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-   -   ER - Am I ready? (http://www.early-retirement.org/forums/f26/er-am-i-ready-18221.html)

robls 10-13-2005 08:12 AM

ER - Am I ready?
 
What do you think about my chances on ER'ing now?

50-year old, single male
$400,000 in IRA/401k accounts
$70,000 in savings
No mortgage-own home free and clear
Property taxes are $1,600 per year
No car payment-2003 Toyota Highlander paid off early
No credit card debt-I only have one card that I pay off each month
Currently live on about $15,000 per year. Probably can cut this down considerably.
But with paying my own health insurance it will be about the same.
Am I missing anything?

Thanks.

Rob

brewer12345 10-13-2005 08:42 AM

Re: ER - Am I ready?
 
If you really do live on $15k a year, this would be do-able except for the fact that health insurance will probably be a budget buster. How about a part time job at Starbucks, Costco or one of the other places that offers benefits?

acg 10-13-2005 08:52 AM

Re: ER - Am I ready?
 
If it feels right, why not??? Sounds like you saved some money and have figured out a plan on the back of an envelope (as many of us do!) You can always go back to work if the urge or need strikes. Barring no catostrophic illness. That is probably the best reason for wanting to ER. To enjoy the time that is left for the more important stuff.

My last day (one more time) at work is tomorrow (48).

I jumped off the bridge before and lived to tell about it!

dex 10-13-2005 08:57 AM

Re: ER - Am I ready?
 
What do you think about my chances on ER'ing now?
Am I missing anything?
I think you are missing a lot.
First, RE should be about enjoying life (in my opinion) can you enjoy life on 15K a year or are you just existing?
Second, Financially you are in good shape if you continue working. But you have 12+ years until Social security. You will need to spend down your 70K after tax savings and then eat into your retirment savings. You retirement savins will most likely be hit with a early withdrawl penity if you withdraw before 59 1/2.

I'm guessing your house is worth apx 100K so you have a net worth of $570K but no mention of a pension or other income streams.

Others have mentioned that they figured a minimum of $20K for their annual expenses and still others will chime in that they RE'd with less than you.

acg 10-13-2005 09:28 AM

Re: ER - Am I ready?
 
Dex, "you are passing through Fearsville".

Isn't FIRE also a "state of mind" ? More than just about money and security???

Security also has a price which I have paid dearly. I am also in a similiar situation to Robls, having made the decision to RE, and have always "LBYM" without sacrificing quality of life issues. (no more need for all the material stuff). People can enjoy life without $$$. Money is an excellent servant, but a terrible master. Don't get me wrong.

What's the point of socking it away? Why not "Feel the Fear and Do It Anyway"? Take time while your young enough to enjoy the fruits of your labors...rather that waiting till it is too late. Build a legacy, yes, but for what? and whom? Those are the next pressing questions. The answers are in the cards and will be revealed at some point in the game.

It is a difficult decision to make. You are scaring me!

All ER is afterall, is a new beginning. Right?

robls 10-13-2005 09:40 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by brewer12345
If you really do live on $15k a year, this would be do-able except for the fact that health insurance will probably be a budget buster.* How about a part time job at Starbucks, Costco or one of the other places that offers benefits?

I plan on getting a part-time job at one of the many places you mentioned. Or doing some under the table work-I do have some leads there. So, I guess I am not really ER'ing completely.


Quote:

Originally Posted by dex
I think you are missing a lot.
First, RE should be about enjoying life (in my opinion) can you enjoy life on 15K a year or are you just existing?
Second,* Financially you are in good shape if you continue working.* But you have 12+ years until Social security.* You will need to spend down your 70K after tax savings and then eat into your retirment savings.* You retirement savins will most likely be hit with a early withdrawl penity* if you withdraw before 59 1/2.

I'm guessing your house is worth apx 100K so you have a net worth of $570K but no mention of a pension or other income streams.

Others have mentioned that they figured a minimum of $20K for their annual expenses and still others will chime in that they RE'd with less than you.

On that amount I went to, two NHRA drag racing events this summer. Purchased books that I love to read. Yes I live LBYM. I watch what I spend. Don't eat out much. Plant and work a garden for salads, and other vegetables.
Regarding the early withdrawal penalty, I plan on using the 72(t) SEPP distributions.
No pension. I answered the other income stream above.

ProfHaroldHill 10-13-2005 01:41 PM

Re: ER - Am I ready?
 
I think that your situation is marginal. You could live a long time, during which a lot can happen. Also, cars need to be replaced eventually, roofs on houses, teeth, and so forth. Who can even guess what the cost of medical care will be in just a few years? Medicare has a much larger unfunded liability than SS has, and will need to be changed fairly soon, I'm afraid.

OTOH, a lot of posters to forums like this one have the attitude of "go for it -- you only live once." The thing is, it's easy to retire early -- for a while -- if you have some savings and investments. The question is whether you personally, as a marginal ER (in my view), are willing to risk living in poverty when you are old.

I would urge you to get a copy of J. K. Lasser's "Your winning retirement plan" by Henry Hebeler, and to read it very carefully before pulling the pin on ER.

Good luck, in any case -- HH

brewer12345 10-13-2005 02:00 PM

Re: ER - Am I ready?
 
Hey, robls, don't let all the doom and gloom get you down. There are lots of ways to skin a cat and it is a lot easier to skate through with a smaller portfolio since you are single. For example, check out what Andy Baird did: http://www.andybaird.com/travels/fulltime/index.html

Then there are the kaderli's, who are perpetual www.retireearlylifestyle.com travellers living on peanuts a day.

If you are creative it definately can be done. Just make sure you will be happy living the life you will be living.

I can't even consider a whole swath of possibilities because I am responsible for my family. I'll need a far larger portfolio before I can check out, unfortunately.

retire@40 10-13-2005 08:08 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
Currently live on about $15,000 per year.

I'd love to see the breakdown of this budget.

haha 10-13-2005 09:06 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by retire@40
I'd love to see the breakdown of this budget.

Me too. People write about their $24,000 for a couple budgets that "could in a pinch be adjusted down", then in a later thread we are talking about health insurance and hip surgery for dogs.

I am as cheap as I can handle being, and my food alone, grocery, not eating out, is always somewhere between $350 and $400 a month. For me alone. Every month I think I am going to scrape by at @ $2000 or less, some damn thing happens that gives me an unexpected expense. If my dog gets cancer, lo siento, pero adios. Yet I still spend over $1000 a year on him- vets, food, supplements. My computer gear and much of my electronics toys are hand me downs or outright new gifts from my kids. I own my home, use catastrophic health ins, don't have any ongoing pharmacy needs, yet If I keep it under $30,000 I feel pretty good. And if I travel, it's almost always a low key trip within Washington, or maybe to see my family. So no or little hotel. Oh yeah, I almost never eat out.

I mean what if your city decides the sidewalks need to be repaired? This is usually little more than a grab for the homeowners money, but you pay it or you get a lien on your house. Or what if utility costs keep going up? It wouldn't be absolutely out of the question would it? Or what if you get sick? Even now, before they mess with it too much, even Medicare is pretty expensive once you add the various supplemental coverages that many prudent people will want.

This board has a well known and well loved proponent of “Leap, don't look.” But he recently posted that he owes more than he has on deposit to pay it; he is holding his breath till he gets SS; and he needs a reverse mortgage ASAP! Oh yeah, I forgot, his wife works.

So while I suppose robls could do it, I am not clear about why he would want to. I would rather stress about my boss than stress about an inexorable descent into real poverty. By many definitions, $15,000 a year is poverty.

IMO, these budgets are gettin' curioser and curioser.

Ha

robls 10-14-2005 04:35 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by retire@40
I'd love to see the breakdown of this budget.

I'm not going to go into finite details about my budget.
My yearly salary before taxes has been between $28K to $35K for the last 15 years.
I have tried to put away as much 401K and IRA money as possible.
25 years ago, using money from the sale of my parents home, I (along with the help of friends) constructed my own home. There were some things I had contractors do, but for the most part it was a do-it-yourself project. Yes, my parents who are now passed away, moved into the new home. My father was retired at the time with a pension. My mother still worked at a minimum wage job. So, that helped towards my savings.
Hope this helps in explaining some of your questions.

Rob

Dawg52 10-14-2005 07:28 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
I'm not going to go into finite details about my budget.
My yearly salary before taxes has been between $28K to $35K for the last 15 years.
I have tried to put away as much 401K and IRA money as possible.
25 years ago, using money from the sale of my parents home, I (along with the help of friends) constructed my own home. There were some things I had contractors do, but for the most part it was a do-it-yourself project. Yes, my parents who are now passed away, moved into the new home. My father was retired at the time with a pension. My mother still worked at a minimum wage job. So, that helped towards my savings.
Hope this helps in explaining some of your questions.

Rob

Sounds like you have done a very good job of savings based on your income numbers. When I first read your post, I thought that you might be playing it a little to close for comfort. But if you are willing to work part-time, I think you will be fine. Be sure to find a "fun" part time job. Don't* retire and then do something that you will not enjoy for less money.* As far as your budget goes, I am also single and live on a budget similar to yours. I play golf and do everything that makes me happy. I do plan to travel some when I retire so that will increase the budget some, but overall.......I'm a pretty cheap date.* :)

wildcat 10-14-2005 07:44 AM

Re: ER - Am I ready?
 
Dog51, your avatar changed to reflect your pre-retirement mental breakdown? ;)

Just my thoughts. I think robls is straight up on everything. Many of us are just accustomed to making more money so we tend to have bigger budgets. People who make less get by on less. Nice job saving and planning robls. Still hanging onto the Highlander?

Quote:

But with paying my own health insurance it will be about the same.
As many have pointed out this is the only clause I see.

kat 10-14-2005 08:11 AM

Re: ER - Am I ready?
 

Rob, it all looks terrific to me and I hope you enjoy it! I like your attitude toward money. My expenses are very low without trying, with my favorite activities being free -- hiking in the Adirondack mountains and cross country skiing and reading. (Already have all the gear.)

I appreciate hearing what you've shared and hope it all goes great for you.

Kate

SteveR 10-14-2005 08:26 AM

Re: ER - Am I ready?
 
If you can live and be happy on $15k then go for it. I would not want to do that and have no plans on being that fugal. The poverty line per the US Census numbers is about $9500 for a single person. The median household income for 2004 was about $35,000. If you can maintain your desired lifestyle at this income level and be happy then go for it. As long as your health is good you can supplement this with some part-time work.

It would not be my choice of a desired lifestyle but if it works for you, then it works.

Andre1969 10-14-2005 08:36 AM

Re: ER - Am I ready?
 
I just ran up a quick budget for myself, and it was a real eye opener. *Something that I probably should have done awhile back, but I've usually had a second job, roommates, or both, so I usually just tried to make sure that I was bringing in more than I was spending, and that I put as much as possible into retirement or other investment/savings. *Fortunately, except for a few rough patches, I've been able to do pretty well.

However, I have gotten lazy about budgeting. *Here's something quick and dirty that I threw together though...

HELOC: $600/month. *I'm at the point now that I only have to pay the interest. *However, I'd usually try to round up to the nearest $100. *With the way rates have been creeping, chances are this will go to $700/month soon, if I continue to round up.
Homeowner's insurance: ~$68/month ($800/year)
Property taxes: ~$217/month ($2600/year, and will most likely go nowhere but up *:( )
Electric: ~$115/month
Oil: ~$125/month (probably overexaggerating here, but I'd rather err on the side of caution, and with the way prices are going, who knows?)
Directv: ~$86/month (two Tivos, extra channels, etc)
Home phone: ~$60/month
Cell phone: ~$110/month (my two roommates are on my plan where we share minutes, and they chip in for their part of this)
Car insurance: ~$170/month (this sounds bad, but I have 7 cars, with some of them on an antique policy. *Will probably go down, as I plan on switching one or two of them from my regular policy to the antique one)

So throw that all together, and that comes out to around $1550 per month. *However, that's before I've counted one bit of food, gasoline, repairs to the cars, home repairs, etc. *And then, if I were to retire, there's health insurance to consider. *But on the plus side, most likely the HELOC would be paid off by then!

Still, throwing this quickie budget together sure was a wakeup call for me! *I'd imagine that gasoline runs close to $200 per month. *Food's hard to put a finger on, though, because my roommates buy most of it.

retire@40 10-14-2005 09:34 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
I'm not going to go into finite details about my budget.
My yearly salary before taxes has been between $28K to $35K for the last 15 years.
I have tried to put away as much 401K and IRA money as possible.
25 years ago, using money from the sale of my parents home, I (along with the help of friends) constructed my own home. There were some things I had contractors do, but for the most part it was a do-it-yourself project. Yes, my parents who are now passed away, moved into the new home. My father was retired at the time with a pension. My mother still worked at a minimum wage job. So, that helped towards my savings.
Hope this helps in explaining some of your questions.

I never questioned what you saved or how you saved it. I was only interested in your $15K a year budget because even with a paid off home, it appears lower than what most people need to live on.

Dawg52 10-14-2005 09:40 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by wildcat
Dog51, your avatar changed to reflect your pre-retirement mental breakdown?* ;)

Yeah....pretty much. My job gets the best of me some time so that avatar reflects how I feel at work from time to time. BTW, that is Jack Nicholson in the movie "The Shining" when he was busting through the bathroom door trying to get at his wife with an axe. You got to love old Jack. *

The little guy on my signature symbolizes my retirement attitude. *:)

Jarhead* 10-14-2005 10:12 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by acg
Dex, "you are passing through Fearsville"

It is a difficult decision to make. You are scaring me!

All ER is afterall, is a new beginning. Right?

acg: *First off, if you think you can come to this, (or any other forum), and expect to have "approval" from all posters, on your situation or any other situation, that's not going to happen.

In the second place, you have about as much in common with Dex, as I have with Brad Pitt. ;
(He was a former six-figure plus salary type, where you have mentioned that your income has been around 30,000 before taxes. *(Which indicates to me that you could probably give him lessons on survival.)

Thirdly, you're a young guy (at least by my standards) ;) *If things don't work out, you should be able to supplement your finances with part time work.

From what I have understood from your posts, you have only yourself to be responsible for.

Whatever decision you make, I hope it will be your decision, and not overly influenced by a forum that, in the final analysis, has not a whole lot in common with your situation.

Good luck, Jarhead





justin 10-14-2005 10:24 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by SteveR
If you can live and be happy on $15k then go for it. I would not want to do that and have no plans on being that fugal. The poverty line per the US Census numbers is about $9500 for a single person. The median household income for 2004 was about $35,000. If you can maintain your desired lifestyle at this income level and be happy then go for it. As long as your health is good you can supplement this with some part-time work.

It would not be my choice of a desired lifestyle but if it works for you, then it works.

The median household income for 2004 was around $44,000 according to the US Census.


robls 10-14-2005 10:34 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by retire@40
I never questioned what you saved or how you saved it. I was only interested in your $15K a year budget because even with a paid off home, it appears lower than what most people need to live on.

I wasn't trying to be a pain-in-the-you-know-what. Everyone is different on how they spend and save.

Quote:

Originally Posted by Andre1969
HELOC: $600/month. I'm at the point now that I only have to pay the interest. However, I'd usually try to round up to the nearest $100. With the way rates have been creeping, chances are this will go to $700/month soon, if I continue to round up.
Homeowner's insurance: ~$68/month ($800/year)
Property taxes: ~$217/month ($2600/year, and will most likely go nowhere but up :( )
Electric: ~$115/month
Oil: ~$125/month (probably overexaggerating here, but I'd rather err on the side of caution, and with the way prices are going, who knows?)
Directv: ~$86/month (two Tivos, extra channels, etc)
Home phone: ~$60/month
Cell phone: ~$110/month (my two roommates are on my plan where we share minutes, and they chip in for their part of this)
Car insurance: ~$170/month (this sounds bad, but I have 7 cars, with some of them on an antique policy. Will probably go down, as I plan on switching one or two of them from my regular policy to the antique one)

Andre1969 broke down his budget. I will give some comparables in my case:
Property taxes $133/month.
Electric $60/month.
Gas $85/month. Sure it will go up.
Basic cable. $75/month
No cell phone.
Broadband. My company pays for this. Big saver here. I sometimes work from home, and they pick up the tab.

Rob

robls 10-14-2005 10:37 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by justin
The median household income for 2004 was around $44,000 according to the US Census.*

I am assuming this is "two" people living in the same household??? Possibly with children???

SteveR 10-14-2005 10:41 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
I will give some comparables in my case:
Property taxes $133/month.
Electric $60/month.
Gas $85/month. Sure it will go up.
Basic cable. $75/month
No cell phone.
Broadband. My company pays for this. Big saver here. I sometimes work from home, and they pick up the tab.

Rob

How about food, water, sewer, phone, insurance, medical, Rx, car repairs, home repairs, entertainment, gas (for car), taxes, other? *Also, when your boss stops your broadband are you going to get it on your own?

Not trying to be a pain the rear here...just trying to focus on the true cost of living. *

SteveR 10-14-2005 10:50 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by justin
The median household income for 2004 was around $44,000 according to the US Census.*

I guess I need to be more specific when I post approx. values. The intent was to show an average of male and female earnings for 2004 for "real" median household income. This is from the US Census website.

"Real median earnings of men age 15 and older who worked full-time, year-round declined 2.3 percent between 2003 and 2004, to $40,798. Women with similar work experience saw their earnings decline by 1.0 percent, to $31,223. Reflecting the larger fall in the earnings of men, the ratio of female-to-male earnings for full-time, year-round workers was 77 cents on the dollar, up from 76 cents in 2003. "

The $35,000 approx. figure was a rough estimate based on this data.

justin 10-14-2005 10:56 AM

Re: ER - Am I ready?
 
household = people living together as one economic unit. The average household size was 2.59 people per household in 2000. Per capita incomes are less than the household income. That 2.59 might include one or more parents, and children or fifty-nine one hundredths of a child.

Also, robls, I believe you 100% re: living good on $15k/yr. Health care will be an increasing expense, but there are ways to save. Don't be discouraged by those here who think it is impossible to live on that much. Just because they live on $50-100k/yr (for two people) doesn't mean you can't do it for much less. Look at the bottom rung of our social ladder. Somehow they're making ends meet on $15k per year (or less).

SteveR,
I don't want to be trite, but you're citing the average individual income for a working male or female, the average of which is $35k (ballpark). That isn't household data. The average working household (that would have greater than one and less than two income earners, on average) would combine incomes from both income earners (if applicable) to arrive at the household income. In this case though, we ought to discuss individual income levels, since robls is a household of one person.


Dry Socks 10-14-2005 11:01 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by ex-Jarhead
Whatever decision you make, I hope it will be your decision, and not overly influenced by a forum that, in the final analysis, has not a whole lot in common with your situation.

Well said.

SteveR 10-14-2005 11:04 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by justin
household = people living together as one economic unit.* The average household size was 2.59 people per household in 2000.* Per capita incomes are less than the household income.* That 2.59 might include one or more parents, and children or fifty-nine one hundredths of a child.

Also, robls, I believe you 100% re: living good on $15k/yr.* Health care will be an increasing expense, but there are ways to save.* Don't be discouraged by those here who think it is impossible to live on that much.* Just because they live on $50-100k/yr (for two people) doesn't mean you can't do it for much less.* Look at the bottom rung of our social ladder.* Somehow they're making ends meet on $15k per year (or less).

SteveR,
I don't want to be trite, but you're citing the average individual income for a working male or female, the average of which is $35k (ballpark).* That isn't household data.* The average working household (that would have greater than one and less than two income earners, on average) would combine incomes from both income earners (if applicable) to arrive at the household income.* In this case though, we ought to discuss individual income levels, since robls is a household of one person.*

In the case of robls, it is relevant. *He is the head of his household of one so the figure would be appropriate for him in this case. *We are discussing his individual income as a household of one. *A little flexibility might be appropriate here. *

Andre1969 10-14-2005 11:09 AM

Re: ER - Am I ready?
 
Ooh, that's something else I just thought of...water! *I forget about that bill, because it only comes every quarter. *And when I lived in my condo for years, it was in the condo fee. *The water bill usually isn't too bad, but I did have it break $100 once, when I had a toilet that kept running. *It's amazing how much water a little run can waste!

robls 10-14-2005 11:23 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by ex-Jarhead
Whatever decision you make, I hope it will be your decision, and not overly influenced by a forum that, in the final analysis, has not a whole lot in common with your situation.

Good luck, Jarhead

Thanks, Jarhead.

I was just throwing out the question in general. There are so many variables involved in a decision like this, that it truly comes down to the individual making his or her own decision. Not looking for approval. Just input from others on the board. Thanks to everyone who has responded.

Rob

robls 10-14-2005 11:29 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by SteveR
How about food, water, sewer, phone, insurance, medical, Rx, car repairs, home repairs, entertainment, gas (for car), taxes, other? *Also, when your boss stops your broadband are you going to get it on your own?

Not trying to be a pain the rear here...just trying to focus on the true cost of living. *

I already wrote that I would not give out a detailed budget. Just gave a few lines from my budget.

Rob

haha 10-14-2005 11:34 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
I already wrote that I would not give out a detailed budget. Just gave a few lines from my budget.

Rob

Rob, I've read what the others had to say, and your responses, and I want to change my former perhaps overly cautious stance. Obviously you are in good shape and have things well in hand.

You are the guy who knows best what is best for you.

Ha

SteveR 10-14-2005 11:48 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
I already wrote that I would not give out a detailed budget. Just gave a few lines from my budget.

Rob

I was not asking you to give out details of your budget; only to consider all expenses in your long term plans. I understand not wanting to give up personal information in a public forum.

justin 10-14-2005 11:50 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by SteveR
A little flexibility might be appropriate here.

Steve, sorry if it seemed like I was being a troll. Not my intent! I'll leave that for other esteemed members of this board. :)

I think I was arguing over semantics.

SteveR 10-14-2005 12:01 PM

Re: ER - Am I ready?
 
Justin,

No foul, no harm. Sometimes in our zeal to participate in an exchange of information and opinion, we become too focused on finding fault that we forget about context. ;)


justin 10-14-2005 12:08 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by SteveR
Justin,

No foul, no harm. Sometimes in our zeal to participate in an exchange of information and opinion, we become too focused on finding fault that we forget about context. ;)

True enough. It is nearly impossible for a stranger to tell one's intent in a short one paragraph statement. No emotion, no context, no chance to say, "yeah, that's what I meant".

And we all know more than everyone else and our egos are huge ;)


acg 10-14-2005 02:26 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by ex-Jarhead
acg: *First off, if you think you can come to this, (or any other forum), and expect to have "approval" from all posters, on your situation or any other situation, that's not going to happen.

Whatever decision you make, I hope it will be your decision, and not overly influenced by a forum that, in the final analysis, has not a whole lot in common with your situation.

Good luck, Jarhead...

Thanks Jarhead,

Much too old myself for the approval thing...and been
contemplating major life changes for some time, definitely nothing to be taken lightly.

A wise ('ole) man once said to me, "Work as hard as you can, make as much money as you can the first half of your life...and for the second half, give it all away!"* It's all relative.

I just want to be certain I am the one who will making the decisions on where it goes!!! Not just sure yet what to do with it.

That is why I thought it appropriate to join the forum. In the final analysis, who cares? We all live with our choices and decisions thru out life.

A lot of wisdom and real life experience here.


HFWR 10-14-2005 04:24 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by Andre1969
Ooh, that's something else I just thought of...water! *I forget about that bill, because it only comes every quarter. *And when I lived in my condo for years, it was in the condo fee. *The water bill usually isn't too bad, but I did have it break $100 once, when I had a toilet that kept running. *It's amazing how much water a little run can waste!

That wasn't a small leak... I water my lawn in the summer for less than that!

In the end, many people live on $15000yr; that's lower than I'd like, but it could be done.

GTM 10-14-2005 07:25 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by robls
What do you think about my chances on ER'ing now?

50-year old, single male
$400,000 in IRA/401k accounts
$70,000 in savings
No mortgage-own home free and clear
Property taxes are $1,600 per year
No car payment-2003 Toyota Highlander paid off early
No credit card debt-I only have one card that I pay off each month
Currently live on about $15,000 per year. Probably can cut this down considerably.
But with paying my own health insurance it will be about the same.
Am I missing anything?

Thanks.

Rob

With the numbers you are providing you can do it.

If your investments can return 2% more than inflation.

$470,000 in cash minus a $1500 per year penalty for early IRA withdrawal for a few years will provide income for 48 years.
You will go broke at age 98.


MRGALT2U 10-15-2005 06:10 AM

Re: ER - Am I ready?
 
Here's an angle. Rob has more now than I ever had
(as a single or a couple) and spend more than he does,
obviously.

I have not worked in a long time and will/can not any more.

I believe the largest safety net I/we have is the ability to cut
way back even from the relatively low spending level we
occupy now. Or look at it this way, compared to what we know we
could adjust to (I have taken into account the age factor)
we are living pretty high on the hog spending 25K per year.
It really is all relative.

JG

dex 10-15-2005 06:38 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by dex
What do you think about my chances on ER'ing now?
Am I missing anything?
I think you are missing a lot.
First, RE should be about enjoying life (in my opinion) can you enjoy life on 15K a year or are you just existing?
Second, Financially you are in good shape if you continue working. But you have 12+ years until Social security. You will need to spend down your 70K after tax savings and then eat into your retirment savings. You retirement savins will most likely be hit with a early withdrawl penity if you withdraw before 59 1/2.

I'm guessing your house is worth apx 100K so you have a net worth of $570K but no mention of a pension or other income streams.

Others have mentioned that they figured a minimum of $20K for their annual expenses and still others will chime in that they RE'd with less than you.

Rob,
I've changed my mind - go for it and let us know how you do.

Giving advice is sometimes only showing our wisdom at the expense of others.--Anthony Shaftesbury

It is an easy thing for one whose foot
is on the outside of calamity
to give advice and to rebuke the sufferer.--Aeschylus (Prometheus Bound)

Martha 10-15-2005 07:14 AM

Re: ER - Am I ready?
 
The difference between retiring with a portfolio that yields $15,000 a year and being low income and earning $15,000 a year is that the one with the portfolio has more to lose if something goes wrong. And if you have to dip into your portfolio too much to meet an emergency then it might not yield $15,000 a year anymore.

You should know what state you live in to know what is exempt from creditors if things go wrong. Does your state have a small homestead exemption or large? Does you state exempt IRAs or limit the exemption? It would be good for you to know when evaluating risk.

We know a guy who got laid off from a university teaching position when he was about 40. Now he is in his early sixties. He has lived for more than 20 years, on less than $10,000 a year. He works handiman jobs. He grows his own food. Sometimes has a car, sometimes doesn't. Is very healthy and has no insurance. Last summer he took a 2000 mile canoe trip with his dog from Wisconsin to Montana, most of it UP the Missouri river. Amazing guy.


maddythebeagle 10-15-2005 08:52 AM

Re: ER - Am I ready?
 
I am surprised that Unclemick hasnt responded to this thread. I think he was forced into retirement with 400k or so and made it work with simply living.

wildcat 10-15-2005 09:45 AM

Re: ER - Am I ready?
 
UM2 will only chime in if we start talkin' dividends and Norwegian widows

unclemick 10-15-2005 10:20 AM

Re: ER - Am I ready?
 
Ok Ok

Will toss in the old curve ball (from the old forum).

Psst - Wellesley - current yield about 4%.

Having lived on both sides of the 15k number - the North side is better. We were in the LA swamp in a paid up fish and I carried no health insurance(not recommended).

Post Katrina - restarting from scratch with a mortgage in the burbs - ???? best guess - maybe 30 - 40k living pretty high on the hog. Don't know how to expense rebuying everything from scratch( capitalize over expected life???).

Anywise - having an emergency reserve of 40k was extremely beneficial - to put it mildy.

Yes - you can do it on 15k - but working the nuts and bolts of expenses - and what you are invested in - makes all the difference.

Heh heh heh - the devil is in the details.

dex 10-15-2005 05:21 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by unclemick2
Post Katrina - restarting from scratch with a mortgage in the burbs - ???? best guess - maybe 30 - 40k living pretty high on the hog. Don't know how to expense rebuying everything from scratch( capitalize over expected life???).

Excuse the dumb question: They give a mortage to a person without a job? How does that work?

Martha 10-15-2005 05:29 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by dex
Excuse the dumb question: They give a mortage to a person without a job? How does that work?

Have a high enough net worth and you don't need earned income.

MRGALT2U 10-15-2005 06:20 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by Martha
Have a high enough net worth and you don't need earned income.*

I have no job and thus no earned income. Yet, because I have
an above average net worth, good credit and no debt
(other than reinvested CC money). people want to shower me with
$. It would be interesting to see how much I could borrow.
I suspect it would be almost unlimited if I wanted to work at it.

JG

wildcat 10-15-2005 06:37 PM

Re: ER - Am I ready?
 
Quote:

It would be interesting to see how much I could borrow.
I suspect it would be almost unlimited if I wanted to work at it.
Well, I imagine at some point the bank would disagree ;)

MRGALT2U 10-15-2005 06:46 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by wildcat
Well, I imagine at some point the bank would disagree* ;)

Well, I wouldn't be working with ONE lender. Here is the deal.
I am in the best financial shape of my life and I was always able to borrow all the money I wanted, whenever I wanted it. Don't see any reason that it would be any different now.

JG

Nords 10-15-2005 07:53 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by dex
Excuse the dumb question: They give a mortage to a person without a job?* How does that work?

The lender exhaustively analyzes your pension & future SS income, goes over your retirement portfolio with a fine-toothed comb to verify it'll survive repaying the mortgage, checks your medical history under a microscope to ensure you'd be able to return to the workforce if necessary to avoid declaring bankruptcy, and estimates your remaining lifespan to ensure you don't die before payoff. The mortgage company figures they can take your fees as their income, repackage your loan with a bunch of other subprime mortgages, and sell the whole mess to pension funds & CDO investors.

The mortgage companies earn a penny off each transaction but they do a million of them a day.

The weasels executives who developed this plan will all cash in their options and be working at other firms before the mortgage company goes bankrupt.

wabmester 10-15-2005 11:38 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by Nords
The mortgage companies earn a penny off each transaction but they do a million of them a day.

More like 1% per transaction, and since real estate prices have risen so high, that's a *lot* of money. I mean oodles and oodles of money. Probably the easiest way to get rich today.

uncledrz 10-16-2005 05:05 AM

Re: ER - Am I ready?
 

Quote:

Originally Posted by Nords
The mortgage company figures they can take your fees as their income, repackage your loan with a bunch of other subprime mortgages, and sell the whole mess to pension funds & CDO investors.*

The weasels executives who developed this plan will all cash in their options and be working at other firms before the mortgage company goes bankrupt.*

Which is why with the period of very easy money coming to an end we need to keep an eye on the leverage and credit quality of our investments.*

uncledrz 10-16-2005 05:17 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by Martha

We know a guy who got laid off from a university teaching position when he was about 40.* Now he is in his early sixties.* He has lived for more than 20 years, on less than $10,000 a year.* He works handiman jobs.* He grows his own food. Sometimes has a car, sometimes doesn't.* Is very healthy and has no insurance.* Last summer he took a 2000 mile canoe trip with his dog* from Wisconsin to Montana, most of it UP the Missouri river.* Amazing guy.*


Inspirational. Only shows that too many time our foucs is misdirected, only toward the financial, the paying part, and not on the actual living part.
I canoe, and prefer to go downstream. But what a neat trip, Wisconsin to Montana, upstream.
If you are ready to take that trip, take it. There will be plenty of time to get back into the workforce or find other ways to make some income if you need to.
Uncledrz

MRGALT2U 10-16-2005 07:49 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by uncledrz
Inspirational.* Only shows that too many time our foucs is misdirected, only toward the financial, the paying part, and not on the actual living part.*
I canoe, and prefer to go downstream.* But what a neat trip, Wisconsin to Montana, upstream.
If you are ready to take that trip, take it.* There will be plenty of time to get back into the workforce or find other ways to make some income if you need to.
Uncledrz

I'm ready, but I would have to go downstream and stay in motels. :)


Martha's acquantance is a good example of "Possum Living" which I have posted about before (inspired by BlackHillsBob). We are a long way from that but could wind down to it. Sometimes I'm not so sure we should
not have already. In a prescient moment, maybe 30 years ago, I told my former wife that if we ever did split up I would probably adopt a subsistance
lifestyle. Never did it, but I still think about it a lot.

JG

MRGALT2U 10-16-2005 08:17 AM

Re: ER - Am I ready?
 
Quote:

Originally Posted by Nords
The lender exhaustively analyzes your pension & future SS income, goes over your retirement portfolio with a fine-toothed comb to verify it'll survive repaying the mortgage, checks your medical history under a microscope to ensure you'd be able to return to the workforce if necessary to avoid declaring bankruptcy, and estimates your remaining lifespan to ensure you don't die before payoff.* The mortgage company figures they can take your fees as their income, repackage your loan with a bunch of other subprime mortgages, and sell the whole mess to pension funds & CDO investors.*

The mortgage companies earn a penny off each transaction but they do a million of them a day.

The weasels executives who developed this plan will all cash in their options and be working at other firms before the mortgage company goes bankrupt.*

Hey Nords! This "plan" is brilliant. It's capitalism man............ the engine that
powers the economy (for now anyway). Did you get hit on the head
by your surfboard? :)

JG

Martha 10-16-2005 08:46 AM

Re: ER - Am I ready?
 
A few more things about our "possum living" acquaintance. He is very self reliant BUT he is also dependant on others. My husband's brother drove out to Montana in his suburban to pick him up after his canoe trip. Once he drove down from Wisconsin to Florida is his latest beater to visit his mom. He slept in the car and brought his own food. But in Florida, he stayed with my FIL. My FIL was invited out to dinner with the guy and his mom. My FIL ended up picking up the check for everyone. The trip cost him gas money, that was it.

He is kind of a mooch. Not that there is anything wrong with that. :)

Repairmanjack 10-16-2005 01:08 PM

Re: ER - Am I ready?
 
"He is kind of a mooch. Not that there is anything wrong with that."

Unless you are the moochee.

retire@40 10-16-2005 03:12 PM

Re: ER - Am I ready?
 
Getting back to a $15K budget for a single person, this is the budget for the guy we talked about here before that lives out of his RV.* http://vagabonders-supreme.net/BudgetInfo.htm

Even his budget is over $21K, and he spends under $5 a day on groceries.

AVERAGE MONTHLY INCOME:
Social Security: $1,049
Google AdSense & Affiliate Ads: $770
Donations: $99
Average Monthly Total Income: $1,918

AVERAGE MONTHLY EXPENSES:
Auto Fuel & Tolls: $370
RV repairs by mechanics: $388
MsTioga parts, oil, tires, improvements: $190
Groceries: $146
Dining Out: $46
Insurance: $78
Medicare health insurance: $75
Internet related expenses: $223
TV & Satellite Radio: $36
Cell Phone: $42
Propane: $39
Misc. Expenses: $149
Average Monthly Total Expenses: $1,782

Average Monthly Net Income (savings): $136

GTM 10-16-2005 04:07 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by retire@40
Getting back to a $15K budget for a single person, this is the budget for the guy we talked about here before that lives out of his RV.* http://vagabonders-supreme.net/BudgetInfo.htm

Even his budget is over $21K, and he spends under $5 a day on groceries.

AVERAGE MONTHLY INCOME:
Social Security: $1,049
Google AdSense & Affiliate Ads: $770
Donations: $99
Average Monthly Total Income: $1,918

AVERAGE MONTHLY EXPENSES:
Auto Fuel & Tolls: $370
RV repairs by mechanics: $388
MsTioga parts, oil, tires, improvements: $190
Groceries: $146
Dining Out: $46
Insurance: $78
Medicare health insurance: $75
Internet related expenses: $223
TV & Satellite Radio: $36
Cell Phone: $42
Propane: $39
Misc. Expenses: $149
Average Monthly Total Expenses: $1,782

Average Monthly Net Income (savings): $136

And those figures are only over the last 12 months.
How about the expenses that come up every few years that are not included.
Eyeglasses, dental work, replacement costs etc.

I do not doubt someone can live on minimal #'s but I do not think many around here do.

MRGALT2U 10-16-2005 05:19 PM

Re: ER - Am I ready?
 
Quote:

Originally Posted by GTM
And those figures are only over the last 12 months.
How about the expenses that come up every few years that are not included.
Eyeglasses, dental work, replacement costs etc.

I do not doubt someone can live on minimal #'s but I do not think many around here do.

My son lived in a van for quite some time. He parked it in friend's
driveways and they let him use the shower, etc. He is very
handy and creative, and would work just enough for
"walking around money". Eyeglasses, dental and etc
were all deferred until he went back to a "real job". He went
for years and years with no visible means of support.
(I wasn't helping him) Now, he works for the federal
government..................Argggggggghhhhhhhhhh.. .......... :)

JG

maddythebeagle 10-16-2005 08:03 PM

Re: ER - Am I ready?
 
Back to original subject ;) I dont think the original poster was considering "substance living" considering he has cable, broadband, and a newer SUV? I think he pointed out that he was thinking of doing some odd jobs for some cash under the table. Really sounds like he is looking to semi-retire.

ladelfina 10-18-2005 11:09 AM

Re: ER - Am I ready?
 
Martha said:
Quote:

The difference between retiring with a portfolio that yields $15,000 a year and being low income and earning $15,000 a year is that the one with the portfolio has more to lose if something goes wrong.
That's true, but if you don't have all the job-related expenses like clothes, commuting, lunch/coffee money, higher taxes... the portfolio $15K may represent more like $20k or more of a 'real-world' salary.

I would be on the optimistic side, especially if occasional odd jobs or other flexible work is in the mix.

kat 10-18-2005 03:14 PM

Re: ER - Am I ready?
 

There's also the substantial advantages in having paid off the mortgage and not having to save that big percentage of salary that went to retirement accounts.


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