rodiy2k
Recycles dryer sheets
Hello all:
I am newbie to this awesome forum. Living in today's society where the financial press inundates everyone with horror stories about a generation that can't retire due to all the typical excuses, I breathed a sigh of huge relief to find a forum I can finally share with other smart minded individuals. Although I work in the financial services community for 30 years (not as a revenue producer), I've been looking to share our newly developed "5YP" (five year plan) without shelling out $200 an hour for a CFP; mostly for a reality check. Trying to explain everything in a short introductory post is quite difficult so I apologize if the story gets a tad long but a bit of background is essential if I expect to get sound advice and comments.
I am 48, my wife is 42 and a Canadian citizen of Chinese ancestry with a Green Card. No kids. Although not as wealthy as other posters, we believe one of the best ways to solve the FIRE conundrum with modest means is to be open minded and realize America and all its "greatness" is but one small blip on a large planet regardless of how they want you to believe that the USA is the envy of the Earth. (based mostly on ignorance by those who have never traveled). We love Southeast Asia and recently discovered the MM2H program, a fabulous visa program for middle class retires (50K deposit required) that allows unlimited entry to Malaysia and several financial perks, We would like to retire and move there in 2018; (Thailand is plan B). Here is how we hope to do it.
Current assets: (**EXCLUDING HOUSE VALUE**)
$450K in total investments split among 401k, 403b, 457b, 2 ROTH IRA's, rollover IRA, and taxable account. Also have $100K CAD (in a Canadian RRSP, a tax sheltered account), CD with 35K and about 20K cash. My wife is lucky enough to have 403b and 457b and I have 401k with company match so we max out all 3 retirement plans. The deductions lower our taxable income enough to allow full ROTH contributions. Thus, we "dollar cost" into all the tax sheltered accounts every paycheck and fund both ROTHs annually with our tax refund (we will contribute $63,500 this year) - Combined salaries: $210K - Asset allocation: 60% equity, 40% fixed income; large part in emerging markets and Asia (developed), mostly actively managed no load NTF mutual funds; some ETF's and a stock or two
Mortgage:
We overpaid for our suburban house in 2008 ($735K.) From 2000-2006 we lived in Calgary, Alberta; built new in 2002 for $225K CAD, paid it off in full in 5 years and sold in 2006 for $550K. Once back in the USA, we took a 15 year $400K mortgage, used the Canadian house proceeds to put $338K down and invested the rest. We refinanced down to 3.75% 18 months ago and had them restructure the amortization to pay it off in full on the original maturity (2023). Thus, $438 of every scheduled mortgage payment is additional principal. We also prepay $500 bi-weekly from paychecks. At this rate, we would have about $50K debt left when we want to sell but hope to increase the prepayments to get it to zero by 2018.
Worth noting:
I started tracking our investment values carefully on 1/1/2010 when we had about $245K. We have gained over 100% since them through good asset allocation, diligent investing and living below our means:
Future income sources besides investments and Social (In)Security:
My small company pension has a cash out option that allows payments from age 55 thru the first year of SS eligibility. Would work out to an extra $8 to 10K per year; would be insignificant otherwise
Wife: Pension can start at age 52 - should be about $24K annually; she also a small Canadian pension about $5K annually.
The Plan:
Because of staggered income in different phases, we think we can plan for 30 to 40 years with no problems as long as we live in a cheaper nation. House is now worth about $650K and they are selling well in our area; Hope to sell for 700K by 2018. Plan on leaving almost immediately, using about $550 to $600K to purchase an immediate annuity with a term of 12 to 15 years; this will serve as our income between 2018 and the years when our pensions/penalty-free retirement funds become available. This should net us about $50K annually (more than enough to live in Malysia or Thailand comfortably if you rent). Also plan on keeping about 100K as savings. Would roll my 401k into my ROTH in the year I quit the job at age 53 and pay all the taxes since taxable income drops drastically when employment income ends. (ROTH balance should be 200-250K); this also allows me to bypass the 5 year threshold rule and withdraw all monies tax free after 5 years (once I'm age 59 1/2.)
Wife's pension can start in year 5 of ER to help supplement the annuity. Would roll all her tax sheltered work plans into her rollover with no immediate need to use; Would start to draw on my ROTH 6 years into ER upping annual income as circumstances warrant. When the annuity term ends, I'd be 68, wife 62 and we'd have pension income along with my ROTH and be old enough to use wife's retirement funds if needed ; Would determine if starting SS makes sense and still have not touched the wife's retirement funds (estimated at 500-600K by then); also eligible for some Canadian Old Age Pension for the wife; would hope my ROTH is not yet depleted.
Before you tell us we can't live on 50K after making 210K, please keep in mind that cost of living in Malaysia or Thailand is about 1/3 of even the cheapest US state; Even allowing for another financial calamity, I think we should be OK; travel is cheap and easy in S.E. Asia and the food alone makes leaving America worthwhile (My political reasons for leaving the US warrant a new thread). Healthcare is at US standards and significantly cheaper; Best of all, as the spouse of a Canadian citizen, in a medical emergency we can always move back to Canada where I'd be immediately eligible for social healthcare.
Thanks for your patience reading this; we would appreciate any comments, input, constructive criticism, or suggestions. Let us know if we are insane or on the right track; Life to us is so much more than our well paying desk jobs that we both hate. We feel sorry for all those people whose work is their total identity and look forward to meeting many of you with similar values.
I am newbie to this awesome forum. Living in today's society where the financial press inundates everyone with horror stories about a generation that can't retire due to all the typical excuses, I breathed a sigh of huge relief to find a forum I can finally share with other smart minded individuals. Although I work in the financial services community for 30 years (not as a revenue producer), I've been looking to share our newly developed "5YP" (five year plan) without shelling out $200 an hour for a CFP; mostly for a reality check. Trying to explain everything in a short introductory post is quite difficult so I apologize if the story gets a tad long but a bit of background is essential if I expect to get sound advice and comments.
I am 48, my wife is 42 and a Canadian citizen of Chinese ancestry with a Green Card. No kids. Although not as wealthy as other posters, we believe one of the best ways to solve the FIRE conundrum with modest means is to be open minded and realize America and all its "greatness" is but one small blip on a large planet regardless of how they want you to believe that the USA is the envy of the Earth. (based mostly on ignorance by those who have never traveled). We love Southeast Asia and recently discovered the MM2H program, a fabulous visa program for middle class retires (50K deposit required) that allows unlimited entry to Malaysia and several financial perks, We would like to retire and move there in 2018; (Thailand is plan B). Here is how we hope to do it.
Current assets: (**EXCLUDING HOUSE VALUE**)
$450K in total investments split among 401k, 403b, 457b, 2 ROTH IRA's, rollover IRA, and taxable account. Also have $100K CAD (in a Canadian RRSP, a tax sheltered account), CD with 35K and about 20K cash. My wife is lucky enough to have 403b and 457b and I have 401k with company match so we max out all 3 retirement plans. The deductions lower our taxable income enough to allow full ROTH contributions. Thus, we "dollar cost" into all the tax sheltered accounts every paycheck and fund both ROTHs annually with our tax refund (we will contribute $63,500 this year) - Combined salaries: $210K - Asset allocation: 60% equity, 40% fixed income; large part in emerging markets and Asia (developed), mostly actively managed no load NTF mutual funds; some ETF's and a stock or two
Mortgage:
We overpaid for our suburban house in 2008 ($735K.) From 2000-2006 we lived in Calgary, Alberta; built new in 2002 for $225K CAD, paid it off in full in 5 years and sold in 2006 for $550K. Once back in the USA, we took a 15 year $400K mortgage, used the Canadian house proceeds to put $338K down and invested the rest. We refinanced down to 3.75% 18 months ago and had them restructure the amortization to pay it off in full on the original maturity (2023). Thus, $438 of every scheduled mortgage payment is additional principal. We also prepay $500 bi-weekly from paychecks. At this rate, we would have about $50K debt left when we want to sell but hope to increase the prepayments to get it to zero by 2018.
Worth noting:
I started tracking our investment values carefully on 1/1/2010 when we had about $245K. We have gained over 100% since them through good asset allocation, diligent investing and living below our means:
Future income sources besides investments and Social (In)Security:
My small company pension has a cash out option that allows payments from age 55 thru the first year of SS eligibility. Would work out to an extra $8 to 10K per year; would be insignificant otherwise
Wife: Pension can start at age 52 - should be about $24K annually; she also a small Canadian pension about $5K annually.
The Plan:
Because of staggered income in different phases, we think we can plan for 30 to 40 years with no problems as long as we live in a cheaper nation. House is now worth about $650K and they are selling well in our area; Hope to sell for 700K by 2018. Plan on leaving almost immediately, using about $550 to $600K to purchase an immediate annuity with a term of 12 to 15 years; this will serve as our income between 2018 and the years when our pensions/penalty-free retirement funds become available. This should net us about $50K annually (more than enough to live in Malysia or Thailand comfortably if you rent). Also plan on keeping about 100K as savings. Would roll my 401k into my ROTH in the year I quit the job at age 53 and pay all the taxes since taxable income drops drastically when employment income ends. (ROTH balance should be 200-250K); this also allows me to bypass the 5 year threshold rule and withdraw all monies tax free after 5 years (once I'm age 59 1/2.)
Wife's pension can start in year 5 of ER to help supplement the annuity. Would roll all her tax sheltered work plans into her rollover with no immediate need to use; Would start to draw on my ROTH 6 years into ER upping annual income as circumstances warrant. When the annuity term ends, I'd be 68, wife 62 and we'd have pension income along with my ROTH and be old enough to use wife's retirement funds if needed ; Would determine if starting SS makes sense and still have not touched the wife's retirement funds (estimated at 500-600K by then); also eligible for some Canadian Old Age Pension for the wife; would hope my ROTH is not yet depleted.
Before you tell us we can't live on 50K after making 210K, please keep in mind that cost of living in Malaysia or Thailand is about 1/3 of even the cheapest US state; Even allowing for another financial calamity, I think we should be OK; travel is cheap and easy in S.E. Asia and the food alone makes leaving America worthwhile (My political reasons for leaving the US warrant a new thread). Healthcare is at US standards and significantly cheaper; Best of all, as the spouse of a Canadian citizen, in a medical emergency we can always move back to Canada where I'd be immediately eligible for social healthcare.
Thanks for your patience reading this; we would appreciate any comments, input, constructive criticism, or suggestions. Let us know if we are insane or on the right track; Life to us is so much more than our well paying desk jobs that we both hate. We feel sorry for all those people whose work is their total identity and look forward to meeting many of you with similar values.