Getting closer...

[ChiliPepr]

Hi Everyone,

I have been here a while and figured I should introduce myself. I am 47 years old, working in, and living just outside of Boston with my DO. Career-wise, the last 5 years have been pretty good on my pocketbook, not so good on the stress level.

I currently own a home worth about $650k and owe about $275k. I have about $850k in IRA/401Ks and about $950k in other relatively liquid investments.

I do not think I am ready to retire yet, but I am now starting to look for a lower stress job with a lot of vacation time to start transitioning to a bit more laid back lifestyle. I think I would probably retire if I was comfortable with healthcare expenses.

Both the DO and I are considering spending a few years as expats (maybe Belize, Panama or the EU, she has an EU passport)

Hopefully, the next few years will help solidify the future...

 

[wingfooted]

I agree with your assessment. At 47, not quite enough stashed away but looks like you have a clear shot at maybe $4MM in assets prior to age 55 - where you would be good to go.

Questions

How are your liquid assets and IRA's invested ? What is your target average annual return ?

I would think you are a good candidate to put at least 1/2 of the 401K's and IRA into Roth ?

 

[ChiliPepr]

Liquid assets are in a mix of mutual funds and individual stocks with about 20% international, 20% bonds. The IRA/401k if a more conservative mix of mutual funds. Over the last 7 years my IRA/401k has done an average of about 5%; my other assets have done an average of about 12%.

About 50k of the 401k is already in a roth and my full contribution is currently going into the roth.

I do not think I am a good candidate for conversion to a roth, at least not while I am working. Right now I am in a fairly high tax bracket and would rather wait until my AGI decreases into a lower bracket.

 

[pb4uski]

The critical piece of info that is missing is how much you need to live and what streams of income you have, if any, other than investment results. For example, if you only need $20k a year to live, you are good to ER, but I suspect you need more than that.

 

[ChiliPepr]

ahh, yes! right now, I am paying the house down in 13 years, so that is costing me about $32k a year (Princ, Interest) and another $8k in taxes and insurance. Beyond that I need about another $35k to live as I do now. But I would like to get that to about $45k so I could rent a winter place most years.

I will not retire until I get the house paid off and have about 2.5mil in assets. Now, If I can get the SO to retire with me, I will sell the house and buy something smaller and a bit further away from town. I figure I could find something for about $350k, with would add about another $300k to the assets.

Currently I have no additional streams of income other than investments....

 

[pb4uski]

Simple calc suggests that you are close. If you paid off your mortgage you would have 1,525 left which at a conservative 3% withdrawal rate would be 46 a year.

Sell the 675 place and buy 350 to add 325 and the 46 would become 56 at 3% WR.

And that totally ignores SS. Have you done a Firecalc analysis?

But, how much for health insurance and health care is included in the 35?

 

[ChiliPepr]

I was not including anything for healthcare, It would probably cost me another $12k.

I have done a fire calc and it looks pretty good > 80% success. I would like the additional money in reserve so I can worry less and have a bit more in reserve for emergencies and to use for travel and non-necessities.

Plus, right no I am looking at the FI part and less the ER... When I leave this job, I am hoping to find something with much better hours and more vacation flexibility. This would allow me to continue to build the nest egg and start the transition to ER.

 

[obgyn65]

Welcome. It looks like you are on the right track. Congratulations.

 

[Lagniappe]

With $1.525M left after the house is paid for and 45+12k (health insurance) = 57K in expenses, you are very close. Definitely close enough to take a less stressful, lower paying job.

 

[jclarksnakes]

You have done well. You are at the point where whatever you do is your choice. You could choose to downsize your life and expenses and retire now if you wanted or the work gets to be more stress than it is worth. Or you can choose to stay in the pressure cooker for a few more years so you will not have to downsize the expectations and budget. There is also lots of room in between those two scenarios. Enjoy knowing that unlike most other people your age you have LOTS of choices.

 

[MichaelB]

Both the DO and I are considering spending a few years as expats (maybe Belize, Panama or the EU, she has an EU passport.

Interesting options, Chili. Just wondering how you came up with them and if you have any other locations in mind.

 

[ChiliPepr]

Interesting options, Chili. Just wondering how you came up with them and if you have any other locations in mind.

Well, the Belize came from the fact we are both divers and it is an english speaking country, relatively safe, pegged to the dollar and a large expat community. We know a couple people in Panama and for a lot of the reasons we like Belize. As for the EU, it is because she has family over there. We had thought of places like San Juan or St Thomas, but the cost there is almost the same as stateside and we wanted to try a non-US place. I imagine we would only be doing this for a few years and then back to the states.

We have considered other places, but usually they have addition drawbacks, not that we would completely rule them out. I speak a bit of spanish and the DO a bit of french.

 

[ChiliPepr]

I currently own a home worth about $650k and owe about $275k. I have about $850k in IRA/401Ks and about $950k in other relatively liquid investments.

Well... It has been a couple years since I posted this, so I guess it is time for an update...
I still own the same home still worth about $650k and owe about $260k.
My IRA/401K has increased to $1.2mm
My liquid investments have grown to $1.5mm

Not really looking to pay the mortgage down since I am on a 30 year note at 3.125% and only paying about $1,100 a month on the P&I.

I am still working at the high stress job, but I am feeling a bit better since I see the light at the end of the tunnel.

 

[Bestwifeever]

That's not just any light at the end of the tunnel, that is a big old search light beckoning you! Nice nest egg!

 

[ChiliPepr]

One more year in the books and it is time to take stock and see how close I am getting....

I still own the same home still worth about $650k and owe about $250k, still not paying any extra on a 3.375% mortgage (got the rate wrong last year)
My IRA/401K is $1.197mm
My Roth 401K is $120k
My liquid investments have grown to $1.659mm
Zero debts other than house.

I do not include my house in my net worth calculations, so I calculate my net worth as $2.976 million.

I spend about $100k a year and that should stay about the same after I stop working, might go up a bit with addition of taxes, healthcare and travel.

I did receive a nice promotion at year end that could include a very nice kicker at the end of the years if all goes well. That will mean at least OMY for me.

But, as of today, I think I will consider me officially financially independent.

 

[MikeWillRetire]

Not bad for a 50 year old! Wish you all the best.

 

[WannabeRetired]

Very nice numbers! Congrats!

 

[Gatordoc50]

Nice numbers. Congratulations. Just curious as to why the home has not increased in value in the past few years.

 

[heeyy_joe]

Work until you have all your social security credits. Avoid the zero years.

 

[2B]

But, as of today, I think I will consider me officially financially independent.

Congratulations. You are only working because you want to.

 

[2017ish]

Work until you have all your social security credits. Avoid the zero years.

It all depends. For us, it is meaningless, even if means-testing isn't strongly enhanced and we remain eligible for SS.

DW will retire with less than 35, but past the second bend point. Unless the rules change, working a few more years to fill it up would be meaningless. So too, although I won't have "zero" years, I'll have a few years under $1500, which I see as the functional equivalent of zero. Even though, unlike DW, many of my years weren't at the maximum, it would be silly to keep working to replace those part-time student jobs with maximum years.

 

[robbridg]

But, as of today, I think I will consider me officially financially independent.

Congrats!!!

That's way more than enough for us to pull the trigger & we're 43 & 48. You just need to reduce your expenses. I don't think we could spend 100K/yr if we tried.

 

[aida2003]

It all depends. For us, it is meaningless, even if means-testing isn't strongly enhanced and we remain eligible for SS.

DW will retire with less than 35, but past the second bend point. Unless the rules change, working a few more years to fill it up would be meaningless. So too, although I won't have "zero" years, I'll have a few years under $1500, which I see as the functional equivalent of zero. Even though, unlike DW, many of my years weren't at the maximum, it would be silly to keep working to replace those part-time student jobs with maximum years.

I bet Joe wanted to make a sarcastic note here considering the OP's update portfolio...or at least I interpreted that way.

 

[ChiliPepr]

Nice numbers. Congratulations. Just curious as to why the home has not increased in value in the past few years.

Because I did not update the original value... I am one of those people who do not look at the equity in the house as part of my net worth for retirement calculations. I figure I have to live somewhere and look at the cost of the house on the debit side of the ledger. I guess if I had to put a price on what I could sell it for right now it would be between $735k and $750k.

 

[ChiliPepr]

Work until you have all your social security credits. Avoid the zero years.

I believe that SS takes your highest 35 years... My first year was in 1979 (ok it was only $778 in '79 and $301 in '80) so I won't have any zero years, just a few small ones!