Merit Scholarships are based on test scores, grade point averages, etc. Most private schools award them regardless of financial need. The higher the scores, the more $$. The better schools want the better students; and competition being what it is, schools use merit scholarships as incentives for the best and the brightest to attend their institution.
New Yorker: rich by most standards, but can I really FIRE?
- Thread starter luckyiknow
- Start date
Merit Scholarships are based on test scores, grade point averages, etc. Most private schools award them regardless of financial need. The higher the scores, the more $$. The better schools want the better students; and competition being what it is, schools use merit scholarships as incentives for the best and the brightest to attend their institution.
SVHoper
Recycles dryer sheets
Living in SF Bay Area, I do have some sympathy... we like it here, we would not want to move our kids... again and we pay for those choices.
If you are expecting Ivy league then football lineman is about the best way I have heard to get $
However, if they are even near Ivy league caliber they would certainly get half tuition if not a full ride at one tier down... and so it goes down the chain of 3500 colleges.
I suspect very few people pay full tuition sticker price at private colleges (other than Ivy).
If you stuff 529 accounts... Vanguard has lots of options (non-stock) that will save you a chunk, particularly for the 10 year old.
I am stunned you can accumulate $4mm by hating stocks, but then I am 100% stock sorta person... probably means you don't like REITS or floating rate bonds either
I think there is also a big gap between working lots of hours in a job you dislike to being completely retired. Options such as part-time consulting may have a big impact on cash requirements
If you are expecting Ivy league then football lineman is about the best way I have heard to get $
However, if they are even near Ivy league caliber they would certainly get half tuition if not a full ride at one tier down... and so it goes down the chain of 3500 colleges.I suspect very few people pay full tuition sticker price at private colleges (other than Ivy).
If you stuff 529 accounts... Vanguard has lots of options (non-stock) that will save you a chunk, particularly for the 10 year old.
I am stunned you can accumulate $4mm by hating stocks, but then I am 100% stock sorta person... probably means you don't like REITS or floating rate bonds either
I think there is also a big gap between working lots of hours in a job you dislike to being completely retired. Options such as part-time consulting may have a big impact on cash requirements
FreeAtLast
Full time employment: Posting here.
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It is all about choices. With safe investments you are guaranteed a lower rate or return. Living in NY you are pretty much guaranteed a high cost of living.
Do some searching of your inner self and try to find some balance. Don't look for immediate answers.
Do some searching of your inner self and try to find some balance. Don't look for immediate answers.
Rambler
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Hey Lucky
I think you know what you have to do. The question is "are you willing to do it"? The answer is, yes you are...either willing to work longer, or you are willing to retire and move somewhere cheaper.
Personally I could never live in NYC. I really don't like it. (That's coming from a country boy who now lives in Tokyo). I can't hardly wait to get out of the big crowded city.
I'm in a very similar situation to you in terms of the amount of assets accumulated and age, and I have 2 kids who are both in university, but my home (worth about a million in California) is mortgage free. I live in Tokyo. I have a couple points/questions:
Do you expect to pay for your kids' entire education? If so, why? I believe, as do my two kids, that working is part of their education. I pay tuition, books and rent. They pay for food and play money, by taking part time and summer jobs.
Do you think that NYC is the best place to raise kids? Would it be better to raise them in a smaller, more friendly community, with you around, rather than at work to pay for the $1.8M home and the accompanying $50k in taxes?
What does your spouse think? Does she want to stay in NYC? Is she employed outside the home? If so, does she want to continue to be employed or does she share the desire to retire early? Would she be satisfied to live/work elsewhere and visit NYC on occasion?
Pulling the plug early is not an easy decision for everyone...for some it is a simple thing, others will fret over it for a long time. I'm still in for a few reasons, one is succession planning in a business that I have been with since it had a big fat zero on the revenue line, and which I run with a couple billion in revenues. Its like my child...can't to just tell the global CEO "I'm outta here", without making appropriate preparations.
Good luck on your decision. Stick around and let us know how it goes.
R
I think you know what you have to do. The question is "are you willing to do it"? The answer is, yes you are...either willing to work longer, or you are willing to retire and move somewhere cheaper.
Personally I could never live in NYC. I really don't like it. (That's coming from a country boy who now lives in Tokyo). I can't hardly wait to get out of the big crowded city.
I'm in a very similar situation to you in terms of the amount of assets accumulated and age, and I have 2 kids who are both in university, but my home (worth about a million in California) is mortgage free. I live in Tokyo. I have a couple points/questions:
Do you expect to pay for your kids' entire education? If so, why? I believe, as do my two kids, that working is part of their education. I pay tuition, books and rent. They pay for food and play money, by taking part time and summer jobs.
Do you think that NYC is the best place to raise kids? Would it be better to raise them in a smaller, more friendly community, with you around, rather than at work to pay for the $1.8M home and the accompanying $50k in taxes?
What does your spouse think? Does she want to stay in NYC? Is she employed outside the home? If so, does she want to continue to be employed or does she share the desire to retire early? Would she be satisfied to live/work elsewhere and visit NYC on occasion?
Pulling the plug early is not an easy decision for everyone...for some it is a simple thing, others will fret over it for a long time. I'm still in for a few reasons, one is succession planning in a business that I have been with since it had a big fat zero on the revenue line, and which I run with a couple billion in revenues. Its like my child...can't to just tell the global CEO "I'm outta here", without making appropriate preparations.
Good luck on your decision. Stick around and let us know how it goes.
R
i am surprised that no one asked what your yearly expenses are. that is the starting point to figure out how big a nest egg you need to retire. have you tracked your expenses for an extended period of time?
W2R
Moderator Emeritus
Well said.
If you want your situation to change, it seems to me that perhaps you need to do some introspection and soul searching to determine what you really do want in life, and to determine your priorities. Then realize your priorities from the top one on down, to the extent that you can afford to do so. That means that choices must be made, based on your own priorities.
From where I sit (a low cost of living area), it's kind of sad. It appears that you are throwing away your retirement, the few precious moments that you have left on earth, so that your kids can go to an expensive private college when a state school could give them amazing opportunities for much less money. Well, and also to continue living in a $1.8M house that you say is not a mansion. These choices are not at all consistent with my own priorities, which is why this seems so sad to me. But if those really are your priorities, then you would be happy, not sad.
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donheff
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I hope you are OK Rambler. I hear Tokyo got hit pretty hard by the earthquake.
rescueme
Thinks s/he gets paid by the post
Neither can I nor DW. However, being in an area with easy access to the city, we do enjoy what it brings to us, e.g. shows, shopping, sites - especially during the holidays, and major transportation hubs, such as the cruise ship terminal and EWR - Newark airport, for our international trips.
I guess we have the best of both. The "magic/culture" of NYC and the lifestyle of a "country bumpkin"
...Loop Lawyer
Dryer sheet aficionado
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The OP implied that he lived in an NYC suburb, not in NYC itself. There is a significant cost difference between the two. One way to make ER work in this situation is to move slightly outside commuting distance from the city. The cost of living a bit outside commuting range is significantly lower than it is within commuting range. Bucks County, Pennsylvania, for example -- too far to "commute" to NYC, but not too far to drive occasionally for cultural and other amenities once you're retired. Also, you can telecommute from there, or from central Connecticut, and in either case you can avoid the dreadful NY and NJ income taxes.
MooreBonds
Thinks s/he gets paid by the post
Uh, as an alumni of Carneige Mellon University....while I was pretty bright and did well in high school, do you really think a white male from an upper-middle-class family like me had any chance of landing one of the ~12 scholarships they award annually (a few full-rides, a few half-rides), out of a (at the time) freshman class of 1,200? Not to mention the tidal wave of 10,000+ applicants...
Top universities do have large endowments, but they also hand out large need-based and/or loan packages. The bulk of their financial resources for students are NOT handed out as merit scholarships for a large percentage of the freshman class. The top students are already clamoring to get into the top schools without merit scholarships - that's why they get 10x/20x applicants (or sometimes even more) than they have spots for.
If you have a top-notch student, they only really have any significant chance of scoring a significant merit-based scholarship by applying to a sub-30 or sub-40 ranked school (most of the top 40 schools are the same regardless of which ranking you use - they just shift ranks by a few places). The "sub-30" are the institutions that don't have nearly as many students with an ACT of 34+, so you aren't competing with many other students to get some decent scholarship money.
luckyiknow
Dryer sheet wannabe
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Thanks for all the comments. I'll answer some of the questions when I get a little time. Saw this article today, which is kind of how I feel. It's all relative I know.
U.S. millionaires say $7 million not enough to be rich - Yahoo! News
As far as college costs, I've seen this referred to as another hidden "tax" on the rich. i.e. they're the only ones who pay full cost.
U.S. millionaires say $7 million not enough to be rich - Yahoo! News
As far as college costs, I've seen this referred to as another hidden "tax" on the rich. i.e. they're the only ones who pay full cost.
If you would like to heed my advice, I would recommend adding some risk to your portfolio.
The segment I work for caters to UNW families(5M+ in investable assets). Even our most conservative recommendation has about 30% in Equities with 10-15% bond portfolio in High Yield.
Other than that, you need to figure out what income you need including taxes and reverse calculate the SWR. You're almost there based on the information provided.
The segment I work for caters to UNW families(5M+ in investable assets). Even our most conservative recommendation has about 30% in Equities with 10-15% bond portfolio in High Yield.
Other than that, you need to figure out what income you need including taxes and reverse calculate the SWR. You're almost there based on the information provided.
walkinwood
Thinks s/he gets paid by the post
If you're serious about ER, you need to start doing some detailed fact gathering. How much will college actually cost? Will all your kids get into UPenn? How much do you spend a year now, what expenses will go away when the kids leave for college, when they leave the nest. Etc. etc. etc. Get a financial package like Quicken or an online one or fire up a spreadsheet.
Look up ESPlanner at ESPlanner.com. It will allow you to model how much you can live on given your stash & the return on your investments. Since you have fixed income, you may get a pretty good estimate. Give it a try.
Read the 4 pillars of investment by William Bernstein to really understand the risks of equities & the risks of have no equities. There are other books recommended here too.
ER isn't the stuff of rocket science, but it is work - study, detailed planning and tracking. And yes, compromises.
Look up ESPlanner at ESPlanner.com. It will allow you to model how much you can live on given your stash & the return on your investments. Since you have fixed income, you may get a pretty good estimate. Give it a try.
Read the 4 pillars of investment by William Bernstein to really understand the risks of equities & the risks of have no equities. There are other books recommended here too.
ER isn't the stuff of rocket science, but it is work - study, detailed planning and tracking. And yes, compromises.
pimpmyretirement
Recycles dryer sheets
I credit my student loans for the success I have had to date.
I went to a private university. My parents got me low interest student loans, and told me "we'll make the payments till you graduate."
Faced with the real cost of my education, I figured out how to use AP credits earned during high school to graduate in 3 years instead of 4. I got a part time job during the school year, a full time job during the summer.
I moved into a studio apartment that was cheaper then the dorms. I passed on pizza and beer every night.
Getting out of school, understanding what the debt meant, I continued living like I had in college. I took an internship that started the week of finals when I couldn't find a job. I paid the loans off in a few years.
The discipline I learned has been more valuable than anything else I gained from college. I learned to embraced hard work and a LBYM lifestyle.
Make the kids pay for it. It's good for them.
I went to a private university. My parents got me low interest student loans, and told me "we'll make the payments till you graduate."
Faced with the real cost of my education, I figured out how to use AP credits earned during high school to graduate in 3 years instead of 4. I got a part time job during the school year, a full time job during the summer.
I moved into a studio apartment that was cheaper then the dorms. I passed on pizza and beer every night.
Getting out of school, understanding what the debt meant, I continued living like I had in college. I took an internship that started the week of finals when I couldn't find a job. I paid the loans off in a few years.
The discipline I learned has been more valuable than anything else I gained from college. I learned to embraced hard work and a LBYM lifestyle.
Make the kids pay for it. It's good for them.
SVHoper
Recycles dryer sheets
As a parent who has gone through a very similar process - twice in the last 3 years, I urge you to take a proactive approach to merit $... can easily save you hundreds of thousands.
Another poster mentioned experience with CMU, even an institution as prestigious nowadays has very significant non-need based $:http://www.cmu.edu/ira/CDS/pdf/cds_2009_10/cds2009_2010_final.pdf
This data is available for all schools.
It is buried down toward the end... $63million Need vs $13million non-need with average $10k per student non-need ie obviously for best merit aid your kid needs to be top quartile for school... but again if they are anywhere near Ivy - they will be! IMHO: Sticker price definitely seems to be a bit of game for all non-Ivy colleges.
As someone close to FIRE with school age kids living in the NY metropolitan area, I suggest the following:
1. You said your youngest is 10 YO now. You should put together a estimated budget which loads all of the school costs (assume all three kids go to private colleges with no financial aid), among your other expenses, and goes through the next 12-15 years until they are out of school and in the real world. It should assume that you stay in your current house, with currently local taxes (with inflation adjustments) until then.
2. Assume that you obtain a 3.5% after-tax return on your taxable investments and a 5% return on your tax-deferred investments. This should allow you to invest conservatively enough for your taste and see if the budget works. Assume your home will neither increase nor decrease in value (although your home equity will of course go up as you pay down your mortgage).
3. Assume you stop working immediately. Add some number for health insurance in your retirement budget. See what that leaves you at age 65 (obviously, you can and should run out the retirement budget to age 90) and then determine whether you have enough to FIRE now.
Until you do the work to run the numbers, you won't really know if you can FIRE now. So, do the work and report back.
I'm going to guess that your expenses run approx. $275k/yr, with $50k for taxes, $40k mortgage, $75k school and $110k health/other/inflation. If that is the case, a 3.5%/5% portfolio return is only going to pay a portion of this, and you will start eating into principal immediately. Assuming you can generate $150k in after tax income per year, you are eating $125k in net worth. Once your kids are in college, it will be higher (figure $25k times 12 year or $300k). So, in 15 years, you've eaten through $2.175mm of net worth. That would leave you with $1.8mm of net assets plus $1.5mm net equity on your house. Sell the house at age 65, and you have $3.3mm of net worth, with your expenses dropping significantly going forward and SS possibly available to provide additional income.
Seems doable, but you need to crunch the numbers to confirm that they work and really have a handle on expenses.
brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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I hate to say it, but these numbers are laughable. Get out of Westchester for 5 minutes and perhaps you will see how silly this whole quandry is.
I think this is spot on.
To the original poster, please try and think outside of the box and don't assume your have to shoulder the full ($1mm!!) expense for your kids' education. It is their education, have them take ownership of it.
I am one of 4 kids in my family. I estimate that my parents spent a total of $25,000 for our educations (total, not per sibling). 3 of us received advanced degrees. Other than that minimal help (divide it by 4 kids, and divide that by 4 years of schooling), my siblings and I all financed the rest. Sure, we all have student loans. However, it forced us to seek out merit based scholarships (b/c we didn't qualify for any need-based), work study programs, etc. It also influenced our choice of schools. 3 of us went to public schools, and none of us regret that choice. Right now, we are all doing exceptionally well, and I credit much of our success to the fact that we each took ownership of our education.
It's funny, my parents were not burdened by funding their kids' education, and they retired early. My siblings and I are all very good with money and we're all well on our ways to an early retirement -- if we want it. I think there's a correlation. Had they decided to fund our educations, I can't help but wonder where we'd be at now. I also suspect my parents would still be working.
travelover
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Welcome to the forum and congratulations on your first post. You will be pleased to know that the forum no longer charges posters by the word.
midlifeguy
Dryer sheet aficionado
I live and work in New York and consider it to be a very long business trip. I don't know why anyone would ever want to retire here.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yet, clearly many people do! God's glory reflectd in the richness of individual differences and preferences right here on earth.
Ha
dex
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Yet, clearly many people do! God's glory reflectd in the richness of individual differences and preferences right here on earth.
Ha
Rent 'My dinner with Andre'
And when I was at Findhorn, I met this extraordinary English tree expert, who had devoted his life to saving trees. He just got back from Washington, lobbying to save the redwoods? He's eighty-four years old and he always travels with a back-pack 'cause he never knows where he's gonna be tomorrow! And when I met him at Findhorn he said to me: "Where are you from?" And I said: "New York." He said: "Ah, New York! Yes, that's a very interesting place. Do you know a lot of New Yorkers who keep talking about the fact that they want to leave but never do?" And I said: "Oh, yes!" And he said: "Why do you think they don't leave?" I gave him different banal theories. He said: "Oh, I don't think it's that way at all." He said: "I think that New York is the new model for the new concentration camp, where the camp has been built by the inmates themselves, and the inmates are the guards, and they have this pride in this thing they've built, they've built their own prison. And so they exist in a state of schizophrenia, where they are both guards and prisoners. And as a result they no longer have, having been lobotomized, the capacity to leave the prison they've made, or to even see it as a prison. And then he went into his pocket and he took out a seed for a tree, and he said: "This is a pine tree." He put it in my hand and he said: "Escape, before it's too late."
