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Old 02-06-2012, 02:59 PM   #61
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If you've got evidence as to why our economic picture is going to get better, why school quality and health quality is going to improve, I'm all ears.

Has there ever been a time in history that we didn't have something to worry about. Stop it and go enjoy yourself.
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Old 02-06-2012, 03:05 PM   #62
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Welcome to the board, WK.

I'm surprised that nobody has mentioned health insurance yet. (You're covered for your spouse's upcoming delivery, right?) Your premiums would probably start out pretty cheaply but you'd have to watch out for emerging issues. In about 25 years you'd have to address the long-term care insurance question.

You need to spend the next few months not just with your family, but teaching yourself about asset allocation and realistic investment returns. You're going to need to learn how to safely annuitize that $3M to provide about five decades of reliable after-tax after-inflation income without consuming the principal. For example, you could put it all in Vanguard's Wellesley and see if your budget would fit within those returns. None of your mentors have a clue how to simultaneously cover all the adjectives in front of the word "income", unless they're running endowments for private universities.

I've been ER'd for nearly 10 years since age 41, and I suspect that sometime during the next 30 years of your life you're going to find some sort of paying hobby or project consulting that will produce at least $25K/year. It might not happen until your kids leave the nest, but I'd say the odds of it happening are at least 60%.


You're inviting yourself to go on a self-imposed guilt trip. Kids that age don't give a rat's ass about the finer material possessions in life. They want you there to spend time with them. If you do a consistent job over the next decade then they still won't care about the finer material possession. They may whine about it, but they won't be deprived.

It's all too easy to spend money on a kid to inspire an entitlement attitude that leads right to affluenza.
Great post, thank you.

I agree that kids don't give a crap about 'nice things'.....BUT, while I was growing up I remember EVERY kid on my school bus having the Levi's jeans, the newest Nintendo game, etc etc etc. And the kids KNEW it. Sadly they also knew I was the K-mart kid and let me know it every day, lol.

I want to find a happy medium for my kids. I want them to have SOME stuff, but I don't want their life to revolve around STUFF.
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Old 02-06-2012, 03:08 PM   #63
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Has there ever been a time in history that we didn't have something to worry about. Stop it and go enjoy yourself.
You are right. BUT....

When I was 17 in 1992 our country was in recession.

But we weren't worrying about the sustainability of anything from our health system to our financial system.

Our European friends are now forced to bite the austerity bullet.

I think we're next....even if we don't realize it yet. I hope I'm wrong, but there's 20 trillion reasons why I think austerity is coming.
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Old 02-06-2012, 03:13 PM   #64
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Well, I refuse to sit around worrying about what's going to be. I can only base my assumptions on what's happened in the past since I don't know the future. If it's important to you to keep worrying and working then that's what you have to do. In the mean time I'm going to go back to doing nothing.
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Old 02-06-2012, 03:17 PM   #65
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.....BUT, while I was growing up I remember EVERY kid on my school bus having the Levi's jeans, the newest Nintendo game, etc etc etc. And the kids KNEW it. Sadly they also knew I was the K-mart kid and let me know it every day, lol.
And how are those uppity brats doing today? My guess is that a few of the brats have been successful but most are struggling like many Americans. It looks to me like the K-Mart kid has done pretty well.
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Kids and money
Old 02-06-2012, 06:08 PM   #66
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Kids and money

I'm in your area, similar finances but a few years older, hoping to escape the grind as soon as I can but thinking I need about $6 not $3. Mostly because like you I see lots of risks over the next few decades. I just wanted to toss in one thought. I went to a nice private school as a kid, but in a smaller and less expensive town. I was teased for not having the right clothes and watches and whatnot too but I survived just fine and there were plenty of other kids around in a similar position. I wonder whether a good bit of your budgeting anxiety is being driven by the extraordinary wealth in the DC private school community. Keeping up with those Joneses is a nightmare, especially if you're already paying north of 30k a year per kid in tuition. I really don't think it's necessary. Move to McLean or Potomac or whatever and use the excellent public schools. Your kids will have plenty of peers who are as smart as anyone at Sidwell and don't wear designer clothes. Better yet, if you aren't working why live in this crazy expensive area at all? Plenty of nice places to live in this country that are cheaper and have great schools and good role models for your kids. I bet there are even pockets within a close drive. Prince William? Charlottesville?
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Old 02-06-2012, 06:28 PM   #67
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And how are those uppity brats doing today? My guess is that a few of the brats have been successful but most are struggling like many Americans. It looks to me like the K-Mart kid has done pretty well.
+1. I was from the poor side of town and struggled with my too short pants and not so cool clothes. Fast forward 30 years and at my high school reunion I was one of the most successful people there. I attribute a lot of my relative success to the fact that I didn't have everything handed to me on a silver platter. I wouldn't encourage anyone to make their kids suffer, but too easy a life is no real gift.
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Old 02-07-2012, 12:53 PM   #68
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No doubt about it, kids can be rough on each other. I knew plenty of kids from the poorer side of the tracks practice their own retributions to the rich kids. I do attribute my modest wealth from learning value of money habits in my formative years. My daughter had the burden of aspiring to be rich in a richer area, but being stuck with the wrong (middle to lower middle class mentality) parents.

As I face my fear-of-the-future worries, I live on my guaranteed retirement income and bank my earnings that are above that. It is more austere than I want, so I continue to work until I reach my higher 'number'.
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Old 02-07-2012, 07:52 PM   #69
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Great post, thank you.
I agree that kids don't give a crap about 'nice things'.....BUT, while I was growing up I remember EVERY kid on my school bus having the Levi's jeans, the newest Nintendo game, etc etc etc. And the kids KNEW it. Sadly they also knew I was the K-mart kid and let me know it every day, lol.
I want to find a happy medium for my kids. I want them to have SOME stuff, but I don't want their life to revolve around STUFF.
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I readily admit that my spending is MUCH higher than the norm. I guess it's all relative....to many people, $230k seems crazy high. BUT, I know more than enough people who would consider $230k somewhat of a failure.
Please don't get the wrong idea of me. I'm not a show-off-yuppy type.
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... I decided that I'd rather raise my kids around snobs than around the backward-hat-wearing crowd.
I don't want to teach my kids that they MUST have expensive clothes to be accepted, but I also don't want to send them to nice schools without ANY of the stuff that the other kids have...hence my higher spending projections.
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Cool, but please note I've eagerly listened to all advice and critique.
Well, in that case, let me suggest what REWahoo! is thinking:
Dude, you're a yuppie.

We have members of this board who have retired on less than a third of your net worth, kids & all, and they're quite happy. Fulfilled. Content. They never complain about their kids getting beaten up, either. Maybe your parenting assets would be better spent on martial-arts training instead of juvenile wardrobes.

Your budget is not aligned with your values. You're spending money for things that you don't think are right and that you don't want to do. You're kvetching with what you're being told because you don't agree with it. You're carrying a small chip on your shoulder. For some reason in your first dozen posts you seem to think that we're not sure how to do this ER thing correctly.

You're the only one who can resolve your spending issues. You're spending way too much to solve nonexistent problems. It's not the politics, it's not the fracking, it's not "austerity", and it's not the rich kids beating up people. It's your values, and right now they're being overwhelmed by your fears. When you figure out what's important to you-- to you, not to others-- then you can spend your money where it makes you happy... and you won't have to worry about status symbols.

Until you figure that out then it would probably be best to take an extended vacation to do the reading in books like Zelinski's "How to Retire Happy, Wild, & Free" along with Bernstein's "Four Pillars". You have some serious thinking ahead of you, and you're not going to get much of it done here with a repetitive series of "Yeah, BUT" posts.

Just so you know, we've had similar posts from other members with net worths like yours and concerns like yours. You are not the first to "suffer" from these issues. I sincerely hope that you are the first to resolve them. For some reason the people with smaller net worths seem to have figured out how to solve these problems without the extra million or two.

Danmar, if you're still around here, you might want to take this one!
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Old 02-07-2012, 11:22 PM   #70
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Until you figure that out then it would probably be best to take an extended vacation to do the reading in books like Zelinski's "How to Retire Happy, Wild, & Free" along with Bernstein's "Four Pillars". You have some serious thinking ahead of you, and you're not going to get much of it done here with a
.. another idea - a Buddhist Retreat could be a way to explore what's important to you.
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Old 02-08-2012, 02:15 AM   #71
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@Rescueme post #36. Couldn't have said it better myself. The OP was asking about long term returns not spending levels. Obviously if you can't realistically fund a certain spending level, you need to save more or spend less. Once you have the savings though, spending at a conservative SWR ,no matter how high the dollar amount is, is not morally wrong. At least in my view anyway.
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Old 02-08-2012, 02:27 AM   #72
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Nords. Just read your post referring to me. Have been away for a while but thought I would check in. the OP is very young and I agree needs some time to figure some of this stuff out and decide what's important to him. I wouldn't retire at his age wih his assets but to each their own. It certainly could be done if he wanted to and many have. I didn't read all the posts and maybe he deserved your response but maybe his age and inexperience is showing through? Cheers.
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Old 02-08-2012, 06:48 AM   #73
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@Rescueme post #36. Couldn't have said it better myself. The OP was asking about long term returns not spending levels. Obviously if you can't realistically fund a certain spending level, you need to save more or spend less. Once you have the savings though, spending at a conservative SWR ,no matter how high the dollar amount is, is not morally wrong. At least in my view anyway.
+1 We have got way off on a level of spending tangent. While the level of spending is outrageous compared to what many of us live on in retirement, it wasn't the OP's question, which had to do with whether a 7.7% rate of return was sustainable/prudent.

The average annual return for a 60% bond/40% stock portfolio for the period 1926-2010 according to Vanguard was 7.8% and for a 40% bond/60% stock portfolio for the same period was 8.7%. see https://personal.vanguard.com/us/ins...io-allocations

So based on historical returns it would seem that a 7.7% long term rate of return is possible. My reluctance would be that this economic downturn is unique and the low interest rate environment is such that we may well have defined a "new normal" where investment returns are significantly lower than returns of the last century. As for me, I'm assuming a 5.5% return for a 40%/60% portfolio in my static projections (and 3% inflation or a real return of 2.5%).

I think OP may be able to retire using a combination of careful and flexible spending and prudent investing with leverage. At the least, I think he should take some time off, enjoy life and his four year old and newborn for a while and think about what he wants to do for the rest of his life and what his values are.
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Old 02-08-2012, 06:51 AM   #74
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I agree with an earlier post-consider rental property, esp. single family homes. I have never earned less than 10-12% on paid off properties, (less if you pay for management help-however, the tax benefits of deductions should offset those costs and then some).

Many real estate people are noting the change in attitudes about home ownership, esp. with the young. Many are afraid to make the investment plunge and will become long term renters. Good long term investment with prices so low and people always needing a roof over their heads.
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Old 02-08-2012, 09:51 AM   #75
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Wilton, I do not disagree with many or even most of your points. I may get mocked for this, but overall I think for people who have children to raise well, the world gets tougher every day.

My generation was the top of the hill. More opportunity, more help, somewhat saner government, cheap energy, cheap school tuition, less inter-group conflict. But once the descent is begun, there may be ups and downs, but the course is down. Just like when you start down a mountain. The trail will go up and down, but you know that you will be going down overall for a long while to come.

I share your dislike for backwards caps, and even more for pants worn below the buttocks. When I started high school over 50 years ago I came home after a few days and told my mother, I won't survive being around these hoodlums. So she took on my dad and within a week I was at an elite school where I actually looked up to and respected the very high achieving new classmates I had. Money makes the mare go, regardless of how stridently people may deny this. Also, it cannot be overemphasized that parents have a totally different set of responsibilites from singles or couples without children. If a non-parent wants to drive around in a 15 year old car with 15 year old safety and s/he feels ok with it, big deal. Their decisions are not as far reaching as those of a parent.

I think your ideas about the money it takes are better than most, and definitely more realistic. But investment returns do not respond to our needs, only to background economic reality and starting valuations.

So if you have a good wife, ring the cash register if you want to but go right back to what you know works, and feel good that you are taking care of business.

Ha
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Old 02-08-2012, 10:39 AM   #76
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Your budget is not aligned with your values.
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You're spending way too much to solve nonexistent problems. ... When you figure out what's important to you-- to you, not to others-- then you can spend your money where it makes you happy... and you won't have to worry about status symbols.
On the up-side, you know what your values are. They're just tangled up with your goals, your fears, your past experiences, and etc.

You've already received a lot of good advice, but I thought I'd speak up because I have been where you are. Retired at 42 with two kids, burned out from a long-term business, etc.

My advice would be to give yourself a definite year or two of sabbatical. Spend that time just relaxing and recovering from the burn-out. Be with your family. Enjoy life. Refill the well.

I guarantee that time will be chock-full of education. You will find out things you did not realize about yourself, the people around you, your kids, your day-to-day life, your wants, your needs. You may enjoy life so much that you realize you are willing to sacrifice some things in order to keep your freedom and that time with your family.

You'll also be in better shape to decide what you want to do work-wise for the next chunk of time. After you take a breather, you may realize there's something you *want* to do. There are *many paths* -- you are on one, and maybe that's your preferred path and you will want to stay there. But you have plenty of time and money to explore what else is out there. You have the freedom to pursue whatever you want -- why not give yourself as much information as you can? Not just about businesses you can buy, but lives you can live?
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Old 02-08-2012, 11:08 AM   #77
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This thread has certainly been an interesting one. We are a varied group. There has even been some hint of private school mentality versus public school mentality. I have a granddaughter in public school here. Have there been any problems? Yes, but though different I think there would have been as many problems if she was in private school instead. Overall she has done very well. Kids can be pretty tough on each other no matter what their background. It seems to me that comparing private and public schools in this area the drug use and the level of entitlement mentality is pretty similar. Kids using drugs and harboring a strong entitlement mentality whether from good neighborhoods or the ghetto want to hang out and not work on their education. Good kids who want to learn can mostly ignore them and get a pretty good education whether in public or private school.
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Old 02-08-2012, 11:48 AM   #78
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The simple answer to your question, NO!

Not counting Social Security, the Initial Withdrawel Rate for a 60 year time frame should be no more than 2.5%. That means your porfolio should be at least 9M. Your 3M porfolio can sustain 75K per year.

Best advice is to keep working and reduce expenses and maybe retire in 10 years. Good luck!
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Old 02-08-2012, 12:54 PM   #79
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There has even been some hint of private school mentality versus public school mentality. I have a granddaughter in public school here. Have there been any problems? Yes, but though different I think there would have been as many problems if she was in private school instead. Overall she has done very well. Kids can be pretty tough on each other no matter what their background. It seems to me that comparing private and public schools in this area the drug use and the level of entitlement mentality is pretty similar. Kids using drugs and harboring a strong entitlement mentality whether from good neighborhoods or the ghetto want to hang out and not work on their education. Good kids who want to learn can mostly ignore them and get a pretty good education whether in public or private school.
From someone who went to public and private schools I agree. The worst kids I went to school with were a bunch of wealthy Catholic kids my senior year in high school. They were wilder in general than the norm at any of the public schools I went to. I live in a well to do neighborhood now, and the rich kids in the neighborhood are causing nuisance problems all the time (vandalism in all forms, drunk driving, etc.). There are good and bad everywhere it seems...
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Old 02-08-2012, 08:38 PM   #80
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There has even been some hint of private school mentality versus public school mentality.
Kids can be pretty tough on each other no matter what their background. It seems to me that comparing private and public schools in this area the drug use and the level of entitlement mentality is pretty similar. Kids using drugs and harboring a strong entitlement mentality whether from good neighborhoods or the ghetto want to hang out and not work on their education. Good kids who want to learn can mostly ignore them and get a pretty good education whether in public or private school.
When I think of the private vs public debate, I remember that most of the band members of Aerosmith went to private schools.

Why? Because they'd been expelled from the public ones!

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The simple answer to your question, NO!
Not counting Social Security, the Initial Withdrawel Rate for a 60 year time frame should be no more than 2.5%. That means your porfolio should be at least 9M. Your 3M porfolio can sustain 75K per year.
Best advice is to keep working and reduce expenses and maybe retire in 10 years. Good luck!
Gosh, you seem pretty certain that the answer is "no" and that the withdrawal rate should be 2.5%. Got a link to back that up?
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