OK what would u do?

[Bestwifeever]

Interestingly, per Wikipedia, U Thant retired from the UN on 12/31/1971 but stayed active until his death from lung cancer in late 1974, at the age of 65. That is what U actually did.

 

[Scratchy]

Not what i was guessing. Hats off to you on your successes and talents.

If I were in your position, I would take the three million offer. This is assuming you would be able to back out if things became intolerable.

If you are looking to spend $300,000 a year, 8 million is not enough of a nest egg at your age, in my opinion. If most of this is in 401K accounts, you may have to draw close to $400,000 a year to clear $300,000 after taxes. If most of this is in taxable accounts, I'm not sure how much you would have to draw down, it depends on how much of that money is capital gains. Also, capital gains and dividend taxes might very well be much higher a few years from now. There are already proposals to increase the tax rates on long-term capital gains and dividends, and it would not be surprising at all if this happens, given the current political climate.

Anyway, the point is, you would start out with a spend rate of possibly around 5%. This is too high at your age. If you took the three million offer, presumably you would clear around 2 million after taxes, which would bring your nest egg up to 10 million and you would be looking at around a 4% draw rate, possibly. This is much better. Even then, you should be prepared to cut back your spend rate if the first few years go poorly for you.

So I know it sounds ridiculous to say a 8 million is too little to retire on, but if you want to spend $300,000 a year, it really is not enough. Back to work! Or be prepared for the real possibility that you may have to significantly cut back your spend rate.

 

[Bigdawg]

really, why do u shame those who have done well? I cane here for logical advise not cheap quips

Really? Stop being so thinned skinned. Please tell me you weren't actually offended by what he posted?

 

[Whisper66]

Franklin - Your signature "A persons wealth is measured by what they can afford to do without" is worth some serious thought and talking to our wife about. With your assets, there should be no finanical worries and no reason to go back to work if you really don't want to. Personally I'd just run Firecalc each year to set a maximum budget I could spend and stay within that budget. Good luck to you. And if you go back to work, you may find you enjoy it since you could quit again anytime without too much financial concern. BTW - this is a good test for you. Remember that we will eventually have another serious downturn (ie:recession) so good to think this through now.

 

[audreyh1]

I am happily retired (age next week 63). The last thing I really wanted was to suit up and join the game. But.....the recent market drop cost be a few years of WD's. No worries a drop for me is around $400K!!!. So, Ive started takin the calls and am 50/50 on whether I should re-enter the race at 63!!. Still have about $8MM in eggs but will absolutely spend $300K annually (shoot me now!). Offer is for about a 2 year commitment for what looks like $3MM. Admittedly don't need this but I got 2 years till the magic 65.....ugh....I love this forum and don't judge just slap me and say get over it!!! This forum is full of honest feedback so give me your thoughts.

There has been a big recovery already, not that a big drop couldn’t happen again.

$400k down compared to $8m. 5%. That really is no big deal.

You are already 63. Is giving up another 2 years of your life really worth it?

How conservatively are you invested? Do you have a large equity allocation? Is that what is making you nervous? Maybe you should reevaluate the appropriateness of your allocation with respect to your current situation of being retired and your risk tolerance.

But if you really enjoy working and relish this new challenge then do what inspires you.

I would not be worried about needing to withdraw $300K annually from $8M as long as my asset allocation was appropriate.

 

[Scrapr]

per your previous posts you are retired about a month. Market has gone up in the last month.
Are you missing work? Or at least parts of it? Can you do only the parts that you enjoy?

 

[Another Reader]

I would not go back to work to support my spouse's spending habit. I would start discussing the mechanics of retirement with her to see if we could get on the same page about spending. Going back to work if you cannot agree would not be my choice.

Your work sounds interesting and good for the ego. If I were in good health and I thought I would enjoy the work, I would do it, but only with an agreement with the spouse about a reasonable level of spending.

 

[Aerides]

The december dip was felt by everyone here, it's the same rough ratio, regardless of the net dollar impact.

You have an opportunity - even though FI - to add what would amount to a ~25% increase on your overall egg after taxes, while simultaneously burning a couple more years off the clock (reducing your overall need for retirement money).

But you can sell one of your properties and meet the same goal without burning time, something you have stated you already wish to do.

And your budget, while larger than most, means you likely have greater discretionary wiggle room. Likely a lot of budget of house upkeep frees up with that property sale as well. Taxes, HOA, Utilities, maintenance, etc.

Selling the 2nd house AND going back to work means you think you need a 40-50% increase in your portfolio, which means you are totally not comfortable with your financial status (doesn't matter the number, this is a philosophical point).

I'm sure you've been through your line item details, but you seem too quick to be considering the work offer based on financials alone.

 

[pb4uski]

I think that you need to go back to work.

You obviously have way too much time on your hands and are overthinking things.

It sounds like in the long run that your spending will moderate. Let's say that your spending grades to $200k in 10 years and is $300k until then. Carve out the excess of $100k a year for 10 years and that is $1m, leaving $7m to support $200k of annual withdrawals.... a WR of less than 3%... very safe for a 63yo.

 

[SmallCityDave]

ur ok

Most people that use "u" instead of "you" are texting and or 15 and under, it makes me question the sincerity of the question.

 

[HarveyS]

My opinion: Time >> Money.
Seems to me you have enough $ saved to live your lifestyle for the rest of your life. (assuming you have the proper AA).
You have a limited number of "good" years left, with health and vitality to do what you like. We can disagree on the absolute number of years, but it is limited. Same goes for your wife.

If you like work better than biking, hiking, fishing, golfing, tennis, travel, lunch with your wife on a Tuesday, helping in a homeless shelter, working for charity, (fill in the blank), then go do the gig. The money won't change your life or lifestyle. But, you'll never get those two years back.

I left work 4+ years ago at 52. Had an opportunity not unlike yours, but turned it down. Having complete control of my calendar has allowed me to spend time with dying parents, 3 and 4 week vacations with family, travel with friends, exercise more, etc., etc., etc. Your post caused me to reflect on my decision. Absolutely no regrets on choosing time over money for me.

Do what YOU want - you have earned and saved for that.

 

[steelyman]

Most people that use "u" instead of "you" are texting and or 15 and under, it makes me question the sincerity of the question.

Could be a Prince fan.

 

[gwraigty]

Like a couple of posters already mentioned, an $8M portfolio can be invested for income production that would allow the current spending (though it's excessive IMO) to continue without touching the $8M.

 

[24601NoMore]

Based on your tagline of wealth being measured by "what a person can live without", it would appear a better path would be to figure out what parts of the $300K budget you can indeed live without and cut, so that you no longer need to spend $300K/year. No disrespect intended, but you do not appear to be living the tagline..

Many of us here on ER have pretty nice lifestyles, and spend a fraction of that. Unless you're jetting off to Tahiti in first class every month, have multi-million $$ properties you're paying tens of thousands per month to maintain or something similar, it's hard to fathom what in the world you need $300K per year for. You can have a VERY nice lifestyle for half of that, easily.

And, as others have said, $8M gives you plenty of opportunity to convert at least some of that to investments more geared toward producing income that covers your annual spending needs. There's no need to take huge equity risk at your age in life and financial position, IMHO. Recommend focusing on income and you should be beyond set, even at $300K annual spend.

ETA - if you feel comfortable sharing some high level details of the budget, maybe we can help suggest areas that could be reduced without significantly impacting lifestyle..

 

[24601NoMore]

Also - at your age, you have no idea how much longer you have to enjoy life. You may THINK you're perfectly healthy and have decades left, but life has a way of jumping up and biting us in the arse that you usually never see coming.

Case in point - very successful BIL that just turned 60. Healthy as a horse. Longevity in their family (mother is nearing 90). Totally randomly, developed lung cancer - even though he never smoked. It's now spread to other areas of his body that unless a miracle happens probably means he won't see 61. I'd recommend thinking long and hard about what you TRULY value in life, and if you were to get a diagnosis like this tomorrow, what you'd regret not having time to do..

I heard about his diagnosis AFTER I decided to ER at 55, but have many similar stories from other friends and family over the past couple of years. Those experiences were a huge part of what convinced me to no longer waste my life w*rking just to "run up the number". At some point, your time left is far more important than a few extra "eggs" as you called it in the basket.

 

[Moemg]

I would enjoy my life and if enjoyment to you means returning to work go for it .There will always be drops in the market and this last one was hardly a blip on the radar .

 

[jollystomper]

To the OP, if your AA is such that you cannot stomach drops of $400K in an 8M portfolio, your choices are to either:
(a)adjust your AA to minimize those drops, (which of course will also minimize your upside, but perhaps you do not need as much upside) as drops *WILL* occur again
(b) take the job offer. Even less worry about your drops traded off with less time for yourself and no guarantees to recover that time from those working years.

 

[tb001]

Not what i was guessing. Hats off to you on your successes and talents.

If I were in your position, I would take the three million offer. This is assuming you would be able to back out if things became intolerable.

If you are looking to spend $300,000 a year, 8 million is not enough of a nest egg at your age, in my opinion. If most of this is in 401K accounts, you may have to draw close to $400,000 a year to clear $300,000 after taxes. If most of this is in taxable accounts, I'm not sure how much you would have to draw down, it depends on how much of that money is capital gains. Also, capital gains and dividend taxes might very well be much higher a few years from now. There are already proposals to increase the tax rates on long-term capital gains and dividends, and it would not be surprising at all if this happens, given the current political climate.

Anyway, the point is, you would start out with a spend rate of possibly around 5%. This is too high at your age. If you took the three million offer, presumably you would clear around 2 million after taxes, which would bring your nest egg up to 10 million and you would be looking at around a 4% draw rate, possibly. This is much better. Even then, you should be prepared to cut back your spend rate if the first few years go poorly for you.

So I know it sounds ridiculous to say a 8 million is too little to retire on, but if you want to spend $300,000 a year, it really is not enough. Back to work! Or be prepared for the real possibility that you may have to significantly cut back your spend rate.

What am I missing here? He said 300k included taxes? It would be very surprising if the majority of this $ was not invested in taxable accounts. Probably ~ a 50% cost basis, with some dividend income, so say 150k of his own money, 75k of dividend income and another 75k of capital gains. Taxes on that are pretty cheap, no? By my estimates about 15-20k, assuming capital gains taxes don’t get massively changed of course.

At 4% swr he could take 320k and I would assume he’s got another 35-40k per yr of SS income that he’s not counting in there.

 

[mrfeh]

Cut spending,

+1

 

[tb001]

Many of us here on ER have pretty nice lifestyles, and spend a fraction of that. Unless you're jetting off to Tahiti in first class every month, have multi-million $$ properties you're paying tens of thousands per month to maintain or something similar, it's hard to fathom what in the world you need $300K per year for. You can have a VERY nice lifestyle for half of that, easily.

And, as others have said, $8M gives you plenty of opportunity to convert at least some of that to investments more geared toward producing income that covers your annual spending needs. There's no need to take huge equity risk at your age in life and financial position, IMHO.

Curious what you would suggest re converting some to produce income.

And FWIW, it’s *very* easy to spend that in a HCOL area without being able to jet off to Tahiti in business class every month! A nice, fairly recently purchased house could be costing 20-30k per yr in property taxes alone. One of the reasons I really enjoy this forum is because we have such a diversity of posters here. It helps me understand where we are outliers and forces me to think about the opportunity cost for lifestyle choices we’re making. I think my favorite thread is the annual budget one, for exactly that reason.

 

[38Chevy454]

Money might be able to buy happiness, but it can't buy health or more time on this earth. Consider what two more years working is taking away from the rest of your life.


If the recent drop in markets and nestegg value is of concern to you, then you are too risk averse and need to be more conservative with your allocation. I hesitate to say, but you might be a candidate for a FA that will prevent you from making bad decisions based on emotional response rather than logic and technical basis.



I also think you could cut spending without a big hit to lifestyle and ensure that your current savings will provide for the rest of your lives. No need to go back to work.

 

[Aerides]

Most people that use "u" instead of "you" are texting and or 15 and under, it makes me question the sincerity of the question.

My mom does it, she's a decade older than the OP, and she and uses more emoji's in one text than I do in a year. My 55+ former boss loved to reply "GR8!" - people from different cultures and generations grab will always grab onto bits from others.

carry on

 

[imoldernu]

Some possible philosophy from an older person who didn't retire:

http://www.berkshirehathaway.com/SpecialLetters/WEB%20past%20present%20future%202014.pdf

 

[Car-Guy]

A 400k drop is just blip at your NW. If that scares you into thinking about going back to work, then maybe you should either go back to work or get out of the market, or both. That's only 5%... Heck I'd been up and/or down ~15% in the first 5 years of retirement and my spend is about 70% of yours... Never even thought about going back to work.... YMMV....

 

[mountainsoft]

I am happily retired (age next week 63). The last thing I really wanted was to suit up and join the game. But.....the recent market drop cost be a few years of WD's. No worries a drop for me is around $400K!!!. So, Ive started takin the calls and am 50/50 on whether I should re-enter the race at 63!!. Still have about $8MM in eggs but will absolutely spend $300K annually (shoot me now!). Offer is for about a 2 year commitment for what looks like $3MM. Admittedly don't need this but I got 2 years till the magic 65.....ugh....I love this forum and don't judge just slap me and say get over it!!! This forum is full of honest feedback so give me your thoughts.

Just for kicks, I ran your numbers at https://www.calcxml.com/calculators/how-long-will-my-money-last?skn=

To err on the side of safety, I assumed you would move your 8 million portfolio into an online savings account paying just 2% interest. You could diversify with CD's for higher interest and/or multiple banks but the point was to put it all in funds that were FDIC insured so you won't lose anything to market swings. Yeah, you'll earn less interest, but with that much money it doesn't matter.

I also assumed you were in the highest 37% tax bracket, and your 300K per year equaled 25K per month.

Using those numbers the calculations showed your money would last 30 years. Do you expect to live to 93? Even if you plan for 3% inflation per year your money would last 22+ years. Obviously, if you can reduce your spending, your money will last longer.

Clearly you have enough money to last the rest of your life. I can't even imagine having that kind of money. I wouldn't even know how to spend 25K per month consistently. However, if you WANT to go back to work that's fine too. It's your life, do what makes you happy.