rodiy2k
Recycles dryer sheets
I recently read a long thread on an article about the 4% withdrawal rule and its merits (or lack thereof). After skimming the 50+ replies, I took away a lot information, some useful, some not so useful. My wife and I are planning ER in 2017; (I will be 53, she will be 47). Relative to most on this forum, our plan seems a bit “out of the box” for three reasons:
1) First off, we plan on expatriating to Penang, Malaysia via a visa program called MM2H (Cost of living is significantly lower and we love Southeast Asia)
2) Rather than relying only on the merits of the capital markets or worrying about the sad state of artificially manipulated low interest rates, we plan on hedging it by paying of our mortgage, selling our overpriced California house, leaving the USA within a few months, and living mostly on the proceeds, at least through the years that would generate early withdrawal penalties if we tapped the funds (Roth and traditional IRA’s, two small pensions that won’t be available yet and 401k plans). Although we will probably take a loss (we paid $738K), we anticipate having 550 to 600K after realtor fees and the 50K that is required as a fixed deposit for the visa program.
We plan on simply budgeting a maximum of 50K per year rather than tap into any of our retirement assets and allow them to grow tax free until we need them. We anticipate this can generate ample income for 10 to 15 years based on our lifestyle choices. (This number is based on extensive research and posts on forums specific to Malaysian expat living and obviously depends on inflation, interest rates etc.) We’d probably transfer about 100K to the local currency initially and the rest will remain out of the market in laddered CD’s or similar interest bearing instruments. Leaving the bulk in USD affords protection in the event of another Asian debt crisis. (a real possibility given the amount of debt relative to GDP lately).
3) Most importantly, unlike everyone else, I do not have some master planned withdrawal spreadsheet, have not studied graphs, charts and read dozens of reports detailing how to make your money last, and will not hire a professional advisor even if they are fee-based. (I don’t feel we have enough net worth to really benefit from this). Granted, I work in the financial services industry for 30 years although I am not a licensed professional nor do I have any specialized training in retirement planning. What I do have is relatively good investing and budgeting skills. Although I don’t really doubt my ability to manage a successful early retirement, sometimes the forum makes me wonder if others think I’m crazy for “winging it”. A brief synopsis of our current financial situation follows and I will leave it open to comments, thoughts, suggestions.
We currently have about 500K in total investments plus an additional 100K CAD in a Canadian tax sheltered account ; At year end 2008, we only had 275M. We max out my 401k and my wife has both 403b and 457k; By doing this, it allows our taxable income to drop enough to make us eligible to also max out two Roth IRA’s; thus, we will invest about 63K this year; We also prepay about 20K a year on our mortgage. We’ve increased net worth by over 100% in 4 years by starting both retirement accounts shortly before the market bottom; Our portfolio is conservatively balanced at approximately 40% fixed income, 60% equities and is very diversified in a combination of mainly no-load mutual funds and some ETF’s and closed end funds; no individual stocks; The asset allocation is roughly 30% US, 20% Asia ex-Japan, 30% other foreign developed and 20% emerging market (the fixed income is very diversified).
In my personal opinion, although the market is ripe for a pullback, I anticipate that QE and the market’s eventual acceptance of its tapering should probably produce positive returns through 2016 or longer. Barring another calamitous financial crisis, I allow for a range that has us starting ER with an amount between 700K (low end) and 1MM (high end). We’d begin collecting the small pensions at age 50 (mine) and 55 (hers) and keep them in very safe investments or even savings products.
Once the house proceeds cash runs dry, I have absolutely positively no idea how much we’d need to withdraw every year to make it last another 20 or 30 years. What I do know is that nobody has a clue about future tax rates, and studying 100 years of past performance makes about as much sense to me as asking a psychic. There’s no way predicting future rates of return, political or social events that could trigger a crisis or timing the market. I’d rather concentrate on understanding how to use proper asset allocation and attempt to stay properly invested in any investing climate than worry about how much to withdraw each year. In lean times, live more modestly; in boom times I’d take an extra vacation
Am I crazy?
1) First off, we plan on expatriating to Penang, Malaysia via a visa program called MM2H (Cost of living is significantly lower and we love Southeast Asia)
2) Rather than relying only on the merits of the capital markets or worrying about the sad state of artificially manipulated low interest rates, we plan on hedging it by paying of our mortgage, selling our overpriced California house, leaving the USA within a few months, and living mostly on the proceeds, at least through the years that would generate early withdrawal penalties if we tapped the funds (Roth and traditional IRA’s, two small pensions that won’t be available yet and 401k plans). Although we will probably take a loss (we paid $738K), we anticipate having 550 to 600K after realtor fees and the 50K that is required as a fixed deposit for the visa program.
We plan on simply budgeting a maximum of 50K per year rather than tap into any of our retirement assets and allow them to grow tax free until we need them. We anticipate this can generate ample income for 10 to 15 years based on our lifestyle choices. (This number is based on extensive research and posts on forums specific to Malaysian expat living and obviously depends on inflation, interest rates etc.) We’d probably transfer about 100K to the local currency initially and the rest will remain out of the market in laddered CD’s or similar interest bearing instruments. Leaving the bulk in USD affords protection in the event of another Asian debt crisis. (a real possibility given the amount of debt relative to GDP lately).
3) Most importantly, unlike everyone else, I do not have some master planned withdrawal spreadsheet, have not studied graphs, charts and read dozens of reports detailing how to make your money last, and will not hire a professional advisor even if they are fee-based. (I don’t feel we have enough net worth to really benefit from this). Granted, I work in the financial services industry for 30 years although I am not a licensed professional nor do I have any specialized training in retirement planning. What I do have is relatively good investing and budgeting skills. Although I don’t really doubt my ability to manage a successful early retirement, sometimes the forum makes me wonder if others think I’m crazy for “winging it”. A brief synopsis of our current financial situation follows and I will leave it open to comments, thoughts, suggestions.
We currently have about 500K in total investments plus an additional 100K CAD in a Canadian tax sheltered account ; At year end 2008, we only had 275M. We max out my 401k and my wife has both 403b and 457k; By doing this, it allows our taxable income to drop enough to make us eligible to also max out two Roth IRA’s; thus, we will invest about 63K this year; We also prepay about 20K a year on our mortgage. We’ve increased net worth by over 100% in 4 years by starting both retirement accounts shortly before the market bottom; Our portfolio is conservatively balanced at approximately 40% fixed income, 60% equities and is very diversified in a combination of mainly no-load mutual funds and some ETF’s and closed end funds; no individual stocks; The asset allocation is roughly 30% US, 20% Asia ex-Japan, 30% other foreign developed and 20% emerging market (the fixed income is very diversified).
In my personal opinion, although the market is ripe for a pullback, I anticipate that QE and the market’s eventual acceptance of its tapering should probably produce positive returns through 2016 or longer. Barring another calamitous financial crisis, I allow for a range that has us starting ER with an amount between 700K (low end) and 1MM (high end). We’d begin collecting the small pensions at age 50 (mine) and 55 (hers) and keep them in very safe investments or even savings products.
Once the house proceeds cash runs dry, I have absolutely positively no idea how much we’d need to withdraw every year to make it last another 20 or 30 years. What I do know is that nobody has a clue about future tax rates, and studying 100 years of past performance makes about as much sense to me as asking a psychic. There’s no way predicting future rates of return, political or social events that could trigger a crisis or timing the market. I’d rather concentrate on understanding how to use proper asset allocation and attempt to stay properly invested in any investing climate than worry about how much to withdraw each year. In lean times, live more modestly; in boom times I’d take an extra vacation
Am I crazy?
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Sounds like you have made up your mind, or did you want our blessing? 
