Hi.... I have no clue!

[Webzter]

Quote:

Originally Posted by flyfishnevada I have to agree with some of the other posters. Analyze your spending. $10,000 a mo is a lot of money, even in an urban center.

Unless it's also financing trips abroad and paying to not fly econo class. OP said that's the big unknown in retirement, things like more travel...


Personally, I'd live somewhere cheap and then fly to nice places, but I know I'd miss the urban center culture (I still do, but it's always pointed out to me that I'm uncultured anyway )

[er dr]

Quote:

Originally Posted by flyfishnevada I have to agree with some of the other posters. Analyze your spending. $10,000 a mo is a lot of money, even in an urban center. Don't guess, track your spending for a while and get a real number. Then you have choices. Work until you can finance that lifestyle, cut out some spending to shorten the time that will take or dramatically cut your spending and retire now. What's more important to you? Financing a certain lifestyle or having your freedom. Only you can answer that.

I guess I'm a little greedy. I want a certain lifestyle but I want to reach it very soon. I'm estimating $10K/mo which includes cost for a home in Canada (approx $2200-2500 total monthly cost including mortgage, utilities, taxes, ins etc), a small home in West Florida (approx $1000/mo for everything) which leaves me approx $6500/mo for everything else including food/travel/car/clothes/charity/entertainment/taxes/misc expenses. I'd rather over estimate slightly than under estimate. Once I've paid off the mortgage on the 2 homes then $7K would be ideal, but that will be 15+ years from now.

After evaluating things and plugging my current data into FIRECalc and other calculators as well as assessing my spending and aources of income, I feel pretty comfortable that I'm GOING TO RETIRE IN 2 YEARS! I know there are a lot of variables that one cannot control completely (ie housing market, stock market, health etc) but if I am careful to diversify and give myself options for additional income on the side (ie wife may keep on working... he he he), then I think I'll be ok.

I love reading about others who have retired early or are at that point now! Gives me a lot of encouragement!

[robbridg]

It sounds like your thread title is quite false. You definitely have a clue.

[er dr]

Quote:

Originally Posted by robbridg It sounds like your thread title is quite false. You definitely have a clue.

Well.... actually what I had no clue on was what rate of return I should use for my investment. basically a 3% ROR over 20 yeras is vastly different than 10% ROR. I was hoping to get some ideas as to how to figure out where I stand and I've learned a lot by going through other threads as well as from responses to this thread. here's an exact quote from my initial thread...

"looking at different web sites, various people rec using anywhere from 4-11% growth from your investment portfolio. That is a huge range. If you factor is 3% inflation that in essence gives you 1-8% true growth. What is a good rule of thumb? Thanks for any advice and I look forward to reading other posts and hopefully getting some pearls of wisdom!"

I really had no clue how to figure out what was appropriate. I found the FIRECalc posted here and I love it! It seems to be alot more accurate as compared to just using a number like 5% ROR! For now this is the one I am using to help me plan my strategy.

Other than that I agree I'm not completely clueless!!

[meekie]

Quote:

Originally Posted by er dr Ok.. so this is my plan....

Sounds like you have a lot of things going for you. The only thing I'd worry about on your detailed plan is waiting till a certain year to start selling your real estate, and then needing to sell on a regular basis for income. Real Estate is so variable that I'd be keeping an eye on the markets and selling places when it's a good market, and not when you need the money.

[er dr]

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Originally Posted by meekie The only thing I'd worry about on your detailed plan is waiting till a certain year to start selling your real estate, and then needing to sell on a regular basis for income. Real Estate is so variable that I'd be keeping an eye on the markets and selling places when it's a good market, and not when you need the money.

Very good point and you're absolutely right! My thought was keeping a year or two cash reserves in a short term CD or something similar just for those occasions when the timing isn't right for selling a home or maybe if we go through another dip in the market and I may not want to touch the money in my IRA for a couple of years to allow it to possibly build back up. That is the problem with relying on investments when retiring early. Don't want to keep it in too safe of a investment vehicle because will miss out on some good growth but obviously can be nerve wracking in too aggressive of an investment. I have a lot of research and thought to put in before I take the plunge. Thanks for you input!

[SandsofTime]

May I suggest a little bit different approach: here is goes.... you should sell your assets when the market is strong for said assets, not on some time of a time-table (even a flexible time-table). Therefore, all the assets should be sold when the market is good. Now, as for all the real estate that you own but which has minimal positive cash-flow, it appears that such a situation could become a source of significant headaches in the future. Perhaps you ought to consider selling all of your real estate, as well as your business, and put all the equity into a truly PASSIVE system such as a very diversified portfolio, that includes precious metals, emerginig markets, broad US market funds, did I say Gold, silver, some foreign currencies, AND a paid off house. I am a great believer in having as many of your necesseties of life FULLY paid off. It may not be economically the smartest thing, but it is often emotionally (psychologically) a very strong thing.
So, those are my 2cents. Good Day.

[er dr]

Quote:

Originally Posted by SandsofTime May I suggest a little bit different approach: here is goes.... you should sell your assets when the market is strong for said assets, not on some time of a time-table (even a flexible time-table). Therefore, all the assets should be sold when the market is good.

Unfortunately I really do not have any other assets (besides business and real estate ... see below) to sell.

Quote:

Originally Posted by SandsofTime Now, as for all the real estate that you own but which has minimal positive cash-flow, it appears that such a situation could become a source of significant headaches in the future. Perhaps you ought to consider selling all of your real estate, as well as your business, and put all the equity into a truly PASSIVE system such as a very diversified portfolio, that includes precious metals, emerginig markets, broad US market funds, did I say Gold, silver, some foreign currencies, AND a paid off house. I am a great believer in having as many of your necesseties of life FULLY paid off. It may not be economically the smartest thing, but it is often emotionally (psychologically) a very strong thing. So, those are my 2cents. Good Day.

I've thought about selling all my real estate in 2 years when I sell my business but the two issues I have with that is it may not be a good time for selling real estate and so I would be taking quite a hit on all my properties plus I would be paying all the capital gains all at once and secondly... managing that real estate is really all I have left to do so I kinda want to keep it around for the time being until I get sick of managing it! I definitely don't want to be dealing with it when I'm in my 60's! It is an interesting thought though and who knows... in 2 years the real estate market might be hot and I may do as you suggest and get out while the getting is good!!!!

[Nords]

Quote:

Originally Posted by er dr Unfortunately I really do not have any other assets (besides business and real estate ... see below) to sell. I've thought about selling all my real estate in 2 years when I sell my business but the two issues I have with that is it may not be a good time for selling real estate and so I would be taking quite a hit on all my properties plus I would be paying all the capital gains all at once and secondly... managing that real estate is really all I have left to do so I kinda want to keep it around for the time being until I get sick of managing it! I definitely don't want to be dealing with it when I'm in my 60's! It is an interesting thought though and who knows... in 2 years the real estate market might be hot and I may do as you suggest and get out while the getting is good!!!!

What I'm hearing from SOT is:
"You need to develop an exit strategy so that you're ready to implement it when the time is right."

Now that you're checking your portfolio against FIRECalc's historical performance, you need to develop an asset allocation that comforts you with the optimal combination of performance and low volatility. You don't want to be constantly thinking that the grass is greener for just a little more risk.

When you've developed an AA that survives FIRECalc's history, you could also buy a membership in FinancialEngines.com and run it by their Monte Carlo calculator. Although Monte Carlo has a number of issues of its own, the FE advantage is that you have a wider selection of assets to run through their algorithm.

[er dr]

Quote:

Originally Posted by Nords When you've developed an AA that survives FIRECalc's history, you could also buy a membership in FinancialEngines.com and run it by their Monte Carlo calculator. Although Monte Carlo has a number of issues of its own, the FE advantage is that you have a wider selection of assets to run through their algorithm.

Will check it out!