Long overdue introduction...

[firewhen]

Skyline,

Everyone is different, but I have ruled out part-time. As was already touched upon, you will still think about w*rk, be tied down, probably w*rk long hours to get done what you need to, even nicely "asked" to come in on your off days in a pinch. Yes, you can lay down ground rules, but I am not sure it would be easy to stick with them. For me, it likely will be cold turkey.

We are in a very similar situation to you, just alittle further down the line. While the day-to-day kid expenses are not much, there are the extras, which in our situation are hard to ignore. Yes we can afford nursery school or summer camp, so we do them. These are both several thousand. Even with them, 10k is still doable.

How will you know you are ready? When you can wake up one morning, look yourself in the eye in the mirror, and say this is it! I am not there yet. Part of my hesitation is financial, some is age, some is embarassment. I will have to lie to my immediate family (i.e. parents and siblings). May even have to make up a story for the kids, so they don't spill the beans (i.e. daddy is a consultant form home). We just can't announce to the world that we have enough money for me to "sit at home all day". No one would ever suspect it, and both dads are in their seventies and w*rking.

I'm rambling here, but do you have these issues? How will you handle them? Money aside, once you feel that is set, how will you occupy yourself. Like us with kids, you can't be a vagabond, and will be somewhat tied down to your current situation. If I were single with the money I have, maybe I would be a world traveler for awhile, bumming around Europe and wherever.

My suggestions:

Do the math. If you feel you are there, what do you want to do for the next 20 years while your child (and maybe children, you would be surprised, at least while they are young, how well they get along) is still at home. If w*rk hinders that too much, then stop.

One of my fears is that if every day were Saturday, I do not know how I would fill those Saturdays, and I am not yet willing to give up the day job to find out.

 

[skyline]

...
For me (at this stage of the game)... Work is all about the money. I do not dislike what I am doing. Sure, I am human. I like kudos (rather my ego does). But I am going into work for one reason! For the compensation. Otherwise, I would spend my time volunteering for a charity.

Chinaco,

I'm at the same place as you are wrt money vs. job satisfaction. Yes, there are a bunch of folks I enjoy interacting with, and that does have some value, but the reason I go to work is for the cash. The kudos have worn really thin too - I'm not so far as to get openly sarcastic about it with co-workers, but nowadays, all I think about is how I can parlay any success at work into more $$$s.

 

[skyline]

skyline,
Howdy. I don't have much to add to the ideas already presented concerning the "should I stay or should I go?" question. Most of what follows is "devil's advocate" stuff--it might have the unwanted effect of keeping you on the diving board. Still, in the spirit of open discussion . . .

I would say that you should consider the hassle/pay issues carefully before you make a decision to go part time. If you are part time with the same company, you will have fewer hours, but will likely also have many of the same stressors (do you think about work when you are at home? Do you dread Mondays? Does work hinder you from taking off to do something on short notice? These sames issues may exist for you if you are PT, but you'll be getting a lot less compensation for puting up with them.)

How much "psychic reward" do you get from your work? This is tough to evaluate, and you probably won't really know until you change the situation. It sounds like you are the "go-to-guy" when trouble strikes, and folks count on you to fix things. There's great psychological reward in taking a mess and making it better. Not just the self-satisfaction of fixing things, but also the smiles and confidence of co-workers and management. It can be heady stuff, and truly intoxicating. Are you really ready to "get off the juice?" If you go PT, your status will change--you won't be in the know on everything, and, depending on your company, you may not be brought in on the toughest problems anymore. Could you have done some of your prevous projects working M, W, F? So, try to determine just how much this will really bother you if you're not invited to "play" when a crunch comes.

So, some things to think about--maybe hanging in for another couple of years isn't such a bad idea, especially if it will make you feel better about the finances and if you can change your work situation so that the money continues but the parts you dislike are reduced. It may help to put a mark on the wall for re-evaluation, so you don't "two more years" yourself to 65.

For me, getting out of my existing work environment entirely was key. I still work PT, but doing different work with different responsibilties that don't encroach on my private time.

Another thing: You mentioned that you planned to stay in the Bay area for almost 2 more decades. In your shoes (Birkenstocks?) I would carefully evaluate all aspects of that decision. Your present nest egg will go a lot farther in many other very nice places. You could buy a nice house for cash, have plenty of resources for travel, lots of time to spend with your child withot work responsibiities, and have $$ left over for the possible eldercare issues if you moved. I was raised in SoCal, and thought it was the center of the universe. Now, I don't think I'd ever go back to live there.

Finally (I gotta say it): You'r not overexposed to equity in your company, are you? You sound like you've likely got that under control, but you surely know many smart folks who did dumb things in that regard.

You're in a great situation, really. Congratualtions. You've ascribed a lot of it to luck, but you're clearly competent and dedicated.

Samclem - the 'devil's advocate' discussion is exactly why I'm writting these posts, so please keep them coming.

The concerns about part-time work being almost as painful as full-time are very legitimate - I've gone through a lot of these scenarios and I think where I'm at is that I need to take the first step and discuss the whole part-time thing with the folks at my company. As Nords mentioned in his post, how the company responds will go a long ways towards influencing and making me feel 'right' about the decision I take. Plus, I can only do so much analysis on my own - I need to see what options the company will be open to. I can see a couple difference approaches: Do the same thing but limit my hours - not so good since it's all the headache with less pay, or, manage a limited set of projects during peak periods. The second option means I'd be working a schedule more like a seasonal consultant. If I can pretend to be highly objective about it, it's the option that makes more sense for everyone, but I don't know if my company woudl go for it (simply because it's easier to supplement me than to replace me).

BTW, the 'psychic reward', as you put it, isn't really a factor for me - It was once very intoxicating, but as I wrote in response to Chinaco, that aspect of the job ceased being valuable a while back. What I do like, are the handful of folks at work that I like that I've gotten to know over the years. I'm sure I could keep in touch with them outside of work, but I do enjoy shooting the breeze with them while in the office. That's the one thing I'll miss about work (well, other than the money, of course)

And yes, no overexposure to company stocks - all vested options were exercised and sold IMMEDIATELY. I don't need that kind of headache. Plus, thanks to the wisdom and learning from this forum while lurking here, I completely rebalanced my investment portfolio into a series of low expense index funds, with only a tiny bit of 'play money' (I won't go into any details on how I invest my money - although I don't talk about my net worth with anyone, I do discuss how I invest often with friends and coworkers)

(see the next post for a response on the relocation question)

 

[skyline]

Welcome Skyline,

I've been following your thread from its beginning and had this nagging question from the start. I didn't ask earlier because of the definiteness (is that a word? ) of your original statement but since samclem broached the subject, I decided to ask. What follows is from your original post.
The question is why don't you just move to a lower housing cost area and retire? You state that you have equity of $600k but that the mortgage payments on your house are (after doing some math) $25k/yr so if you moved to a less expensive house you could potentially pay for it with your current equity and no longer have mortgage payments. Given this you would then have $2.1M to provide for the $25k of expenses you had last year plus any other expenses you think your baby & parents will add. Depending on how you figured the last two expenses you look golden.

jdw - the relocation question was the one thing I answered for myself earlier in the year. Yes, you're absolutely right that relocating would open lots more options for me. I travel now and then for my current job, mostly in financial centers throughout the country, but also to smaller cities. I know there are lots of great places to live out there (I make a point to check out neighborhoods when I go to a new city) - many with great quality of life. Selling my house and buying another place 1/2 or 1/3 the price means no mortgage, and lots of extra spending money each year.

In the end, it wasn't so much about what I'd gain as it was about what I'd lose - my extended family is within an hour's drive from where I live now - I'd want my child(ren) to be involved with them as they grow up (and it's unlikely that my extended family would follow, although that is a possibility). I think about my friends too - not that I couldn't make new friends, but it seems like it's harder and harder to form strong friendships the older you get. Easy to make lots of acquaintances, hard to make trusting friends. Not sure what it is about age (or about me), but that's the experience I've had. The last thing is just that I like it here. I like the diversity, the way people think (social and political), even the weather. Plus I'm very liberal - I'm not sure I could take living too far away from either coast.

Anyways, after several months of research, I stopped all of a sudden and realized that I didn't need to research anymore. It was a weird clarity that I'm hoping will hit me with the FIRE decision in the near future.

 

[haha]

I think about my friends too - not that I couldn't make new friends, but it seems like it's harder and harder to form strong friendships the older you get. Easy to make lots of acquaintances, hard to make trusting friends. Not sure what it is about age (or about me), but that's the experience I've had.

It isn't just you, it is the nature of human life. Once you are into middle age or older, interest groups are about as good as it gets. Either that or the type of friends that you sleep with.

Ha

 

[Budman]

Hey folks, I've been lurking here for quite a while (a year?) and finally decided to register and post. It's funny, I work in IT, with most of my projects in financial systems - including portfolio mgmt and stock trading systems. I considered myself pretty sharp in financial matters as a result - but I was astonished by how little I knew about actually planning my financial future, esp. for FIRE. I want to thank all the regular contributors for all that I've learned here, and hope I can help others going forward (hopefully as a been-there-done-that experienced FIRE contributor?)

Anyways, for reasons which you all know about, I've found it very difficult to speak to family/friends/etc. about finance, esp. FIRE. I'm approaching a FIRE goal (in fact, passed my initial goal of $2M saved), but find myself stressing more than I care to about the decision, and ultimately unable to make the decision. I really need to get some feedback and input - but lacking any face-to-face options, I'm hoping you all can share your experience/input with me.

Here's a quick summary of my financial situation: I'm in my late 30's, married with a 1yr old child (jury's out on whether we'll have another). Due to hard work, LBYM, and some luck (well-timed stock options), my wife and I have been able to put together about $2.1M liquid + another $600K in equity in the house. I live in a pretty high cost area (S.F. Penninsula), with no intentions of moving before my kid(s) leaves for college. My job is both good and bad. Physically, it's very simple - 15 min commute, 40-45 hr/week, work from home often with flexible hours. Mentally, it's very demanding - highly political, stressful, and reactive environment. The money's very good (about $220K/yr), but I've already exhausted all my stock options for the forseeable future, so that's a little less incentive to stick around.

Advanced firecalc says I can hit above 90% success today on a withdrawl of about $90K/yr. Last year's expenses were just about $50K post-tax incl. mortgage, but that was really bare-bones as it was also our first year with our son, so we pretty much lived like hermits. I figure if I FIRE, I'll need to add on another $10K for healthcare, another $10K for travel/misc, and another $10K for child-related expenses. Which would pretty much be all of my yearly safe withdrawl.

So here's what I'm struggling with (I realize all these topics are regular topics, but I'd love to get feedback from the group based on my specific above):

* I really dislike my job - but it's not that demanding and the money is good. Should I stick around and pad the savings some more? Am I an idiot for walking away from a lucrative job like this?

* One option is to try to work out a part-time deal with my employer - I can't decide if the part-time headache would be worth the additional incremental income. Should I either quit completely or stay full-time until I'm ready?

* I can't seem to be able to get comfortable with the $10K/yr estimate for expenses of raising kids - I expect them to be LBYM, just like me (well, they won't have much of a choice while they're living with me, I guess), but any number I come up with feels like I pulled it out of my a**. Any thoughts from folks with kids living in similiar neighborhood (large city along either coast?).

* My wife's parents are in pretty good shape, but mine are not in such good health (financial and medical). I can't help but feel irresponsible wanting to FIRE so early, when some additional years of work could go a long ways towards helping my parents when their money runs out.

* $90K a year seems like a lot. I know lots of families do it for far less. But I've reviewed my expenses and don't see much to cut out. I live way below my means, to a point where the rest of my family makes fun of me. Cutting out the mortgage payments, last year we made it on only $25K/yr, but all the other expenses I listed as add-ons seem legitimate - and sure enough, every time I sit down and run a scenario, it adds up to around $80-$90K/year. Am I missing something here?

* Finally, DO I JUST NEED TO GROW A PAIR AND GO FOR IT? Or am I being reckless and selfish in wanting out so early?

I realize that I'm really the only one that can ultimately answer most of the above - but I'd certainly appreciate any feedback, short or long, inflammatory or supporting. Just writing this out was very therapeutic for me...and hearing the thoughts of those of you who've gone through this decision personally will be that much more valuable.

And if you made it this far, thanks a bunch for taking the time to read all this...

Welcome Skyline,
My opinion is that you should not ER yet. I think you know that. I'm about 20 years older than you and I think 100K/yr. minimum is needed to retire in Ohio and then I'm uncertain whether that provides enough safety margin to keep me happy with my boating adventures. It depends upon what you want and what your goals are. It sounds like you have a great job with low hours, and a great salary. Hive it up man! Ride that gravy train down the track of prosperity. Get the kids raised and then go out in style when you are about 55. I think you need to exploit your earnings ability. And by the way...this Bud's For You!!

 

[Brat]

Skyline, you are in a powerful position. Your problem is that the job is eating at your gut to the detriment of your family and perhaps your health. Employment is not an all or nothing proposition. Figure out what you want to do professionally if you had your 'druthers, then do it.

I have a SIL with a 4.0 in Accounting who is teaching business classes at a HS, maybe even in your school district, because he can. His brother, same profession, is teaching at a local college. They both are at the top of their game and because they could stepped off the fast track to live their lives adding value to both family and community.

So if you want to leave a mark teach at Santa Clara, they value those who have been there, done that.

 

[EagleEye]

Skyline:

A few follow-up questions and a few observations:

- I ran your numbers through the standard FIRECalc and it didn't work out to a 90% success rate. I ran $2.1 million and assumed that you would draw on it for 60 years. It gave me a 78% success rate. What parameters are you using in your FIRECalc queries?

- Even at 220K/year, saving $2.1 million seems to be a real achievment. For those of us still saving, can you share any further info as to how much of that is attributable to the options and how much of it is attributable to extraordinary events (e.g., gifts, inheritance).

- I agree with an earlier poster that you should definitely consider a move to a cheaper area. You'll have all the padding you need and you won't have to delay your life's next great chapter. You'll have plenty of opportunities to visit your old neighborhood if you wish.

- I completely disagree with "Budman". Throwing away another 15 years of your life so you can hit a completely artificial target for your income stream would be a tragic mistake. He says you need $100K/yr to retire well Ohio, but there is absolutely no basis for that statement. Rather than pull a round number out of your butt and then work additional years to meet that phony number, you should think about what you really need, pad it a little, and then just go for it. That seems to be what you are doing.

 

[skyline]

Skyline:

A few follow-up questions and a few observations:

- I ran your numbers through the standard FIRECalc and it didn't work out to a 90% success rate. I ran $2.1 million and assumed that you would draw on it for 60 years. It gave me a 78% success rate. What parameters are you using in your FIRECalc queries?

- Even at 220K/year, saving $2.1 million seems to be a real achievment. For those of us still saving, can you share any further info as to how much of that is attributable to the options and how much of it is attributable to extraordinary events (e.g., gifts, inheritance).

- I agree with an earlier poster that you should definitely consider a move to a cheaper area. You'll have all the padding you need and you won't have to delay your life's next great chapter. You'll have plenty of opportunities to visit your old neighborhood if you wish.

- I completely disagree with "Budman". Throwing away another 15 years of your life so you can hit a completely artificial target for your income stream would be a tragic mistake. He says you need $100K/yr to retire well Ohio, but there is absolutely no basis for that statement. Rather than pull a round number out of your butt and then work additional years to meet that phony number, you should think about what you really need, pad it a little, and then just go for it. That seems to be what you are doing.

EagleEye:

The >90% success rate (it's 94%) is a result of Advanced FIREcalc. I added in the anticipated profits and reduced yearly withdrawls from downgrading the house about 20 years down the road (although I'm not likely to move prior to my kids starting college, I do see myself moving afterwards), and social security at age 67 for both of us (adjusted down about 30% to allow for reduced benefits). I know that any reliance on social security is crazy, considering that it's 3 decades away, but I think barring any financial meltdown, there should be some benefits to be had.

Part of my FIRE hesitation is that, as you calculated, standard FIREcalc delivers lower odds of success. I have an irrational opinion that advanced FIREcalc is a way to convince yourself that you can spend more money than you should by playing with a bunch of extra 'what-ifs'. But the rational side of me says that FIREcalc is already a worst-case tool, so you shouldn't feel too bad about tweaking numbers to get a result you feel is more realistic. Of course, you do have to accept than once you do that in Advanced FIREcalc, you're no longer playing with a worst-case analysis tool.

Re: the savings breakdown, I never did do a detailed breakdown since the options were spread over multiple years, but it probably represents about 15%. I didn't count the options towards the income number since I no longer have any that are worth anything (and I wanted input based on what I thought I was going to earn, not what I earned previously), although there are some profit sharing components to it. No significant gifts or inheritance. Of course, my wife also contributed to the total before we had our baby (about the same order of magnitude as the options). So savings based on just my own sweat-generated income and subsequent earnings on that income? I guess I'd say it's about 1.3-1.5M. It wasn't so much achievement as it was a very boring, LBYM, buy & hold approach that suprised me as much as anyone in its effectiveness.

BTW, it seems a lot of folks are surprised by the income someone my age can earn in IT - as someone pointed out earlier in the thread, IT has been a great sector to be in - I know I'm a little ahead of the curve, but not by that much. Kids 5 years out of college can earn a six-figure salary as development leads. Consultants with not much professional skills (but strong technical skills) can earn my income as contractors - I can attest to both scenarios as I have team members and contractors that fit these descriptions right now. I thought the whole outsourcing thing and the dot-com disaster would drop salaries, and it did for a little while, but surprisingly, it's come back even stronger in the last year or so than it's ever been. While it obviously doesn't help most of the readers here whom already have professions, IT might not be the worst place to direct your kids/relatives to as they consider careers (From a pure financial basis, that is. From a lifestyle basis, nothing seems to be better at sucking all life out of you)

Re: Budman's advice, he obviously has his own comfort level baked into his plan/expenses/approach. To each his own, and if that type of approach and maximizing earning potential is what will work for him, that's great. For me, I would agree with you that there's no way I would wait another 15 years. If I can't get comfortable enough to FIRE now, I'm hoping I can within 2 more years full time or 3-4 more years part-time. I'd drive myself bat-s**t insane if I stuck it out another 15 years.

 

[Budman]

Skyline:

A few follow-up questions and a few observations:

- I ran your numbers through the standard FIRECalc and it didn't work out to a 90% success rate. I ran $2.1 million and assumed that you would draw on it for 60 years. It gave me a 78% success rate. What parameters are you using in your FIRECalc queries?

- Even at 220K/year, saving $2.1 million seems to be a real achievment. For those of us still saving, can you share any further info as to how much of that is attributable to the options and how much of it is attributable to extraordinary events (e.g., gifts, inheritance).

- I agree with an earlier poster that you should definitely consider a move to a cheaper area. You'll have all the padding you need and you won't have to delay your life's next great chapter. You'll have plenty of opportunities to visit your old neighborhood if you wish.

- I completely disagree with "Budman". Throwing away another 15 years of your life so you can hit a completely artificial target for your income stream would be a tragic mistake. He says you need $100K/yr to retire well Ohio, but there is absolutely no basis for that statement. Rather than pull a round number out of your butt and then work additional years to meet that phony number, you should think about what you really need, pad it a little, and then just go for it. That seems to be what you are doing.

I didn't mean to single out $100K as a minimum to retire in Ohio. Obviously one can retire on much less in Ohio. My comment was more aimed at comparing Skyline's $90K number as somehow being adequate in California to FIRE. I think it depends more upon what one's long term goals are and their means to achieve them. Skyline has, what appears to be a great ability to produce income and it would be a shame to throw that away, especially while in the midst of raising a family, and a world full of uncertainty. Retiring in your 30's is just too soon. Every thing else being equal, why short oneself? Also, the "round number" I threw out is not phony nor did I pull it out of a butt. It is based on my own goals and expense profile, home grown financial model, firecalc, fidelity's calc and others.

 

[txdakini]

Hi Skyline: Several thoughts:

You may want to do a significant amount of research into health insurance costs if you haven't already. I am 55 and live in Texas which is more expensive than California, health insurance wise. Costs are only going to go up and private health insurers can turn you down for almost no reason. I was turned down for health insurance after I quit my job because I had once (several years before) had a liver function test slightly out of the normal range, never to be repeated and had fibroids (most women have them) which had never caused me a bit of problem. That's all it took to be denied coverage. That bounced me into the state pool for the uninsured. Cost about 6k per year with 5k deductible. we now have retiree medical through my husband's company, decent insurance at 15k per year for both. They can also cancel you if you have significant claims in some states. A book I recently read said that about 40% of folks in the 50 to 60 range are being turned down for private insurance. Ask around to find out what others are paying at different ages and different health situations. I understand California passed some kind of guaranteed health insurance coverage, but not sure of the details. One thing I believe is that health insurance costs will go up more than inflation rates so you'll need to build that in to your budget.

Second is that I too was in IT and making what you were making six years ago. I, too, had stock options and bonuses (as CIO of a startup in Silicon Valley). It was incredibly stressful, commuting to California from Texas each week, while my IT team was in Texas. Politics were unbelievable and startups are hell. After 9/11, I quit with no real plan other than to rest. I was totally burned out and had been unhappy at my jobs for about ten years. Don't wait too long or else find a place where you can be happy.

One other point is that I wouldn't be too sure about your skills not translating into upper management positions, assuming that is what you want. I went from being a project manager, managing $25M per year projects for a defense contractor to NASA, to being VP of IT for a subsidiary of a huge financial firm with a 30%+ increase in wages. I had three jobs as VP or CIO before I quit. Two of them were a piece of cake, smaller companies or divisions, politics okay, the third which was the start up was absolute hell. Still, if you can make 200k+ not being an executive, I dont' know why you'd want to move up. Unless you have some kind of passion for management. It really is only more headaches.

I started my own business from home, make a tenth of what I made before, but keep my own hours, can work from anywhere in the world so long as I have a computer and a phone and really enjoy doing it.

I also agree that you may want to consider moving to a cheaper locale and retire now. There are some beautiful places in this country with culture and lots of advantages. If you take a sabbatical, you may want to travel a bit to check them out. Just my two cents worth.