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49 and $5M in Retirement - Having trouble FIREing myself
Old 06-30-2020, 01:29 PM   #1
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49 and $5M in Retirement - Having trouble FIREing myself

I built a good career and have achieved highest level of corporate hierarchy. My earning power now and next few years will be highest of my career/life. Have a comfortable life but I'm drawn to making a change and retiring for simplier life.

As far as retirement savings: I have over $5M in networth and worrier in me says, may not be enough. I have couple of kids to send to college and who knows what the life challenges to come.

I can either stay where I am and make as much as possible to retire early or retire early and see what life will be like as early retiree - which has been my dream.

My monthly expense, even if I retire, will definitely be over $15k a month. Health care, food/dining out, kids expense, traveling, auto, insurance, etc.

With low interest environment, its going to be hard to get yields on conservative investments (ie CD/bond). So 4% rule may not be so comforting going forward.

How do you get comfortable Firing yourself? Welcome comments.
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Old 06-30-2020, 01:46 PM   #2
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We need to know your investable assets to answer you. Home equity reduces the 5M by how much?
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Old 06-30-2020, 01:49 PM   #3
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I see nothing about how satisfied you are in your job. If going to work was miserable, I'd tell you to get your affairs in order and hang it up. But if you're okay with the profession, hang in there a little longer.

Another question is whether the kids are heading toward a private university--or state university. My buddy has two children in private schools and both went to fancy universities. One is a GYN-Oncologist. He's having to work until 70 years old. I still cannot get over his wife going to SMU for a Physical Education degree (that she calls sports management.) Private universities can pull a well to do family to their knees.

Many think that it's best going into retirement debt free--including a home. I hope you know where you want to retire to. Our main house on 4 acres was paid for, and so was my inherited lake house. I took a slow, deliberate path to simplify my life--knowing every one in our company retired early.

You might want to hang in there until the kids get into college, and then test the waters of retirement. If anything happens, at least you know you're going to be fiscally all right and can hang it up at any time.
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Old 06-30-2020, 01:51 PM   #4
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Home equity portion is about $400k. But I have other private investment not part of $5M that will cover more than $400k so about $5M investable assets is conservative. My private investment - in private companies, is hard to value but certainly will be more than cover home equity due to current private company valuation.
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Old 06-30-2020, 01:57 PM   #5
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My daughter just got accepted to MIT so definitely have her go there. She will be a freshman and expect $80k per year for next 4 years. Have another daughter in high school so will be a big expenses for college.

As far as work wise, I'm a CFO of a mid sized company so there are days where it is pressure cooker and days it's just normal work day. I do browse this website and dream of retirement and enjoying worry free lifestyle.

Once I leave work, obviously will be hard to re-enter at the same position. that's one of the big consideration.
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Old 06-30-2020, 02:02 PM   #6
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So how old are the kids and do you like your job? I assume from your comments that you are C suite. Any major bonuses in the near future, or other lump sum amounts that will pump up your assets significantly?

I agree that 5M may not be enough for a high end life style assuming you don't want to scale down your spending.

Edit: Oops your last post crossed with mine. You sound somewhat ambivalent about this decision. Best not too jump too soon. Make a plan, perhaps 3 more years, drive the numbers to a bullet proof Fat Fire portfolio, then jump.
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Old 06-30-2020, 02:26 PM   #7
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OP

If you had lower expenses, and no college expenses, I would say you are good to go. As it is, you are probably OK, but not a lot of wiggle room. With maybe $700k in college expenses ahead of you, I think I would look at a plan to get out at 55, with more money, and no huge expenses planned. Just me.
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Old 06-30-2020, 03:06 PM   #8
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Originally Posted by Fremontpoke View Post
My monthly expense, even if I retire, will definitely be over $15k a month. Health care, food/dining out, kids expense, traveling, auto, insurance, etc.
Reduce your monthly expenses. I find it very difficult to accept that anyone has to spend more than $15k/month in retirement. That's a desire more than a necessity.

$5M net worth is likely not going to last for a 49 yo burning through at least $180k a year in retirement.

You need to make some changes in your spending, or keep working and saving.
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Old 06-30-2020, 03:34 PM   #9
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Welcome, Fremontpoke!

As you have noticed, folks here aren't shy about expressing their opinions.

Personally, I would recommend very close monitoring of your spending for the next year or so and consideration of how you might adjust that if needed during retirement. Also thinking about what you would be retiring to - how do you plan to spend your days after some well-deserved time off to decompress? Getting to an asset allocation you feel comfortable with for the long term is also important.

We paid for private college for both of our kids and would do it again, but others here have different opinions as you have seen. You need to make your choices and plan accordingly.

Hopefully the discussion here will help you figure out the best time for you to ER. Enjoy!
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Old 06-30-2020, 03:57 PM   #10
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Keep working. It is satisfying to have the status and you don't seem motivated to quit. You'll know when you are ready.
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Old 06-30-2020, 03:58 PM   #11
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$5M net worth is likely not going to last for a 49 yo burning through at least $180k a year in retirement.
With a reasonable AA, that's only 3.6% of invested assets per year. Should work, and if the OP runs FIRECALC, would likely get a 98-100% chance of success.

P.S. Due to COVID-19, I never did "get comfortable Firing" myself? Closer though, because I'm almost to the "I have enough and I've had enough" place in my life.
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Old 06-30-2020, 04:11 PM   #12
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With a reasonable AA, that's only 3.6% of invested assets per year. Should work, and if the OP runs FIRECALC, would likely get a 98-100% chance of success.

P.S. Due to COVID-19, I never did "get comfortable Firing" myself? Closer though, because I'm almost to the "I have enough and I've had enough" place in my life.
Well, take out $700k for two daughters to go to pricey colleges, and you are over 4.1% WR. Could work. But awful close for some one accustomed to spending $15k/month.

We don't know OP's income, but I would guess he could support the college out of income, if working (at the cost of reduced savings). With that kind of college costs anticipated, I could not pull the rip cord until at least one DD is launched.
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Old 06-30-2020, 04:17 PM   #13
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Fremontpoke, I punched out at 51, have been retired for 7.5 years, had no debt left, more invested, and had two kids with just a semester or two left in college for both of them. I also had a pressure cooker role, CEO of a geographical division of a global firm, leading nearly 100k employees. My division was Asia Pacific, so I had a lot of water between my countries, which meant lots of red-eye flights (sleeper seats in business, but still, not really good sleep, night after night). As you know, the pressure just goes up, every year, regardless of a global recession or a COVID-like pandemic.

If I had any advice for you, it would be this: 1) you probably don’t have enough, just yet, to fund a great retirement and two kids at 80k per year schools. I’d probably wait until one was finished and the other mostly done, if not completely finished. 2) someone like yourself or myself who has been in the pressure cooker for so long, runs the risk of exploding if they wait too long...so, wait, a couple, maybe 4 more years, but not too long. 3) take that time to figure out what you are going to do with your time. If you don’t, you will find very quickly that you have too much time on your hands and not enough to keep your mind busy. When I left, it took a while to decompress. I think I got on my wife’s nerves a bit. But, I had some very big projects to work on around the home we had built while living overseas. We’ve now sold that home in CA so we could move here (I’m your neighbor, in Gilbert), but I have little to do every day and I’m looking for a new challenge. So, I’m researching a couple of things I can do that I might find I can be passionate about. Yep, you need something to do. Hanging by the pool all day gets tired really fast.

The final word of advice is this: hang in there a while longer, but with a smile on your face, because you DO have enough that if you HAD to pull the rip cord, with a few small alterations to your lifestyle, you could. Others will think it’s crazy to hang on any longer with $5m in the bank, but, you’ve had a big job with a big lifestyle, and that usually accompanies a big personality. In my opinion, that requires just a little bit bigger nest egg. In in case, remember sequence of returns can make or break a retirement. We’re in some very choppy water right now. I’d wait until both the asset bucket and the BS bucket were a little fuller. When the BS bucket starts to overflow, you’ll be glad you had a little extra cushion in the asset bucket. If you ever feel like you need to chat, send me a pm.
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Old 06-30-2020, 04:19 PM   #14
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How do you get comfortable Firing yourself? Welcome comments.
After receiving a regular paycheck for almost 20 years, I wasn't comfortable semi-retiring back in January 2007 without regular monthly income. Back then, I defined my means as my income and lived within it, and I still do that today. An advantage of this somewhat antiquated approach to (semi-)retirement planning: I sailed right through the 2008 financial crisis with no stress whatsoever. Stock market crashes? Yawn, boring. Bonds crash? Yawn, boring. American farmland market values crash? Yawn, boring. The current market value of my assets might be of interest to whoever inherits my cr*p, but I could not really care less.

The "safe withdrawal rate" meme readily infects minds that want to declare themselves "financially independent" but don't qualify under the old-fashioned standard of "income > expenses". Of course, the hostility of American corporations (getting rid of traditional defined-benefit pensions) and American government (e.g. the [A]CA and driving some interest rates to near zero) to the income-oriented approach is well known, but some of us cling to the old-fashioned "financial independence" standard nevertheless. YMMV - good luck!

P.S. Congrats on your substantial savings and your daughter getting into MIT. If she gets through a demanding educational program with her native curiosity and love of learning intact - call it a success!
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Old 06-30-2020, 04:47 PM   #15
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Originally Posted by Rambler View Post
Fremontpoke, I punched out at 51, have been retired for 7.5 years, had no debt left, more invested, and had two kids with just a semester or two left in college for both of them. I also had a pressure cooker role, CEO of a geographical division of a global firm, leading nearly 100k employees. My division was Asia Pacific, so I had a lot of water between my countries, which meant lots of red-eye flights (sleeper seats in business, but still, not really good sleep, night after night). As you know, the pressure just goes up, every year, regardless of a global recession or a COVID-like pandemic.

If I had any advice for you, it would be this: 1) you probably donít have enough, just yet, to fund a great retirement and two kids at 80k per year schools. Iíd probably wait until one was finished and the other mostly done, if not completely finished. 2) someone like yourself or myself who has been in the pressure cooker for so long, runs the risk of exploding if they wait too long...so, wait, a couple, maybe 4 more years, but not too long. 3) take that time to figure out what you are going to do with your time. If you donít, you will find very quickly that you have too much time on your hands and not enough to keep your mind busy. When I left, it took a while to decompress. I think I got on my wifeís nerves a bit. But, I had some very big projects to work on around the home we had built while living overseas. Weíve now sold that home in CA so we could move here (Iím your neighbor, in Gilbert), but I have little to do every day and Iím looking for a new challenge. So, Iím researching a couple of things I can do that I might find I can be passionate about. Yep, you need something to do. Hanging by the pool all day gets tired really fast.

The final word of advice is this: hang in there a while longer, but with a smile on your face, because you DO have enough that if you HAD to pull the rip cord, with a few small alterations to your lifestyle, you could. Others will think itís crazy to hang on any longer with $5m in the bank, but, youíve had a big job with a big lifestyle, and that usually accompanies a big personality. In my opinion, that requires just a little bit bigger nest egg. In in case, remember sequence of returns can make or break a retirement. Weíre in some very choppy water right now. Iíd wait until both the asset bucket and the BS bucket were a little fuller. When the BS bucket starts to overflow, youíll be glad you had a little extra cushion in the asset bucket. If you ever feel like you need to chat, send me a pm.
Thanks for this thoughtful comment. Very helpful and sounds like you know what I'm going through. So appreciate the advise/comment.

Sitting around my office & in meetings and reading these comments on early retirement is pretty interesting feeling.

My feeling on early retirement is nice to retire early but doesnt seem interesting to cut spending to make it less enjoyable.

Going few more years sound like to right option but I got to believe after retirement, there is a way to make passive income without making sacrificing life style.
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Old 06-30-2020, 04:47 PM   #16
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Looks like you would need to work longer with 15K a month. To many unknowns in the future to be 100% it would work.

FIRECalc >>> doesn't like it for a 30 life span.
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Old 06-30-2020, 04:50 PM   #17
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Any pension or Social Security to consider? That might be enough to push you over the edge. With portfolio only it would be nice to reach 3% withdrawals.
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Old 06-30-2020, 05:42 PM   #18
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Well , for a modest fee of just 1/2 of one percent of assets , a great number of us ER - Org members can be your retirement and spending reduction coach
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Old 06-30-2020, 05:52 PM   #19
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As an officer of a mid size company my question relates to the status of the company. Is it public or private? What is the likelihood of a takeover/sale/recapitalization that might be a windfall for the execs? In your shoes I would consider this very carefully. If you leave and there is a windfall you miss, that would be a bummer.
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Old 06-30-2020, 06:15 PM   #20
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Looks like you would need to work longer with 15K a month. To many unknowns in the future to be 100% it would work.

FIRECalc >>> doesn't like it for a 30 life span.
The Firecalc 100% success rate at the default settings is 3.59% WR.
At the default settings with no Social Security with a 45 year retirement, the success rate is 93%.

Still, I would probably work a few more years for some extra padding and still can retire by 55 y.o. or a little earlier.
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