Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-15-2013, 11:02 AM   #141
Recycles dryer sheets
 
Join Date: Jan 2012
Posts: 65
A few thoughts--

(1) Not sure what your plans are with regard to paying for your kids auto insurance when they begin to drive, but assuming you are going to fund it, you can expect your auto insurance costs to go up dramatically. While you could just make your kids pay the cost of insurance, I think that in all likelihood, it will mean they will not be driving (legally anyway) as the costs to insure teens is beyond the ability of most kids to generate that kind of coin.

(2) Your home maintenance expenses seem way low to me---a general rule of thumb is 1% of the home's value, and in my own experience, that figure never seems to be sufficient. (Maybe I just bought a money pit.) Obviously, your own experience will vary based upon how handy you are, type of home construction, etc.

(3) Medical/dental also seem very low to me. It sounds like you know the details of Obamacare better than I do, but I would be surprised if your out of pocket costs are as low as you have budgeted. Also , even if they are, given the economics of medical care (costs seemingly ever increasing), the current US Budget situation (not swell), as well as the reality that over the next 60 years, the Dems are likely to lose the Presidency at some point, I would not expect what you will currently be able to get for free to continue. I think it unrealistic to expect that current promises under Obamacare will be able to be maintained in the long run. In short, I think you need to plan for higher out of pocket medical costs. Hopefully, I am completely wrong.

(4) Given your nest egg, seems to me that you may want to consider LTC insurance, or at least recognizing that some of your assets may be needed to fund those expenses towards (hopefully) the end of your life. Obviously, shXt happens, and you could need that care tomorrow if you end up walking off a cliff on one of the hikes you take with all of your new time off. Again, an accident like that would have a pretty immediate impact on your assets (drawing them down). In the same vain, you mentioned several times about possibly needing or choosing to go back to work later--if you feel that the possibility exists, seems to me you still may need life insurance. Your current assets may not be sufficient to fund future needs, and if you are gone, you may want to leave those resources behind for your family. Finally, given that you own a home and have pretty significant assets, you may want to budget for an umbrella liability policy. (No, I am not an insurance salesman--just someone who is afraid to leave his house.)

(5) I believe you indicated you were a Fed Employee. If so, and I know you know this, leaving work now will basically leave you with no federal pension benefits. While a federal pension is not great, it certainly is a meaningful amount of money, and would provide you some additional financial security. By leaving, you do give up a pretty significant benefit.

(6) I certainly did not have your assets when I was your age, and for you to be able to even consider retiring at 35 is remarkable. I would not be able (or perhaps the right word is willing) to live on what you are proposing to do for the next 50-70 years. But I do have a great deal of admiration for someone who has the courage to do this. I am not as brave as you. Whatever happens--I wish you well.
__________________

__________________
ProGolferWannabe is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-15-2013, 11:28 AM   #142
Recycles dryer sheets
 
Join Date: Sep 2012
Posts: 62
BTW, Obamacare is currently being discussed in another thread and there is a possible conclusion of that thread that the subsidized insurance might be a really sh***y insurance, which most doctors won't accept.
I can't comment about something that does not exist, but I know that around here good doctors don't accept MEDICAID. With MEDICAID (currently), you'd be stuck with residents / students and/or young doctors who are just starting out.

So, it is something to consider....
__________________

__________________
hsv_climber is offline   Reply With Quote
Old 03-15-2013, 12:30 PM   #143
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by hsv_climber View Post
BTW, Obamacare is currently being discussed in another thread and there is a possible conclusion of that thread that the subsidized insurance might be a really sh***y insurance, which most doctors won't accept.
I can't comment about something that does not exist, but I know that around here good doctors don't accept MEDICAID. With MEDICAID (currently), you'd be stuck with residents / students and/or young doctors who are just starting out.

So, it is something to consider....
Thanks for the heads up, I'll have to read up on the other thread since there wasn't much posted there last I read it.

I am also concerned about a 2 tier health system here in the US, and have voiced that opinion here previously. Basically the private insurance would give you access to plenty of providers, whereas the subsidized exchange provided insurance might limit you to less than desirable health providers that slowly back away from the subsidized plans (if reimbursements are stingy).

Sure it is a definite possibility and is more likely to be a short term problem than a long term problem. But there will be a larger group of vocal, politically relevant people on the exchange insurance plans as compared to medicaid recipients today. Middle class people. You can't F with middle class people too much and stay in power politically here.

I am glad that my ER timing will allow me to see what happens with obamacare, exchanges, insurance plan choices, costs, what they cover, doctor availability, etc.

I just check my GP Dr and his practice won't even take medicare patients, but so far he hasn't dumped his existing medicare patients.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-15-2013, 01:01 PM   #144
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by ProGolferWannabe View Post
(1) Not sure what your plans are with regard to paying for your kids auto insurance when they begin to drive, but assuming you are going to fund it, you can expect your auto insurance costs to go up dramatically. While you could just make your kids pay the cost of insurance, I think that in all likelihood, it will mean they will not be driving (legally anyway) as the costs to insure teens is beyond the ability of most kids to generate that kind of coin.
I have heard up to $2000/yr increased insurance for 1 kid. I expect that expense to fall on us (mostly) for a period of 1-6 years, but I think the expense starts dropping in year 3 or 4 in our jurisdiction. Given our access to transit, this is an expense that could theoretically be cut if we had to (but maybe not the 1st expense). Unfortunately we have 2 kids 1 year apart so it will be double the expense for a few years.

Quote:
(2) Your home maintenance expenses seem way low to me---a general rule of thumb is 1% of the home's value, and in my own experience, that figure never seems to be sufficient. (Maybe I just bought a money pit.) Obviously, your own experience will vary based upon how handy you are, type of home construction, etc.
My number works out to right around 1% of house value to cover big ticket items, plus the small stuff I spend routinely each year. For total turnkey operations with someone else doing everything, I'd say 2-3% is more appropriate. So far I'm handy enough or savvy enough to contract well for services and not have too much out of pocket. And we'll probably hit a few largish deferred maintenance items before FIRE (or specifically set aside $5k-10k or whatever for these).

Quote:
(3) Medical/dental also seem very low to me. It sounds like you know the details of Obamacare better than I do, but I would be surprised if your out of pocket costs are as low as you have budgeted. Also , even if they are, given the economics of medical care (costs seemingly ever increasing), the current US Budget situation (not swell), as well as the reality that over the next 60 years, the Dems are likely to lose the Presidency at some point, I would not expect what you will currently be able to get for free to continue. I think it unrealistic to expect that current promises under Obamacare will be able to be maintained in the long run. In short, I think you need to plan for higher out of pocket medical costs. Hopefully, I am completely wrong.
I may tighten up this area of budget some more. Maybe what I have is inadequate. I still don't have a good feel for what we'll owe under an obamacare exchange subsidized insurance plan. My understanding was max out of pocket is somehow limited based on AGI (and ours will be low).

My crystal ball says obamacare gets repealed either very soon after 2014 (within a few years) or not at all. Tinkering may happen but killing it seems unlikely once it is engrained in our society and thought of as an entitlement. Maybe it'll take more than 3 years, who knows. I can always go back to work if access to health insurance is a concern.

But, yes, this is a risk.

Quote:
(4) Given your nest egg, seems to me that you may want to consider LTC insurance, or at least recognizing that some of your assets may be needed to fund those expenses towards (hopefully) the end of your life. Obviously, shXt happens, and you could need that care tomorrow if you end up walking off a cliff on one of the hikes you take with all of your new time off. Again, an accident like that would have a pretty immediate impact on your assets (drawing them down). In the same vain, you mentioned several times about possibly needing or choosing to go back to work later--if you feel that the possibility exists, seems to me you still may need life insurance. Your current assets may not be sufficient to fund future needs, and if you are gone, you may want to leave those resources behind for your family. Finally, given that you own a home and have pretty significant assets, you may want to budget for an umbrella liability policy. (No, I am not an insurance salesman--just someone who is afraid to leave his house.)
Financial shortfalls that necessitate going back to work are likely to be triggered by long term poor stock market returns. I may coincidentally meet my demise prematurely or (worse?) end up incapacitated to the extent I need LTC early on. However injury or premature death are largely uncorrelated with stock market returns. Hence, the cumulative probability of early death or needing LTC early in life AND having portfolio failures are getting down in the fraction of a percent range.

I (and DW) will accept a 100% probability that we won't have to work right now in exchange for a <1% probability the survivor may have to work at some future point in life due to spousal early death or incapacity AND portfolio failure.

And there is always SS survivor's benefits that protect us for 5 years after quitting work (longer if we have self employment income subject to payroll taxes that earns us creditable SS quarters).

For the typical needs of LTC in one's 60's or 70's, I don't have LTC included in my ER budget. If my portfolio doesn't grow over time I'll be screwed I guess. Of course if money is that tight I would probably choose to go back to work at some point early on.

Quote:
(5) I believe you indicated you were a Fed Employee. If so, and I know you know this, leaving work now will basically leave you with no federal pension benefits. While a federal pension is not great, it certainly is a meaningful amount of money, and would provide you some additional financial security. By leaving, you do give up a pretty significant benefit.
Not a Fed. I have 2 years service at the current gig, will have 5 years at age 35 when I plan to be FI. That gets me a pension large enough to buy a really nice cheeseburger a couple times a month. Unfortunately it would start 30 years after I retire, at age 65. In other words inconsequential, and I plan to roll my cash balance out of the pension and into my 401k. ~20-25k is all it will be in 3 more years.

Quote:
(6) I certainly did not have your assets when I was your age, and for you to be able to even consider retiring at 35 is remarkable. I would not be able (or perhaps the right word is willing) to live on what you are proposing to do for the next 50-70 years. But I do have a great deal of admiration for someone who has the courage to do this. I am not as brave as you. Whatever happens--I wish you well.
Thanks! It is a little daunting to think about locking in a budget for many decades. On the flip side, maybe I'll get bored and find something that interests me and has enough of a pecuniary advantage that I'd rather trade my free time for money. Or maybe I'll do the "just one more year thing" for a year or 3.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-15-2013, 01:24 PM   #145
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 79
FUEGO, congrats on your achievements so far! DW and I are also in our mid/upper 30's and have a young family. We have the means to be FI if we made some adjustments (namely private schooling, letting go of a live-in nanny/housekeeper, and a slight downsize in home a few streets away) but currently struggle wether these discretionaries are a worthwhile trade-off of working a few more years.

I'll be your devils advocate and I'll only list some of my rationale for working just a few more years (not the other side, since you've got that well covered) and building a slightly better cushion. Whether these are important for you obviously only you can decide.

1) Every year that you work in your mid-30's is equivalent to 4 years of work in your mid-50's (time value of money, assuming money grows at 7%)

2) Extra efforts/time/risks/retraining for a new position if you need to side hustle for part time work. Time/energy you would not need to expend "punching in the clock" at your current position for a few more years.

3) Extra financial cushioning may help educational/business oppurtunities for your kids at a later stage of life. Regardless of how good your kids are brought up, money does buy oppurtunity - that is the reality.

4) Sleeping better during the next stock market bear market and having additional funds to take advantage of the next crash.

5)Less wiggle room than someone who is not LBYM (ie. not as many areas to reduce expense since you are already frugal)

6 Family time is important now but the kids will be in school 8 hours of the day anyways. If I can spend a few hours/day on the weekdays, and the whole weekend with them..... they should be fine.

7) Last but not least, heck you will only be 35 and chances are you will have 2/3 more of your life ahead of you!


Apex
__________________
Apex1 is offline   Reply With Quote
Old 03-15-2013, 01:24 PM   #146
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by hsv_climber View Post
BTW, Obamacare is currently being discussed in another thread and there is a possible conclusion of that thread that the subsidized insurance might be a really sh***y insurance, which most doctors won't accept.
I can't comment about something that does not exist, but I know that around here good doctors don't accept MEDICAID. With MEDICAID (currently), you'd be stuck with residents / students and/or young doctors who are just starting out.

So, it is something to consider....
Can you link to that other thread? I can't find it using the search feature. Thanks!
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-15-2013, 02:45 PM   #147
Recycles dryer sheets
 
Join Date: Sep 2012
Posts: 62
Here is the link:

Bottom line on health insurance changes for pre medicare

Pay attention to posts from "Nikki J", who is a physician in MA, the only State that has already implemented subsidized plans.
__________________
hsv_climber is offline   Reply With Quote
Old 03-15-2013, 03:11 PM   #148
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by hsv_climber View Post
Here is the link:

Bottom line on health insurance changes for pre medicare

Pay attention to posts from "Nikki J", who is a physician in MA, the only State that has already implemented subsidized plans.
Thanks for the link, I missed the bulk of the discussion on that thread when I read it right after the thread was posted.

I think there are already some specialist deserts in my locality where they won't take any insurance options available to me from my employer or DW's employer. At least not the ones recommended by doctor friends. So maybe it will be status quo for us in terms of access to specialists? At some point you have to pay more for access to better service.

Hopefully in a few years we can see the implications of the exchange insurance policies and how they segregate providers into 2 (or more) tiers of quality. I have certainly heard (anecdotally) of some practices dropping out of taking any insurance because they didn't want to deal with low reimbursement, denial for some services, and administrative expenses. And/or concierge medicine arrangements.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-16-2013, 10:34 AM   #149
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
FUEGO. before you roll a pension cash balance into your 401k, look carefully at the plan. My cash balance will be modest in a year (no more than 40k), but I don't plan on rolling the money into my 401k. My employer offers the option to use 401k money to buy additional pension credit once you are drawing on the pension (I could do so as early as age 50). Depending on how this is priced, it could be a very, very attractive option, especially as there would be zero risk of pension default.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 03-16-2013, 07:33 PM   #150
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,031
Congratulations on accumulating 1.4 at 35 . What would happen if you retired into a bear market like the 2008 retirees ? We watched as our savings dropped by 30-40 % .$900,000 for 60 years without health insurance is a longshot especially with three children .
__________________
Moemg is offline   Reply With Quote
Old 03-16-2013, 09:23 PM   #151
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by brewer12345 View Post
FUEGO. before you roll a pension cash balance into your 401k, look carefully at the plan. My cash balance will be modest in a year (no more than 40k), but I don't plan on rolling the money into my 401k. My employer offers the option to use 401k money to buy additional pension credit once you are drawing on the pension (I could do so as early as age 50). Depending on how this is priced, it could be a very, very attractive option, especially as there would be zero risk of pension default.
Mine has some option for buying back in later if you cash out now. That might be a decent option down the road for me. However I don't think I can buy more than the actual years of service I have at the time of my termination of employment. Which will be 5 years of service if I ER at 35. I believe my monthly pension amount at age 65 would be around $100 per month in 2013 dollars. If my employer doesn't somehow screw the plan participants. After I realized that COLAs are by legislative fiat and goodwill and not linked to CPI or anything, that really sealed the deal that I don't particularly want to do business with this entity any longer than I have to, so I plan to pull out the $25k or so. Of course I'll have to study the rules a little closer once I'm about to jump out of here.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-16-2013, 09:26 PM   #152
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by Moemg View Post
Congratulations on accumulating 1.4 at 35 . What would happen if you retired into a bear market like the 2008 retirees ? We watched as our savings dropped by 30-40 % .$900,000 for 60 years without health insurance is a longshot especially with three children .
I would probably be thinking hard about going back to work if I retired into a 40% stock market drop within a year or two of ERing. Shouldn't be hard - just call the time off a sabbatical or whatever.

I would love it if the market was flat or down for the next few years as we continue accumulating, instead of this rip roaring bull market we are experiencing right now.

FYI, I'm 32 now and targeting that 1.4 million within 3 years. Based on what we have today plus what we will contribute over the next 3 years, we need a rate of return of around 0% real to get us to $1.4 million.
__________________

__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 08:40 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.