Newbie here... cash hoarder, forced retirement on the horizon

[BeachOrCity]

Quote:

Originally Posted by deskpilot Hi all, My wife and I are 50. Income: 280K - but our jobs will be off-shored within 1-5 years Cash: $1M 401k: $1.7M Pension: none Retiree Medical: none No Debt House $400K, no mortgage Spending range in retirement: $80K to $120K Kids: 3 grown If I am using the various retirement planners correctly, we need to earn 3-4% and we'll be ok if we stop work in the next few years. Does that sound right? I'm not looking to get super rich. I am looking for the absolutely safest way to get 3-4% I'm terrified of putting a large chunk of my wealth into stocks. I've tried some mutual funds and never did well. Is there a very safe way to earn 3-4%? Should I get an advisor? BR, Mike

I would suggest you sign up for mint and track all your existingg expenses over time. Then export the data to create a spreadsheet where you can adjust for items like taxes and healthcare that will change in retiremenet.
This will give you the data you need to be confident about spending.

On the safe returns subject. Bottom line is to be able to withdraw 3-4 percent and adjust for inflation you have to have some equity exposure and yes a bear market will scare you and at some pointwill happen. You could set aside a cash or money market reserve to mentally help you with this but it will be a small drag on returns but the peace of mind would be worth it.

[Sunset]

Quote:

Originally Posted by Walt34 Welcome to the forum! There is no absolutely safe way to earn 3-4% (that anyone knows of). That said, you should be okay with a WD rate of 3 to 3.5%, that grosses you $94,500/year at 3.5% That said, here are some questions you will want to have solid answers to: http://www.early-retirement.org/foru...ml#post1399715

It's true, nothing is safe.

• Cash will be eaten up by inflation.
• CD's, bonds, by a company are worthless if company goes bankrupt.
• Bonds, CD's , bank accounts insured by FDIC are worthless if gov't collapses or changes the law.
• Stocks are worthless if company goes bankrupt.
• Gold and silver are worthless once someone figures out how to extract it from the ocean waters or people stop believing in it, and there is not enough of it to be useful for exchange anyway, which is why platinum is never talked about as a currency.
• Land becomes worthless once a super dump is created/found next door, or neighborhood becomes a crime hotspot, or drilling for oil ruins the drinking water.

So you best bet is simply read a lot , and diversify so not all your eggs are in 1 basket.

[OrcasIslandBound]

Deskpilot hasn't been back to this thread for some time, so we appear to be just talking to ourselves.

Anyway, I suspect that the 3 - 4% withdrawal rate applies in a reasonable investment pool, not an all cash portfolio.


Sent from my iPhone using Early Retirement Forum

[medved]

Most people on this board are opposed to using financial advisors, preferring to do it themselves. But, just so you do not think that is a universally held view, there are some of us (including me) who think a financial advisor can be worthwhile. Of course, you want to get a good and honest financial advisor. (Just as you want a good and honest doctor, plumber, electrician, auto mechanic, etc.). You could learn to do any of those things yourself, I suppose, or you can elect to hire someone who you trust. Your call. Really depends on whether you want to take the time to get educated about investments, and whether you trust yourself to do it well, or you would prefer to pay for expertise. By the way, if you do decide to hire an advisor, I don't think you need to pay one percent of AUM. There are several services now that do this for much less than that, or you could hire someone for an hourly rate or a flat fee to help you make a plan that you are comfortable with, and then you could implement it on your own.

I am not opposed to the idea of doing it yourself. That is a fine way to proceed, if you want to. But I just did not want you to think that everyone on this Board thinks using advisors is a bad idea.

[deskpilot]

Quote:

Originally Posted by OrcasIslandBound Deskpilot hasn't been back to this thread for some time, so we appear to be just talking to ourselves.

I'm Here! I'm Here! Been perusing the other boards for a few days. Lots of good threads about folks getting decent returns over time if you can ignore the ups and downs.

Almost all of the advice in this thread points to educating myself so that I can manage my own investments. I'll take that to heart and stop being a procrastinator about learning this stuff.

The idea of keeping my taxable income very low and getting ACA subsidies was interesting. I guess that translates to being more aggressive with my deferred-tax investments and very conservative with my cash until I turn 65.

thanks for all the good advice.

Mike

[MBAustin]

Excellent, Mike! Check back in after you've done some reading and started putting together your plan. We won't charge 1% for our opinions!

[deskpilot]

Update:

Everything is unfolding as I'd expect. My involuntary termination date is end of 2018. DW knows of no layoff plans, but she is in the same megacorp and probabably a dead DW walking.

I will have severance to cover 2019 and 3.1M when all is done, no debt, and kids moving out in 2019.

We have done a lot of budget analysis as suggested in these forums and our spending in retirement looks to be 50K + medical + 15K discretionary. If ACA stays around, it will be quite cheap as we will manage our income to fully subsidized levels via roth conversion. If the roth option goes away it would even makes sense to pull money from our 401k's with penalty if needed to get the full subsidy.

I am pretty sure that I will be FI.

I am really really leaning towards RE. I am very influenced by the early demise of a number of coworkers my age and the many time > $ threads in this forum. I will NEVER work for an uncaring megacorp again. I will probably get bored and look for something enjoyable in my field (software) where I can work from home.

[MBAustin]

Sounds like you are ready for FIRE. You are fortunate to have lots of time to plan and prepare. Hope everything keeps going according to plan.

[joeea]

Quote:

Originally Posted by deskpilot I am pretty sure that I will be FI. I am really really leaning towards RE. I am very influenced by the early demise of a number of coworkers my age and the many time > $ threads in this forum. I will NEVER work for an uncaring megacorp again. I will probably get bored and look for something enjoyable in my field (software) where I can work from home.

Terrific!

In spite of the fact that this is an ER-centric forum, it makes complete sense to explore all the opportunities at your disposal now that you are FI.

I contracted for a year after retiring (from software) and it was terrific! When the pressure to pull in top dollar is removed, you can choose to do the things that you truly enjoy - from a location you enjoy.

For me, I enjoyed being in the office for two days per week. But I was amazed at how much better it was to only do the parts of the job I enjoyed, while leaving behind all the parts I grew to dislike (middle management administrivia, office politics, etc).

Congratulations! Hopefully you find what you will enjoy doing. And if not, just try something else!

[OldShooter]

Quote:

Originally Posted by vipertom1970 to me, muni bonds at least AA rated + insured is the best and safest way to protect your mone by generating 4% to 5% without federal tax and sometimes no state tax.

Be a little careful of this thinking. Muni yields are lower because of their tax advantages. This means that their advisability depends on the buyer's tax bracket. From what the OP said, his tax bracket will be very low at least for a while. Hence, munis are probably not the "best way" for him. The calculation must be done.

We are after total return. To focus on taxes is to focus on the tail, not the dog.

More here: https://www.schwab.com/resource-cent...more-sense-now