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ER with young baby - about to talk to CFP
Old 03-24-2013, 02:43 PM   #1
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ER with young baby - about to talk to CFP

Dear All

First, I really want to thank you all of you who make this website the very best source of people with the same grand dream. I have been following on and off for many years. I come here to educate myself, come here to motivate myself, and come here to ensure myself. Embarrassingly, I just created my account and want to post something.

My wife and I, both 40 - have been LBYM all our life. We are lucky to share the same goal since we were younger which is to be FI.

We are around 5 years toward our scheduled FI date and recently just had a baby girl (5 months) old. While we are pretty conservative on budgeting (budget for more than we need), we plan to talk to one of the CFP to make sure our plan still approachable. After selecting a few good CFPs, the fee would be a one time $2,500-$3,000 and may be $400-$600 annual. I decided to check with all of us here first if it's worth a check up with professional.

Stat (combined)
-----
Home Asset : $325k (no mortgage left)
Retirement Investment: $225k
Cash Equivalent: $280k
Fixed Income(bond,etc) $950k
Equity $652k

Total NW $2,432k
Without Home $2,107k

Goal
-----
-Financial Independent by 45 - retired from MegaCorp and Medical Field
-We are both originally from Thailand. We also plan to move back to Thailand to take care of our aged parents and shift to help on (non-profit, social etc.)
-Or do the same plan in US for our daughter's better education with a couple trips back a year.
-Based on our family discussion, if we can make $80,000 annually from investment income (this is way more than we spend - 2 of us), we can be happily set ourselves free.
-Base on the grand scheme of what people talk about which is 4% safe withdraw rate(and we adjusted it to 3%), I will need about $2,100,000 in investment. I think we are on the right track to reach that goal by our due date.

Question
----------
-Most important thing, How can I budget for my kid? We do not plan to have more baby. We allow more budget than what we have spent and use 3% SWR to be conservative. Am I missing anything? Is 3% too aggressive for 40-45 years old FIRE?

-As we want our retirement fund sooner for ER, I have not been putting max. into 401/IRA (only as much as the company match). I could be wrong. Feel free to advise me on this.

-I have my investment in various places. Do you guys combine them into one place and withdraw from there? or I can withdraw from various place as a fixed%?

-Should I really go to CFP for these questions? and 10+hours of their time($250/ hour).

We just want to make sure we are on the right track here.
-------------------------------

Again, thank you everyone who making this forum the way it is.
Thank you all who FIREd for keep educating us.
Thank you all who are working toward this dream for walking together.

In the past 20 years in working toward FIRE, here is what I learn

FIRE = SAVING/WANT

2 ways to get to FIRE closer, 1. Increase your saving and 2. Decrease your "want" and try to desire what you already have. If you keep practicing of 1 and 2, things are getting closer very fast.

I didn't mean to type this long. Thank you for reading thru this line.
I really hope to contribute to the forum more.

Sincerely,
Saenar
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Old 03-24-2013, 03:03 PM   #2
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Saenar, welcome to the board! I love seeing "young" success stories like this. I won't comment on whether or not you're ready, but I'll say you're way WAY ahead of most people your age.

Have you run the numbers on FireCalc?


As for the financial planner, we used one recently, and it made me sleep better. She didn't tell me much I didn't know, but it was just reassuring to have a pro look over things. I'll probably use her again in 3-4 years, but not on an annual basis. My cost was much less than yours, but you may be in a high cost area.

We found ours here:
Fee-Only Financial Advisors Home - NAPFA - The National Association of Personal Financial Advisors

Again, you've done very well for yourselves. Best of luck to you!
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Old 03-24-2013, 03:07 PM   #3
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Quote:
Originally Posted by saenar View Post
In the past 20 years in working toward FIRE, here is what I learn

FIRE = SAVING/WANT

2 ways to get to FIRE closer, 1. Increase your saving and 2. Decrease your "want" and try to desire what you already have. If you keep practicing of 1 and 2, things are getting closer very fast.
Very true, and very well stated. Congratulations, you have already accomplished quite a bit. I think you have a good idea of what you want your FIREd life to be, and you are clearly capable of good financial management on your own. If you do choose to hire a CFP, it should be a fee only one (which it sounds like they are), and I think an initial analysis of your retirement plan should be sufficient. I don't think you'll need the extra $400 / yr or whatever for an annual check up after that. If you have significant assets at some companies (eg Vanguard, Fidelity) they will provide this for free or reduced cost.

Whatever you do, congrats again on having done very well so far, and enjoy the new baby girl
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Old 03-24-2013, 03:21 PM   #4
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Originally Posted by SumDay View Post
Saenar, welcome to the board! I love seeing "young" success stories like this. I won't comment on whether or not you're ready, but I'll say you're way WAY ahead of most people your age.

Have you run the numbers on FireCalc?


As for the financial planner, we used one recently, and it made me sleep better. She didn't tell me much I didn't know, but it was just reassuring to have a pro look over things. I'll probably use her again in 3-4 years, but not on an annual basis. My cost was much less than yours, but you may be in a high cost area.

We found ours here:
Fee-Only Financial Advisors Home - NAPFA - The National Association of Personal Financial Advisors

Again, you've done very well for yourselves. Best of luck to you!
Sumday - thank you so much for your quick response.

Yes, I did check FireCalc and other sources. It's hard to determine when the baby is in the picture as well.

Thanks for your link to NAPFA - I did select one of those list. I am in the bay area. Perhaps, I will try to tell him that I may not need the many hours.
Do you show your CFP all your current situation before the fee got determined?

Thank you
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Old 03-24-2013, 03:24 PM   #5
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Caninelover

Thank you for your question response and your compliment. How do you plan / how do you manage to withdraw on regular basis? you plan to put all the money into one company and withdraw from there?
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Old 03-24-2013, 03:29 PM   #6
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My advice would be to hang around here and at Bogleheads for a while and read a few books from the list below before you go paying a CFP. You are smarter than you think you are and most of what you are paying for is a warm fuzzy feeling.


Investment Books
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Old 03-24-2013, 03:44 PM   #7
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Originally Posted by saenar View Post
Caninelover

Thank you for your question response and your compliment. How do you plan / how do you manage to withdraw on regular basis? you plan to put all the money into one company and withdraw from there?
Hi saenar,

We are about the same age but my net worth is much lower, ~$600k, and my FIRE age goal is farther away at 55, so I am really still in the accumulation stage. I would probably not feel comfortable with putting all assets in one company, I would choose the right company for the asset, but if you have a few thousand in your accounts at either Vanguard or Fidelity, they will provide a financial plan with a CFP once a year to help you iron out the details.

Having said that, I currently plan on my own, but as I get closer to FIRE (probably around age 50 or so) I would hire a fee-only CFP to sit down with and do a reality check, and to work out the details of withdrawal.
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Old 03-24-2013, 04:18 PM   #8
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I am the same age as you and we have a 2 year old child. We plan to retire or go into semi-retirement in 5 years or so as well. As for how much a child would cost, it is high if both you and your wife are working like us. We pretty much have to pay for a live in nanny, her food, and now nursery school which is quite expensive in our area. Once he goes to elementary school it will be a lot cheaper for us since he will be going to a good public school and I guess we have to pay for various classes (like weekend soccer or martial arts etc etc.) But by then most of the cost will be our time which would be cheap since we will have retired. So main driver of costs for a young child will really be nanny (which can be avoided as soon as you retire) and nursery school (which would go away as a cost as soon as the child goes to real school.)
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Old 03-24-2013, 04:56 PM   #9
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Quote:
Do you show your CFP all your current situation before the fee got determined?
She sent us a questionnaire to complete before our first meeting, and then she quoted us the fee. When we had our "results" meeting (which took 3 hours) she said that she has a set fee for this plan, but adjusts it if someone has a more complex situation. Ours was a little more complicated due to real estate, but it still fit within her normal fee.

We are ~5 years away from retiring, so that's why we chose to do this. Plus, DH just had taken his pension as a lump sum (rolled into his 401(k)), so we wanted to make sure we were doing the right thing with that new money.
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Old 03-24-2013, 05:48 PM   #10
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Originally Posted by kmt1972 View Post
I am the same age as you and we have a 2 year old child. We plan to retire or go into semi-retirement in 5 years or so as well. As for how much a child would cost, it is high if both you and your wife are working like us. We pretty much have to pay for a live in nanny, her food, and now nursery school which is quite expensive in our area. Once he goes to elementary school it will be a lot cheaper for us since he will be going to a good public school and I guess we have to pay for various classes (like weekend soccer or martial arts etc etc.) But by then most of the cost will be our time which would be cheap since we will have retired. So main driver of costs for a young child will really be nanny (which can be avoided as soon as you retire) and nursery school (which would go away as a cost as soon as the child goes to real school.)
Thanks much kmt1972. Very glad to know someone in the similar situation. Currently my wife is on maternity leave but we have been talking about childcare quite a lot. Thanks for your info on major cost of Nanny. We hope to be able spend lots of good time with her during our SER too. See you around!!
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Old 03-24-2013, 05:50 PM   #11
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[QUOTE="caninelover;1299821"]

Hi saenar,

Thanks again Caninelover. I may have to look into them now. I have some investment with them and will check with them
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Old 03-24-2013, 06:03 PM   #12
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My advice would be to hang around here and at Bogleheads for a while and read a few books from the list below before you go paying a CFP. You are smarter than you think you are and most of what you are paying for is a warm fuzzy feeling.

Investment Books
Thanks travelover. I will read more on the link you provided and by the way, donald duck is my fav. Disney character.
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Old 03-24-2013, 06:44 PM   #13
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Given the complexities of your situation, primarily your plans to move to and/or spend a lot of Thailand, and you having a kid in retirement, I think going to a CFP makes a lot of sense.

But only if you get a CFP with specialized knowledge, in your case you really want somebody who is familiar with foreign investments, tax rules etc. ideally in Thailand.

My guess is you probably know enough and generally investment and safe withdrawals rate. and/or can pick up it by reading this forum or Bogleheads.

What you really need to know is if you earn X dollars, in Thailand, because of work, rental property, foreign investment, it will result in Y dollars in additional taxes,either here or Thailand. Plus tricks like you can put money in Thailand educational IRA (I have no idea if these exist) and then it won't be counted for financial aid in the US.
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Old 03-24-2013, 08:43 PM   #14
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I haven't found much a Financial Planner added that a little bogleheads.org reading didn't do better. The main problem is that by the time you know enough to tell a salesman from a real Financial Planner, you know enough to do it yourself.

If you find comfort in talking to someone who may or may not know what they are talking about and will likely try to charge you thousands and possibly steer you to make poor choices that benefit the planner, you can get that readily enough. Most of them are good talkers, so you might feel better after having a discussion. But even that's not too likely, since most planners get paid more when you "take action" that likely involves commissions and sales of products, so mostly you will find yourself steered towards something like that.
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Old 03-25-2013, 12:00 AM   #15
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Given the complexities of your situation, primarily your plans to move to and/or spend a lot of Thailand, and you having a kid in retirement, I think going to a CFP makes a lot of sense.

But only if you get a CFP with specialized knowledge, in your case you really want somebody who is familiar with foreign investments, tax rules etc. ideally in Thailand.
Thanks much Clifp - I never thought about the CFP that specialize in foreign investment. I still have questions on either one investment house or multiple? Perhaps, I should create a new thread about that. I may have to be more selective on CFP. Thanks again.
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Old 03-25-2013, 12:02 AM   #16
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Congratulations! You are doing very well and your plan looks pretty good to me. In my opinion you are too heavy in fixed income and cash and need to move some of that to equities. As has already been said you will eventually need the services of a CFP who has knowledge about expatriation and Thailand economic issues. I would hold off on the CFP for now and do some study of the good basic stuff on bogleheads for awhile. Again you are doing very well.
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Old 03-25-2013, 12:05 AM   #17
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Thanks everyone for all the answer here. It seems like I will have more homework to do.

1. Read more on Bogleheads.
2. If still in doubt, I should be more selective on CFP who also has some knowledge on foreign investment.
3. I still want to get an idea of single investment house vs. multiple. I will try to search the forum first and may post a new thread for this purpose.

Thank you very much.
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Old 03-25-2013, 04:39 AM   #18
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Question
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-Most important thing, How can I budget for my kid?

Like you plan to do, I'm retiring with a pre-schooler. In my case I figure there are two very expensive periods in his life - 1st is when he is in a private preschool with a nanny covering the post-school day (~50k a year between the two) and the second is in college.

I'm retiring at the tail end of his expensive preschool years, so that mostly is behind us. I also fully funded a 529 for him which I consider 'off balance sheet'. That takes care the large expenses, what's left are lives normal expenses and things that are mildly expensive but fit well within our operating budget (classes, extracurriculars, braces, etc).

Fully funding the 529 is to me like paying off the mortgage early - it may not be the wisest financial decision in all cases, but worth it to me for the piece of mind.
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