Last night one of our accountant friends told us that ER just isn't possible for regular folks anymore. My DBF would like to go see a financial planner (fee only, of course) to find out *if there's any hope....anyone have a similar situation or any encouraging thoughts?? Adventuregirl
Did this accountant "friend" happen to be ER'd? Otherwise how the heck would they know anything about ER possibilities?!?
Just like stockbrokers who don't own yachts, I'm extremely suspicious about financial people who can't figure out how to become financially independent.
I went through a two-year search for a financial planner who could verify my math and shoulder some of my ER angst. It was a bust. Most of the advisors aren't interested in calculating very detailed scenarios. (One of them listened to my parameters over the phone and said "Why not just hold your withdrawal rate under 4% and stop worrying about it?") While you may not have a pension, they'd rather run cookie-cutter scenarios like "70% of your pre-retirement income" and "assume your investments grow at 8%". Others want you to buy their specific financial products while claiming that their share of the 12(b)-1 fees means that they're "fee based".
Here's a couple suggestions:
- Put together a detailed budget of your annual expenses. Take your time on this and be brutally conservative (especially on healthcare). Use the SS website's calculator to get an accurate estimate of your benefits if you ER instead of working to age 62. Look at paying off the mortgage (or not) or rental costs. Other threads here project the costs of new roofs, rising property taxes, replacement appliances/cars, a kid's wedding, a fantasy vacation, etc.
- Once you have that budget, run it through FIRECalc and see how big a portfolio you'd need to achieve an 80% success ratio. Or, to be even more conservative, multiply your annual expenses by 25 to determine your required portfolio size for a 4% withdrawal rate. Anything under a $40K annual budget is a six-figure portfolio.
- Figure out how much (and for how long) you'd have to invest at a 6-7% annual return to achieve the size of that portfolio. Think about part-time work, high-deductible medical insurance, PT lifestyle, cutting back on other expenses, whatever.
If you're still concerned, check your math with the Financial Engines website (it'll cost far less than a financial advisor and it doesn't have sales pressure).
If you must go the human route, try AXA. They have some of the most robust simulation software in the business (although it's arguably no better than Financial Engines). Find the nearest rep and tell them what you want, but be upfront about the possibility of not going through with the whole thing.
They'll give you a free hour's consultation to try to change your mind. Along with an interview on risk profiles, objectives, etc. they'll give you a form requesting a humongous data package. Just the process of finding & organizing all of that data will cause you to check your FIRE assumptions and start making your own calculations. Then, before you go back to the AXA rep's office, you can run your numbers one more time through FIRECalc & Financial Engines before deciding if you want to pay these people.
The $2500 didn't seem worth it. Especially after spending a few months here!