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What steps do I take to prepare to retire early within 1 to 3 years?
Old 02-23-2014, 12:49 PM   #1
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What steps do I take to prepare to retire early within 1 to 3 years?

Hi:

I am 43 years old and I hope to retire somewhere between 1 to 3 years. The exact date will depend in part on whether my job is relocated to another part of the country. It will also depend on how soon I reach a net worth that FIRECalc suggests will lead to a successful retirement plan with 95 percent confidence.

So I work in a corporate job, I have a professional license. I have factored in the cost to maintain my professional license in my retirement budget. I have not ruled out working part time or for a portion of the year sometime in the future. I am single and live in a suburban setting in a ranch style home. I am paying a mortgage and property taxes, etc. but I have included all of the expenses of what I believe is my cost of living in the required annual spending amount that I inputted into FIRECalc.

I plan on residing at my current location after FIRE. I tweak FIRECalc with all sorts of slight changes to see how if affects my likelihood of success. When making my budget, I factored in a likely health insurance premium in addition to auto, home, umbrella insurance etc.

I want to take the final steps before I leave full time employment slowly and deliberately, so I am not rushed. Taking preparation action will also help me to deal with a difficult work situation that continues to get worse. If I am slowly preparing for my departure, I think I can endure an unpleasant situation.

I tried to find threads that have addressed this issue and this timeline, but I was not successful. Would you be able to lead me to some threads or suggest the matters that I should take care of in my work and personal life as I prepare for this exciting new phase of my life.

Thank you for your help.
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Old 02-23-2014, 01:41 PM   #2
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Nico, if you search for "preparing retirement" in the site's search box, you should get many threads related to your question.
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Old 02-23-2014, 02:07 PM   #3
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Hi inky:

When I performed the search I received 1658 threads. Any way to winnow that down to a manageable number of threads? Can I use Boolean operators in the search?

Thanks.
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Old 02-23-2014, 02:52 PM   #4
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It's a normal Google search, so yes, you can use Boolean operators.
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Old 02-23-2014, 03:07 PM   #5
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Hi inky:

When I performed the search I received 1658 threads. Any way to winnow that down to a manageable number of threads? Can I use Boolean operators in the search?

Thanks.
Make sure you are in V2.0 mode (green text) and use the Google seach box at the top of the page. The other search function sucks.
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Old 02-23-2014, 05:11 PM   #6
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Hi travelover:

Thanks for your help. I was using the advanced search function under the search option on the horizontal bar.

I am now using the "powered by google" search box and I am getting better results.
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Old 02-23-2014, 09:03 PM   #7
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I want to take the final steps before I leave full time employment slowly and deliberately, so I am not rushed. Taking preparation action will also help me to deal with a difficult work situation that continues to get worse. If I am slowly preparing for my departure, I think I can endure an unpleasant situation.
My experience was that when I was convinced I was financially independent and could retire at any time, the work frustrations weren't so bad. I could partially view them from an outsider's perspective.

It was even easier when I told my boss I'd be leaving in x months, but I could stay on longer if he had trouble finding a replacement who could hit the ground running. (I ended up working an extra six months.)
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Old 02-23-2014, 09:10 PM   #8
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It sounds like you've done the financial planning. You didn't mention your current asset allocation, but you certainly know that you need to line up your actual assets with whatever is in your plan.

Maybe you want to think about living in retirement. What do you do? Who do you talk too?

Professionals in corporate settings may find that almost all their human contacts are from work, and those are likely to fade pretty quickly after retirement.
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Old 02-24-2014, 05:33 PM   #9
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Congratulations on your ER plans !

I wanted to retire at 50 but chickened out. I gave myself 2 more years, so I am right in that area that you are.

I knew that my home was too big, too much work, and had too high of a run rate so I downsized and now live in a community that offers lots of planned activities. This has allowed me to make new friends (many of who are retired), and have a good set of "things to do" once I'm am j*b free.

The reason I chickened out was because I wanted greater than 100% success in FIRECalc. I also wanted a 90% success rate to age 90 in Fidelity's Retirement Income Planner (RIP) tool. Those factors will allow me to sleep at night.

Your plan to keep your professional license and do some PT work in your field is a great plan. You can always decide to fully hang w*rk up later but the PT income will give you additional comfort and freedom.

Preplanning is power !
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Old 02-24-2014, 08:07 PM   #10
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There is a 2008 thread entitled, "How do/did you preapre for ER?". It is in the "Early Requirement FAQs" forum in the first item under "Best of the Boards."
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Old 02-24-2014, 08:11 PM   #11
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There is a 2008 thread entitled, "How do/did you preapre for ER?". It is in the "Early Requirement FAQs" forum in the first item under "Best of the Boards."
Here's a link: How do/did you prepare for ER?
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Old 02-25-2014, 08:40 AM   #12
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The FAQ thread has a nice list by Nords

Here is my Pre-retirement list about 2 years out:

i. Track our expenses and get a better handle on them. Develop a two-part budget (core and enhanced).

ii. Look into health insurance options and cost.

iii. Estimate retirement tax burden and what assets to draw out first. Standard wisdom is first taxable, then tax deferred and final non-taxable.

iv. Develop a flexible withdrawal strategy.

v. Revisit our asset allocation and think about if/how I should adjust it as I near ER.

vi. What should be done before we retire to maximize employer programs? (See Nords list and Chapter 8 of Engineering Your Retirement)

vii. Have the plan examined by employer-provided "experts" at TIAA-CREF and Fidelity.

viii. Have an answer to the question “What will you do all day?”.

Zorba
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Old 02-25-2014, 09:11 AM   #13
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Articles like these might help you to prepare in an unusual way, too:
Don't Get Fired Or Quit, Get Laid Off Instead | Financial Samurai

Then, there is a number of good books how to prepare for the non-financial matters, like Ernie Zielinsky's "How to Retire Happy, Wild and Free" with the exercise of the get-a-life-tree or Ralph Warner's "Get a life".
Both have helped me a lot.
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Old 02-25-2014, 09:35 AM   #14
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nico08, by comparison to your thought process, I think mine was more like "Ready, FIRE, Aim". I had checked out all the Megacorp stuff first (pension, HC, retirement process), done the financial calcs and planned my backups, etc. But when the time came, it came very quickly. I pulled the trigger and then assessed the damage afterwards. Not too many surprises except good ones. If you've already assessed the financial questions, already assessed the "what will I do all day?" questions, "where will I live?" questions, it may come down to waiting for that "feeling" or waiting for that "event" that convinces you "It is time!" As mentioned elsewhere in the forum, I received an assignment I didn't want to do. That's all it took for me to pull the trigger.

You can agonize about it, but, for me, it finally just felt right. Good luck and remember YMMV.
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Old 02-25-2014, 09:46 AM   #15
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Nico, in response to your question, we didn't do anything special in preparation until we had about 6 months to go other than tracking our expenses so we had a good fix on what our "normal" living cost were. We had already consolidated far-flung retirement accounts from our years of work at Vanguard, put our AA where we wanted it and gone through periodic financial planning exercises with Vanguard's financial planners.

In the last year, we downsized from two homes to one, made sure our physicals, dental, etc was all up to date and then pulled the plug.
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Old 02-25-2014, 10:39 AM   #16
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Hi Zorba:

Your list is helpful, especially point iii. I am getting to a point now where I need to start planning out the withdrawal phase of things. Taxes will play a role in that decision making. Before, the withdrawal phase seemed so far in the future, so I was not really planning for it.
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Old 02-25-2014, 10:43 AM   #17
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You taxes will likely be a lot lower - that was a pleasant retirement surprise for us. You can take a copy of your 2013 return, eliminate your work income and make any other appropriate changes and get a good idea of how much lower.

My federal income taxes were 0% in our first year or retirement and less than 5% last year (second year) as I changed strategies and started Roth conversions.
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Old 02-25-2014, 01:54 PM   #18
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Doing what pb4uuski suggests will get you a long way. I also ran some of the tax-sensitive retirement calculators such as ORP (Retirement Calculator - Parameter Form) and the Flexible Retirement Planner to see suggestions in how best to take out the taxable, non-taxable and tax deferred.

And I can't emphasize how important it was for me to separate out taxes from discretionary and non-discretionary expenses in item i (i.e. Expense tracking). I have tracked these three items now for a about a decade. This gives me a lot of confidence that I can have a withdrawal strategy that works for the "core" budget needs but if all goes better than expected provides for extras. - Zorba
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Old 02-25-2014, 04:31 PM   #19
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Here is my two cents, not sure if I'm answering your real question or not. Give solid thought to "What will you do all day?" Or as I prefer to think about it, "what do you want to do with the second half of your life?" Congratulations on a solid path to FI, but that is only one side of the coin.

There are SO many different personalities represented here on the boards. Some are very happy sleeping late, slowing down, and just enjoying a slower pace. Others seem to have more volunteering/hobbies/activities than they have time for! My only advice is not to get so focused on what you are leaving behind that you forget to focus on where you are going. Give some thought to what successful FIRE means to YOU.

Congrats, good luck, and lots of folks here to reassure you every step of the way!
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Old 02-25-2014, 05:20 PM   #20
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Doing what pb4uuski suggests will get you a long way. I also ran some of the tax-sensitive retirement calculators such as ORP (Retirement Calculator - Parameter Form) and the Flexible Retirement Planner to see suggestions in how best to take out the taxable, non-taxable and tax deferred.

And I can't emphasize how important it was for me to separate out taxes from discretionary and non-discretionary expenses in item i (i.e. Expense tracking). I have tracked these three items now for a about a decade. This gives me a lot of confidence that I can have a withdrawal strategy that works for the "core" budget needs but if all goes better than expected provides for extras. - Zorba
I have also listed out my annual expenses, and I identified those that make up my "bare bones" budget and those expenses that may make life more pleasant, but are not crucial. I created the "bare bones" budget when a lay-off from my current job was looming. I can probably rely on that budget during those years where the market does not perform well.
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