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Old 04-09-2008, 11:58 AM   #101
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One question -- does everyone agree with Nords that 2% SWR is too conservative and that 3% is fine, even if you are looking at the possibility of 50+ years in retirement? Thanks!
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Old 04-09-2008, 12:08 PM   #102
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One question -- does everyone agree with Nords that 2% SWR is too conservative and that 3% is fine, even if you are looking at the possibility of 50+ years in retirement? Thanks!
Naturally, that would depend on your asset allocation. I think that if you had a 60/40 (equities/fixed) AA, 3% would probably be all right but that is IF past market conditions are assumed to continue into the future.

In other words, nobody knows but you will probably be just fine with 3%. I would strongly urge you to try using the Firecalc calculator as a double check (link at the bottom of this page).

I will probably use a lower SWR than that, because (1) I'm not so sure that the assumption that past conditions are indicative of future conditions is valid, because (2) my asset allocation is more conservative than that, and because (3) I can.
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Old 04-09-2008, 12:13 PM   #103
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To me it depends on how sure you are of your expenses as much as inflation and returns.

Got medical covered? If not, it's tough to project for 50 years.

Got kids? An Ivy League education costs a lot more than a state public college. If you budgeted for the first, you're good. But what about advanced degrees, if you want to help them? I know there are people who say let them take care of themselves, but I'd like my daughter to start her career without school debts, and hopefully she'll work on her own FIRE plan.

Family situations? Any family you might feel obliged or want to help care for?

I'm currently looking for about a 2.5% SWR for my own comfort level. I'm 46 now, and may pull the trigger this fall.
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Old 04-09-2008, 12:16 PM   #104
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Running bum, Thanks. No kids, so no college expenses to pay for. Probably no family members who need financial help. Health insurance is a big unknown. I may be able to continue on an expensive group plan or DH may get access to group plan if he continues at his new job for a long enough period of time. Neither option is definite, so we could be on our own for health insurance and that is one of my concerns. Thanks!
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Old 04-09-2008, 12:18 PM   #105
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Running bum, Ivy League colleges often have the best financial aid and now offer aid with no student loans required -- all grants. So ironically they can be the cheapest places to go to college! I went to one and it cost less than my state university.
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Old 04-09-2008, 12:23 PM   #106
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Running bum, Ivy League colleges often have the best financial aid and now offer aid with no student loans required -- all grants. So ironically they can be the cheapest places to go to college! I went to one and it cost less than my state university.
That's true, so use a college with a $40K+ annual bill that offers aid only based on need, which many of us with a very nice nestegg won't have a chance of getting.
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Old 04-09-2008, 12:29 PM   #107
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Running bum, Ivy League colleges often have the best financial aid and now offer aid with no student loans required -- all grants. So ironically they can be the cheapest places to go to college! I went to one and it cost less than my state university.
So true. Also, grad schools generally provide assistantships for their grad students that include tuition and a small stipend. In my department, 100% had their tuition and expenses paid for. Depending on their qualifications some had to work part time (teaching labs and such), some didn't, and some were paid for doing research that became their doctoral research. I taught and worked in the departmental library for my M.S. assistantships, and had a research assistantship doing my own dissertation research throughout my Ph.D. studies.

In other words, if you are at least reasonably qualified you don't pay THEM to attend grad school... they pay YOU.
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Old 04-09-2008, 05:15 PM   #108
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Great thread with great tangents - hoping, to me it wasn't a money issue, it was a relationship and control issue. I work with many MDs and it is truly a 'profession' that is a way of life. Many MDs never retire, they just adjust their exposure. True your DH may know you well enough to say you are too young to 'retire', but retirement can mean many things and we can gain pleasure and get satisfaction in life from many things---not just 'paid' work.

Your issue was the classic for money or love question - glad to hear it's worked out. I'll be in the same boat - my husband is going to Europe early and I'm going to have to unravel a few things before I join him. It's not convenient and not necessarily the best thing financially, but to me, based on our previous agreements and my previous marriage experience, being geographically co-located with my spouse has a higher priority than earning lots of money and living apart. I value my relationship with him such that I am willing to make changes in my career/job to accomodate that. I value the relationship because of him - couldn't say that nor did I act in that way with previous husband.

Thanks for posing the question - brought out a great discussion.
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Old 04-09-2008, 05:23 PM   #109
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deserat, you are exactly right, it is a relationship and control issue as much as a financial one. I have been the primary breadwinner and the more stable one financially. He was in school, earning almost nothing, for many years while I was working at the same job. So the idea of him being the major breadwinner is going to be completely new for us and could change the power balance in the relationship. I think we are strong enough as a couple to handle being apart, but we did that before for a number of years and I am not eager to return to that lifestyle, esp. not cross-country. At the same time, I don't want to regret giving up a once in a lifetime position (at least financially) and blame him for that. So, my compromise is that I will move if I get a new job I like. If I don't, then I will stay until I can no longer stand being apart (which probably won't be more than 3-6 months, tops).
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Old 04-09-2008, 06:22 PM   #110
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.. Ivy League colleges often have the best financial aid and now offer aid with no student loans required -- all grants. So ironically they can be the cheapest places to go to college! I went to one and it cost less than my state university.
The cost of attending Ivies depends on parent's assets and income. Our expected parent contribution is $65,000 per year. That means that we have to pay for the entire cost. For most people, these schools , as you said, offer generous financial aids in form of grants. At Harvard, the cost is free if parent's income is below $60K or 10% of income for those with higher income but not significant financial assets. Overall, it is a great deal for most families -- thanks to a handful of rich and generous alumnae that have contributed heavily into the endowment fund of their choice.
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Old 04-09-2008, 09:10 PM   #111
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One question -- does everyone agree with Nords that 2% SWR is too conservative and that 3% is fine, even if you are looking at the possibility of 50+ years in retirement? Thanks!
I am planning on a 3% SWR rate starting in a couple of years. However, I do have fat in my expenses and if things go pear shaped then I can cut back on lifestyle very easily. Like Nords I have a pension so am not wholly dependant of savings and SS.
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Old 04-11-2008, 10:00 AM   #112
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Ok everyone, one more question. There is a chance (slight) that I may be able to stay at my current position, work 1/2 time, and commute back and forth (cross-country). Is that a crazy idea? $ will be good, but the stress of commuting might be too much. Alternative is significantly less $ but no commuting. Thanks.
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Old 04-11-2008, 05:16 PM   #113
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Ok everyone, one more question. There is a chance (slight) that I may be able to stay at my current position, work 1/2 time, and commute back and forth (cross-country). Is that a crazy idea? $ will be good, but the stress of commuting might be too much. Alternative is significantly less $ but no commuting. Thanks.
I've done the commuting thing twice in my life, first time for 6 months, 2nd time for 5 months, during a period when my kids were young (ages 2&4, then 4&6).

Left early Monday, returned late Friday. It SUCKED and I hated it but the end results were good and I don't regret my decisions. I think it is a very personal thing but if it is for a short time and your marriage is solid then you could give it a shot.
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Old 04-11-2008, 05:44 PM   #114
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I would say try it for 6 months and see how you like it - commuting like that can be very draining. Some of the comforts of home can't be planned as you are traveling a lot. It is also expensive - cost out what it would take to do that, although based on the $100K a month, it is probably moot.

Heck, I hate commuting 40 miles in the Bay Area! :-)
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Old 04-11-2008, 05:58 PM   #115
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Ok everyone, one more question. There is a chance (slight) that I may be able to stay at my current position, work 1/2 time, and commute back and forth (cross-country). Is that a crazy idea? $ will be good, but the stress of commuting might be too much. Alternative is significantly less $ but no commuting. Thanks.
If you REALLY want to work, it sounds like the best of both worlds to me. If you're job has you travelling much at all now, then there really wouldn't be much difference, would there? I especially like that idea if your new job on the west coast would involve travel.

BTW, we are planning a 3% SWR, like Alan, but do not have a pension or medical, and planning it to start around 48 or 49 years old. We are in the west but not on the coast. Our expense budget at that 3% SWR level is pretty cushy, with a good portion of travel, hobby, and spending money, as well as conservative estimates on most everything else. I think you could do it on 3%. That said, I had been planning on 2.5-2.75% until the recent roller coaster ride began, and if there is any way we can get back there before ER, we will, even if it means 1 more year.

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Old 04-11-2008, 07:23 PM   #116
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Hmm, first of all I liked it when we didn't know you were in law because I was imaging you were Katie Couric or maybe Julia Roberts or Carly Fiorina (because I have no life) but you're probably cooler than them anyway.

As someone who worked half time for a fraction of the dough but without the commute I say don't do it. You could easily work much more than half time and have the stress of commuting. Hard to let those deadlines go, not take the calls, not check for progress while you're not there. Hard on your personal relationships, too. But it is one solution. Is there a possibility of being bicoastal--having an office in both places?
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Old 04-12-2008, 01:39 AM   #117
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One question -- does everyone agree with Nords that 2% SWR is too conservative and that 3% is fine, even if you are looking at the possibility of 50+ years in retirement? Thanks!
Maybe I've been studying value investing and The Intelligent Investor by Benjamin Graham for too long, but having a 50% margin of safety is not necessarily a bad thing.

I did my FIRE when I achieved financial freedom based on a 4% safe withdrawal rate (ignoring any future social security and medicare benefits I might get). So in theory, I don't ever have to work again.

But I consider myself to be in early semi-retirement. I still take on work assignments from time to time (I work as a contractor through a temporary help agency), but I'm able now to be very selective in terms of the work assignments I'm willing to accept. If there is something about a particular opportunity I don't like, I can afford not to accept it and instead wait for a better opportunity to come along.

I end up with a lot of downtime as a result, but I'm happy about that (since it gives me the time I need to work on other projects). But the occasional contract brings in additional earned income that allows me not to have to draw on my investments to pay living expenses. This earned income also qualifies me to make my annual IRA contribution (which helps by being able to compound returns in a tax-advantaged account).

My suggestion is to get your financial ducks in a row while you are still working (i.e., get rid of debt, build up cash reserves, and so forth). Then when you pull the trigger and FIRE, you will be in a better position financially. Also, don't be afraid to look at a new career of some sort for the new experiences, relationships, and occasional earned income to reduce the financial pressure on your investments (because you never know what the future will bring, which is why a margin of safety [or fallback position] is so important to have).

Being early semi-retired, in other words, gives you the power of choice in terms of what you do with your time. You can even afford to get up in the morning (or afternoon) after you have finished sleeping rather than getting up based on what the face of a clock shows.
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Old 04-12-2008, 01:17 PM   #118
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One question -- does everyone agree with Nords that 2% SWR is too conservative and that 3% is fine, even if you are looking at the possibility of 50+ years in retirement? Thanks!
You realize that it doesn't matter what I think, and that you have to live with both the financial (mathematical) & emotional (sleep-at-night) consequences of your decision?

You may be struggling with either "just one more year" syndrome or perhaps you're more interested in a "Work Less, Live More" semi-early retirement. Either way you're going to have a tough time doing it by opinion polls...
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Old 04-18-2008, 06:24 PM   #119
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Everyone on the board has been extremely helpful, and I thank you again for all of the advice. I now have to make a decision quickly. I have been offered a position on the West Coast that is a very good job, but the annual pay is what I would make in less than one month in my current position. Also, I would get very little vacation and would essentially be starting over. The alternative is to stay put, make as much $ as I can in the next several months, and look for a new job later if DH confirms he is happy in new location with new position. Of course, this job no longer will be available. It is a great position with a lot of responsibility that will help me long-term in my career, but the $ is very low. Do I take this job, or wait it out in my current position? Thanks.
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Old 04-18-2008, 06:29 PM   #120
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Everyone on the board has been extremely helpful, and I thank you again for all of the advice. I now have to make a decision quickly. I have been offered a position on the West Coast that is a very good job, but the annual pay is what I would make in less than one month in my current position. Also, I would get very little vacation and would essentially be starting over. The alternative is to stay put, make as much $ as I can in the next several months, and look for a new job later if DH confirms he is happy in new location with new position. Of course, this job no longer will be available. It is a great position with a lot of responsibility that will help me long-term in my career, but the $ is very low. Do I take this job, or wait it out in my current position? Thanks.
What do YOU want to do?
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