39 in NYC - VERY glad to find this place

[Maurice]

Hi everyone -

So good to find this site - somehow I thought I was the only one out there planning an early retirement.

A little about me (using Maldini's post as a template):


Family Info
Married, no kids.
Committed to both of the above
I am 39 and wife is 41

Work Salary Info
Combined household income varies from $500-750k (bonus driven)

Current Savings:
$2,900,000

of which ~500k is in retirement accounts.


Asset Allocation (approx)
75% stock
15% bonds
8% alternative (private equity, gold, foreign exchange, REITs)
2% cash

I also keep another 3 or 4 months worth of expenses in cash which doesn't figure in any of the above numbers.

Approximately 1.4M (half my portfolio or 2/3 of the equity portion) is in a concentrated position in a single stock, which I cannot sell until 2009.

Of my 'directable' equity investments, I'm 60% US, 20% Europe, 18% Asia, 2% Emerging Markets. All are broad market index funds (or ETFs) except one small sectoral bet (a healthcare index ETF)


Mortgage
About 450k left. Home value around 1.5MM.


Retirement Goal
43-47.

Current Savings Rate/year:
$200k +, depending on income

Current Expenses/year
$165k.

Expected Expenses in retirement (in todays dollars)
This is the hard part. Lifestyle is one of the variables I'm playing with.

My wife and I want to retire (mostly) in Latin America - still deciding where. Ideally we would keep a (smaller, cheaper) place in NYC and spend a couple of months out of the year here, another month traveling, and the balance in the Latin American home. Of course if we give up on the NYC home it makes the whole enterprise much cheaper, in fact we could probably pull the trigger pretty soon if we did. Another variant would be to rent in NY a month or two a year, which has the added advantage of being entirely discretionary thus something we could forgo in years the markets aren't doing is well.


What I plan on doing in retirement:
My hobbies are classical piano, cooking, and reading. My wife shares the last two hobbies and draws/paints/sculpts as well.


Anyway, that's my situation in a nutshell. I just discovered this place this morning, and am still taking it all in. Expect to hear some more specific questions later. In the mean time, any questions or comments on the above are welcome.

 

[Sandy]

Maurice:

Welcome. You have accumulated more than most here, but since you are in the big apple, expenses are up there as well. You seem to have a good sense of what you want, the tricky part will be trying to figure what your expenses will be in your revised living situtation.

Take time to review the "best of" and the FAQ's that meet your situation. We look forward to your input.

 

[donheff]

Maurice? Didn't Steve Miller sing about you?

Welcome to the Board. A lot of us older ERers (I retired at 56) wish we had gotten started sooner. You sould like you will be in great shape when you pull the plug. Here is hoping your single stock holds up until 2009./

 

[twaddle]

Welcome to the site, Maurice.

You've got a great gig there. What's driving your retirement goal? Burnout?

 

[Gekko]

Welcome. I'm also a fellow NYer who recently joined. And congrats on the NW, I think so far your stats are the best I've seen yet, especially given your age. My NW is pushing $4mm, bonus-driven income in the high six-figures, occaisionally breaking seven, but I'm mid-40's. Plan on working well into my 50's if I can, as I think career has not peaked yet and I'm having fun. Also, if I stay in NYC, I want to have a very substantial sum set aside - enough to continue present yuppentatious lifestyle (yes, I admit it).

Still, I think its prudent to start planning now, constantly reevaluating, and be prepared to move up the RE date if need be. Like you, I am a bit tied up with the stock handcuffs, but fortunately, those have been vesting rapidly over the past couple years giving me greater flexibility.

Most on this board would say that we are both already FI and could RE tomorrow, and that is clearly true on some level. Reading this board will be an eye-opener, especially in terms of all the different perspectives on cost of living and lifestyle. Us NYers tend to have some pretty skewed views on those things and some very different priorities.

 

[clifp]

Aloha Maurice

As other have said you are obviously in good shape for RE. The one scary thing is your concentrated position in a single stock. I was a similar situation in 1999, fortunately for me I sold most of it at high price. Many/most of my co-workers held the stock and suffered a 80% paper loss, while many friends in smaller companies lost all of there paper millions and end up owing several hundred thousand in AMT taxes.

If possible I'd advise looking at some way to minimize the risk through the use of options like collars, stock option swaps and similar schemes.

 

[Maurice]

Thanks for the welcomes everyone.

Twaddle - that's kind of it - my wife and I are getting tired of the rat race. On most days I still like my job, its just that I look back at the end of a year and realize I worked too much and didn't enjoy myself enough. Also, the wife and I took a year break once before, so I know what its like on the other side.

Gekko - agreed re the FI status. The real question is lifestyle. I'm also just entering my peak earning years, and can expect my early 40s to be pretty lucrative if I keep this up. Theres a big difference between retiring with 5mm vs retiring with 8 or 10, no? On the other hand, there's something to be said for being footloose and untethered in my early 40s.

 

[twaddle]

I'm also just entering my peak earning years, and can expect my early 40s to be pretty lucrative if I keep this up.

That's the acid test for ER, IMO. My net worth was sufficient, my BS bucket was full, but the hard part was walking away from the present value of my future earnings.

You're literally making a decision to walk away from millions. But, in the end, I know I made the right decision by walking away. The freedom and lack of stress is really amazing. You don't even realize you're stressed by work until you've left for a few months (the frog slowly boiled).

 

[Gekko]

To the points on lifestyle, stress, etc., it's something I am constantly reevaluating. In the not too distant past, wife pointed out to me that I was becoming an unhappy SOB and that I either needed to make some changes in the way I work (and play) or get off the treadmill. Right now, I've been trying to make enough changes improve the work/life/hapiness balance to a point where I (and wife) can tolerate my career for an extended period of time. Much of the changes have to do with stepping back and asking myself why I'm doing what I'm doing (in all aspects of life) and how I could do it in a way that makes me a better person. After all, what is the point of our lifestyle if doesn't bring happiness and what is the point of seeking FI if it doesn't bring freedom.

I've made many changes in attitude and approach, and I am now more inclined to stop and smell the roses, and consciously think about appreciating what I have (an interesting and lucrative career, a beautiful and loving wife, an extraordinary home, and money enough in the bank to not sweat the small stuff). I've also had to come to terms with my workaholism. Yup, I am a bonafide workaholic and so my chosen vocation is one that encourages exactly that - complete and total dedication to working like a dog in the noble pursuit of profit. Wife has spent the last 10 years trying to get me to step away from the insanity. I now realize that its in my blood, I was born with it, and I'm not going to be able to just go cold turkey someday. So, part of joining this board is the beginning of the preparations for RE, even if that might be 5-10 years from now.

 

[dex]

Are you a native New Yorker of did you move in from somewhere?

 

[Maurice]

I moved here 12 years ago. I lived all over before that (mostly FL, Chicago, upstate NY)

 

[Nords]

Welcome to the board, Maurice.

Twaddle - that's kind of it - my wife and I are getting tired of the rat race. On most days I still like my job, its just that I look back at the end of a year and realize I worked too much and didn't enjoy myself enough. Also, the wife and I took a year break once before, so I know what its like on the other side.
Gekko - agreed re the FI status. The real question is lifestyle. I'm also just entering my peak earning years, and can expect my early 40s to be pretty lucrative if I keep this up. Theres a big difference between retiring with 5mm vs retiring with 8 or 10, no? On the other hand, there's something to be said for being footloose and untethered in my early 40s.

You're also in your peak "enjoying family" years, your peak "traveling and poking around the world" years, and your peak "Why am I putting up with all this crap!??" years.

There's also the possibility of entering the peak "I don't understand it, he seemed so healthy just last week, this is all so sudden" years. We've heard plenty of those words on this board.

There's a difference of $3-5 million in your calculations but it's only money. Spouse made one of those million-dollar decisions a few years back and we haven't missed it a bit. If we'd had the benefit of a year's ER lifestyle we wouldn't have even hesitated as long as we did.

You may find that it's a lot easier to re-develop your favorite lifestyle once you quit the job, and your personal money situation may actually improve once you're not distracted by all that work-related stuff.

I'm repeatedly stunned by the amount of money it takes to solve "problems" in NYC that are non-existent outside the megalopolis...

 

[dex]

Nords,
I grew up in NYC - Bronx - there is a mindset there that NYC is the center of the universe and anything outside of NYC is the hinterland.
After traveling around the USA and the world I discovered that the people in NYC were nuts. They live in a world of many minor insults on a daily basis and the things that they say that they like NYC for they very rarely use. It is a place that lives to work instead of working to live.

 

[Olav23]

Hi Maurice, welcome!

Mortgage
About 450k left. Home value around 1.5MM.

I, too, am an NYCer. There are a few of us on here, as you can see. You mentioned keeping the place in NYC. Are you in NYC-proper, where you will be gouged monthly on maintenance fees, even after the mortgage is paid off? I'd figure out the carry costs even after payoff, and see how much it would cost for a comparable sublease/short-term lease for a month or 2, here and there.

Or, you could rent it yourself, if you prefer. But that will quickly become another "job" long term.

Just a thought

 

[Nords]

I grew up in NYC - Bronx - there is a mindset there that NYC is the center of the universe and anything outside of NYC is the hinterland.

My PILs grew up there too, although they hasten to add that they grew up in such-and-such a part near this street, that block, and the other thing's 2nd-floor apartment. You know, the good part of the Bronx. I forget the details but I've heard enough about the 1940s Bronx lifestyle to fill a coffeetable book.

I spent four days in Manhattan last May. For those of you who live there, I was the ponytailed guy in the surfer-dude clothes who kept bumping into everyone while gawking at all the big buildings & traffic. Sorry about that.

I was going to look up various Bronx places and my spouse's Manhattan birthplace but after a couple days it just all blurred together. I don't think I'll be going back...

 

[Maurice]

Nords,
I grew up in NYC - Bronx - there is a mindset there that NYC is the center of the universe and anything outside of NYC is the hinterland.
After traveling around the USA and the world I discovered that the people in NYC were nuts. They live in a world of many minor insults on a daily basis and the things that they say that they like NYC for they very rarely use. It is a place that lives to work instead of working to live.

Did you move away while young? The type of New Yorker you describe certainly exists but it tends to be the younger set. Frankly, life here is hard enough that most people who aren't truly taking advantage of the benefits of New York leave after 10 years or so ('leave' might mean move to the burbs). That's certainly been my experience anyway.

In my case the two big attractions are (1) my industry, which is centered here and in London, and (2) the arts, as I am a classical pianist by avocation and there is quite a community here.

 

[Maurice]

Hi Maurice, welcome!



I, too, am an NYCer. There are a few of us on here, as you can see. You mentioned keeping the place in NYC. Are you in NYC-proper, where you will be gouged monthly on maintenance fees, even after the mortgage is paid off? I'd figure out the carry costs even after payoff, and see how much it would cost for a comparable sublease/short-term lease for a month or 2, here and there.

Or, you could rent it yourself, if you prefer. But that will quickly become another "job" long term.

Just a thought

Thanks, Olav.

My place is in the gentrified part of Brooklyn. I could definitely rent it out, but as you point out it would become its own job to do so. Plus if I were to keep it I would have it set up the way I like it which doesn't lend itself well to the rental market (e.g., no television and a very fine piano I wouldn't want renters to set their wine glass on). My wife brings up the possibility of rental, since we could probably get 6000-7500/mo for the place furnished, but I'm dead set against it.

As it turns out, the carry charges are quite low. I pay no real estate tax until 2013 and the maintenance is only $500ish (small building, no services).

 

[Maurice]

I spent four days in Manhattan last May. For those of you who live there, I was the ponytailed guy in the surfer-dude clothes who kept bumping into everyone while gawking at all the big buildings & traffic. Sorry about that.

I think I spilled my coffee on you - sorry!

 

[Maurice]

You're also in your peak "enjoying family" years, your peak "traveling and poking around the world" years, and your peak "Why am I putting up with all this crap!??" years.

There's also the possibility of entering the peak "I don't understand it, he seemed so healthy just last week, this is all so sudden" years. We've heard plenty of those words on this board.

The man speaks sooth.

 

[Nords]

The man speaks sooth.

Besides the benefit of learning from Yakers' recent experiences, there's this thread:
http://www.early-retirement.org/forums/f35/handling-just-one-more-year-syndrome-20091.html

 

[Enuff2Eat]

maurice, congrats on you success. such an amazing story. anyhow, to be a member of this forum, you must at least dislike your job a little bit. if one love what he does so much than there is no need to ER, you will be like Alan Greenspan working at the age of 72, right??

i am formerly a nyct person but still go down to ny everyother weekend to visit families there. Question for you, how about kids?? 1, 2, 3 it will definitely change your outlook about ER, personally i think dogs are fine too. also, your and your spouse hobbies sounds cheap and reasonable to me. that's a big help. wait till 2009 then work part time.

enuff

ps. whoever get out of the rat race first, WIN.

 

[Maurice]

I definitely dislike the job a little bit or more. Its fundamentally interesting in that I deal with an interesting subject (financial derivatives) but its stressful and I deal with a lot of BS of a big bank.

To answer your question, we have no kids, so that gives us loads more flexibility in decision making right now.

Re 2009, I've often thought I should work at least through 2009 given the inherent risk of that concentrated position - which in practice would mean hanging on until feb 2010 to get 2009's bonus. In 2010 I'll turn 42. I could see leaving then or hanging on maybe 2-3 more years.

 

[Gekko]

We have a lot in common. No kids either, so we have a little fun spoiling our nieces and nephews. Question for you on estate planning, since you're my long lost twin brother and neither of us has kids. With insurance, our estate would amount to a pretty significant figure (more than double our NW). We're still young, so no worries about health yet and we're leaving everything to each other, but in the event of a "double-whammy accident" where say wife and I both buy the farm at the same time (like an airplane crash), we've been debating exactly where to leave the money. Right now, after setting aside some money to take care of our parents, and leaving some modest tokens of affection for various relatives and siblings, we are mostly inclined to leave the bulk to charity. Have you given much thought to this?

 

[Moemg]

Welcome to the board Maurice & Gekko .

 

[Maurice]

We have a lot in common. No kids either, so we have a little fun spoiling our nieces and nephews. Question for you on estate planning, since you're my long lost twin brother and neither of us has kids. With insurance, our estate would amount to a pretty significant figure (more than double our NW). We're still young, so no worries about health yet and we're leaving everything to each other, but in the event of a "double-whammy accident" where say wife and I both buy the farm at the same time (like an airplane crash), we've been debating exactly where to leave the money. Right now, after setting aside some money to take care of our parents, and leaving some modest tokens of affection for various relatives and siblings, we are mostly inclined to leave the bulk to charity. Have you given much thought to this?

You do sound like my twin brother!

We have given estate planning a little thought, and we have a will. The main beneficiaries are siblings and parents, with the nieces and nephews getting 100k each or so. As the net worth grows, we will revisit that, especially as our parents pass on. I like the idea of charity, and could see us doing that. I think the neices and nephews will also figure more prominently in the next will once our parents are gone.

Question for you - why bother with life insurance? I have long term disability insurance and an umbrella liability policy, but not life insurance. I don't really need it with no kids and enough in the bank for my wife's FI. (I may have some token amount provided by MegaBank but nothing I pay for)