45 yrs old | Married | 2 Kids | Is it Time To Quit?

[HawaiiShrimp]

Hi,
Thank you for accepting me on this website. I am totally new here. Please feel free to call me "Shrimp". I try to put as much accurate data as possible so that I can get your honest feedback and advice. Nice to meet you all!

Post as much information as you feel comfortable with:

1. Age: 45
2. Wife: 41
3. Kids: Two kids. 10 & 5 yrs old
4. Desired age to retire: 50 (or earlier)
5. Salaries: $180k (me), $50k (wife)
6. Job situation: Being a mid-level manager in big tech, I work from home now due to covid. I like my job and I love the team I worked with. However, from time to time, things do get stressful. Sometimes, I feel like quitting. Overall, I give it a 7.5 out of 10.
7. Where I live: Southern California (High Cost of Living region)
8. Annual spending: After maxing out 401k and paying the mortgage, our family spends about $60k a year (estimate) at the moment. We intend to spend more after ER in order to travel more.
9. Asset allocation: 100% stock
10. Risk tolerance: High
11. Primary Residence: House value ($900k), Mortgage ($260k), Equity ($640k)
12. Rental Property: $160k (Fully paid)
13. 529 plan: $30k each (Putting $200 per kid per month)
14. Portfolio (Pre-tax): $7.2M (Stocks)
15. Portfolio (Taxable): $1.8M (Stocks)
16. Total Net Worth: $9.9M

Specific questions:

1. My wife and I are considering moving out of CA and live in a zero state income tax state such as Washington (1st priority, we like the Pacific Northwest). Can you recommend some good cities I should consider?
2. We have in-laws and a few good friends living here in CA. If we move out of CA, we worry about feeling lonely honestly. Any advice on how we should coup with that?
3. Personally, I want to retire in 5 years or less. Do you think I can financially handle that comfortably?
4. We intend to sell our house in CA and buy a $2 million dollar primary residence in Washington. Do you think that is a good idea?
5. Mentally, I am not quite sure what I really would do if I quit. I have my hobbies (fishing, reading, visiting coffee shops, and hanging out with friends). But then, what else's out there? I've been a 9-5 guy with a paycheck for the last 20 years. I am not used to having no paycheck. I have this feeling of insecurity here. Not sure how to handle this feeling. Any advice?
6. If we move, we intend to sell our house in CA and buy a $2 million dollar primary residence in Washington. Do you think that is a good idea?

Again, thank you for your time and advice in advance.

Best regards,

HawaiiShrimp

 

[DrRoy]

Financially you are in great shape. A conservative 3% WR gives you $300K/yr + the rental. I would back off of the 100% equities. Mentally, you do need to figure out how you would spend your time. Try some retirement transition books.

 

[finnski1]

Well you're about one good day(today?) from the 8 figure club so you sure as heck don't need my advice,
You say you have a high risk tolerance and being 100% stocks would back that up.
Never the less if over the next several years you watched your NW go to 8,7 or even 6 million and stayed there awhile while you were approaching your target date are you really ok with that?
I am not suggesting at all that the market will do that as I have no idea just recommending it as a thought experiment.
Congrats on your success so far.

 

[Golden sunsets]

I think you can do whatever you want to do. But why spend so much on a home? Your joint income is relatively modest, especially for a couple who have managed to acquire so much wealth, so I assume you have also lived modestly. Your current $900,000 home one would presume is modest, given that its in So California.

Just curious, did your wealth come from consientious saving and investing or did you inherit a chunk, or strike gold in some other way.

 

[street]

WOW! You have done well for your age. You really have the world by the tail and it is your choice what your expenses will be going forward. I know what I would do as far as home etc.. would be and that junk would take me a long ways.

If I had your money I would throw mine away. Good luck!

 

[Aerides]

[*]Annual spending: After maxing out 401k and paying the mortgage, our family spends about $60k a year (estimate) at the moment. We intend to spend more after ER in order to travel more.
[*]Personally, I want to retire in 5 years or less. Do you think I can financially handle that comfortably?

Welcome.

Yes you can retire, today. There are details of course, like insurance, taxes, costs of your new place vs. current, how much you travel, but with that kind of balance sheet it's not possible to go wrong.

You have $9M in equities and spend under 100k per year. Even you put it all into CD's your money will outlive you by decades.

 

[Time2]

I'm surprised by the post!
Either you have spent zero time reading early retirement posts or this a humblebrag.
If you haven't read any early retirement posts, maybe you don't know about the 4% guideline. The guideline says you can spend 4% of your networth every year and add a yearly inflation adjustment (Trinity Study). Say you buy that $2M house (why I don't know), you have $7.2M left. $7.2M x 0.04 = $288,000. You say you spend $60k now, so double that to $120k, you still have an excess $166,000 a year. I didn't add in your rental income.That doesn't include 5 yrs of savings additions and 5 years of growth. At a conservative 5%, you could have $12M in 5 years. Many here retire early on 10% of that.

 

[pb4uski]

Why wait? Waiting 5 years means that is 5 less years that you are retired and can do whatever you want to when you want to, including spending time with the 5 and 10 years olds. You have plenty of money.

How concentrated is your $9.9m in stocks? Diversification risk? Pendulums swing both ways.

 

[HawaiiShrimp]

Never the less if over the next several years you watched your NW go to 8,7 or even 6 million and stayed there awhile while you were approaching your target date are you really ok with that?

Yes, I am ok with that. I have seen it in the past (2008/9) and Mar 2020. It is not easy, but I manage to stay invested for the long term.

 

[HawaiiShrimp]

But why spend so much on a home?

As a family, we stay home and do family things (cooking, baking, in-door exercises, reading a lot), so we want to get a dream house. Sounds cheesy, I know. The area we are interested in WA, house prices are in that range.

Your joint income is relatively modest, especially for a couple who have managed to acquire so much wealth, so I assume you have also lived modestly. Your current $900,000 home one would presume is modest, given that its in So California.

Yes, I think so. We are currently living in a modest house in South Cal standard. Typical 2000-2500 sqfts, 2 story, tract home.

Just curious, did your wealth come from consientious saving and investing or did you inherit a chunk, or strike gold in some other way.

No Inheritance here. I like to invest and started in my low 20's. I've been invested in individual stocks and index funds for a while.

 

[HawaiiShrimp]

Welcome.

Yes you can retire, today. There are details of course, like insurance, taxes, costs of your new place vs. current, how much you travel, but with that kind of balance sheet it's not possible to go wrong.

I have not done any research of health insurance yet. That's gonna be the #1 expense going forward, I suppose. If there's any recommendation of insurance companies I should look into, please let me know?

My wife and I want to visit different countries 3-6 months in a year. Just rough number so far, we haven't really seriously discussed about it.

Honestly, as you can probably tell, I have a hard time leaving what I am doing, "our daily routine" (i.e, take kids to school, work, cook, clean and sleep). Thanks.

 

[OldShooter]

Congratulations. Re moving, being a high-tech guy (like me) I'd suggest that you do a fairly detailed tradeoff study on lower COL options.

I'd start with the plethora of magazine articles that rank retirement towns.

I'd look hard at climate change and natural disaster potential. Floods, hurricanes, earthquakes, fires, etc. Tornadoes, too, but they tend to be very localized hence less of a statistical risk. This probably rules out the coasts, Florida, much of the West, etc. But, surprise! : https://en.wikipedia.org/wiki/New_Madrid_Seismic_Zone

Quality and cost of available primary and secondary education. Lousy public schools might push you to private schools with consequent spending.

Of course, livability. This is highly personal. Big city life or off the grid? Probably somewhere in between.

I'd look at the total tax picture, not just income tax. And in particular I would look at state finances including underfunded public pensions. You can be sure that Chicago and Illinois will both son be going after owners of nice homes for additional taxes. A day or two ago someone posted a map of the US with states' pension funding status shown. Sorry I don't remember the thread but maybe someone else will. It was a really good map and an eye-opener.

The drum of diversification has been well beaten already in the thread, but: Thump, thump!

 

[HawaiiShrimp]

Why wait? Waiting 5 years means that is 5 less years that you are retired and can do whatever you want to when you want to, including spending time with the 5 and 10 years olds. You have plenty of money.

That is a great question. I am constantly thinking about it. I think the main reasons I am "not yet quitted" because:

(1) I foresee my daily life will pretty much remain very similar WITH vs WITHOUT a full time job in the short term. Being Work-From-Home now, my job (as a tech manager) involves very minimal amount of my time (estimate 2-3 hours of focus work per weekday). The rest of the time, I am free to do anything else.

(2) My job gives me insurance coverage, a stable income so I can continue to fund my 529, 401k (company matched).

(3) My wife prefers the kids to stay in the current school with their friends so she doesn't have a strong desire to move elsewhere in a better house yet. She's been frugal all her life too. She's working part time because she likes her duty and her colleagues, that's another reason why.

How concentrated is your $9.9m in stocks? Diversification risk? Pendulums swing both ways.

7-8 individual stocks, S&P Index.

 

[HawaiiShrimp]

Congratulations. Re moving, being a high-tech guy (like me) I'd suggest that you do a fairly detailed tradeoff study on lower COL options.

I'd start with the plethora of magazine articles that rank retirement towns.

I'd look hard at climate change and natural disaster potential. Floods, hurricanes, earthquakes, fires, etc. Tornadoes, too, but they tend to be very localized hence less of a statistical risk. This probably rules out the coasts, Florida, much of the West, etc. But, surprise! : https://en.wikipedia.org/wiki/New_Madrid_Seismic_Zone

Quality and cost of available primary and secondary education. Lousy public schools might push you to private schools with consequent spending.

Of course, livability. This is highly personal. Big city life or off the grid? Probably somewhere in between.

I'd look at the total tax picture, not just income tax. And in particular I would look at state finances including underfunded public pensions. You can be sure that Chicago and Illinois will both son be going after owners of nice homes for additional taxes. A day or two ago someone posted a map of the US with states' pension funding status shown. Sorry I don't remember the thread but maybe someone else will. It was a really good map and an eye-opener.

The drum of diversification has been well beaten already in the thread, but: Thump, thump!

Thank you for the advice. Big city life or off the grid? Definitely somewhere in between. Are you retired? How's that working out for you? Any regrets? What triggered you to make the jump? etc. In terms of FIRE, FI is easier than
RE. I find it psychologically challenging to make the jump into retiring early. Trust me, it's not a humblebrag; it's real.

 

[pb4uski]

.... 7-8 individual stocks, S&P Index.

What are your biggest holdings as a % of total? For individual stocks, IMO anything over 5% would be a warning bell and over 10% would be a red alert. Think Enron, WorldCom, et al.... also one-time blue-chip high-fliers that have tarnished over time like GM, GE, IBM, Xerox, AT&T, etc.

 

[HawaiiShrimp]

What are your biggest holdings as a % of total? For individual stocks, IMO anything over 5% would be a warning bell and over 10% would be a red alert. Think Enron, WorldCom, et al.... also one-time blue-chip high-fliers that have tarnished over time like GM, GE, IBM, Xerox, AT&T, etc.

Mainly index funds (S&P) now. Each Individual stocks are below 7% per Asset Allocation now.

 

[OldShooter]

... 7-8 individual stocks, S&P Index. ...

What @pb4 said.

Thank you for the advice. Big city life or off the grid? Definitely somewhere in between. Are you retired? How's that working out for you? Any regrets? What triggered you to make the jump? etc. In terms of FIRE, FI is easier than
RE. I find it psychologically challenging to make the jump into retiring early. Trust me, it's not a humblebrag; it's real.

I love retirement. Left the rat race in 2003 after my partner and I sold our business. As that was happening I began working on my pilot's license. I ended up with Commercial and Instrument ratings and spent a bunch of time flying and managing SAR missions and traing with Civil Air Patrol. I'm not very good at just boring holes in the sky, so getting the ratings, keeping current and proficient, and the CAP thing worked out well. No regrets. I stopped flying a couple of years ago due to not flying enough to maintain proficiency. Ended up with a bit more than 1,000 hours and 130 airports in my logbook, US, Canada, and New Zealand.

Other stuff includes volunteer deployments with Red Cross, two hurricanes and the Oklahoma floods/hurricanes so far. Fun. (For Anyone Reading: Red Cross blood stocks are low and donations are needed: https://www.redcrossblood.org/)

Lots of travel; 40+ countries. Also no regrets. About 6 years ago I was on a nonprofit investment committee and realized (after 40 years of investing) that I needed more technical expertise to deal with a smoke-and-mirrors FA. So I've been working on that with posters on this site being a big help.

Never fear! You will find lots to do. If you want to stay techie, many nonprofits come up short in that area and would welcome a volunteer worker bee or volunteer board member.

Come on in. The water's fine.

 

[Dtail]

I would retire now. Quite a high NW in relation to salaries. Congrats.
You can always try out retirement and if you get bored, you can find some work to keep you busy irrespective of job pay, since you don't need it.
Personally for me and many others on this site, we would never go back to work and find many ways to keep busy and not be bored.
I retired at 57 and it would have been earlier if not due to an expensive divorce, plus not truly planning for retirement until much later in my work years despite saving and some LBYM.

 

[stepford]

As someone looking at a (smaller) forever home in WA I have to say that $2M doesn't seem all that ridiculous in the higher COL parts of the state. Just to get a nice (~2000 sqft) place with a yard and a view in an area we like looks like it may take most of our $1M budget. If we had the ~$10M resources of the OP and the needs of a family of 4 I would not think $2M that unreasonable (however nuts it must seem in other parts of the country).

 

[HawaiiShrimp]

Wow, first of all. Congrats to you on a happy retirement time!

Never fear! You will find lots to do. If you want to stay techie, many nonprofits come up short in that area and would welcome a volunteer worker bee or volunteer board member.

Come on in. The water's fine.

Nonprofit investment committee. That sounds interesting. I don't even know there's such a thing.

 

[HawaiiShrimp]

As someone looking at a (smaller) forever home in WA I have to say that $2M doesn't seem all that ridiculous in the higher COL parts of the state. Just to get a nice (~2000 sqft) place with a yard and a view in an area we like looks like it may take most of our $1M budget. If we had the ~$10M resources of the OP and the needs of a family of 4 I would not think $2M that unreasonable (however nuts it must seem in other parts of the country).

Agree, stepford. As much as I want things to be more affordable, it's not always the case. $2.0M is a lot of money but, at the same time, I am looking for 3000 sqfts+ with 4-5 rooms (family visits), decent size lot, and in a nice/good school neighborhood. I have friends in Vancouver, so being able to drive across the Canadian border on the Westside is important to me.

 

[OldShooter]

... forever home in WA ...

Maybe not so "forever."

"Earthquakes occur nearly every day in Washington. Most are too small to be felt or cause damage. Large earthquakes are less common but can cause significant damage to the things we count on in everyday life, such as buildings, roads, bridges, dams, and utilities.

"Washington has the second highest risk in the U.S. of these large and damaging earthquakes because of its geologic setting."

-- https://www.dnr.wa.gov/programs-and-services/geology/geologic-hazards/earthquakes-and-faults

 

[bloom2708]

Go to 50-50 stocks/bonds/cash and retire soon.

Unless your spending (not mentioned) is $350k+

Great work.

 

[aaronc879]

My wife and I want to visit different countries 3-6 months in a year. Just rough number so far, we haven't really seriously discussed about it.

How does that work with two young kids at home especially if you move away from friends and family?

 

[aaronc879]

Not paying state income taxes is not a very good reason to relocate IMO. If your kids are in good schools that they like and your friends and family are near by then I don't see a good reason to move. You can easily afford the state income taxes, they shouldn't even be that high after you retire.