Do you think we are ready?

[ColdFeet]

So I'm in an industry that has been lucrative but times are changing.. currently making 1/3 or typical and I feel it may get worse. My wife owns a business and it is a really sweet job. It's tough to leave it.

I've got two rental properties that net about 35k/yr passive (sort of) and a house free and clear. One rental we'll keep as a backup as its a great retirement location in FL. And have about 650k sitting in nice returning adj rate accounts waiting for allocation (after selling some rentals). The prolonged market levitation in both RE and stocks is not providing the timely entry I would like. So.. of course the clock is ticking on that cash.

Fixed Annuity Rates are so decent now I'm rethinking our retirement plans for 10 years out. I am almost 51 wife 49.

Our dream is to live abroad. Mexico for now while our dog lives out her life and easy to bring her. We were going to attempt that in our 60s.

There's no better time than the present though right? I feel we could make this work now swapping our 60s for our 50s with fixed annuity rates the way they are.

After combining house sell and cash I could buy a 5.45% fixed annuity and net about 70k/yr. Plus 35k rental income. Plus 150-200k safety account. Easily live a nice life in Mexico for 10 yrs and all assets would not lose money (other than fluctuating real estate).

Who knows what we'll feel like in our 60s or 70s. I would like this adventure now. The hold up is my wife's business. It's too good to give up. But she can do most remotely coming back to the states for 2 big events. But.. its the appearance to her clients as she is required to sign checks and such and this looks like she is not as engaged. Even shaved down to just one client that would be an additional 70k/yr. And that client is in love with her so possible.

So Question: Would you do it? Or just stay the course and retire in 10 yrs. I feel the fixed rates locked in provides an incredible opportunity.. and in 10 years who knows what will be possible.. rates could be negative. So doing it now may be the less risky time.

We may get our fill and move back to FL in our 60s - but if she can't keep that business going the passive income may not be enough as I'll be moving into one of those rentals.. the other will have been sold by then b/c my mother inlaw lives there and won't be there that long. More cash but no income. So.. possibly back to work for a bit. But after such a lay off the jobs most likely won't be as desirable/flexible/lucrative.. but we would survive fine. Also have SEPs and ROTHs not included in any of the numbers. So that will continue to grow. More buffer.

To me now is the time but I love my wife's job as much as she does. We are having to decide to follow our dreams or possibly give up that awesome career that won't ever be duplicated.

Apologize for the long post.. there's a lot of info to share. Help push us off the ledge one way or another.

 

[LateToFIRE]

That was kinda hard to follow. So, if I understand correctly, you'll have about $105K of fairly fixed income at age 51/49 with another potential $70K of income from part-time remote business, and in terms of assets you'd have $150K-$200K in a cash account and the equity in your rental properties. And you'd like to move to Mexico.

My question is: What could go wrong?

 

[InsertCleverHandle]

Putting the financial calculations aside, how much time have you spent in Mexico? A week vacation is very different that living there full time. My suggestion is try it out a bit more before you commit fully. Spend a month there and see if you want to stay longer. Maybe also try some other locations. Medellin, Colombia is very nice with a temperate climate.

 

[HawkeyeNFO]

What are your expenses today? Projected expenses in MX?

What would be your annual income? Tough to follow your initial post, sounds like maybe $105k? A lot of people here advise against annuities.

 

[MarieIG]

Dear ColdFeet, ,

Welcome to the ER forum.

Maybe not - but not due to not having enough money.

It seems a bit - rushed.

You may be ready, your wife may not be. It does not have to be all or nothing. How about you ease into it. You retire, and your wife increases her remote time, and vacation time. (I would not like to see your wife regret giving up her sweet gig in a few years time, and be unable to get it back.)

With regard to annuities, proceed with caution. I would not put all funds with one insurer due to insolvency risk, inflation, and the need to have funds for lumpy expenses. I would have concerns about a large capital gains hit.

So, would I do it? Not how you outlined it - but of course, I am not you. I would probably retire, with spouse continuing to work, do Roth conversions if applicable, have DW work remotely a few days a week, take staycations and increase travel.

With regard to annuities, I would proceed with caution. Do not invest too much with a single carrier. If applicable, I would buy a smallish 100% joint and survivor annuity now (researching the guarantee limits - and whether or not they are applicable if you are no longer a resident in the state where it was purchased), and determining whether you want the option to trigger the annuity at a later age. There is also "inflation risk" with annuities. Some people recommend buying annuities at certain ages, i.e. 55, 60, 65, 70 and so on, so that you get higher payout rates as you age, and there is another interest rate spike, you could take advantage of I would also keep some cash in a good money market, for lumpy expenses.

Below are two basic resources:

Some Important Questions to Answer Before Asking - Can I Retire?

FIRECalc

 

[ColdFeet]

What are your expenses today? Projected expenses in MX?

What would be your annual income? Tough to follow your initial post, sounds like maybe $105k? A lot of people here advise against annuities.

Yeah sorry its a lot to swallow as it is multi-faceted.

Yes 105k plus the potential for another 70-100k if my wife can pull off the work abroad thing. So the income is not a problem. We only spend about 50k here with no debt.

The main question I guess is this and I've never heard it before: Swapping our 60s for our 50s. I assume the worse at the end. Wife loses her business at 50 and we live our dream until 60. Then we are pretty much back at square 1 with the financial situation which won't be bad but far worse than if we just kept working.

Now if the opportunity to roll a similar annuity at 60 we could just keep rolling along. But - we may have to move back and work again. For those that have retired early what would that feel like at 60 yrs old.

We aren't extravagant so possibly could still live in the US retired. But.. Don't mind working so if here I don't see why we wouldn't. I just want at least those 10 yrs of adventure.. maybe in our 50s instead of 60s.

 

[ColdFeet]

Dear ColdFeet, ,

Welcome to the ER forum.

So, would I do it? Not how you outlined it - but of course, I am not you. I would probably retire, with spouse continuing to work, do Roth conversions if applicable, have DW work remotely a few days a week, take staycations and increase travel.

With regard to annuities, I would proceed with caution. Do not invest too much with a single carrier. If applicable, I would buy a smallish 100% joint and survivor annuity now (researching the guarantee limits - and whether or not they are applicable if you are no longer a resident in the state where it was purchased), and determining whether you want the option to trigger the annuity at a later age. There is also "inflation risk" with annuities. Some people recommend buying annuities at certain ages, i.e. 55, 60, 65, 70 and so on, so that you get higher payout rates as you age, and there is another interest rate spike, you could take advantage of I would also keep some cash in a good money market, for lumpy expenses.

Below are two basic resources:

Some Important Questions to Answer Before Asking - Can I Retire?

FIRECalc

Thank you! Yes.. that's the side plan. We'll probably move to FL early within a year and I'll have to recreate my business and my wife gets to keep hers. Glad you were able to follow along. I just don't know what it feels like to be 60 yet so the desire to do such a thing is uncertain at that age. Thus the push - which is all possible due to these better than usual interest rates.

I had thought about the annuity issue. Yes well schooled. I'd probably opt for splitting it between insurers and half possibly going to a dividend portfolio and really diversify the idea.

 

[MarieIG]

Thank you! Yes.. that's the side plan. We'll probably move to FL early within a year and I'll have to recreate my business and my wife gets to keep hers. Glad you were able to follow along. I just don't know what it feels like to be 60 yet so the desire to do such a thing is uncertain at that age. Thus the push - which is all possible due to these better than usual interest rates.

While I can't speak for everyone, you still have a zest for life, enjoy the day-to-day, but have much less patience for work-related nonsense.

If you retire first - you may be able to incorporate a month or two a year abroad in different locations - in addition to the shorter vacations. It doesn't have to be all or nothing.

Edit - Another thought. When I was growing up, DM who did not work outside the home, used to take me to Europe over the summer to visit relatives and for a vacation. I always enjoyed going - and I always enjoyed coming home (i.e. the back-and-forth increased the pleasure in both.)

 

[LateToFIRE]

You asked about age 50 vs 60. Of course, YMMV, but can at least speak for my near 60 self - yes, I think there is definitely a difference in energy and stamina between age 50 and 60, and I am a fairly strong, reasonably healthy 60. But at ~60 there are more health concerns to watch out for and access to really good medical care is far more critical to extending my lifespan now than it was several years ago.

Also, would say that emotionally, I needed those 10 years to mature a bit more - yes, I know, should have been pretty mature at age 50, but I dunno, I learned some important things about life and priorities in that 10 years. Guess I'm a slow learner. So, money aside, I am just far more prepared for retirement now vs 10 years ago, even though I was FI back then. The other thing to consider, if adventure is on your bucket list, is the odds that one of the two of you becomes less fit thru illness or aging. So, its not just all about you, but also your mate's condition could impact your ability to realize on the adventure thing.

Edit: Sounds like you're going to regret it if you don't at least try your live abroad adventure. If I were in your shoes with your priorities, I'd try to go in part of the way for a year or two, keep a foot in the working world, while living in Mexico. As others have noted, annuities... ummmm... not a fan.

 

[pacergal]

I am a bit confused with your financials. If retiring at 50 and having to go back to work at 60 if your wife income crashes while you are in Mexico "retired" for 10 years, it doesn't sound like you have enough to retire to me.

 

[Montecfo]

I think you are fairly early in your thinking. This seems like a bit of a trial balloon. I would investigate the annuities. With interest rates higher than recent times, it should be a good time to buy one. Definitely want joint and survivor and at least some inflation protection.

As far as swapping your 60s for 50s, I would not quit until I knew I was set and had a very solid plan. 10 years hence the economy could stink and then you have been out of the market for a decade.

Now, if your wife can do the biz from Mexico AND you can continue to save toward a fully funded retirement, that could work.

A lot of moving parts here. As others have stated, check out a longer term stay in Mexico first.

Can't tell you how many ideas I have had that then had to modify or reject because after analysis I realized it would not work or was not sure I wanted to do it after all.

But doing something at 50 vs 60 is different. Most of us do not think we retired too early....

 

[Al18]

Not a fan of annuity now that inflation rates are way above normal. You may want to consider a 10 year CD ladder instead. What is the inflation rate in Mexico over the past decade. Have you considered the reduced SS benefit from retiring without 35 years of work history?

 

[ColdFeet]

Thanks everyone. All good points.. too many to reply to each. It's a tough one and all your comments are as broad as I imagined it. But have given me a little more to chew on. The fact its not cut and dry for you either is actually helpful.