Was just fired from job...35...approx 420K in assets...Time to throw in the towel?

[oldcarfan]

As of mid-September I was fired from my position as asst. manager at a small business in the U.S. Have approx. 420K in liquid assets, age 35, no debt, do not own home. Currently without health insurance, no dependents. Have extremely frugal habits and can probably live on 8 or 10K a year as long as no major health or lifestyle change.

Currently living in a very depressed economy (that's why only 8K is required) and would never relocate. Love where I am. Love not working! However am concerned about financial consequences of retiring now.

Can I afford to retire at this point? (am conservative investor but flexible if income is needed)

 

[MasterBlaster]

Well using the forum standard 4% SWR in a mixed portfolio, $420k brings in a reliable $16.8k/year.

If you can live on that for all of your expenses then you are set.

If not then you better find some work.

 

[dex]

Can I afford to retire at this point? (am conservative investor but flexible if income is needed)

Prior to being fired what were your plans?

 

[ziggy29]

Rents go up and you need health insurance. So I'd say the answer is "almost certainly not."

 

[FIREd]

First, you say you could probably live on $8K-$10K a year. Better make sure...

Second, I think you need to protect your existing assets with some kind of heath coverage. Perhaps catastrophic health insurance (HDHP) could work for you. I think retiring completely would be difficult at this point, but if you can find a part time job and earn enough income to cover health insurance and emergencies, I think you'd be in pretty good shape.

 

[glippy]

I'd say buy a distressed foreclosed home in your area and fix it up with all your free time so you have a place to live. If you're in a depressed area there ought to be plenty around. I just bought a house in New England for less than $30k. They're there if you can pay cash and swing a hammer.

If you can set aside $100k out of your nest egg, invest it wisely and not touch it for 20 years it ought to mature to a healthy amount to cover one of those Cadillac health plans in 20 years when you're 55, a <$100/month disaster plan ought to do for now. In the meantime you can have 20 years of stress-free life with plenty of time to take good care of your health.

Also, I'd look into seeing if you're eligible for unemployment benefits. Those can last up to almost 2 years now-a-days. They ought to cover your frugal living expenses giving your nest egg a little more time to mature, untouched.

If you're not willing to take some risk then enough will never be enough.

 

[FUEGO]

I second the suggestion for unemployment. Our state pays you $50k to not work for 2 years. You say you were fired, but apply for benefits anyway. Lots of times they will err on the side of the employee, especially during "these difficult economic times". Assuming you didn't steal from your employer or beat up somebody on the job.

Regarding health insurance, you may want coverage more for your assets than for the actual medical benefits. It may be a moot point in 3 more years if the current laws stay in place. Assuming you don't generate a lot of taxable income, you'll get free or very cheap government subsidized insurance starting 2014 (and assuming politics don't change and the health insurance laws don't change from what they are now).

I'll take the opposite angle and say "why not retire?".

 

[haha]

You obviously are very good at saving, that is a wonderful amount to have at 35 without having got a big hit like options. Congratulations on that.

I can't say whether it is adequate, twice that wouldn't be enough for me at age 69. But you are in a diferent location, and you obviously live differently from me.

Ha

 

[Sam]

Have approx. 420K in liquid assets, age 35, no debt, do not own home... Have extremely frugal habits and can probably live on 8 or 10K a year as long as no major health or lifestyle change.

If you can live on 10K/year, go ahead. You have more than enough money. The longer you live, the richer you'll be. You will end up with about $20 million when you reach age 65.

And please share with us your itemized 10K annual budget.

 

[MasterBlaster]

you can live on 10K/year - anybody can really.

The question is.... Do you want that 10k lifestyle ? Or do you want a better lifestyle ?

 

[Coach]

oldcarfan, a decision to retire isn't irrevocable -- you certainly could give it a try for a few years and see what you think.

Coach

 

[GusLevy]

I pulled the ripcord myself last year and so having the first yr behind me the biggest suggestion that I would make to you is to at least sign up for COBRA since you noted that you have no current insurance. The plan that I have is good for 18mo and is subsidized 60% due to current federal legislation. In addition, some states like CA will extend COBRA for an additional 18mo once the federal COBRA expires. Anyway, I experienced a complete rupture of my Achilles Heel back in August which certainly made me aware to be insured at all times from hereon: The injury would prob have cost me a minimum of $15k if I did not have my COBRA.

Good luck.

 

[NW-Bound]

oldcarfan, a decision to retire isn't irrevocable -- you certainly could give it a try for a few years and see what you think.

Coach

Yes, that pretty much sums it up!

It is tougher for older folks who are still clinging to their existing job, because they fear they will not be able to re-enter the work force with the same pay. However, the OP is still young.

 

[Independent]

In my state, an HSA eligible health care plan with a $2,750 deductible and $2,750 max out-of-pocket has an annual premium of $1,361 (male, 35, nonsmoker, standard). It's a large chunk of your spending, but only 0.3% of your assets. I think I'd take that to protect the assets.

I'll bet you'll eventually get bored living on $8k-$10k, but there's plenty of time to think about other things you could do. I think that buying a fixer-upper is a great idea, but that's my personality.

(If old-car-fan is a self description, this may work for you.)

 

[harley]

Sure you can. Check out this conversation from the movie Office Space.

Lawrence: Well, what about you now? what would you do[if you had a million dollars]?
Peter Gibbons: Besides two chicks at the same time?
Lawrence: Well, yeah.
Peter Gibbons: Nothing.
Lawrence: Nothing, huh?
Peter Gibbons: I would relax... I would sit on my a## all day... I would do nothing.
Lawrence: Well, you don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do s#*t.


I wouldn't do it though. You've still got a whole life in front of you, one that could include a wife, kids, travel, etc. You don't want to lock yourself into a mean existence. Also, you're bummed out right now (understandably). Take some time, look around, think about things, maybe look for a career you think you'd enjoy more, whatever. Never make big decisions when you are bummed. And definitely go for the unemployment. Good luck.

 

[Midpack]

You sound like a perfect candidate - here's how you can retire now, seriously...good luck. Early Retirement Extreme: — written by Jacob Lund Fisker, Freelancer

 

[kumquat]

If your hobbies are defined in your screen name, you can't live on $8k - $10K per year.

 

[Moscyn]

35 is still very young and you may meet someone you want to share your life with, have children, have new hobbies or interests, etc. Why not give yourself a two to three year non-working break and see how you feel about a frugal lifestyle and imagine living like that for the rest of your life. The point is you have the advantage of youth and can work a few years and save up more and make a difference in your retired lifestyle if you wish to.

 

[cardude]

I would say, based on my experiences, that 35 is too young to consider yourself retired forever. As other posters have said, why not just call this a sabbatical, recharge your batteries, and then get ready for the rest of your life. I can't imagine being retired and alone for the next 40-50 years.

My experience is that I got out of the car business a couple of years ago when I thought the sky was falling. I'm 45, married and have two boys ages 11 and 13. I have plenty of stuff to do between kids and dw (who still works) and fishing and surfing, etc., etc., and am having a good time, but I still wonder from time to time if I quit too early. In hindsight, I could have sucked it up for a year and then the business would probably have gotten back on track and I'd be busy making money. However, I had enough money (sub 2% swr), and I was all stressed out, so that's why I did it.

So I would suggest you methodically find something you want/like to do (not just for the money, but enought money so you don't have to live like a hobo), find a good wife or partner or whatever to share your experiences with, and have kids if you're able so when you get older can watch them grow and prosper. Basically, get busy living.

 

[Nords]

In hindsight, I could have sucked it up for a year and then the business would probably have gotten back on track and I'd be busy making money.

If you could go back in time to just about any date between late 2007 and March 2009 to reassure the car dealer you were back then, would you have believed yourself?

 

[obgyn65]

Agree with this.

Well using the forum standard 4% SWR in a mixed portfolio, $420k brings in a reliable $16.8k/year. If you can live on that for all of your expenses then you are set.

 

[chinaco]

You might be able to FIRE if you were doing it in extreme terms. But you would be living at close to a poverty level.

You need to educate yourself and do some careful (and conservative analysis).

IMO - Unless you are ill or know that you will have a short life... you are likely to need to go back to w*rk. Take some time to regroup, develop a plan for FIRE, go from there and follow your plan. This unexpected interruption (job loss.. can I just stop working) is not a plan... perhaps a reaction to what happened... but not a plan

 

[zpdrmn]

Some suggestions on housing, health insurance, etc are already posted by other members. As for life style, you decide on what you like. Some people have suggested doing more things, things you may not be doing now. But what the...
Since you can live a frugal life, you may be able to lead a simple life too. If you are spiritually inclined, you could be a monk/nun (not suggesting that's the only way to go, a because...therefore connection, or an if..then connection there). You can go even simpler than what you're doing now. Just a thought.
The decision is all yours.

 

[Midpack]

Well using the forum standard 4% SWR in a mixed portfolio, $420k brings in a reliable $16.8k/year.

If you can live on that for all of your expenses then you are set.

If not then you better find some work.

4% SWR is based on a 30 year retirement, hopefully not likely at age 35. I have heard people here say 3% is the indefinitely sustainable SWR...but that's still $12.6K/yr FWIW.

 

[oldcarfan]

Prior to being fired what were your plans?

To continue working indefinitely but retire as soon as financially possible. Job had good health benefits while it lasted