Our 60 month countdown starts today...

[DesiGirl]

Hi Not sure at 38 we would be considered young or not. Till now I have been the one driving my Hubby's ER plan, his attitude has been too cautious that we'll see when we get there. I have done all the budgets, accumulation spread-sheets, seperate accounts for kids schooling (since it lasts only for 10 years) and so on and finally got him convinced and excited about ER which will probably happen around 4-5 years. I had to convince him that eliminating 20ish years from woking life is no joke and he should focus on that instead of not so happy 4-5 years he needs to put in. (Im stay at home Mom BTW, did put my 10 years in mega-corp though))

We have to save like crazy (expenses 25% of Gross income and savings 50% of the gross) because we are 50% short of our retirement goal. Most of the savings (70-80%) earn 9.5% guaranteed by Retirement Plan so dependency on Market Gods is low. Good thing is House even though not built yet is fully funded and also Kids Education upto PG level and their marriages which would be really Grand compared to what we could afford

Finally getting so excited to have a 60 month count-down chart in Hubby's office & home. Will help him go thru stress-ful 50-60 hour job which is no longer exciting (but high paying for sure).

Just wanted to share my feelings and looking for encouragement and suggestions. Unfortunately as other thread going on "Cover Stories" our families or friends have no clue and they think we'll probably be taking 15-20 years loan to construct our house and more money to educate kids hence my DH has 20 years of job to do atleast. They even encourage me to put my Engineering degree to use and lend this hard-working guy some helping hand.

So really really glad to have this board where I can share what we are going through.

Thanks for reading,
DesiGirl

 

[chris2008]

Hi! You did not report on financial details so I do not know how much you and family are willing to sacrifice to make ER happen. But all accumulated wealth is not worth it if the effort destroys life quality for years.
Only you and your loved ones can define what is essential for your life quality.

When we thought about ER for the first time we thought it might be doable 5 years from then, in 2008 (hence my forum name). The saving side went well, but the market broke down and some of our investments took a dive. So we postponed and will now focus on early 2012, when DH will get a pension.
If we from the beginning had sacrificed issues that meant life quality for us the disappointment would have been huge. But as it is it does not hurt at all. We have all we need and most of what we want, our investments are back up but we will stay with the 2012 goal.

Also, if you have trained yourself to extreme frugality it might get difficult to relax after ER.

However, guaranteed 9,5% without market risk is really something. I guess with such an investment vehicle I would try to put in whatever I could, too. What is it?

 

[obgyn65]

Welcome DesiGirl. I note you live in India - where do you intend to retire (US, India or somewhere else) ? The cost of living (plus SS, healthcare, etc.) is not the same everywhere, which in turn may have implications on your ER plans...

Finally getting so excited to have a 60 month count-down chart in Hubby's office & home. Will help him go thru stress-ful 50-60 hour job which is no longer exciting (but high paying for sure).

DesiGirl

 

[DesiGirl]

Thanks obgyn65 and chris2008.

We are planning to settle in India.

Some of the details about our profile are in this thread - http://www.early-retirement.org/for...a-couple-late-thirties-with-2-kids-48620.html

I'll update on some of the changes.

Yes we are saving like crazy but not by depriving ourselves in significant way, just lot of DIY and being smart about money. Things like I cook myself (India most people in our financial situation hire Cook), my husband drives by himself instead of hiring Driver, I tutor my kids, since I do have luxury of maid who does cleaning+dishes+laundry I am able to cook most meals at home, eating out for fun and not out of necessity. We wear simple outfits and use them till they last instead of changing every year. We do 10-20 days of vacation every year but optimize like using train travel (which is lot cheaper in India) instead of always flying. So we are leading our life according to our values instead of increasing our needs as our income keeps growing.

Currently since we are paying rent our budget is $25-30K per annum. Once DH retires I'll set seperate account for remaining schooling needs for kids (at 20% inflation rate) , support for my FIL for 10-15 years who is currently 70+ , Emergency & self funded Health insurance. So after removing rent and these other expenses our budget will be down to $22K. I have accounted for 5% inflation adjustment every year.

In the retirement portfolio $200K will throw 15K (@ 7.5 % post tax, different schemes give 8 to 9.5%). This money would be in fixed income instruments guaranteed by Gov of India. we'll also have approximately 6-8K of rental income which would be ear-marked for vacations. Now we'll have 250K in stock market which will take care of inflation adjustment and growth. So we can withdraw 4% from stock folio every year and put into guranteed fixed income instruments which would give us approx 5% inflation adjustment every year. Bad years would mean no inflation adjustment (no withdrawl from Stock folio). I would also keep 20K in special inflation account for long bear markets.

Currently our kids are young, after retirement in 2015 they'll be on their own by 2025. After that we would have even more flexibility in our budget. For long term we would have 2 houses worth 250K and 150K which we can easily downgrade to a 100-150K apartment.

Broadly we have shortfall of 250-300K and we are saving 50K , 40K out of which is going in guaranteed 9.5% tax-free Provident Fund (which can be removed at retirement with no tax liability) rest going in Indian Market. We take 5-7% inflation adjustment as needed every year and invest the remainder (mostly my husband gets 10-12% raise).

My biggest concern is that I am planning for almost 50-60 year retirement in high return, high volatility environment. But it is for upper middle class life.. so we ourselves could live for 8-10K (excluding house) if needed.

Medical currently is very reasonable in India. Our current yearly expense is $500-600. Most of the Insurance policies available have limit of 12-15K per family per annum so I'll keep $25K aside in 8% return fund and let it grow for any major medical need. (Premiums are quite high for such low cover so don't see any value in buying health insurance)

Regards,
DesiGirl

 

[DesiGirl]

Chris 9.5% is in PF which is available for employees in India, it is even taxfree upto certain limit (Better than 401K, doesn't get taxed on withdrawl as well). Also recently State Bank of India offered 9.5% bonds with 15 year lockin. Gov of India offers RBI Bonds at 8% and also Senior Citizen Scheme gives 9% (For people > 60 years). Now unfortunately all these are available for Indian residents only. In India food inflation has been staying in 15% range for last few years as well so returns are not that great really , but then again food is probably 10-15 % of the upper middle class budget.

 

[chris2008]

Thanks for the further information. This and your other thread explain a lot.
I guess I would try the same in your shoes.

 

[landover]

can't resist

YouTube - Desi Girl Full Video Song (Dostana) (HQ)

 

[DesiGirl]

No I'm not even half as pretty as her...

 

[brewer12345]

DesiGirl, what I have found is that you should be prepared to make mid-course adjustments to your plan as the world changes. We were originally reaching for full ER in an expensive coastal US area where we live. After a number of years of dashing my pipes out and a a market implosion, we have re-evaluated. I will burn out long before we get there and upon some navel gazing we realized we don't want to stay where we are any more. So instead we will be looking to ESR and relocate in 2014 or so. A big change from our earlier plans and one we were not really open to at first, but it makes the most sense to us.

As an aside, my DW is going to my 4 YO's pre school to explain Diwali to the kids (this is a Presbyterian church sponsored preschool). For the first time in the 4 years my kids have been going there, there are a couple of desi kids in class and DW asked the teacher why they did not talk about Diwali, since they talk about Xmas, Chinese New Year and Hannukah. Response,"thank you for volunteering.". So whitebread DW and I had to do some research and ask our Hindu friends for details, plus she enlisted one of the desi moms.

 

[walkinwood]

Brewer,
Take the kids to Edison for a field trip on Diwali (nov 5th).

DesiGirl,
Congratulations on your plan. 5 years is a long time to have DH's nose to the grind-stone, so be realistic. Many have said that a happy marriage (for those married) is a pre-req for a successful retirement. Happy Diwali.

 

[DesiGirl]

Thanks Brewer. That is my thought process as well, I don't expect to be able to plan next 30-50 years (who knows about the life expectancy). Our critical period is till 2025 when both kids should have completed basic studies and elder one must be financially on her own. (Age 24 & 21) After that we should have lot more flexibility. For those 10 years we not only would have the reqd. income generated from Bonds but even seperate account which would hold inflation adjustment money (So we don't even have to pull out from market for inflation if it is in negative territory) exposure to market would be < 50% and that too we do not have to pull any money if market is belew certain threshold - Read in "Unveiling Retirement Myth" that first 5-10 years really make or break ER.

Do you need any help for Diwali talk, I'll be more than happy to compile and type up some info.

Thanks Walkinwood. Yeah marriage is happy so far that's why I'm walking this path otherwise I might very well have lots of fun burning money we are saving and let DH work till 55-60 I know 5 years is long time but if we are not focussed it would easily turn into almost 15 more years of job instead of 5. Not too many financial compromises, just focus on getting value for money and optimize where we can. DH is already quite burnt out so best course of action seems to be get him out as soon as we possibly can. His job being high paid, me working wouldn't contribute significantly. Also taking half pay cut to still work for more than 40 hours is also not an attractive option. So its lot of encouragement & pep talk & just hanging in there...Thanks for the Diwali wishes.

 

[brewer12345]

DW did the Diwali explanation this morning, but we got lots of help for our research.

A trip to Edison on Friday might be lots of fun. I have been meaning to take DW and the kids to Mithaas for lunch anyway...