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What am I missing?
Old 01-17-2013, 06:33 PM   #1
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What am I missing?

OK, I've been looking at posts here for quite awhile, and have seen numbers run ,till I'm blue in the face. Seems like trying to predict an unpredictable future- kind of like the long term weather forecast.

Still, some people with seemingly good numbers take the plunge and RE, while others with equally good numbers do not. What makes people choose one or the other?
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Old 01-17-2013, 06:37 PM   #2
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Motivation.

Some of really wanted to get out of the rat race. Others not so much.
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Old 01-17-2013, 06:44 PM   #3
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Not having access to health insurance is ( was ) a major obstacle for most wanting to retire early.
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Old 01-17-2013, 06:53 PM   #4
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Not having access to health insurance is ( was ) a major obstacle for most wanting to retire early.
I'm curious, is this really true for most people?

I never gave it much thought really. I had worked for myself a few times over the years and had purchased insurance before. When I retired two years ago, we got a high deductible health plan along with an HSA and it has worked out well for us.

Maybe certain states have more problems than others? We live in Ohio.
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Old 01-17-2013, 07:53 PM   #5
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For me, not in order of importance....

- I'm 43 and retirement could be quite long
- young kids, so living expenses will vary in the future
- sandwich generation, been helping my mom for a few years already
- college, first house down payment, & wedding funding for the kids, are nice to have options, if they are deserving
- enjoy domestic and international travel, so extra $ would be nice in ER
- healthcare expense

I think I'm targeting under 3% SWR by age 48, then I'll really have to decide if I enjoy what I do or another path is needed. YMMV
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Old 01-17-2013, 08:19 PM   #6
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For me it comes down to priorities. I've only got one life to live and once I have achieved financial independence, there are other things to do that I value more highly than working in my current job.

I am hanging in there a bit longer than the numbers tell me is necessary. Possibly I'm being too cautious, but I'd rather work for a bit longer now than run the risk of having to either look for work or take involuntary cuts in my standard of living late in life.
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Old 01-17-2013, 08:23 PM   #7
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I never gave it much thought really. I had worked for myself a few times over the years and had purchased insurance before. When I retired two years ago, we got a high deductible health plan along with an HSA and it has worked out well for us.
Article claims that 1/2 of americans are uninsurable due to pre-existing conditions:

A pre-existing health-conditions study says half the country is uninsurable. - Slate Magazine
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Old 01-17-2013, 08:31 PM   #8
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Quote:
Originally Posted by mpeirce

I'm curious, is this really true for most people?

I never gave it much thought really. I had worked for myself a few times over the years and had purchased insurance before. When I retired two years ago, we got a high deductible health plan along with an HSA and it has worked out well for us.

Maybe certain states have more problems than others? We live in Ohio.
I have heard a few times that Ohio has some relatively sane rates, which I am also assuming you are healthy. My health insurance is dirt cheap in MO with a high deductible, also. I think it comes down to fortunate health and low cost areas. Some of the rates quoted by members here would force me back to work just to pay for the premium. This past year having a healthy year, I actually made a small profit on carrying health insurance when factoring in the HSA tax break, so it represented less than zero percent of my budget. I hope it continues.
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Old 01-17-2013, 10:28 PM   #9
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Health insurance is definitely a factor. It's a big expense, and if you have pre-existing conditions you may not be able to afford it or get it.

We all have very different levels of risk tolerance, and we all have different levels of income we're looking for in retirement. Some people are all CD's, pensions, and annuities, some are all equities. Some are willing to try 4% SWR, some want <2%. Some could accept a step down in lifestyle if things went south during retirement, some can't. Look at the wide variance in allocations for target date retirement funds. Even "professional" money managers can't agree what we should do.
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Old 01-17-2013, 11:48 PM   #10
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Health insurance was the last piece of my ER puzzle to fall nto place before I ERed in late 2008. New York, my home state, is terrible for individuals trying to buy HI. I had found a decent HI policy in 2009 when my COBRA expired (see below) but they increased the premiums by 20% for 2010 and 25% in 2011 (a 50% total increase), making the policy pretty much unaffordable. So I switched to a more bare-bones policy midway through 2011. The ACA will help me go back to a better policy without costing me the arm+leg I was paying in 2011.

In 2007, I reduced my work hours to below the minimum 20 hours per week to remain eligible for their group health plan. So I went on COBRA for the next 18 months, expecting to leave the company by the end of 2008. The one thing I did not want to do at the time was to be working yet having to pay top dollar for an individual HI policy. I lobbied to get my employer to continue COBRA bayond 18 months or let me pay 100% of the group health premiums (instead of 50%) to return to their group health program but they refused.

So once all the numbers fell into place, I ERed in late 2008, just before my COBRA expired. I amde sure to let them know how stupid their group health rules were, as I might have stuck around a little longer had they let me stay on COBRA or reenroll in their group health program. (But the main reason I left was the terrible commute, even 2 days a week.)
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Old 01-18-2013, 02:46 AM   #11
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Originally Posted by mpeirce View Post
I'm curious, is this really true for most people?

I never gave it much thought really. I had worked for myself a few times over the years and had purchased insurance before. When I retired two years ago, we got a high deductible health plan along with an HSA and it has worked out well for us.

Maybe certain states have more problems than others? We live in Ohio.
No question this is a state-dependent issue. YOYO in some states with no shall-issue HI provisions. In others their "high risk" pool is closed to new applicants. Nationally- ACA is not a sure thing as deadlines keep getting pushed back. Open enrollment in HI exchanges is supposed to start Oct 1, but some pundits are now opening doubting this will happen. I know many who are rooting for the exchanges to start up on time so they can join RE Class of 2014.
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Old 01-18-2013, 04:35 AM   #12
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Originally Posted by rbmrtn View Post
Not having access to health insurance is ( was ) a major obstacle for most wanting to retire early.
THIS.

Besides that, I don't have any specific desire to stop working, but I don't want to continue working doing what I'm doing "at all costs" (read: substantially lower salary). Just by staying, my salary has lost 16% buying power over the last 11 years, and a job switch in my situation would result in a big drop in pay, not an increase. So I'll ride this wave into shore, even if that means another 11 years and another 16% loss in buying power - but there will be a limit in terms of increased aggravation and/or decreased buying power. While we're not at FI yet, once we get there (perhaps 11-12 years from now) my inclination to simply step off will skyrocket.
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Old 01-18-2013, 04:46 AM   #13
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In my case, I need extra financial cushions. I am turning 48 this year, still pretty young to FIRE. Ambivalent about the loss of a high paying, high status, highly trusted and respected position.
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Still, some people with seemingly good numbers take the plunge and RE, while others with equally good numbers do not. What makes people choose one or the other?
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Old 01-18-2013, 06:58 AM   #14
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Old 01-18-2013, 08:44 AM   #15
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OK, I've been looking at posts here for quite awhile, and have seen numbers run ,till I'm blue in the face. Seems like trying to predict an unpredictable future- kind of like the long term weather forecast.

Still, some people with seemingly good numbers take the plunge and RE, while others with equally good numbers do not. What makes people choose one or the other?
There can also be precipitating events, such as expected or unexpected layoff, early-out offers from the employer, and health crises either personal or familial.
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Old 01-18-2013, 09:04 AM   #16
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Jake, my number crunching led to the same result. You do it over and over again, change the variables, and all that, but in the end there is no guarantee.

I don't even know if I qualify as an early retirer as I will be 63.5 years old on my last day of work, which is exactly 70 days from today. Health insurance was a big, big, big issue. I'm extraordinarily healthy in a general sense-ride a road bike 100+ miles a week, go to the gym, have great BP and cholesterol, etc., but I had an aortic valve replaced almost 6 years ago and will need another replacement some day. I also had a major injury that will result in a hip replacement--someday. Until there was some certainty, which there still isn't, I wanted to wait until I was within 18 months of medicare so I could COBRA if need be.

And the other factor was getting rid of debt.

We are now happily debt free and the numbers look good, but the insurance is keeping me here until I'm within 18 months of medicare.

Others may have different motivations, but this is my story and I'm sticking to it.
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Old 01-18-2013, 09:33 AM   #17
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We all have different motivations, and different levels of optimism or pessimism about our financial situations. I could likely have gone earlier than 60 but would have taken a big hit on a pension payout (but still would have been ok at the lower level). However, up until 58 more or less enjoyed the work. Last two years not so much. So a month after turned 60 left, took a month off, and then restarted career in private sector at a higher salary. It didn't work out as the work wasn't to my taste and after having had a month off unfettered, let the new job just dribble down to nothing. I've concluded that a lot of what made the job(s) enjoyable just don't mean anything to me anymore. That and a fast growing intolerance for BS of any kind. Frankly, if I lost all assets, pension, etc and had to return to work, I think I'd, well....couldn't do it.

So in conclusion, it's just a matter of your own personal situation, mood, and comfort level with your finances.
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Old 01-18-2013, 01:23 PM   #18
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There can also be precipitating events, such as expected or unexpected layoff, early-out offers from the employer, and health crises either personal or familial.
+1. ER was kind of foisted upon us, but only 2 years ahead of schedule. Those two years would have made the difference in many factors (including HI, though that was renegged on by employer anyway) affecting pretty confident security vs. not-so-sure borderline insecurity.
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Old 01-18-2013, 01:37 PM   #19
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I've just reached the edge of the FI universe so now i am working to bank more $$ so my "fun" expense can be increased. Also, many of us here are very (anal)ytical, so we run numbers over and over again with different variables. Also, it takes some time to get a real feel for wht your spending will be. I'm 42, so RE for me would (hopefully) be a long time, and I'd rather put in more years now, then have to be a wal mart greeter when I'm 70.....
All that being said, i'm shooting for a <=3% withdrawal for RE, at or around 2015.
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Old 01-18-2013, 04:34 PM   #20
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Jake, my number crunching led to the same result. You do it over and over again, change the variables, and all that, but in the end there is no guarantee.

I don't even know if I qualify as an early retirer as I will be 63.5 years old on my last day of work, which is exactly 70 days from today. Health insurance was a big, big, big issue. I'm extraordinarily healthy in a general sense-ride a road bike 100+ miles a week, go to the gym, have great BP and cholesterol, etc., but I had an aortic valve replaced almost 6 years ago and will need another replacement some day. I also had a major injury that will result in a hip replacement--someday. Until there was some certainty, which there still isn't, I wanted to wait until I was within 18 months of medicare so I could COBRA if need be.

And the other factor was getting rid of debt.

We are now happily debt free and the numbers look good, but the insurance is keeping me here until I'm within 18 months of medicare.

Others may have different motivations, but this is my story and I'm sticking to it.
My dad did the same thing in 1994 when he retired. With my mother ill from cancer, it was imperative that they had uninterrupted medical insurance coverage. He quit when he was 63.5 (my mom had researched this) and went on COBRA to bridge him over to 65 and Medicare. Sadly, she died one year into this plan but it was still a good plan.
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