Hi from Sunny California

[Rdub]

Great site! I am 44, married with 2 kids (5/7). My wife just gave notice and will be RE by the end of this month. I am an accountant, so I do a lot of planning, saving, modeling. I have always managed my own investments and enjoy doing so. I track all of our spending in Quicken and also maintain a spreadsheet with my goals in life (personal and financial), net worth trends, and a financial forecast until I am 100. Ok, maybe I am an accountant with FIRE OCD.

I came from big family (including foster kids) and my dad worked his butt off trying to make ends meet. Seeing my dad work real hard and then having a heart attack at an early age, did a number on me. I told myself that I would go to college and not get married until I was financially secure. I would work hard, save my money, take care of my health and make time for fun. I started working when I was 13, joined the military, finished college, worked for a big CPA firm and then joined a tech company, where I have been for the last 16 years. I workout nearly every morning, see my doctor every year, take a couple vacations each year with the fam and love being a dad.

I have used some of the tools and book recommendations from this site over the last year. I created a Get a life- retirement tree with over 50 items on my to do list. Some are in process and some need to wait for RE. I have run retirement calcs through: Financial Engines, FIRE Calc and Flexible Retirement Planner. I have also had professionals at Schwab, Wells and Vanguard run retirement analyses with consistent results. I am not afraid of getting bored, but I am concerned about: 1) not having enough time in retirement to do all the things on my list, and 2) outliving my assets.

The pendulum of life has been swinging harder towards ER. I have been working 50-60 hrs per week, which includes working every Sunday morning. With work taking so much time, I am missing out on some of the best years with my kids (they think I am king right now), wife, family, friends and hobbies. My parents are getting up there in age and I look forward to spending more time with them before it is too late. Several friends have passed in recent years, which has clarified for me, that I would much rather spend my limited time on this planet enjoying my family/friends and hobbies that make me smile. My plan at 30 was to retire by 55. I have been working hard to reduce that over time and 3 years ago, I made the plan to retire in 2015 at the age of 45. This past year, I have set my RE date for May 2015.

NW ~$7.5M

401ks/Roth IRAs- 10%
529s- 2%
Taxable accts- 64%
Real Estate- 20%
Other- 4%

Investments (mostly Vanguard): Cash 13%, Bonds 25%, Stocks 45%, Other 17%

The high cash position is due to rebalancing and is being put back to work. I look forward to learning more from this site and helping me maintain my focus on FIRE.

 

[rodi]

Hello from another Californian.

Very impressive net worth.

You don't mention what your expenses are - obviously that's a big factor in whether you have enough. But, assuming your networth is from savings (vs a windfall like an inheritance) you've clearly mastered the art of living below your means.

 

[Rdub]

Thanks Rodi- no lotteries/inheritance for me. I have been fortunate in my career, and the company I work for has done very well the last 16 years. I'm expecting to spend ~$150-180k per year. The kids are in private school, but we have no debt... I hate debt. I paid our house off a few years ago as part of my plan to enter retirement without a mortgage. I would have done better with that money in stocks, but I sleep very well. I have 2 rental/vacation condos that have mortgages. One is just above break-even, the other is cash-flow pos around $25-30k/yr. A lot of our spend is discretionary, which will allow us to vary our budget when the market catches a cold.

 

[jclarksnakes]

Some of us are a lot more like our dads than we think we are. Your dad was probably working really hard because he thought he had to (he was probably right). And you are also working very hard (also probably working smarter than your dad) and you feel like you have to. With your net worth you don't have to. If I was you I would put effort into figuring out how to live a good life with what you have now rather than working 50 to 60 hour weeks to amass more $$$. To put it another way.......You have already won the game. All you have to do is figure out how to best utilize your winnings.

 

[heeyy_joe]

Welcome and well done on the wealth accumulation and your healthy workouts. And a 13% cash position is not too high.

 

[38Chevy454]

With your NW totals it seems you are very able to retire in 2015. The big factor is to control your spending, as your current levels are pretty high ($150-180K/yr). Do you live in a high COL area, besides the fact all of CA seems to be pretty high? Moving to lower COL may be a consideration to save some spending and ensure your money lasts as long as you.

Keep up the good health habits and you will live longer and have less medical problems. I agree with the suggestion to try and work less now and enjoy that extra time with your kids. They will be grown up and out of the house before you realize. You can't get time back once it has passed.

 

[Ready]

Welcome to the forum Rdub. Sounds like you will fit right in. And congrats on the great job building your net worth. You are in a great position to do whatever you want with the rest of your life. Enjoy!

 

[TallTim]

Welcome to the forum Rdub. Sounds like you will fit right in. And congrats on the great job building your net worth. You are in a great position to do whatever you want with the rest of your life. Enjoy!

+1 and welcome from another SoCal resident. Agree with the others you are well set. If you haven't, may want to look at FIRECALC for ideas on portfolio size vs spend over time ... but really, with that NW, even with high COL and kids' college you should be just fine unless you are flying chartered and vacationing on private islands

 

[LongPrime]

Move the bonds to VA with guaranteed income withdrawal feature and take the insurance and insurance kicker. Buy VA in increment amounts and time. Do extensive shopping. Expect to hold VA till 59.5 (tax) and to capture guarantees (mimicks bonds).

 

[Brat]

If your NW includes your employer's stock in a taxable account: My daughter is also a CPA in the Silicon Valley. I recall her once saying that if you have stock options from a start-up you really need to know the tax implications before you exercise them. She knew of situations where the stock was worth less than the tax obligation during the tech crash a few years back.

Doubtless you know that, just a reminder.

 

[MBAustin]

Welcome and congratulations! Enjoy those kiddos (there was a recent thread about stay-at-home dads you might want to check out).

As I'm sure you've already considered, one thing you may want to look into after you are both RE is Roth IRA conversions. Also quite a few of us here went from reinvesting dividends/capital gains in our taxable accounts to taking them in cash and using that for spendable income.

We'll look forward to seeing more posts from you next year!

 

[Rdub]

Thanks jclarksnakes, heeyy_joe, 38Chevy454, Ready, TallTim, LongPrime and Brat!

38Chevy454-
I'm budgeting ~$20k/yr for the girls primary school, that jumps to $32k/yr in high school. I am trying to fund ~$200k/each in their 529s when they enter college. I also have taken into account their first cars and part of their wedding costs into my budget. I have been looking at healthcare costs in RE and I am estimating around $20k/yr with 5% inflation. Other than that, we do live in the heart of Silicon Valley, so COL is a little high.

The majority of our forecasted spend is discretionary with hobbies (cars, auto crossing, golf...), vacations, gyms, etc. I enjoy cooking and BBQing, so realistically, we will be eating more at home.

I included in my budget helping our parents out a bit more financially as they age. Currently, they can still go grocery shopping and out for the occasional restaurant without any help. So my support right now is on helping them with their budget and managing their IRAs. However, as they get a bit older, the plan is to ensure their house/car are in good repair, they have their meds, and they are not eating cat food.

Needless to say, I am trying to budget a little high. But I know there is a lot of fat I can cut if needed. My plan has been to RE at 45, and by sticking to the plan, it also builds a margin of safety that my conservative side needs.

TallTim-
I've used FireCalc and like the flexibility of it. No charters or private islands for me. However, the 2 rentals we have are in Hawaii which is where we vacation every year. Being kinda thrifty (and vertically challenged), we fly Alaska Airlines coach and utilize their low cost calendar to schedule our vacation days. To add to my bargain hunting, my wife and I have separate Alaska Air Visa cards. Sure it costs $75/year, but we get $110 companion fares each year. This year it cost me ~$1600 for 4 round trip tickets.

LongPrime-
Thanks- I'll look into VAs, just not familiar with them at all.

Brat-
Good point, our options are in RSUs now and when they vest, they vest net of tax. I had some hefty tax bills when we had ordinary options. I tend to harvest some each year for diversification. I don't count them in my NW until they hatch (vest). I have friends that ended up in the exact position your daughter described. They worked at a startup, cashed in their options to buy a Porsche and didn't realize how big the tax bill would be. Ouch!


I've never discussed my NW or spend with anyone other than my wife, so I get a little embarrassed just writing this. However, I am here to learn so I feel the need to be open.

 

[Rdub]

Welcome and congratulations! Enjoy those kiddos (there was a recent thread about stay-at-home dads you might want to check out).

As I'm sure you've already considered, one thing you may want to look into after you are both RE is Roth IRA conversions. Also quite a few of us here went from reinvesting dividends/capital gains in our taxable accounts to taking them in cash and using that for spendable income.

We'll look forward to seeing more posts from you next year!

Thanks MBAustin! I have been utilizing the backdoor Roth for the last few years, great tool. We have a pretty sizable chunk in our 401ks and I am hesitant to convert those into the Roth after RE due to the tax hit. Moving from reinvesting to using divs/cap gains will be an interesting transition for me. My current plan for RE income is in the following order:

Cash
Rental Income
Muni Bond Income
Interest in Taxable Accounts
Dividends in Taxable Accounts
Sell overweight assets from TAXABLE accounts:
Unrealized S/T Losses
Unrealized L/T Losses
Unrealized L/T Gains
Unrealized S/T Gains
Sell other assets from TAXABLE accounts (if nothing is overweight):
Unrealized S/T Losses
Unrealized L/T Losses
Unrealized L/T Gains
Unrealized S/T Gains
Sell from tax-preferred accounts
Minimum required distributions
Traditional IRAs (401ks)
Social Security (later)
Roth IRAs

I am trying to prep myself mentally for the transition from building my NW to spending it. Hopefully it is not as scary as it currently seems. Keep the great ideas coming!

 

[EastWest Gal]

Your list is organized and seems comprehensive. Thanks for all of your ideas too.

 

[Rdub]

Somewhat funny story... My landscaper hasn't shown up since the week before Memorial weekend, no calls, no return calls, nothing. Been using the guy for several years, always pay on time, bring him a water when I am home, etc. My first call was of concern asking if he was ok. After he missed 2 weeks in a row with no call, I left another message for him to not bother coming anymore. I tuned up my lawn mower that I haven't fired in several years and got the yard taken care of. Part of my FIRE plan was to fire my landscaper and take over that duty next year. I always liked doing the yard work.

Anyhow, I had surgery last week to remove a kidney stone that was stuck and a few small ones remaining in my kidneys. Not fun at all. Had to get a stent inserted between my kidney and bladder which was removed on Monday. It was horrible, recommend you avoid it if you can. So I return to work today and had lunch with an employee. I told him the story of my landscaper and he starts laughing. He said, "I thought you would start mowing your lawn once you retired, do you have something to tell me?" Too funny, I never mentioned anything about taking on my yard work again once I retired. Matter of fact, I haven't mentioned to anyone at work about retiring anytime soon.

 

[Rdub]

It has been about a year since I started this thread, so I figure it is time for an update.


May 2014 May 2015 % ∆
NW $7.5M $8.9M 18.6%

Taxable $4.9M $6.0M 22.4%
401ks/Roths $0.85M $0.93 9.4%
529s $0.14M $0.18M 28.5%
Real Estate/Other $1.6M $1.8M 12.5%


Investment Mix

Stocks 62% 57%
Bonds 25% 32%
Cash 13% 11%

Taxable accounts were up due to savings and returns. The taxable accounts hold primarily Vanguard admiral stock funds (~90%) and company stock (~10%).

401ks/Roths- Maxed my 401k contributions. Since my wife retired, there are no more contributions to her 401k. I primarily hold bond funds/REITs in my 401ks, which is why the gains are relatively low. I maxed our post tax IRA contributions and converted to Roth IRAs. The Roths hold primarily Small Cap value funds. Since the bulk of the value is in the 401s, the Roth gains have a relatively small impact on the overall gains of this category.

529s are in Vanguard Age based investments. We contribute $14k/yr to each account.

Real Estate/Other has benefitted primarily from a good real estate market and pay down of rental mortgages.

Investment mix- I am continuing to deploy cash with a rough goal of 5% cash, 35% bonds and 60% stocks.

Early retirement update:
I planned to retire this year, but was infected with the OMY syndrome. I believe you need to be both financially and emotionally prepared for early retirement. Financially, I feel I am ready, but not quite emotionally there yet. There was a leadership change in my division last year and work has been way less stressful and more interesting. I plan on telling my boss in Jan 2016, just after I book our long summer vacation to Maui.

The gains in NW above are better than I had forecasted and my spending is in line. One of the benefits of the ER delay is that if my forecasted savings, spend and return rates hold true, I should reach a $10M NW around my new retirement date. A number I wished for, but never thought I would actually achieve.

Spend update:
I track all of our expenses each month, so our forecasted expenses this last year versus our actuals were very close. I include general housing related expenses in our budget to account for miscellaneous repairs/upgrades. However, this year will be higher than planned due to replacing our water heater this month and our roof next month. In addition, our 2014 taxes were slightly higher than what I planned. But overall, I am really comfortable with our spending forecast.

Wife's retirement update:
My wife retired a year ago at 38 and has really enjoyed herself. She is way less stressed, but has been very busy with our kids, volunteering, working out and hanging out with her friends. She is not sure how she found time to work before.

Early retirement activities update:
I have a bunch of activities/goals for retirement; house projects, hobbies, more family time, etc... So I started easing into them this year.
* Concerts are booked for the year (4 down, 10 to go)
* I am learning the acoustic guitar
* 2 vacations planned, the 3rd is in the works
* Raced my car in March, planning at least one more this year
* Took a Smoking/BBQ class in Feb and I am working on perfecting my ribs and brisket.
* Went to the driving range last weekend- goal is to get my golf game back as I head into retirement.

In addition to all this, my 2 little angels are keeping us on our toes with school activities, soccer, gymnastics, ballet, t-ball and piano. My oldest (8) is doing great in gymnastics and will start competing this summer. There will be lots of weekend travel, but it is so much fun watching her do well and enjoying the sport.

Enjoy your summer!
Rdub

 

[Katiek]

Congrats. I wasn't here when you started this thread, so it's nice to read your story and see your update. Glad work is less stressful and you are enjoying your OMY. You've worked hard and planned well, so you have a lot of options and can pursue whichever ones interest you the most!

 

[WannabeRetired]

That's gotta be a great feeling, Rdub. Congratulations! Well done!

 

[Rdub]

Quick update...

Even though it has been a tough market, my portfolio is still in line with my projections.

6 concerts down... 8 more to go
Practicing guitar ~5 times per week
2 vacations down... 1 more to go

Still need to golf more and set up my next auto racing event.

On the vacation front, we just flew back from Hawaii late last night. We had a blast at the Aulani Disney Resort. We ran into Alfonso Ribeiro, no I did not do the Carlton with him. We also ran into Timothy Bradley (professional boxer) and had a nice chat with him. Great boxer and super cool dude. We took some Ukulele lessons... which I have officially added to my retirement to do list. I was back in the office first thing this morning. The funny thing is, I dreaded coming into the office and wished I was still on vacation... next year.

I reached out to my friend/old boss who retired last year at 50. I told him I was back from vacation and had a quick question... "Do you wish you would have retired sooner?" His response... it was his only regret. Can't wait for next year! 276 days left... but who's counting.

 

[readytofire]

It sounds like you are on track and almost there (emotionally). Financially you are set!

 

[Katiek]

thanks for the update! Sounds like a great vacation and that your plans for ER are all on track!

 

[Rdub]

Happy New Year and time for an update...

I wasn't comfortable pulling the trigger last May. Summers are usually the most stressful in the office with annual plans, annual employee reviews and a fiscal year end. This past summer was no different from a work perspective, but I also lost my father in law while we were on our summer vacation. Needless to say, it was a tough summer.

I plan on telling my boss on Mar 15 that I will be retiring on May 15. I have been grooming my backfill and feel good leaving my team in really good hands. I may have to announce a little earlier since the guy I have been grooming is being recruited for a position in Europe. He knows my plans and would much rather have my job than moving his family to Europe, but if there is a lot of pressure on him, I will announce a little earlier to make it easier on him and my boss.

My withdrawal rate will be just under 2.5%, which I know is conservative, but helps me sleep better. I update my spreadsheet every month and there were no major surprises this past year, other than my NW ending higher than I had forecast due to higher savings and better market returns. I am feeling very confident about retiring this year and don't have any of those nervous butterflies second guessing myself.

I have a 2 day racing school set up for the weekend after I retire and a packed summer with the kids. Wishing everyone the best in 2017!

 

[Katiek]

Congrats and thanks for the update. Nice to see your plans coming to fruition!

 

[Rdub]

Another quick update:
1) I told my boss in January that I was going to retire.
2) Last day in the office will be early May
3) Last day as an employee will be early June (burning some vacation)

My finances are ahead of my plan and I haven't had any regrets about my decision. I am waiting for the panic to set in, but I think I have been planning long enough that I hope it will be minimal.

We started announcing my retirement plans last week and the comments have been pretty standard. It usually comes in the form of congrats I'm jealous, to congrats FU (in jest) and what are you going to do all day. There were a couple boneheaded comments like have you saved enough or do you have your kids college accounts funded. The most common is OMG, how old are you, that is awesome.

I noticed that quite a few of the execs have a similar response: you are so brave to do this so early. I could retire now, but I really enjoy working. This seems to be more self reflective than any kind of criticism. They also comment that this is surprising because I am charging and pushing the teams just as hard as ever even though I won't be at the company much longer. I just say it is personal pride that drives me. I'll use the same passion to enjoy my family time and hobbies in a couple months.

The count down is on, 50 days left!

 

[nativenewenglander]

Congratulations. Enjoy your well deserved new life. We are friendly with a couple who retired in their early 40's from Wall Street. He and his wife also have two daughters that are probably 11 and 13 or so now. The wife took a job recently as the president of a non-profit, he is an adjunct professor as of last fall. He is home everyday for the kids, but I know he was bored stiff. It sounds like you have some hobbies, he didn't which was part of the problem. Cheers!