Logic please, Mr. Spock!

[nap470]

Hi! As many do, I have lurked awhile and decided to join this wonderful group. I am 54 and my wife is 51. We have a 14 year old daughter who will be attending a private high school ($10k per year) in the fall. Then college and quite possibly beyond. Our financial situation is as follows:

Total Net Worth (without home, cars, ect.) = $4.5M
No debt
Home value approx. $390k, no mortgage
Estimated withdrawal rate of about $70k annually. FireCalc gives us a 100% success rate for 30 years. FA gave us a 99.9% success rate a year ago with me retiring then. Said they can't use 100%. But I still have that twing of uncertainty...what if?

The $4.5M is comprised of about $770k of tax deferred IRA/403b, $90k in 529b, and the remainder in taxable investments allocated approximately 47/33/20. The 20% being alternative investments and cash. I will be the first to admit that we have too much cash ($500k) but with markets so high, I have been slowly dollar cost averaging it back into the market. I firmly believe that the market's performance is soley determined by me, i.e. that if I invested the cash at one time, the market would decide to correct 40%. The reason that our taxable amounts are much more than our tax deferred is because we both were military officers (13 yrs, no pension) and after funding IRAs, would invest in taxable accounts since no 401k opportunities in the military. We were disciplined savers and had some fortunate stock market results. We also inherited about half of the $4.5 from my wife's parents.
So why do I need logic? I want to retire now, my wife does not really believe in retirement. Won't even discuss it or want to plan for it. She fears growing old so avoids the topic. Her parents felt the same and thus did not spend much of their money. She thinks I am to young and what will neighbors and friends think? As for me, I have two big mental hurdles; I have been saving for so long that I'm not sure I can handle watching money go the other direction and can't get out of the accumulation mindset. The second is that I want to set a good example for my daughter regarding the value of hard work. But I have been working since I was 6 (grew up on dairy farm) and want to spend time outdoors, volunteer, and visit family residing in another state. I do not see them that often. My father died at 56 and it left a big impression on me. I see friends my age die and it makes me think. When I was age 22, post college, I set a target age of 58 to be financially free to choose to work or do something else. Just got there earlier than planned. As I exercise in the forest preserves, I find myself longing to be there now...not 4 years or more from now. With taxable dividends and capital gains really adding to our annual taxes, I feel like we are working just to pay the IRS.
My apologies for such a long post. Is retiring now being illogical and selfish? I feel I'm at the door, but I think I need a push through the door.

[Texas Proud]

Congrats on joining in and delurking.....


Others will chime in and give you the different ways people have done it... I am still in the 'maybe' stage...

But, what you have and what your expenses are make it doable... who cares what people think....


Right now, I have not been working for a few months... when asked I just say I am on a sabbatical... I was working consulting and if they call with a good offer I will go back and work a project... but if not, I will continue doing what I am doing...

MY DW does not like it at all... causing some friction... hope we will work it out..... so, I do not know what to tell you about that...

[Katiek]

I wouldn't care what people outside your family think, but it can be hard if you and your spouse aren't on the same page.

You mention a current spend rate, but what about college? Are you planning to cover all or some of the cost, and if so, have you figured that into your calculations?

Do you calculations include amounts for taxes and health care?

And I don't mean to suggest anything negative, but you mention that a chunk of the money has come from your wife's inheritance. Is that money still in her separate name? That could become relevant if you and she have very different views about retirement timing and she's not willing to withdraw amounts from these accounts yet.

Congrats on your spending habits that enable you to be a in such a good position and to have options.

[bingybear]

I would agree with most of the above... but would modify a bit. Do your calculations including health care... insurance + expenses. I used insurance _+ max out of pocket... if I don't need the max out of pocket... ... more play money!!
second... retiring near 50 and only calculating for 30 years seems a bit short... try 40 or 50 years.
As for statistics.. there really is no 100% without a known set of conditions. firecalc back tests previous data an provides the results which can be 100% of all available back testing data. So ... 99.9% and 100% are likely the same for what these people are considering. One is protecting themselves and the other has defined the conditions tested.
double check your spending.

[nap470]

I realized I left some items out of my post. I made it sound like my DW and I do not get along. Actually we are a good team together and all monies are in joint accounts with no fears of either of us running away with someone else to Vegas. We have just always saved and not discussed specifics other than plans for our daughter. I knew not to bring up certain subjects. I just think it is getting to be time but will approach it delicately.
Healthcare is expensive but we have been paying our own premiums the past 4 years as neither of us have plans through work. I have been contracting since 2011 and provide my own benefits and her work does not offer it. We actually prefer it now and have gotten pretty good at deductions. College and high school we have factored in. The FA's plan calculated taxes in also. I feel like most of it is mental for both us. But I feel blessed to be in this situation.

[nap470]

Quote:

Originally Posted by bingybear I would agree with most of the above... but would modify a bit. Do your calculations including health care... insurance + expenses. I used insurance _+ max out of pocket... if I don't need the max out of pocket... ... more play money!! second... retiring near 50 and only calculating for 30 years seems a bit short... try 40 or 50 years. As for statistics.. there really is no 100% without a known set of conditions. firecalc back tests previous data an provides the results which can be 100% of all available back testing data. So ... 99.9% and 100% are likely the same for what these people are considering. One is protecting themselves and the other has defined the conditions tested. double check your spending.

Thanks bingybear for the tips. I will continue to play with adjustments in FireCalc. I know the FA ran the whole plan using age 90 as end of plan for both of us and factored in taxes and college. Both the FA's plan and FireCalc left our daughter pretty well off, so I think there is room to raise the WR some if needed. Healthcare was considered part of our expenses so I will have to look at that closer.

[pb4uski]

It is mental as you have plenty for both of you to retire and never fear running out of money. While it isn't illogical or selfish to want to retire, let's say that you did and you daughter is going to school and your wife is still working. What would you do?

I'm guessing that SS taxes, federal and state income taxes probably eat up a lot of what you earn, so another factor to consider is if it is worth the time and aggravation for 50 cents on the dollar (or whatever it is).

I retired for a few reasons... we had enough... while we are in good health it seems that every time I pick up the paper I see obituaries of people my age or younger ... I had other things that I want to do with my time. I had enough... why continue to work whne there are so many other better things to do in life?

[harley]

I had been dreaming and planning and talking about ER and FIRE since my mid-30s, mostly to DW, but also to anybody who would listen. We made plans and discussed options, from simple to extreme. As time went on it even became sort of mundane and boring. But all the while I was planning and saving and investing and moving toward FI. I worked for Megacorp and had a good paying job, decent bennies, a possible pension and retirement medical coverage, which was huge before Obamacare. DW was involved in many discussions during that time.

As I approached my late 40s I realized we were getting close. DD was on her way out of the house (the first time, anyway), the numbers lined up pretty nicely, but I wasn't quite there for the retirement medical. But I was talking it up big time, getting beyond the dreams to actual plans. DW was still taking part, but seemed a bit off. I attributed it to empty nest syndrome, menopause, etc. Usually got my ass chewed off if I mentioned that.

Just as I/we were turning 50, Megacorp went through another merger/rearrangement, and I realized that if I got RIF'ed, according to previous packages I'd get enough time added to become eligible for the medical coverage. I jumped on it, aggressively pursued getting laid off, and succeeded. Retired, lump sum instead of the frozen-by-then pension, and medical coverage with penalties for ER, but it was the guaranteed coverage we were after, not necessarily the cost. I was in heaven, but noticed DW (who was out of work at the time too) didn't seem as excited.

After a few years of change, conflict, happiness/unhappiness and discussion, I finally got her to admit that she had never really believed we would/could/should do it. Her dad was the work-until-they-carried-him-out-on-a-stretcher type, and she just couldn't wrap her mind around never working again. She got a job with the county, but it didn't last because she couldn't stand the waste and disorganization. She got a retail job she loved (selling tea) that she loved, but then she got promoted and quit in the face of the politics. She went back to school and took classes and training, and started her own business doing hypnotherapy and Reiki, and had a blast with that, especially when she got to do Reiki on horses. But eventually she quit that because running a business is a PITA.

In the meantime, I had a small part time business that brought in a little cash, but mostly I was enjoying life big time. Over time she accepted the concept, became comfortable with the idea of not running out of money, and now she's just as FIREd as I am. Now she's even incredulous that her DS and BIL are still working despite being FI, and thinks they're weird. It's been 9 years, and it's been a journey, and we both took different routes, but we got there together eventually. Either of us might get a job sometime if we felt like it, but mostly we find ways to enjoy our lives, together and separately.

I've given DD the good example of being a good person (she doesn't know everything), doing whatever you are doing to the best of your ability, and get yourself out of the control of the Man (FI) as soon as possible. If you are logically oriented you can get used to spending vs. saving, and might even have fun figuring how to maximize your circumstances (Roth conversions, playing with the tax code, fine tuning your AA).

I guess my point is, go for it and let her go her own way, and you'll probably meet back up in the future. You can do things that make you happy, and she can do what makes her happy. As long as you keep the lines of communication open you should be OK. Show her the numbers and keep repeating yourself, and eventually she'll get more comfortable with it.
Good luck.

[Nords]

Quote:

Originally Posted by nap470 The second is that I want to set a good example for my daughter regarding the value of hard work.

Welcome to the forums, Nap.

If you want to set a good example on the value of hard work for your daughter, then you should show her how it's made you financially independent for the rest of your life.

Otherwise if you keep working past the point of fulfillment, she'll think you're nuts. My daughter would think that I'm an idiot:
"I'm setting a good example by working at a job" - Military Guide
Retiring early- with kids? - Military Guide

My daughter has grown up watching her financially-independent parents enjoy our lives since she was nine years old. It's made her keenly aware of the value of our hard work and, more importantly, of the value of a high savings rate. She'll be 23 years old in a few months, she's started her own military career, she's working 60+ hour weeks, and she completely understands.

But when she was in school I was considerate enough to not drive by the bus stop in the mornings with my longboard strapped to my roof rack.

[scrinch]

Welcome nap470. I understand your feelings. I am two years older than you, am in about the same financial position, and have been toying with retirement ideas for quite a few years now. In my case, my DW and I have been trying to come to an agreement about retirement timing, with me on the sooner side and her on the later side. What we have done now is set a date, which is about a year from now. We figure that we will have some time to get used to the idea of retirement as it gets closer, and can change our minds if it gets close and we have second thoughts.

Maybe you want to take a similar approach. Talk with DW (and DD) and set a date. Talk about it in the meantime and see how it feels as the time grows nearer. If it feels good when the time comes, pull the trigger. If not, you can extend and deal with whatever issues came up to cause you to postpone.

[JoeWras]

Welcome nap!

I do want to mention one thing straight away: make sure your spending of $70k is correct. Have you looked at your expenses carefully over the last few years? We use Quicken and I have a 15 year history. Very helpful for future planning.

I say this because you have big tuition for the next 8 years, health care, and taxes. I'm wondering if that might be just a bit light. But then again, it may be OK.

As for DW not being of same mind... Well, DW and I are a bit like that too. However, her BS bucket filled and now she's ready to go in 3 years when she gets medical benefits. I'm OMY (One More Year ... probably 3 in this case to sync with her).

We are now of the same mind to do this in 3 years max. I'm hoping for a harley style RIF gift I can't turn down. But that's another story.

One way we got closer in thought was through some big vacations. Have you taken one? Maybe this summer before your daughter gets too tied up with school and potentially a future job?

I mean big, like 4 weeks. See what it is like to unwind. That helped us. A lot. It helped me so much I'm going to probably owe Megacorp money when I ER because I take every bit of vacation I have and more! (Hint: if you don't ER yet, please for the love of God, take time off an enjoy life just in case.)

[EastWest Gal]

I'm sure with your planning and budget that you'll be fine. Your daughter has already seen you working hard.

I'm a physician and about your age. I've wanted ER all my life. The last few years were physically brutal due to the lack of space the hospital provides for physicians to work. So after standing and some walking after a 10 hour day, everything from the lower back down was painful and swollen.

Our NW is more than $1M less than yours. Even with some unexpected expenses we are spending much less than our net worth is gaining.

Heck, you're close to the level where inheritance tax kicks in, and you worry you won't have enough!

Check a couple of books: The Joy of Retirement, and How to Retire Happy, Wild,and Free.

There are a lot of people who retire before 65, which is an artificial age set by SS and Medicare. Ben Franklin retired in his early 40s, and everything we value in him historically occurred in his retirement years.

Good luck with DW. Glad to have you aboard.


Sent from my iPhone using Early Retirement Forum

[Car-Guy]

Quote:

Originally Posted by EastWest Gal So after standing and some walking after a 10 hour day, everything from the lower back down was painful and swollen.

Maybe you should see a doctor about that

[Car-Guy]

Quote:

Originally Posted by nap470 I have been saving for so long that I'm not sure I can handle watching money go the other direction and can't get out of the accumulation mindset.

Based on your WR and investment info you provided, it doesn't necessarily have to go in the other direction. Maybe it just won't grow as fast if you retire. I retired a few years ago, I don't practice living below my means (but within) and my net worth is still going up.

[athena53]

As others have mentioned, you'll be a good example for your daughter. I saw my Dad edged out of a good job at age 51 after a merger and, because he and Mom had been good savers and investors all along, he did a 180-degree turn and left the steel industry to become a stockbroker. They also moved from Chicago to Myrtle Beach. The stockbroker thing didn't work out even though Dad cold-called people on every mailing list he could get and also helped people who walked in the door. He also felt pressured to sell whatever the brokerage was pushing that day. So he quit and retired to a life of golf and church. Mom kept her PT job at a Hallmark store- I think she enjoyed the interaction and making a little money after years of running the household.


The lessons I learned? It is good to save. Jobs disappear even when you love what you do and give 100% (or 110%). There is life beyond Megacorp. Prepare for it. They're all good lessons for your daughter.


I retired at 61, so lasted 10 years longer than Dad; a brother retired at 58 but he worked his rear end off in a job that owned him 24/7 and has a sweet DB pension. My 3 other siblings should do just fine, too. We learned good lessons from Mom and Dad.