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Poll:35 Now, Plan to Retire by Age 43, PIPE DREAM???
Old 11-04-2012, 01:36 AM   #1
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Poll:35 Now, Plan to Retire by Age 43, PIPE DREAM???

I'm 35 now and have worked for about 13 years. Plan to work another 7-8 years. Plan to live till 80-90 if I'm lucky...hahaha.

I've been saving approx. 130-150k per year since I started working and have been fortunate enough to have an excellent management postion with a great company. I've never held back on enjoying material things but they don't give me the same buzz anymore. I've been there and done that wrt material wealth and joys. I live a simpler life now and am happier.

In another 7-8 years I should have a few million (3 mil) and want to retire to a low cost destination for 10 months of the year and visit family and friends in the US for about 2 months a year. In my retirement phase I would like to travel, pursue charity work and spend time with my wife and 2 kids.

With about 3 million earning about 7% spread out over several currencies and funds to diversify risk to the market and inflation, I would earn about 200k usd per year. I plan to only use about 65-70k per year and re-invest the remainder (just for security reasons and as a buffer to unexpected circumstances) Thus the nest egg continues to grow (hopefully beating the then real inflation rates, not the posted ones)

The largest cost would be international school for two kids in a low cost destination and the college in the US.

When the kids are college age (15 years from now) they would return back the the US for school (unless better options exist at that moment in time). This would also cost a bundle of cash. At that age, I would be about 58-60 and if the need arises I would not mind returning to work in part-time fashion 2 days a week for 4-5 years until the kids are done college. This would help me earn an addition maybe 70-80k / year.

Info: I'm a male who eats health, exercises lightly (no heavy weights), no smoking, no drugs and drinks 2-3 glasses of red wine per week.

Do any forum members see any serious flaws with my vague plan? (I have a more detailed plan that is beyond the scope of a thread post)

Any feedback is greatly appreciated.

Thank you and have a nice day.
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Old 11-04-2012, 06:48 AM   #2
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I think counting on 7% return is maybe a bit optimistic or not conservative enough.
I think saving in a 529 plan for the kids now may also be something you should be looking at.
Don't forget about the dreaded TAXMAN in your calculations.
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Old 11-04-2012, 07:14 AM   #3
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From your $3million portfolio, you plan to use 70k annually. Does this include taxes? If so your under 3% withdrawal rate should be safe even for the long retirement you have envisioned. What may be a complicating factor is how much of the $3million is going to go for kids' education. You probably should count that money separately, especially when figuring the safe withdrawal rate. Lastly, I'm not sure how realistic it is to imagine you could return to work 2 days a week and earn $80k after having been away for years.

Your plan, as vague as it is, seems pretty solid. Your high savings rate could pump up your portfolio, especially if you give it a year or two extra beyond your current plan and retire at say 45. That could take care of kids college without complicated accounting or returning to work.
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Old 11-04-2012, 09:37 AM   #4
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You will probably find 70K a year is more than you need to live a nice lifestyle in your new country. Latin American International schools will set you back 7-10k per child in upfront costs, and then 800-1,000 (per child) monthly tuition.

Obtaining residency could cost you upwards of 100k depending on country and type of Visa. Most countries will accept an annuity stream of roughly 2k a month
and that would be your cheapest option. Also a portion of your portfolio could be invested in Local currency CD's and earn 8+ % and Sovereign debt may generate approximately 6%. Depending on country you may receive 3-5% in appreciation on top of posted rates.

With Facta being postponed for a minimum of four years it is an opportune time to move money offshore for the purpose of Real estate investment as this does not need to be reported to the IRS.

Even after enactment many developers have accounts at US banks and you can buy internationally (transfer locally) and accomplish "offshoring" without the paper trail.
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Old 11-04-2012, 10:47 AM   #5
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Quote:
Originally Posted by NYEXPAT

Even after enactment many developers have accounts at US banks and you can buy internationally (transfer locally) and accomplish "offshoring" without the paper trail.
....you might avoid a paper trail, but not the obligation to comply with IRS regulations and pay tax on any income or gains generated offshore.

FATCA is being delayed at the FFI level, but FBAR and 8938 reporting are still required as is compliance with US taxation, at least if you remain a US citizen.
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Old 11-04-2012, 11:02 AM   #6
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Even with taxes, a withdrawal rate of well under 3% is what you are looking at and that is definitely possible for ER'ing at 43.

Is your target expenses of $65-70k / year calculated in future $'s, to correctly compare with your projected $3M in savings?
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Old 11-04-2012, 01:21 PM   #7
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I would suggest that you run you plan in Quicken Lifetime Planner using reasonable assumptions and then do a What-If using conservative assumptions. My guess is that you will be fine. Then, stress test it using the Monte Carlo simulator at Vanguard. https://retirementplans.vanguard.com...estEggCalc.jsf

As an example, if you assume a 50 year time horizon, $75k annual withdrawals, an initial nestegg of $2.8 million ($3.0 million less $200k off to the side for the kids education) and a 60/35/5 stock/bond/cash AA the simulator suggests there is a 96% chance of portfolio survival.
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Old 01-07-2013, 02:13 AM   #8
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Thanks for everyone's feedback. It's been of great help.

I'm reassessing and reformulating a plan with great redundancy.

Happy new years to everyone!
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Old 02-10-2013, 09:09 AM   #9
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your plan looks very sound and youre ability to save attests to the fact that you are disciplined enough to live below your means (the key to a successful FIRE)... just make sure that you have a solid plan for health care coverage and contingencies for you and your spouse as you advance in age.... congratulations and good luck!
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Old 04-23-2013, 04:17 AM   #10
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Originally Posted by FlipnSf View Post
your plan looks very sound and youre ability to save attests to the fact that you are disciplined enough to live below your means (the key to a successful FIRE)... just make sure that you have a solid plan for health care coverage and contingencies for you and your spouse as you advance in age.... congratulations and good luck!
health is always one of the unknowns, but i have been and will continue to live a healthy (vegan, 1 beer a week) lifestyle with plenty of exercising

thanks for your feedback
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