Too young to retire?

Given the facts that 1) you want to move back to the US and 2) you are a very conservative investor, I would say you need to work a little bit longer.

CDs currently have negative real returns. You can find 5-year CDs paying 2.25%, but inflation has been running at 2.6%+ over the past year and has accelerated over the past 4 months. It has run at an annualized 7.8%+ since the beginning of the year. It means that, with CDs, your future purchasing power is eroding, even if you reinvest the interests. If you spend the interests, things get even dicier.

Plus the health care situation in the US is in flux. We don't really know what kind of system we will end up with. If Medicare goes away for people in our generation (I am 37 too), I think we will have to completely rethink traditional retirement strategies.
 
@REWahoo: Thank you. I will read up on the acronyms.

@FD: That's scary. From all counts, I need to get away from my cash holdings and invest..............2.6 and 7.8, damn.......I am only getting roughly 1.15 right now......I'm losing money and that is not a good thing, not at all.......considering the risk I am taking. I am in Iraq right now. :confused: Damn.
 
If you can keep your spending at your current rates and inflation stays low you can last for quite a while. It may be difficult to keep your spending down at the 10K (adjusted for inflation) level. One or two trips back to the US would blow your budget pretty easily. At a interest rate of 1.15% with inflation at 3.5% you can last 50 years.

My guess it would be very difficult to keep spending at your current level over a time period that long. It will be difficult to find health insurance in that budget before Medicare kicks in and one major hospital trip will wipe you out.
 
@brianinsf: I agree. I have to get my head out of the clouds and come back to reality. Warzone money is only temporary.

..........my brother was uninsured and he broke is leg............major hit to his finances..........I have to be smart now. I have big nestegg.......and I am still relatively young. The question is, what now?........I'm a novice when it comes to things like this. I'm actually terrified. Odd that I just found this forum. Responsive, it is, and for that I am thankful..............I'm quite skilled and have been with my current employer for 13 years; however, I have to plan for the future...........weird...............I'm an engineer, yet, I'm freaking retarded when it comes to simple stuff like investing/finances...............where have you guys been all my life?!?1
 
Start searching for a good woman who is a citizen resident of a country where you would like to live. Keep saving your money, eventually marry the best one in the best country with health coverage you can find.

This does not apply to the US.

Ha
 
I would be looking at ways for that $665K to be making you money on its own. Once you accomplish that, you can most definitely retire now.

The best ways I can think of are 1) real estate and 2) business ownership.

I would pick #1 and with $665K you should be able to generate approximately $7K++ monthly, if not more, in revenue. Subtract cost of insurances and property taxes and you still have a good amount to live on.
Plus, you still have all your cash, just transformed into equity which you can borrow on at any time should you ever need to.

You could put $665K into real estate, generate your rental income, then pull out 25% - 50% of the equity and get even more real estate or anything else -- like buying a business.

If you buy smart, then you are buying at the bottom of the real estate market and you don't really have to worry about any further declines.
You basically have the pick of the litter on which city/state to buy property in now since you are not tied down to any particular location already.

So what you accomplish with this is living 100% off returns on capital and never having to eat into your principal.
 
By definition the members here have a bias to "approving" early retirement. But at age 37 you have a long life ahead, which potentially includes many financial bumps in the road. My 2 cents - you don't have enough, yet.
 
Not only that, why would you want to retire so early. It is a privilege to work, especially these days!
 
Sandhog said:
@mrcollie1 - If I was 37 again with kind of nest eggs you have, I'll keep 6 months of living expenses in cash and invest all in various dividend stocks. Find companies that have been around and steady dividends. 35 Growing Dividend Stocks With Low PE Ratios

I would retired right now if I had nest eggs like yours. You are never too young to retired and never too old to go back to work if you need after FIRE.
Click to expand...

This is some pretty simplistic advice. What does OP do? Is he in a career where any kind of time off would kill it and he'd have to start something anew if he ever had to go back to work? Yea it would be great to retire at that age, but say he gets to 50 and only has a few 100K left with only a small SS pension to look forward to, he is pretty much screwed. Not alot of options beyond Walmart greeter after a 10+ year resume gap
 
accountingsucks said:
This is some pretty simplistic advice. What does OP do?
Click to expand...
Almost all internet advice is simplistic. If the advice givers were to be held to any sort of responsibility they would all quiet down fast, as it is clear that these things are always unpredictable and risky.

In Sandhogs case, he wisely did not give "advice", but only said what he himself would do in the situation given.

Ha
 
Can you come back and work in the US at least long enough to get a handle on what expense you might have in retirement? You've done a great job of piling up a nest egg. Now that you may be there or close, you need a reasonable estimate of what your expenses will actually be. What they were overseas is pretty meaningless for this aspect, though it's commendable that you were able to keep it so low and sock money away.
 
OP, here is what I would do in your situation:

1) I would find out when my pension vests, since I know those in the armed forces qualify for a pretty good pension after a certain amount of service, I think it is 20 years. I would check if there is veteran healthcare. If not, I wold research what happens in 2014 for those who earn/spend less than $40k.

2) I would learn about investing. I would read as many threads as possible, and ask about good places to go to get a good overview.

3) I would try and guess my real expenses. I would make a spreadsheet and try to figure out every category I need or want, and put a number next to it for the yearly expense. (Personally my basic non-rent/house expenses only add up to $4k).

4) Then, after doing those steps, which would take a good month at least to get something accurate, if I was close or ready, I would start looking for an appropriate area to buy in. Whichever area I eventually decided upon, I would rent there first, so I could look at the houses in person and have time to cool off. I would choose a house appropriate to my family needs. (Personally a 2-bedroom 1000 sq. ft. house would be perfectly fine for me, and those can be bought for around $50k in a decent area if you do your research).

5) Once I was settled in a house, and perhaps during the rental period, I would think about whether I wanted to landlord. If so, I would look for one or two more houses to buy in the area, and slowly build up properties. (Personally, I wouldn't, landlording is work, it is nothing like getting money from investments, and I do not want such responsibilities randomly intruding upon my time).


My guess, is that you do not have enough money quite yet, but are close, perhaps even very close (less than a year). I suspect you are used to living on at least $25K+. You will have to learn more about investing, you currently aren't keeping up with inflation, and would run out of money within 20-30 years if you retired, even with what normally would be the right amount. Also, it is completely possible to live on $10k in the US, but it isn't something you just jump into, it requires, above all, a frugal lifestyle. It also requires a lot of knowledge of the cost of all the basics in the US, how to find the best deals, a plan for how you will obtain health care, and at least a basic idea of how all the major aspects of the tax system works.
 
Sandhog said:
@mrcollie1 - If I was 37 again with kind of nest eggs you have, I'll keep 6 months of living expenses in cash and invest all in various dividend stocks. Find companies that have been around and steady dividends. 35 Growing Dividend Stocks With Low PE Ratios

I would retired right now if I had nest eggs like yours. You are never too young to retired and never too old to go back to work if you need after FIRE.
Click to expand...


I suppose at 37 , five years from now you may be in a realistic position to jump back into the employment fray. If you find you have a "ruh-roh" moment 10 or fifteen years from now though, I find it hard to believe it's going to be anything but really tough to get back into fray at all, never mind anything as lucrative or enjoyable as line of work you used to be in.

I guess what i'm saying is don't fool yourself into thinking it will won't be that painful to switch to plan B.
 
mh said:
I suppose at 37 , five years from now you may be in a realistic position to jump back into the employment fray. If you find you have a "ruh-roh" moment 10 or fifteen years from now though, I find it hard to believe it's going to be anything but really tough to get back into fray at all, never mind anything as lucrative or enjoyable as line of work you used to be in.

I guess what i'm saying is don't fool yourself into thinking it will won't be that painful to switch to plan B.
Click to expand...
I'm not the OP but wished I was. :( I'm into my 50's and FIRE is nowhere in sight. I know exactly how painful it was to switch the plan and keep working after divorce when I was on my merry way to FIRE at 55.

However, having worked since I was 12, it's better being employable than unemployed at my age. I should achieve FIRE at 60 or 62 at the latest. I just work and work. Once a week or so, I spurge at VFW for $1.50 beer and $6.00 nacho plater. I'm content and don't have time to think since I work two jobs. One full-time and one part-time. Few more years, then no jobs. Sleep late, walk for miles, go fishing, go boating... looking forward good life of leisure and pleasure. :cool:
 
Sandhog said:
I'm not the OP but wished I was. :( I'm into my 50's and FIRE is nowhere in sight. I know exactly how painful it was to switch the plan and keep working after divorce when I was on my merry way to FIRE at 55.

However, having worked since I was 12, it's better being employable than unemployed at my age. I should achieve FIRE at 60 or 62 at the latest. I just work and work. Once a week or so, I spurge at VFW for $1.50 beer and $6.00 nacho plater. I'm content and don't have time to think since I work two jobs. One full-time and one part-time. Few more years, then no jobs. Sleep late, walk for miles, go fishing, go boating... looking forward good life of leisure and pleasure. :cool:
Click to expand...

I muddied the reply attributions. i was targeting my re; to the original poster but i did not make that very clear. my bad. In any case, in your example (if i understand correctly) , you've been working continuously with some setbacks along the way.

That's still a lot different (to me anyways) than declaring victory at 37 and 6 - 10 years later discovering that's wasn't really the case If a few doubts are present , i would keep working till I made them go away in some concrete fashion.

I was in a comparable financial state when i was 37. I also toyed with the idea ER / ESR but in the end decided
i wasn't sure enough that i was there yet financially. In hindsight, I'm pretty confident i made the right decision.
 
haha said:
Start searching for a good woman who is a citizen resident of a country where you would like to live. Keep saving your money, eventually marry the best one in the best country with health coverage you can find.

This does not apply to the US.

Ha
Click to expand...

I have never heard this advice before. Makes pretty good sense. I would expect a relatively wealthy gringo would be viewed as quite a catch in a
lot of places. What about you HA?
 
Danmar said:
I have never heard this advice before. Makes pretty good sense. I would expect a relatively wealthy gringo would be viewed as quite a catch in a
lot of places. What about you HA?
Click to expand...
Price would be too high for me. I think I would rather die earlier than get married again. :)

But everyone has a different utility function.

Ha
 
You can if you want, but you must consider many factors like, annual expenses, trips, lifestyle anticipation, hobbies, insurance etc. I think you can if you want to, just be careful with how much you spend. Safe investment might be in your reach. Good luck kid.
 
A little late to the party but I thought I'd jump in.

I'd suggest that bad information is worse than no information. So, all I'll suggest is what I would be thinking about if I were in your shoes (disclaimer, I'm nowhere near your shoes... I live state-side, am married, and have most of my portfolio in equities).

First, what's driving the thought of retiring at 37? Hobbies on the side that are constantly more interesting/engaging than work? Burn-out with the current job? If it's job-related, then what could fix that?

Almost $700k is an impressive portfolio but, especially with it all cash, it [-]almost definitely[/-] probably won't be enough to survive on for 40+ years. How long do you plan to live? Realistically? Someone who's family regularly celebrates centennial birthdays before kicking off has a different horizon than someone who's male family members routinely drop of poor health in their 60's. Of course, if you have a family history of not seeing 65, and spend accordingly, it'd suck to have that disease cured by your 60th birthday.

Where in the US? That seems like a bit of an unknown? Downtown Manhattan is going to be different from a hunting cabin in Vermont.

Any defined benefit plan with the employer? If so, how far off? (putting in another 5 years to get a pension at 55 might open up a lot of opportunities).

Have you thought about semi-retirement or just changing focus? It strikes me that an engineer might be able to set out consulting or at least doing contract work. A 6-8 month engagement with another 4-6 months off between projects might not be so bad. Bonus, if you're setting up your own business as a free-lancer, you keep your skills and contacts up to date if you need and you don't have to worry about explaining any gaps on the ol' resume.

And, the big big big thing... you need to learn about investing. At the end of it, you might say that all-cash suites you just fine and that's the way it is. Or, you might decide to start testing the water some with a portion of your portfolio (say, $100k into a conservative mix at Vanguard). If your work offers it, a meeting with a financial advisor might be an ok way to at least start learning (head my lead-in, though, bad info and all that).

While I'm really, really not a fan of annuities, a SPIA (single premium immediate annuity) from a top-rated insurer might be worth considering from your risk tolerance perspective.

There are some great getting started threads on the forum, especially with regard to reading, but I think it might be wise to pick up something beginner-friendly like Bogleheads' Guide to Investing and maybe also poke around over at diehards.org.

Anyway, sorry for the massive brain dump, but I was thinking about about this thread while I was out in the pouring rain dropping 4x4 posts.
 
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