybe something you even like. Not to mention, I bet your kid would love to have both of you around (though unlikely to express it).

Run the numbers, re-evaluate your spending and make a plan and do it.
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Old 07-20-2010, 02:22 PM   #35
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Thanks for all the advice, except for TSTurbo, obviously he or she has issues that are beyond this board to solve.
Actually, TSTurbo probably came up with the most valuable advice to you.

As one of my best managers I ever had said to me, "Sometimes the best thing you can do for somebody is give them a swift kick in the butt."

Think about "what if's" carefully. Want to know harsh?
Think about what if you retire at 45 with your current level of assets/expenses......but then run out of money in 10 years and have to try to get job(s) at age 55. Every time we go to a grocery store or Walmart, we look at each other and think how glad we are that we don't have to be working there. Most of the clerks & greeters are 65+ years old.

Jobs stressful? Join the club.

Twelve year old kid, means you have 5-6 years to go until college. What is that gonna cost? Probably more by then that you expect. Good luck on financial aid---when they see your $1M-$2M in savings, they'll be telling you that you should *supply* financial aid rather than receive it.
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Old 07-20-2010, 07:30 PM   #36
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QueenM what part of the country do you live in? Sounds like a city with a lower cost of living would really help you out and make your dream come true.
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Old 07-20-2010, 08:18 PM   #37
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We are on the let you kid(s) pay for their own school bandwagon. We did the pre-paid tuition thing and it's fairly in expensive considering (about $110 a month total for two kids). Other than that our kids are on their own. Why should an adult (your 18 year old offspring) have their aging parents, who should be retired and sipping drinks on some beach, instead slaving away to cover the costs of their education? I mean college isn't exactly tough. Ya, a lot of studying, but it ain't like a real job by any means. If the only thing standing between you and FIRE is funding junior's college expenses, maybe you should reevaluate. Loans, grants, scholarships, part-time jobs, summer internships, military, maybe even work for a few years and save (gasp!!), their are thousands of ways to pay for college without mom and dad slaving away their golden years while you do beer bongs and find yourself.
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Old 07-20-2010, 08:41 PM   #38
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The toughest part as a parent is the child factor. My son is the joy of my life and the best decision we ever made. With that being said, if it was my husband and I we could retire today and make ends meet, no doubt. Time for coupon clipping, happy hours for dinner out, board games (our favorite hobby), netflix, etc. But with a child you have alot of knowable and unknowable expenses (trumpet lesson, golf lessons, swimming lesson, soccer annual fees, eventually weddings, grad school, etc.). That puts extra pressure on to build the nest egg.
It is tough. However, DH retired last month (he is 62) and I semi-retired a few months ago (still work very part time). We have children ages 13, 16 and 19.

One of the major factors was thinking about what is fair for our children. We are aware of the fact that we chose to have children at somewhat later than usual (I first married in my late 30s).

We also thought about the providing of the upper middle class amenities to kids. Like Walt mentioned, I somehow managed to grow up without most of those things. I did have piano lessons and some swimming lessons. I paid for my wedding. My parents did pay for my graduate school although I certainly think they had no obligation to do so. That said, I attended state schools for college at a time when they were very inexpensive. I lived at home until I received my BA as well.

So, I don't feel that kids necessarily have to have all those things. We've paid for some but feel it is also important for kids to learn the value and cost of things. So we have paid for our son's karate class but now that he wants to take guitar lessons he has been told that he will need to get a job or save up to pay for them. We would have felt the same way if we were still working full time. We have offered to pay for state university, but not grad school. I'm not sure that we would do our kids any favor to pay for all that.
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Old 07-21-2010, 09:14 AM   #39
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If safety is the main criterion, then definitely save more. In the grand scheme though five more years in a situation you do not enjoy is a significant price (hmmm....10-20% of what may be your best years with good health). You have around 6 more years with your child at home -- what will those years look like with your child if you quit versus if you stay on? 5% withdraws might give you a 75%-80% success rate, but if you trim spending in bad years and/or work a little over the years at something you enjoy your success rate is easily as good as a static 4% SWR. Nothing in life is static though....if you can enjoy the process with the apparent unknowns (the unapparent unknowns will be there either way :-)) then given you are relatively secure I'd make the change now and figure out the rest over the next 5 years. Of course there is middle ground too.....changing jobs, working part time, one spouse quitting (and offloading the other), taking a sabbatical for a few years. Best of luck!
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Old 07-21-2010, 10:15 AM   #40
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Thanks for all the advice, except for TSTurbo, obviously he or she has issues that are beyond this board to solve.
Actually, I fully agree with TSTurbo's comments as they applied to my own life, before retirement.

There's more than one of us who have been (and still are) having "life challenges", but we are still in the ring, fighting.

One suggestion; have you considered that one of you (quite possibly your DH) leaves their job and takes a "time out"?

That would relieve some of the assumed pressure (such as the commute) plus give you an opportunity to live on a reduced salary, without going "all in".

My own take is at this time you are being driven by emotions, and I understand completely (been there, done that). However in today's employment market the odds are against you to regain a job at your former salary and level of responsibility, based upon your age and willingness to just leave the workforce for the reasons you stated, if things don't turn out.

Anyway, you asked the question. If you don't like my answer? Well, remember the old saying (e.g. if you don't like the answer, don't ask the question)...
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