50 year old lawyer seeks enlightenment as to ER

[survivor1998]

You have the assets! What are you waiting for? Do you want to spend more time with your kids before they are gone? TRY PARTIAL retirement at first. Visit with your partners, get help with the cases you have, gradually stop working full time and stay as an "advisor" to help them with the "Marketing" aspects. You basically keep working part time to wine and dine and keep a back log of work coming in for them. Make sure your partners come along to establish a relationship w/the client. If you miss it, go back! If not, they have a relationship built and your home free! Please explore ways to cut your taxes. I have rental properties and stay active regarding their management so it is a great tax advantage. Consult your CPA or Financial advisor ASAP!

 

[meanmrmustard]

Back to check-in

Thought I'd check in and update. It's been a few months. Thanks all posters. I'm 51, still grinding away at practice of law although seem to have entered a recession-related slowdown lately, so earnings have dropped off, key associate lawyer I work with leaving to go in-house for a client of ours, another very good associate still with me. Portfolio doing OK, it's now $4.5 million, plus a few hundred K cash in firm account I haven't transferred to portfolio yet, plus modest house, mortgage-free. No debt. I now track all household expenses carefully in Quicken, a result of input from this board (thanks!). So I now know where household spending goes, and am glad I do, but don't seem to have succeeded in reducing outflow much. Wife not working, four teenagers. Lots going on, all somehow involving spending $. We don't seem to have snazzy lifestyle, yet our family household costs, including 20 year old in university are $210K to 225K/yr, excluding income taxes, but including property tax. Seems a huge amount to most people, I know. Lifestyle-wise, we do not look much different from other downtown families that I know, that likely earn a lot less. I really can't understand how the proverbial firefighter married to a teacher do it -especially with several kids. Easy to see why so many folk can't save anything and/or go into debt! Maybe its downtown lifestyle. Things would maybe be different if we were in small town or rural area. I don't seem to have taken steps to ER in any definite way, nor even started a transition process, so it seems I'm choosing by default to continue in salt mine for a few more years. Assets may seem high enough to most folks that ER is a no-brainer, but in fact, its not clear from FireCalc that I can confidently ER in all future market scenarios, as discussed by certain hard-nosed posters, above. Getting to say 6 million would make it a pretty sure bet. One recent development is I am getting headhunted a lot lately by big law firms, forcing navel-gazing: do I want to get out or not? Do I want to commit to working a few years in return for some big signing bonus (i.e essentially sell my firm)? Stay where I am? Pack it in now? Am I being too cautious? Guide me, anonymous sages and oracles!

 

[Katsmeow]

We don't seem to have snazzy lifestyle, yet our family household costs, including 20 year old in university are $210K to 225K/yr, excluding income taxes, but including property tax. Seems a huge amount to most people, I know. Lifestyle-wise, we do not look much different from other downtown families that I know, that likely earn a lot less.

I do understand. I am also an attorney, 3 kids. Income not as high as yours but there was a time when we spent a lot and we were in considerable debt. That was then and this is now and we don't have the debt any more and are spending probably a third of what we spent 5 to 10 years ago, and that is with 2 kids in college.

Coincidentally, this weekend I was looking at some of my old records of spending and I was astounded at some of what I used to spend and take for granted.

Last month we spent about $200 for dining out and groceries were under $800. That is with 4 of us in the house, the youngest 14.

But 7 or 8 years ago, we routinely spent $400 to $600 a month on dining out. We ate out several times a week. At that time, our kids mostly ate lower cost kids meals and of course there has been some inflation but we spent much more on dining out then. Now? We don't dine out that often and frequently it is just DH and I rather than us and the kids. We pay more attention to where we dine out and how much it costs.

7 or 8 years ago we also spent closer to $1500 a month on groceries. True there were more people in the house then but still...

We freely bought DVD movies whenever we wanted them. Now we use Netflix and Hulu and an occasional Itunes TV series.

We went on one or two vacations a year staying at a nice place but not extravagant. Still that was $5000 to $10000 a year. Now we go on vacation every couple of years and spend less.

Some of our expenses were related to child needs (we had a child in a therapeutic school...sending him to college is actually cheaper).

Still...I realize that I used to be just much less concerned with how much things cost. I used to spend $100 a month to get my hair colored and cut. Now I go to one of those cheapie places every 3 months for a cut and when I was coloring bought the color at the store and did it myself. Big difference in cost.

10 years ago I bought a brand new Lexus with all the bells and whistles. It was over $40k even then. Two years ago I actually did buy a new car but it was a Prius (with cloth seats and I passed on getting a lot of upgrades) that cost much less.

Anyway, looking back on what I used to spend I am amazed by much of it. Some of it I would do again (many of the things that were child related). A lot of it I did without really thinking about it and just assumed it as part of upper middle class normality. But the reality is that most people just don't spend money that way.

From your first post: "lessons, money for movies, concerts, skiing, clothes, food (difficult to dine out with family of six for less than $150), excursions, once a year trips (travel is expensive when you have to pay for six airline tickets and two maybe three hotel rooms)."

Most people can't afford to do most of those things or do them on a very small basis. They don't do lessons or they do one kind of lesson and no more. They go to movies infrequently. They don't go to concerts that cost money and can't afford to ski. Their clothes are the basics. They don't dine out often. When they do, they don't go to places that cost $25 a person to eat. They go to McDonalds or something very inexpensive or just the parents go without the kids. They don't go on vacation every year. Or they go somewhere within driving distance so they don't pay for airline tickets. They stay with friends or family, etc. All of that spending is discretionary (well we need some clothes and food). It is nice to be able to do all that (and I know it from personal experience). But those are all wants and not needs.

 

[Nords]

Getting to say 6 million would make it a pretty sure bet. One recent development is I am getting headhunted a lot lately by big law firms, forcing navel-gazing: do I want to get out or not? Do I want to commit to working a few years in return for some big signing bonus (i.e essentially sell my firm)? Stay where I am? Pack it in now? Am I being too cautious? Guide me, anonymous sages and oracles!

I see this all the time in military veterans of your age approaching a 30-year retirement decision, and I've prepared a small wake-up talk for them. Are you asking for the tough-love approach? If you are, then here's what it would sound like:

First, [-]military veterans[/-] lawyers are notorious for having no reason to ER. Apparently you're doing what you love and would hypothetically only get better at it with age. There are lawyers on this board who are also ER or heading in that direction, but who perhaps accelerated their ER plans because their firms would not cooperate with specialization interests or part-time wants or telecommuting desires. They're willing to cut expenses and boost savings without a 101% guarantee of success. You do not seem to fit any of those criteria.

Second, you're not mentally or emotionally ready to ER. Don't even waste your time agonizing about it. You're not willing to reduce your expenses, you're not confident in the FIRECalc financial forecasts, and you're not focusing on what you'd do all day. Heck, you're even contemplating going after a [-]civilian career[/-] better job offer. If you really sincerely gave a crap about ER then you wouldn't have to consult your navel. If you hated what you're doing or just wanted more control over your daily life then those "non-discretionary expenses" would vaporize in a heartbeat. You have neither incentive nor desire to change your behavior.

Finally, your $6M probability logic is mathematically protected from a whole flock of black swans, but it still leaves room for error. Would you feel better if you waited until you had $10M? $8M? $6.5M? What's your real number? Right now you're just pushing the finish line back because you don't seem to want the race to end. You could read Bernstein's comments on financial forecasts, especially part III where he implies that any success guarantee over 80% is semantically meaningless:
http://www.early-retirement.org/for...ment-calculator-from-hell-articles-32828.html

You would be surprised at the number of ERs who have managed to accomplish their goal on about one-sixth of your portfolio, with the same size of family. Some have done it with even less despite having more kids. Cutting expenses and relocation would accelerate that ER goal but are not always mandatory. Good thing for you, because you don't seem to be motivated to consider either one.

You're not being overcautious so much as you're being "not ready". In that situation, your ER now would be a miserable failure exceeded only by your unhappiness. Heck, your family would probably be even more unhappy [-]with[/-] than you.

When the ER time is right, you can't expect to have the heavens part and for archangels to sound the trumpets. So... what would it take for you to truly emotionally and physically desire ER? Grumpy co-workers? Bickering partners? A loss of control over your time? A colleague's heart attack or a stroke? One of your own?

Start with a small ER-readiness cost-control experiment: try not to eat out for a week. Yes, yikes-- try to eat 21 consecutive meals from food that you've prepared at home. Just so that there are no misunderstandings, that means brown-bagging everything breakfast and dinner.

Then see if you can do it for a month.

Then see if you can persuade your family to do it for a week.

Maybe then you'll be ready to think about the threads like "city living without a car" or "expecting your kids to pay the extra college expenses above a public school" or "frugal cooking" or a subscription to the "Dollar Stretcher" weekly e-mail.

Or maybe you'll decide that you're not totally despondent over your current lifestyle and not unwilling to renew your membership in the "just one more year" club. Put away your dog-eared highlighted copy of "Your Money Or Your Life" (with all the notations in the margins) and read Marc Freedman's "Encore". What, you don't have a worn-out copy of YMOYL? Well, QED.

Judging from my personal experience on a much smaller scale, I would suspect that 95% of the board's membership is not sympathetic to the travails and trials of ER'ing on a $4.5M portfolio, let alone the issues associated with getting to $6M.

But that's just the talk I give to shipmates who don't see how I could possibly have achieved ER on less money than they think they "need". If you're looking for something other than the tough-love approach, then "Never mind"...

 

[clifp]

Nord's is one of the best writers on the forum, so I am not going to try and improve on his tough love.

So let me just add this thought. There is absolutely nothing wrong with continuing to work. If you enjoy or probably more accurately feel challenged by your job than keep to doing it. I'm sure that the legal profession is intellectually challenging and probably feels good when you win case/help a deserving client.

I've been retired for more than 10 years and I am your same age 51. I was absolutely ready to take some time off and I don't regret my decision to do it. But big part of the reason I did quit is I found myself with sufficient assets to retire, sort of like a lottery winner. I know many people with similar assets and even a handful with $10+ million who continued to work. I enjoy the freedom to dp what I want and lack of pressure that early retirement brings, however there absolutely times I miss the sense of accomplishment/meaning that is associated with a good job. I imagine most everyone has good and bad years in the workforce. I can say that being retired is much better than a bad job, but not as fulfilling as a good job. So if I could find a "good" job I'd take even if I don't really need the money. Of course in this economy finding any job is a challenge so nothing is likely to change.

 

[chris2008]

Thanks for keeping us updated.
Nord's contribution is excellent - I will keep a printout in my ER file and re-read it when it comes to sending DH's and my termination letter at the end of 2011.

It seems that the recession related slowdown has also taken away much of your stress and thus the ambition to ER. This is perfectly ok.

If you continue to think about ER, here is what I have noticed in your posts:
You seem to have nothing to ER TO but just contemplate about ER FROM something. For a happy retirement decision I believe you need to find out what you want to get out of retiment - other than only free time.

You might also be shy to implement changes in your family life. Do you feel that the other members have a right to keep their lifestyle as now and uneffected from your ER?
Have you talked with them about your desire to ER, how stressful your work can be and what they would think about your ER? Or do you want to maintain a certain image?
If not, now that you have the numbers it is time to have the talk with your wife how to reduce your spending as a family in the best possible way.

 

[kcowan]

Another exercise in addition to the brown bag approachis to go through your closet and ID those items that have not been out for a month. Aside from seasonal items, such an exercise will illustrate that most of what you buy is not essential.

Similarly, look at your communications bill. It will be shocking to see what dribbles out every month that is not strictly required. Eliminated duplication and redundancy.

But only if you are serious about retiring...

 

[Danmar]

Hi Mustard. Nords post rings pretty true to me. I don't think your lifestyle is extravagant but agree you could reduce expenses if you were motivated. if I were you I would buckle down for a few years till kids were further along and your portfolio grew. I personally wouldn't feel comfortable with your savings level and in my case waited until we had 8 figures and a big pension. As you may recall I retired at 56. Stick it out for a while and get your head around ER more. In the end it will be determined by how much you dislike your job I think. Interesting about the expenses, eh? in our case there were no surprises as we had tracked for years. One thing we did find is that with more time available we found more exciting things to spend our money on. Now spend about 30% more than pre retirement. Work as long as you can take it. The extra money will come in handy.

 

[Milton]

Work as long as you can take it. The extra money will come in handy.

But cf. Thoreau: "No one but a fool ever sold more of his time than he had to".

 

[kcowan]

Thought I'd check in and update. ....
Do I want to commit to working a few years in return for some big signing bonus (i.e essentially sell my firm)? Stay where I am? Pack it in now? Am I being too cautious? Guide me, anonymous sages and oracles!

You are consulting the lumpen slums of cyberspace for advice?

I have worked for a large corporation in downtown Toronto. You environment is so far removed from the average respondent here that it is unlikely that you will get definitive advice. A parallel might be a player on Wall Street trying to learn here.

Before going any further, you should schedule a meeting with the family to discuss the issues you are grappling with. I did that and discovered some serious disconnects. Ten years later, I retired. But the ten-year trip was not easy...

 

[Danmar]

You are consulting the lumpen slums of cyberspace for advice?

I have worked for a large corporation in downtown Toronto. You environment is so far removed from the average respondent here that it is unlikely that you will get definitive advice. A parallel might be a player on Wall Street trying to learn here.

Before going any further, you should schedule a meeting with the family to discuss the issues you are grappling with. I did that and discovered some serious disconnects. Ten years later, I retired. But the ten-year trip was not easy...

Good advice. Agree about the huge disconnect re him and the average poster here.

 

[meanmrmustard]

Thank you O Oracles and Sages

Whether or not there is a "disconnect" between me and the average poster on the board, I don't know. The benefit of the board seems to me that there are a lot of people at different stages of life and different financial situations, which is a good thing.

What is clear is that the responses I have had have been far more helpful to me, and thought-provoking, than I expected when I first started the thread last summer.

Many posters bludgeoned me over the head a few months ago until I started tracking expenses carefully. Had I not posted, and gotten an earful on that subject, I might not have started doing it. The forum made a difference.

As to latest batch of posts:

katsmeow, you seem to have a somewhat similar situation to my own, lawyer with teenage kids, and thanks for helpful comments about spending. The amount you spent on restaurants even in your extravagant glory years looks pretty economical to me! I guess that means if I wanted to cut expenses in a big way, all I have to do is get the wife to do more cooking. That probably makes me sound like a chauvinist pig, but I have no time or knowhow myself in that department, while she is at least “at home”. Effect on marriage may be negative, however. Is it worth it?

Nord, thanks for drill sergeant rant to the effect that if I wanted to retire I would just do it and stop whining. Maybe it’s true, I’m too much of a wimp to retire! I had always though of it in the opposite way: do real men ER or eat keish?

Danmar I remember you from last summer. As I recall you retired later in life than where I am now, with more money, and also higher spending, so you represent the “Keep on Plugging for a While, It will be Worth It One Day” point of view.

Chris2008: you’re right the recessionary slow down has been OK with me in some ways. I spent a reasonable amount of time this past summer and fall in a kayak, which was just fine.

Thanks to all others who took the time to post. I appreciate it! I’ll check in and update now and then.

 

[kcowan]

Mr Mustard does not sound very mean to me

 

[Katsmeow]

The amount you spent on restaurants even in your extravagant glory years looks pretty economical to me! I guess that means if I wanted to cut expenses in a big way, all I have to do is get the wife to do more cooking. That probably makes me sound like a chauvinist pig, but I have no time or knowhow myself in that department, while she is at least “at home”. Effect on marriage may be negative, however. Is it worth it?

Well I'm in US so remember to convert dollars to Canadian.

Truthfully I do much cooking myself. I also don't cook for kids except for special occasions. My kids basically fend for themselves (they are all teenagers). One of my sons and my daughter enjoy cooking. My other son doesn't cook but he sometimes can get his sister to make extra for him and he is good at using the microwave. They are all good at eating fruit which, after all, requires no cooking.

And, that is really the type of things that we eat. I eat a fair amount of frozen foods. I also enjoy buying already prepared salads from the store. Target here sells great prepared salads. I don't do much actual cooking. Sometimes I buy a prepared item from the grocery store and then heat it up. All that is probably more expensive than cooking from scratch. But it is all significantly less expensive than eating out.

You can also look at where you eat out. There is a huge variety in price out there. Also, around here restaurant portions are huge. DH and I went out to a Chinese place the other day and shared one entree and one spring roll order. We had plenty of food for half the price.

 

[Danmar]

I think you appreciate the various points of view. Good luck on whatever you decide.

 

[GregLee]

I eat a fair amount of frozen foods.

Mmmm. Crunchy!

 

[chris2008]

If you think about christmas gifts: how about joining a cooking class together as a family or with DW? Some chefs of great restaurants give lessons and it can be a lot of fun.

 

[meanmrmustard]

Well I'm in US so remember to convert dollars to Canadian.

Canadian dollar pretty close to par now, due to US dollar nosedive.

 

[Milton]

I guess that means if I wanted to cut expenses in a big way, all I have to do is get the wife to do more cooking. That probably makes me sound like a chauvinist pig, but I have no time or knowhow myself in that department, while she is at least “at home”. Effect on marriage may be negative, however. Is it worth it?

While I - of course - don't know all the ins and out of your marriage, I very doubt it would be worth it.

(1) there once was a time when you and your wife implicitly, if not explicitly, divided up your respective roles: including the fact that she would stay home and not work. The extent of her cooking responsibilities is something that should have been discussed then ... it is now probably a bit too late to renegotiate.

(2) any amount of money you manage to save from your food budget is likely peanuts compared to the emotional stress resulting from a negative effect on your marital relationship.