Hello from California

[hiker88]

Hi Forum Members,
I’ve enjoyed reading the posts in this forum for the past month and signed up last week. The posts on this site, along with other research I’ve done, has given me plenty of information on things to consider for early retirement.
I’m a 53 year old single guy living in California and think I might be at the point where I am financially independent and can say good bye to my j*b if I chose. Total retirement assets crossed the $1.5M line last Friday (does not include cash for short term spending and funds required to pay off the mortgage). About half of assets in taxable account and the other half in 401k and Roth IRA (all Vanguard index funds). Asset allocation is currently 80% stocks/20% bonds. Estimated social security payment ranges from about $18K/yr starting at age 62 to $31K/yr start at age 70. My maximum expenses would be $60K/year (includes current nonmortgage expeditures+$8K for health insurance+$15K for travel). FIRECalc says I’m at 98% success rate even if I decrease social security payment by 10% to take into account possible future reductions. Figuring on a second career as a landscape photographer, but not sure if I’ll earn any money from it. Any comments appreciated.
Charley

 

[JOHNNIE36]

Hello hiker and welcome to the forum. Hope you find it interesting and informative as I know you will.

 

[heeyy_joe]

Welcome to the board! You may want to become a little more conservative in your asset allocation on equities. 80 percent would keep me up at night; consider what a big drop in the market would do to your portfolio so close to going FIre.

 

[Meadbh]

Welcome to the board! You may want to become a little more conservative in your asset allocation on equities. 80 percent would keep me up at night; consider what a big drop in the market would do to your portfolio so close to going FIre.

+1 and if I were in your situation I would increase my allocation to cash. Not only is it useful to have a cash buffer of a few years' expenses, but bonds are not a great place to invest right now.

 

[tmm99]

Hey hiker,

I am in California also (nothern) and we are the same age! (Wait! I am 54, not 53!! Geez!)

Your networth is bigger than mine, and my allocation is much more conversative than yours - 50/50. I am still chugging along and most likely for a few more years.

Welcome to the forum!

 

[obgyn65]

I do not live in California but welcome to the forum anyway.

 

[hiker88]

Thanks for the welcome. Per Meadbh’s suggestion, I am going to annually convert part of my stock allocation into cash that covers at least a couple year’s worth of expenses. Also, I figure to convert an additional portion of the stock to an intermediate investment–grade corporate bond fund so as to reduce the stock portion to 70%. I’ll leave the rest of the fixed income in the Total Bond Fund and hope it doesn’t lose too much to inflation.

 

[Ready]

Welcome to the forum. I agree with the comments that 80% in equities if you are going to retire is a bit high. It might be fine if you were to continue working because if the market went down you could invest new earnings at the lower prices, but if you are about to stop earning income, a 20% correction in the market could reduce your net worth by $240K, and if that happened, you would have to ask yourself if you would still feel good about retiring.

At a 4% SWR, you are right at the $60K expense that you need. Assuming social security is there for you, you will have a little cushion. But if you could get your expenses down to 45K, you would only need to withdraw 3% per year, which would be a lot more comfortable for me. Of course, if you take on a second career and make even a modest income, that would help a lot.

In any case, good luck with it and let us know how you're doing!