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Hello! I am on the right track, but...
Old 05-16-2011, 09:54 AM   #1
Dryer sheet wannabe
Join Date: May 2011
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Hello! I am on the right track, but...


This is my first post. I have been reading so many wonderful posts and replies that have been really helpful. THANKS to ALL!!

I am 48 years old and single (no kids either). I own my home outright. (paid off mortgage very early) No car payments, credit card debt or really any debt. I have always been frugal and spend money wisely. I would love to escape the 9 to 5 grind. I would be happy not working or just working part time, but there are always health benefits to consider.

I lost my job recently, but I am now working again full time at just under $40,000.00 per year. (pay cut)

I could probably live on 15,000.00 per year comfortably. I would rather not have the best of everything and would rather do without the latest gadgets, fancy meals, new cars, paying for services for things I can do myself and so on. I would rather live simply (but comfortable) without having to work endlessly to pay for items that are not really needed.

I am saving like mad, since Sept of 2010, I have saved at least $17,000.00 from my pay. I plan on keeping this savings rate going.

I suppose that I will need to work at least another 5 years, but probably 7 to 10 years before I can pull the plug?

I have about 50,000.00 each in an IRA and a ROTH IRA. I have about 112,000.00 sitting in a money market account. My credit union has a 2.30 CD for 3 years. I am tempted to do open this with the 112,000.00, but wonder if there is something better? I am not very savvy with investing and I think that I would be interested in a safe, slow but steady way to invest. I have a terrible feeling that we are due for another market "correction", so I keep putting it off. Does anybody have any suggestions or comments for investment ideas or as far as where I stand?

Many here have much larger balances to count on and are more savvy with investments, but I was wondering how others think that I am doing?

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Old 05-16-2011, 10:39 AM   #2
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Join Date: Jun 2007
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You're ahead of 98% of the world so I'd say that's a fair percentile to be in And you're on the er forum now (welcome!) and that puts you at least ahead of 99% of the world.

You have a handle on saving (more like a firm grasp with both hands plus some teeth). But, do you have a firm handle on expenditures in retirement? That should include budgeting for maintenance (car, home), medical, etc. Maybe a realistic column plus a cushion column. That'll help you decide if it's 2, 5, 7, 10 years until you reach that line.

Best thing to do if you're not market savvy is to invest in becoming savvy. You could do worse than to buy a nice intro like Bogleheads' Guide to Investing. It's not so much a question of "better" investments as it is in "finding investments that align with your risk tolerance and reward needs". In light of that, a CD ladder might be an a-ok thing for you, especially depending on how the IRAs are invested.
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Old 05-16-2011, 11:15 AM   #3
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Welcome aboard. Like Webzter noted, you're ahead of the game and on the right track in many ways. Sitting in money markets is unlikely to get you to FI in "7 to 10 years," you're going to have to be a little more aggressive, or less safe. How much is your call. It does sound like you'd benefit from more knowledge on investing, so I've included a link below that's still the best list of related books that I know of. You can probably find most if not all at your local library.

I can't imagine getting by on $15K/yr but I wish I could. At that level, to retire in 7 to 10 years you'd need $375K (4% WR) to $500K (3% WR) before taxes (though taxes will be very low). More likely the latter since you'll only be 55 to 58 years old. And these are ballpark rule-of-thumb estimates at best.

Best of luck, you can do it...

Investment Books
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 30% bond funds / 20% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 05-19-2011, 07:02 AM   #4
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Imo Brad, you need to get savvy. Then get that 112K, minus at least 6 months of living expenses, out of your MMA and into something that makes money!

Also, don't even think of retiring without figuring out how you'll pay for health care.

Good luck and keep saving!
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Old 05-19-2011, 08:33 AM   #5
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Rcbrad, our personal situations are very similar. I am also 48, single, no kids, no debts (see my signature line). I ERed in late 2008 after the last pieces of my ER plan fell into place. The big one was individual health insurance. At first, I found a plan which cost me $469 per month but after the premium rose by nearly 50% in 2 years, I switched to a hospital-only plan which provides only hospital services, not doctor bills, and costs me only $182 per month ($6,000 less per year).

I did, however, have more money saved up and cashed out my company stock so I could generate about $32k in dividends per year. You will need to have a lot saved up in stocks and bonds to generate enough investment income to cover even $15k per year. Remember, inflation will raise your expenses more quickly than it will your income, so I think it would be wise to build in a surplus, or cushion, of income of expenses now in case it becomes a deficit later.

Is there any chance you can work part-time and retain your group health insurance? I did that for 7 years which was working out okay until I could not stand the awful commute even 2-3 days a week.
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
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Old 05-22-2011, 07:53 AM   #6
Dryer sheet wannabe
Join Date: May 2011
Posts: 18
Thanks to everyone for all of the replies and the warm welcome so far! The link of investment books will help. I have heard other suggestions of what to do, but I am concerned with the timing, as I fear that the market is artificially high right now and it seems a "correction" may very well be forthcoming. I am not sure how long it would make sense to wait, before I put my funds somewhere? I really think I need to take more risk than just putting the proceeds in a CD.

My full time job is just ok. I don't hate it, but I am not that happy with the work. The environment is almost a text book example of respect, helpfulness and friendliness in the workplace. The commute is reasonable. I would not mind finding a part time job , after I quit working full time. (if I have to) It seems that this most likely will be the case.

Yes, health insurance is a big concern. I would hopefully like to find a part time job that would offer health benefits if at all possible. It is a tall order to find something like this. Maybe in several years, it appears that there will be more options with health insurance. Decent affordable health insurance should not be tied to a full time job, just like auto insurance is not! I am very healthy, (for now) so maybe just a hospital services option would be a good idea.

I will feel better once I decide something, I am tired of being in limbo with my funds.
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