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Possible good fortune
Old 08-21-2013, 09:25 PM   #1
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Possible good fortune

Have a possible chance to sell my business and retire before hitting the big 50.
My situation is a follows:

3.8 million in taxable cd's
250k in Roth / Seps
220k in 401k (wife's)
60k in bonds
Three rental houses
Primary home paid off


We owe appx 200k on two of our rental properties
No pension
Have to pay own medical insurance
No children to leave money to

If business sells should be able to get at least 1.2 million after taxes

I can't see any downside of getting out of the rat race. Am I missing something ?
A few of my friends said I should keep working. I am burned out.
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Old 08-21-2013, 09:33 PM   #2
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You are burnt out at work. You are FI (unless you have unusually high annual expenditures). You know the answer.
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Old 08-21-2013, 10:32 PM   #3
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Take a year off and then see how you feel. One of your year off projects can be retirement planning.
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Old 08-22-2013, 12:30 PM   #4
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You have $5.5 million in mostly after tax assets. If you can get by spending only $200,000/yr, you pretty much have retirement covered and I'm not including SS or pensions that weren't mentioned. If you can't, you probably need to find advice from another set of people.

Taking a year or so off to "find yourself" is probably a good idea. You seem more an entrepreneur than a wage slave so that's not going to be a career derailer like many of us would experience. If you want to start a new business you are in a great position to do so. If you decide you'd rather travel, relax, take time to see the world happening around you, you have the money to have a pretty solid lifestyle while you do it.
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Old 08-22-2013, 01:07 PM   #5
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Originally Posted by pletal View Post
I can't see any downside of getting out of the rat race. Am I missing something ?
A few of my friends said I should keep working. I am burned out.
I think you do see a downside or you wouldn't have to ask. The median US household income is $50K. You would have 110 times a middle class income saved, not have a mortgage payment, plus have rental income and probably Social Security. So unless you have a super yacht or mansions and castles in various countries like Nicholas Cage to support, you're probably good to go.

If you are burned out and the price is a good deal, sell and take some time off. If you get bored start something new.

I got a buyout offer (a lot less money) from a venture capitalist and wouldn't sell. DH thinks I am a bit daft and would have liked the money. I didn't sell because we don't need the money to retire, I think I can make more in the long run by keeping the business going, it is a hobby business so it would be taking away one of my hobbies, and I didn't want to sell for a low price and then see someone else turn it into the next Facebook or Amazon, even though I am not ambitious enough to do that.
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Old 08-22-2013, 01:37 PM   #6
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Just get new friends. Who will say heck yes you should retire!

Really nice nest egg even without the proceeds from the sale of your business.
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Old 08-22-2013, 01:39 PM   #7
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Quote:
Originally Posted by pletal View Post
Have a possible chance to sell my business and retire before hitting the big 50.
My situation is a follows:

3.8 million in taxable cd's
250k in Roth / Seps
220k in 401k (wife's)
60k in bonds
Three rental houses
Primary home paid off


We owe appx 200k on two of our rental properties
No pension
Have to pay own medical insurance
No children to leave money to

If business sells should be able to get at least 1.2 million after taxes

I can't see any downside of getting out of the rat race. Am I missing something ?
A few of my friends said I should keep working. I am burned out.
Kind of unusual to have ~$4million in taxable accounts for this board. Have you sold other businesses, or perhaps received a nice inheritance?

This has nothing to do with whether you can retire, like others have said just check your expenses against your resources and it should be clear one way or another. I disagree with a previous poster who said "unless you have a superyacht... ". Your assets are nice, but a long way from no worries, ever, style.

I certainly have less, but I also know reasonable people who are making good money who would require a lot more to feel ok in retirement.

And the $50,000 average for a middle class life? I guess it depends on the definition of middle class. There are some very engaged advocates for low amounts being adequate so this is not a debate I want to open. But when a route postman earns $60-65k, airport baggage handlers with no high school diploma can earn in the low 6 figures, ask yourself what sort of "middle class life" we are talking about at $50k for a couple or small family. This has nothing to do with you. You can obviously lead a fully middle class life on your assets, or less.

Ha
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Old 08-22-2013, 01:57 PM   #8
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Originally Posted by haha View Post
I disagree with a previous poster who said "unless you have a superyacht... ". Your assets are nice, but a long way from no worries, ever, style.
That was meant as a joke, exaggerating to make a point, not meant to be taken literally. Super yachts are hundreds of millions of dollars.

See hyperbole -

http://en.wikipedia.org/wiki/Hyperbole
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Old 08-22-2013, 03:23 PM   #9
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Originally Posted by pb4uski View Post
Take a year off and then see how you feel. One of your year off projects can be retirement planning.
+1
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Old 08-22-2013, 06:31 PM   #10
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I think you are in pretty darn good shape even sans the sale of the business. In my world you are pretty close to no worries. Just my .02
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Old 08-22-2013, 06:55 PM   #11
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I'm gonna throw in my two cents:

I think that if you have 3.8M in CDs, contracted within the past few years during the super low CD rate cycle, then, no. You don't have enough. If you are willing to take the 1.2m, invest most of it with a proper AA (for your peace of mind, but with the caveat that you must, at your young age, include a good chunk in equities) and keep a couple hundred thousand cash for 2-3 years living expenses. Over those 2-3 years, unwind your overweighted in CDs position, adding to equities and some bonds. If you were not willing to diversify away from CDs, then I think you may find yourself running out of money before you run out of time.

Hope you don't take this as criticism from a pompous jack @$$...it is just my two cents worth, and it may not be worth even that, but if I was you and wanted to retire, this would be my general direction.

Good luck with the sale.

R
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Old 08-22-2013, 08:22 PM   #12
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Quote:
Originally Posted by haha View Post
Kind of unusual to have ~$4million in taxable accounts for this board. Have you sold other businesses, or perhaps received a nice inheritance?

This has nothing to do with whether you can retire, like others have said just check your expenses against your resources and it should be clear one way or another. I disagree with a previous poster who said "unless you have a superyacht... ". Your assets are nice, but a long way from no worries, ever, style.

I certainly have less, but I also know reasonable people who are making good money who would require a lot more to feel ok in retirement.

And the $50,000 average for a middle class life? I guess it depends on the definition of middle class. There are some very engaged advocates for low amounts being adequate so this is not a debate I want to open. But when a route postman earns $60-65k, airport baggage handlers with no high school diploma can earn in the low 6 figures, ask yourself what sort of "middle class life" we are talking about at $50k for a couple or small family. This has nothing to do with you. You can obviously lead a fully middle class life on your assets, or less.

Ha
I have a large amount in taxable CD's because I am probably way to conservative. They are averaging about 3.8 percent right now with some high interest ones going all the way out to 2017. My income bracket won't allow Roth or regular IRA's, thou I did do some SEP IRA's in the past. We don't spend a lot , under 80k a year. Thanks for all the advice. Will keep you posted.
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Old 08-22-2013, 09:15 PM   #13
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Originally Posted by pletal View Post
I have a large amount in taxable CD's because I am probably way to conservative. They are averaging about 3.8 percent right now with some high interest ones going all the way out to 2017. My income bracket won't allow Roth or regular IRA's, thou I did do some SEP IRA's in the past. We don't spend a lot , under 80k a year. Thanks for all the advice. Will keep you posted.
If you have your own business worth seven figures you may want to look into a custom retirement plan.
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Old 08-22-2013, 09:30 PM   #14
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Originally Posted by pletal View Post
I can't see any downside of getting out of the rat race. Am I missing something ?
No.
Quote:
A few of my friends said I should keep working. I am burned out.
Show appreciation to their advice but call it quits.
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Old 08-22-2013, 09:45 PM   #15
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Give him a break. With his assets, and expenses of $80,000, retiring is a no-brainer even with current asset allocation.
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Old 08-22-2013, 09:46 PM   #16
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...My income bracket won't allow Roth or regular IRA's, thou I did do some SEP IRA's in the past. .
Maybe I am missing something, but I thought since 2010 you could make non-deductible traditional IRA contributions and then convert these to a Roth IRA without any upside income cap.

On the other hand, you would not be allowed to contribute directly to a Roth or to a deductible IRA.

-gauss
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Old 08-23-2013, 10:07 AM   #17
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Originally Posted by Rambler View Post
I'm gonna throw in my two cents:

I think that if you have 3.8M in CDs, contracted within the past few years during the super low CD rate cycle, then, no. You don't have enough. If you are willing to take the 1.2m, invest most of it with a proper AA (for your peace of mind, but with the caveat that you must, at your young age, include a good chunk in equities) and keep a couple hundred thousand cash for 2-3 years living expenses. Over those 2-3 years, unwind your overweighted in CDs position, adding to equities and some bonds. If you were not willing to diversify away from CDs, then I think you may find yourself running out of money before you run out of time.

Hope you don't take this as criticism from a pompous jack @$$...it is just my two cents worth, and it may not be worth even that, but if I was you and wanted to retire, this would be my general direction.

Good luck with the sale.

R
I don't think this logic applies when you have 47x of expenses. I think it is good advise for someone trying to eek by on 1 - 1.5 mil. But he has already won the game. When you start with 3-4 times what you need and are conservative I fail to see how any equity allocation math wise could top his portfolio value after 10 years or maybe even 15 years.
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Old 08-23-2013, 11:32 AM   #18
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Originally Posted by daylatedollarshort View Post
That was meant as a joke, exaggerating to make a point, not meant to be taken literally. Super yachts are hundreds of millions of dollars.

See hyperbole -

Hyperbole - Wikipedia, the free encyclopedia
Oh gosh! No idea how I missed that! Well, I learn something new every day.
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Old 08-23-2013, 11:52 AM   #19
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Big Congrats on the Whopping nest Egg!

Sell the business - I just sold mine & my only regret is that I did not do it sooner!

Don't let that happen 2 U.

I also would suggest getting a financial planner to get the asset allocation tweaked - you are over weighted in the CDs.

Happy FIRE to U....
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