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Old 06-30-2012, 07:58 PM   #21
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You got a very good suggestion there, from a very smart poster who's a lot further down this particular road than you are, and you're giving the appearance of blowing it off. You're gonna surf a long time before you realize that there's no better starting point than the Bogleheads resources. The specific starting point you might want to try is, well, the "getting started" part of the wiki:
Category:Getting started - Bogleheads
after that you might want to jump to the asset allocation section:
Category:Asset Allocation - Bogleheads
and begin with "Investment Policy Statement".

...part-time worth (sic)...

I took the "surfing" comment positively to mean he was going to surf at Bogleheads for a while.
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Old 06-30-2012, 08:14 PM   #22
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I took the "surfing" comment positively to mean he was going to surf at Bogleheads for a while.
That makes more sense than my first impression, but at first I also thought the "modeling" title of this thread was about fashion careers, not financial planning...
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Old 07-01-2012, 12:19 AM   #23
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Welcome to the board, RA35. I think.
Thanks, for sure.

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we tend to take a more conservative & cautionary tone with those who blithely state a plan to live overseas.
Understandable, but the only thing that will dissuade me is financial reality or experience.

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You got a very good suggestion there, from a very smart poster who's a lot further down this particular road than you are, and you're giving the appearance of blowing it off.
I only meant that I'll have to keep surfing that wall of text before I can come back and ask a question or otherwise comment more intelligently on the suggestion.

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A few of the more vocal Bogleheads feel that early retirement is the equivalent of rusting on the front porch.
Gotchya. That makes sense.

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However it's a very frequent mistake among new posters to want to jump right in and pick funds before they've thought through the process of asset allocation.
I am hopefully not on the path to that mistake. All I've done so far is recognize that asset allocation needs to be addressed.

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I doubt that you'll find quick answers here. It's worth taking your time.
I must have given the wrong impression. I'm not expecting any forum to give me the answers. I think I posted earlier that I don't feel like I even know what questions to ask, so I'm just posting my notes here as I try to figure this all out.

I don't know anyone who lives below their means or who who wants to drop out of the workforce the way I do, so all my thoughts, smart or otherwise, are being bounced off this and similar forums.
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Old 07-01-2012, 12:21 AM   #24
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That makes more sense than my first impression, but at first I also thought the "modeling" title of this thread was about fashion careers, not financial planning...
I just want to make a spreadsheet! Man, y'all are killin' me here.
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Old 07-01-2012, 06:11 AM   #25
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And I assumed it was going to be about mathematical modeling...which it sort of is, but not in the way I assumed.

Just reinforces my age-old observation, that anyone who works for me hears all the time: "90% of all problems in any organization are caused by miscommunication/people hearing something different from what others meant."

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T at first I also thought the "modeling" title of this thread was about fashion careers, not financial planning...
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Old 07-01-2012, 09:23 AM   #26
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RetireAbroadAt35, I wanted to make a much stronger recommendation for you to read Jim C. Otar's book (in PDF file) "Unveiling the Retirement Myth". if you are into spreadsheets, he has one available at otar retirement calculator
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Old 07-01-2012, 10:47 AM   #27
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One thing that surprised me a little was that we lost a some close friends while we were gone. We thought many of them would visit but very few did. Over time, it became difficult to keep up because we chose not to return to the US often. As a result, even some close friends just drifted off and it was not easy to reconnect with them when we finally repatriated.
We found the same thing whenever we moved. I am still friends with a couple I met over 40 years ago. But many acquaintences have fallen off the radar in between. Out of sight, out of mind is the watchword.

We have made many new friends in Mexico. We do a lot more with them than we ever did with our former acquaintences. We have also introduced many friends to Mexico over the 30 years we have been going there and still keep in touch with them.
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Old 07-01-2012, 11:14 AM   #28
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I worked in IT. While I've never done small jobs as an independent contractor I think I could get some.

I didn't bring this up in the OP but when I said I wanted to build a model it is so that I can play with some of these ideas.

  • Do I try to earn $10-15k a year so avoid drawing down my nest egg?
  • Do I plan on picking up occasional contracts for years when I want to spend more than $20k?
  • Do I give up on my mini-retirement and go back to work for a year or two? I'd probably earn ~$120k/year but I don't have the stomach for it right now.
When I say I don't want to work, I mean that I just want off the hamster wheel. I don't want to have to work.

How do you mean? Social Security?
I think you will find IT work rather easily as an independent contractor. That makes your plans much more possible. However, speaking as a retired contractor in the IT industry (executive not worker), the trendmill just changes. You have to have realistic expectations about the nature of work. Even hobbies that turn into paying enterprises become work.

My age 60 comment is that it is when your money will likely run out. So supplementing your budget with some new income will extend that proportionately.
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Old 07-01-2012, 12:02 PM   #29
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So I would advise that you find a gig that you love to do that brings in some cash.
Certainly, and if I find a way to make money doing things I love I'll be all over it. I'm not sure I'll ever find that, however.

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My age 60 comment is that it is when your money will likely run out. So supplementing your budget with some new income will extend that proportionately.
I think that's probably true (especially with only $400k in the bank). I'm not sure if I want to try and earn some more now while I'm still in my "peak earning years" or take independent contracts or part-time work to get off the hamster wheel sooner. I just don't want any more deliverables, client meetings, proposals, statements of work or design documents in my future.
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Old 07-01-2012, 12:38 PM   #30
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Not a spreadsheet but a pretty good planning tool IMO is the Lifetime Planner in Quicken. You put in your nestegg accounts/assets and assumptions on inflation, investment returns, taxes, expenses, etc. and it does a nice year-by-year projection of your assets and when they would dwindle to nothing.

It isn't perfect, but IMO it is worth the price of Quicken. It is pretty flexible. One significant downside is that it is a deterministic projection, but if used in conjunction with Financial Engines (since you are a VG customer as I recall) and FireCalc, it is a good tool.
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Old 07-01-2012, 01:06 PM   #31
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Certainly, and if I find a way to make money doing things I love I'll be all over it. I'm not sure I'll ever find that, however.

I think that's probably true (especially with only $400k in the bank). I'm not sure if I want to try and earn some more now while I'm still in my "peak earning years" or take independent contracts or part-time work to get off the hamster wheel sooner. I just don't want any more deliverables, client meetings, proposals, statements of work or design documents in my future.
I don't know what it's like doing side jobs as an IT person, but I've heard that it's easier than many other professions. Having said that, look at your earnings potential right now versus doing things on the side to supplement your income down the road. Do you really think you'll make that much $/hr of effort after quitting your current job? The other things is reliability - can you reasonably expect to find work when you want it on your schedule, at the $ you need, to partially offset your expenses? Is it worth it to tough it out for 2 to 4 more years at your current gig and really setting your finances up more securely, versus having to scrounge for side jobs as a semi-retiree? Or better yet, if you have the time, try lining up a few gigs now in your spare time to see what the experience is like in terms of commitment, $, and headache factor. Not to mention the possible difficulties of lining up side gig IT work when in another country (some clients might not care, but other clients might have concerns).

And then there's the Social Security/Medicare item - do you have enough quarters to qualify for both? Might not be a bad idea to work a few more years to qualify (if you don't already) to have another ace in the hole long-term.
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Old 07-01-2012, 01:53 PM   #32
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Most of us started with a spreadsheet, and Otar's book is a great guide to retirement planning. (Worth whatever he's charging for the download these days.) You might also want to run a bunch of different FIRECalc scenarios. If you think you're close to ER then it's worth trying a paid subscription to FinancialEngines.com.

As for off-topic commentary... this board has never succeeded in staying on topic.

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Just reinforces my age-old observation, that anyone who works for me hears all the time: "90% of all problems in any organization are caused by miscommunication/people hearing something different from what others meant."
I've never heard that!

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Certainly, and if I find a way to make money doing things I love I'll be all over it. I'm not sure I'll ever find that, however.
I was strongly allergic to work when I retired, and for me the dissatisfiers still outweigh the putative satisfiers.

However I've found a way to make money out of just about every hobby that I enjoy. Handyman, surf instructor, writer, author, blogger... even just blogging about your hobbies for other enthusiasts. It's a big beautiful world full of money out there, and I'm living proof that the bar is far lower than I believed possible.
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Old 07-02-2012, 05:22 AM   #33
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From the numbers supplied, it looks like the AA is around 63/13/24 (stock/bond/cash).
After several hours of digging through the Vanguard site trying to answer that question I came to the same conclusion.

Broken down a bit further, I have:
  • 52% domestic stock
  • 11% international stock
  • 13% bonds
  • 24% cash

I think I'll re-balance it towards:
  • 40% domestic stock
  • 35% international stock
  • 15% bonds
  • 10% cash

I'll leave the 401k alone until I'm forced to roll it over. The rest of my holdings will be consolidated and balanced as above.

  1. Sell the older individual stock and put that $34k into an intl stock fund (VGTSX)
  2. Transfer the Vanguard 500 Index Fund (VFIAX) to the total stock market fund (VTSMX)
  3. Transfer the Vanguard balanced index fund (VBINX) to the total bond fund (VBMFX)
  4. Take $60k from cash and put that in the international index fund (VGTSX)


Revisiting the OP, that should yield:


  • $40k in cash (mostly in ingdirect savings & CDs at pitiful interest rates)
  • $72k in Vanguard Total Stock (VTSMX)
  • $96k in Vantguard Total Intl Stock (VGTSX)
  • $9k in Vanguard Total Bond (VBMFX)
  • $168k 401k in Vanguard Target 2040
  • $34k 401k in Vanguard Total Bond Mkt Index
  • $2,700 Roth IRA in Vanguard Total Stock Market Index Fund (VTSMX)
Any comments?


As for making the transfers & purchases - in the past I've contributed gradually, averaging out price fluctuations.

Should I set up several transfers / purchases over the next couple of weeks, at least for the cash purchases?
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Old 07-02-2012, 07:16 AM   #34
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If it would not cause you to have to pay any taxes, I would just go to your new asset allocation as soon as possible. If it would cause additional taxes, then I would do something different.
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Old 07-02-2012, 09:47 AM   #35
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If it would not cause you to have to pay any taxes, I would just go to your new asset allocation as soon as possible. If it would cause additional taxes, then I would do something different.
+1 I was thinking the same thing as I read his post. Before pulling the trigger on the transactions determine what the tax implications would be for any trades outside of tax deferred accounts.
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Old 07-02-2012, 02:25 PM   #36
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If it would not cause you to have to pay any taxes, I would just go to your new asset allocation as soon as possible. If it would cause additional taxes, then I would do something different.
Taxes ... never really had a strategy there. Referring to the previous numbered list:
  1. I would have to pay long-term capital gains as I believe I've held all of those shares for over a year. I bought these through a company discounted stock purchase plan.

    I don't see much of an option but to sell them as I don't want to have so much tied up in an individual stock. I don't know how to calculate the tax on this so I'll try and figure that out so I know what I'm in for.
  2. Not sure if this would be a sale & purchase or a transfer or how it would be taxed. I'll have to do some research.
  3. Not sure if this would be a sale & purchase or a transfer or how it would be taxed. I'll have to do some research.
  4. This will come out of my checking account so no tax issues there.
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Old 07-02-2012, 05:20 PM   #37
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I just started reading about capital gains involving an ESPP - this article and a few others: Employee Stock Purchase Plans.

My corporate overlords always hired E&Y or H&R block to do my taxes each year so I am close to clueless. It seems surprisingly complex and arcane.
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Old 07-02-2012, 05:34 PM   #38
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Taxes ... never really had a strategy there. Referring to the previous numbered list:
  1. I would have to pay long-term capital gains as I believe I've held all of those shares for over a year. I bought these through a company discounted stock purchase plan.

    I don't see much of an option but to sell them as I don't want to have so much tied up in an individual stock. I don't know how to calculate the tax on this so I'll try and figure that out so I know what I'm in for.
  2. Not sure if this would be a sale & purchase or a transfer or how it would be taxed. I'll have to do some research.
  3. Not sure if this would be a sale & purchase or a transfer or how it would be taxed. I'll have to do some research.
  4. This will come out of my checking account so no tax issues there.
Looking back at your OP it appears that all of the proposed sales and purchase would be in taxable account (not your 401k or Roth) so you would owe capital gains taxes on any profit on the sales. At worst, the sale of your individual stock would create a $5k tax but in reality it would probably much less because you will have some basis in those shares. For the other sales you can ask Vanguard what your basis is.
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Old 07-02-2012, 11:40 PM   #39
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That is correct. Here is what I estimate my tax liability on the individual stock would be, assuming a 28% tax bracket (although having only investment income this year I wonder my tax bracket will really be).

Code:
Date       Shares    Value         Basis            Tax         Gain/Loss
2009-11    2            $120.00      $74.79       $6.78      $38.43
2010-05    174         $10,500.00  $6,492.81     $601.08    $3,406.11
2010-11    151         $9,000.00    $5,746.23     $488.07    $2,765.70
2011-05    146         $8,800.00    $7,121.49     $251.78    $1,426.74
2011-11    75           $4,500.00   $3,666.59     $233.36    $600.06
2012-05    15           $900.00      $978.30                      -$78.30
                                           Total Tax  $1,581.06
Still trying to figure out the taxable vanguard accounts.
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Old 07-03-2012, 12:11 AM   #40
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Vanguard won't show me my cost basis until they run their batch jobs again, but from memory my unrealized short-term capital gains were ~$2500 and long-term gains were ~$6500. That should put me at ~$1500 in tax in order to shift those funds from an S&P 500 fund to a total market fund and from a balanced fund to a total bond fund.

Is it worth $1500 to make my asset allocation look a bit more like everyone else's?
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