Join Early Retirement Today
Reply
 
Thread Tools Display Modes
45 today and considering pulling the plug.
Old 04-30-2013, 11:36 AM   #1
Recycles dryer sheets
 
Join Date: Jul 2007
Posts: 51
45 today and considering pulling the plug.

Hi All:


I currently have 1.2 million in liquid assets with a 65/45 stocks to bonds mix. My house is paid off and I have no debt. I am not married and probably won't. I live in New Jersey so I understand the cost of living is a bit higher than other places. I am in good health for the time being and hit the gym regularly. I understand health insurance is the wildcard here. I spend no more than 50K per year. Not big on travel other than an occasional trip to the casino.

So, what do you think? I wish I was typing this during a market correction. I'd be feeling better about a rebound.

Thanks in advance.
Space Mountain is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-30-2013, 11:43 AM   #2
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,584
Does the $50k you currently spend include health care and taxes? That level of spending is pretty high to sustain for 50 years or so.
MichaelB is online now   Reply With Quote
Old 04-30-2013, 12:03 PM   #3
Full time employment: Posting here.
 
Join Date: Jul 2011
Posts: 723
Quote:
Originally Posted by MichaelB View Post
Does the $50k you currently spend include health care and taxes? That level of spending is pretty high to sustain for 50 years or so.
+1
I think a draw rate something closer to 3% might be more realistic at your age.
panacea is offline   Reply With Quote
Old 04-30-2013, 12:10 PM   #4
Thinks s/he gets paid by the post
David1961's Avatar
 
Join Date: Jul 2007
Posts: 1,085
I agree it appears you are a little short. Would you consider moving to a location with lower costs?
David1961 is offline   Reply With Quote
Old 04-30-2013, 12:17 PM   #5
Recycles dryer sheets
 
Join Date: Sep 2012
Posts: 459
As others said short(by a lot) with 45+ years to go. Why do not you wait for a year/two to see how Obamacare turns out to be HC costwise. I too live in NJ and stuck here at the moment - worst state expense wise(12K property tax + 6K for utilities...yikes).
By the way, Happy Birthday!
retire2020 is offline   Reply With Quote
Old 04-30-2013, 01:10 PM   #6
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 3,504
I ER'd in NJ and then moved out of state to CO. Two major expense categories are very high in NJ - health insurance & property taxes. Moving out of state could save you quite a bit.

Traditional SWR methodologies take a percentage of initial portfolio and adjust that amount annually for inflation with no regard to the performance of your portfolio.There are other methodologies - like a fixed percentage of your portfolio at the start of each year, that may make more sense for someone your age. We use that methodology. However, your annual budget can swing wildly, so you need to make allowances for that.

Whether you can ER now or not - only you can decide.
walkinwood is online now   Reply With Quote
Old 04-30-2013, 01:22 PM   #7
Thinks s/he gets paid by the post
heeyy_joe's Avatar
 
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
Too soon unless you are going to move.
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
heeyy_joe is offline   Reply With Quote
Old 04-30-2013, 02:14 PM   #8
Full time employment: Posting here.
 
Join Date: Apr 2006
Posts: 969
I am very similar in terms of age and assets but spend a bit less than half of what you do for a couple of reasons:
  • My SO and I do not mingle assets; so, I am only funding myself.
  • I live in fly over country where everything seems to be cheaper.


I am planning for this to be my last year with a W-2 and hoping Obamacare works out for me in the long term. Frankly, I am not sure how long it will take for me to decide that I am actually retired rather than just taking a sabbatical.


Good luck with whichever path you choose.
__________________
If there's one thing in my life that's missing; It's the time I spend alone
Sailing on the cool and bright clear waters; There's lots of those friendly people
Showin me ways to go; And I never want to lose your inspiration
CoolChange is offline   Reply With Quote
Old 04-30-2013, 03:03 PM   #9
Dryer sheet wannabe
 
Join Date: Dec 2012
Posts: 22
As a very simplistic look at this, if you needed to consistently withdraw a certain amount (indexed for inflation) for 50 years (gets you to 95), the following is an example of what you could expect:

- at 2% inflation, and 4% return on investments, you could expect to withdraw 38,000 in the first year ... indexed at 2% each year thereafter.

- at 2% inflation, and 5.5% return on investments, you could expect to withdraw 50,000 in the first year ... indexed at 2% each year thereafter.

In both cases, you run out of money after approx 50 years.
CDN_47 is offline   Reply With Quote
Old 04-30-2013, 04:24 PM   #10
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 3,594
Quote:
Originally Posted by Space Mountain View Post
Hi All:


I currently have 1.2 million in liquid assets with a 65/45 stocks to bonds mix. My house is paid off and I have no debt.....

Thanks in advance.
If you have been working for the past 20 years I suspect that you would have a significant amount of Social Security accrued (under current law, at least). I worked 22 years after receiving my college degree and accrued close to $1M, in todays dollars, in SS (assuming a 30 year draw starting at age 70). For planning purposes I am assuming that 1/3 of this will be lost through "reform", but that sill leaves a significant amount.

I recently wrote up here how you can check your accrued benefit assuming that you never work another day of your life.

-gauss
gauss is offline   Reply With Quote
Old 04-30-2013, 04:56 PM   #11
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Have you entered your numbers in FIREcalc?
Quote:
Originally Posted by Space Mountain View Post

So, what do you think? I wish I was typing this during a market correction. I'd be feeling better about a rebound.

Thanks in advance.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 04-30-2013, 07:14 PM   #12
Thinks s/he gets paid by the post
Live And Learn's Avatar
 
Join Date: Feb 2012
Location: Tampa Bay Area
Posts: 1,866
Quote:
Originally Posted by Space Mountain View Post
Hi All:
I wish I was typing this during a market correction. I'd be feeling better about a rebound.

Thanks in advance.
I hear that ! When I enter my numbers into FIRECalc or the other calculators I use 90% of my portfolio. I'd prefer to use 80% but then the results say I can't retire.
__________________
"For the time being no discipline brings joy, but seems grievous and painful; but afterwards it yields a peaceable fruit of righteousness to those who have been trained by it." ~
Hebrews 12:11

ER'd in June 2015 at age 52. Initial WR 3%. 50/40/10 (Equity/Bond/Short Term) AA.
Live And Learn is offline   Reply With Quote
Old 04-30-2013, 11:13 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,682
Quote:
Originally Posted by Space Mountain View Post
Hi All:

I currently have 1.2 million in liquid assets with a 65/45 stocks to bonds mix. My house is paid off and I have no debt. I am not married and probably won't. I live in New Jersey so I understand the cost of living is a bit higher than other places. I am in good health for the time being and hit the gym regularly. I understand health insurance is the wildcard here. I spend no more than 50K per year. Not big on travel other than an occasional trip to the casino.

So, what do you think? I wish I was typing this during a market correction. I'd be feeling better about a rebound.

Thanks in advance.
I agree with the others who think that $50k in annual expenses (for a single person, no kids) is high. I live in a high COL area (Long Island, NY), too, and my annual expenses are less than half that.

Health insurance is a big wildcard but with the PPACA going into effect fully in 2014 I will likely get a subsidy due to my low income.

I have about $1.2M in investments, about 1/3 in an IRA I lack unfettered access to for now. My overall AA is 42/58 stock/bond (BTW, 65/45 adds up to 110) because I need my portfolio to be more income oriented. The IRA is stock weighted while the taxable accounts are bond weighted.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 05-01-2013, 12:15 AM   #14
Recycles dryer sheets
 
Join Date: Apr 2012
Location: Seattle
Posts: 479
Quote:
Originally Posted by Space Mountain View Post
Hi All:


I currently have 1.2 million in liquid assets with a 65/45 stocks to bonds mix. My house is paid off and I have no debt. I am not married and probably won't. I live in New Jersey so I understand the cost of living is a bit higher than other places. I am in good health for the time being and hit the gym regularly. I understand health insurance is the wildcard here. I spend no more than 50K per year. Not big on travel other than an occasional trip to the casino.

So, what do you think? I wish I was typing this during a market correction. I'd be feeling better about a rebound.

Thanks in advance.
Hi, 65/35 or 55/45 stocks to bonds? Not that it's a deal breaker. My math came up to 110% (65/45). Cheers and congrats on the healthy savings.
supernova72 is offline   Reply With Quote
Old 05-01-2013, 01:45 PM   #15
Recycles dryer sheets
 
Join Date: Jul 2007
Posts: 51
Hey Everybody:


Thanks kindly for the responses.

Couple things: My asset allocation is 65/35. (Stocks to bonds). My mistake earlier. Sorry. When we have a significant correction, I will rebalance more towards stocks. All of my current bond holdings are in tax deferred accounts. I mentioned 50k as topping out on my yearly spending. I probably won't come close to that. (Taxes & healthcare included). At a 3% withdrawal rate, (36k) I think I'll be OK in my first few years.

Again, thanks to everyone for the insight. Clearly, I am no wizard so the feedback here is GREATLY appreciated.

Space Mountain
Space Mountain is offline   Reply With Quote
Old 05-01-2013, 02:20 PM   #16
Recycles dryer sheets
 
Join Date: Jun 2002
Posts: 381
Hey Space, you're in good company here. I'm a couple years younger than you but our situations are very similar. I'm looking at no more than a 3% draw when I pull the plug, and I'd rather do 2.5% or whatever my investments throw off for income. My goal is to be able to do this at 45, and then decide how much longer I want to work for a cushion. I think you really need to get a handle on what you are comfortable spending as a % of your portfolio. As others have said, at our young ages, I wouldn't even consider more than 3%, and then I'd adjust fire each year depending on Mr Market.
__________________
When you walk in the shadow of insanity, the presence of another mind that thinks and acts as yours does is something close to a blessed event. -Robert Pirsig, Zen and the Art of Motorcycle Maintenance
panhead is offline   Reply With Quote
Old 05-02-2013, 11:00 AM   #17
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 3,504
Spacemountain,
Will you continue to live in NJ after ER?
walkinwood is online now   Reply With Quote
Old 05-02-2013, 04:54 PM   #18
Thinks s/he gets paid by the post
seraphim's Avatar
 
Join Date: Mar 2012
Posts: 1,555
Initially, I'd say No unless you can guarantee keeping your spending under $40. (adjusted for inflation).

If you pull the plug and need to go back to work at 50, what's the likelihood of you getting rehired somewhere? Just a rhetorical question.

I'm FIRED at 57, with a similar valued and allocated portfolio. We also have pensions and live in a lower COL area. We plan a 2% draw and about a $55k base budget (covered by pensions) and $20k for fun because we wish to travel a great deal. Another rhetorical question: if you don't leave yourself 'fun' money (an assumption from your comments) what're you going to do to have fun for the next 40 years? Fun is important.

Both of us have subsidized health care policies, through employers, combined about $700 a month; if that helps. The pension pays 75% of my premium. unsure of DWs. She pays about $100 month more than I. My share'sabout $300 a month, so I'm assuming DW has less of a subsidy than I through her pension. I haven't looked at Obamacare in detail, but I've seen numbers around $8k a year for someone getting a small amount of subsidies. Don't quote me though. that may be off base.

What about long term care? Maybe $250 a month for a policy? What about disaster requiring a large outlay of cash? There doesn't seem to be any margin in your game plan.

I think I'd be uncomfortable about retiring in your present position. FWIW.
__________________
"Growing old is no excuse for growing up."
seraphim is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


» Quick Links

 
All times are GMT -6. The time now is 11:20 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.