Do you have a "Plan B"?

[tuixiu]

If you'd go to Mexico, might as well keep going a bit further until you arrive in San Ignacio, Belize.

 

[Frugalityisthenewblack]

Well, its been awhile...so far my Plan B is going well. I go on a years sabbatical soon and I will be able to experience the joy-of-not-working for a full 12 months to see what it is like.
I've got two concerns. One- I want to do a lot of travel, but stay "on-budget" and not spend anything over and above what I anticipate will be my yearly retirement income in 6 years time, when I will be able to leave work permanently.
Two- I'm worried about filling my days. After a lifetime of rising early and always working I find big voids in my "free" time. I am used to leaving home before 6am for work and going to bed early. Now I will be able to sleep in ...but then what?

 

[MichaelB]

Hi frugality, thanks for the update. Your plan sounds great. I have read lots of ideas on low cost travel, so that should not be an impediment. As for sleeping in, well I got so used to rising early for work that it stuck with me. Of course, now one of the greatest pleasures is lazy and leisurely coffee and newspaper in the morning. Not doing anything in the morning is not the same as not having anything to do...

 

[ESRwannabe]

Plan A is to early semi-retire (ESR) sometime during my late 40s. Living half off of my taxable investments and half off of my part-time work. Then when I am 60+ I will tap my 401k/Roth and so on, and fully retire.

Plan B would be for me to work full time until age 55 when I will be able to retire off of my pension. I have a little over 10 years vested in the pension now. If I work until 55 I will have 30 years vested.

 

[Bestwifeever]

Well, its been awhile...so far my Plan B is going well. I go on a years sabbatical soon and I will be able to experience the joy-of-not-working for a full 12 months to see what it is like.
I've got two concerns. One- I want to do a lot of travel, but stay "on-budget" and not spend anything over and above what I anticipate will be my yearly retirement income in 6 years time, when I will be able to leave work permanently.
Two- I'm worried about filling my days. After a lifetime of rising early and always working I find big voids in my "free" time. I am used to leaving home before 6am for work and going to bed early. Now I will be able to sleep in ...but then what?

Glad the B plan is working for you! Keep us posted on the sabbatical and what you find to do (I have a feeling it won't be too difficult to find something to fill that free time).

Why not do all the travel you want and just break out those costs vs. your retirement budget to see if you stay on budget otherwise? Who knows if you would have those opportunities again.

And sleeping in? Since re'ing, I pop out of bed at 6:30 almost every morning without an alarm--you might be surprised at what your natural wake up time turns out to be.

 

[Lsbcal]

Well, its been awhile...so far my Plan B is going well. I go on a years sabbatical soon and I will be able to experience the joy-of-not-working for a full 12 months to see what it is like.
I've got two concerns. One- I want to do a lot of travel, but stay "on-budget" and not spend anything over and above what I anticipate will be my yearly retirement income in 6 years time, when I will be able to leave work permanently.
Two- I'm worried about filling my days. After a lifetime of rising early and always working I find big voids in my "free" time. I am used to leaving home before 6am for work and going to bed early. Now I will be able to sleep in ...but then what?

I would strongly urge you to develop some non-work interests. They could be things like:
1) Exercise program -- walking, cycling, running, gym
2) Art -- I've gotten decent at landscape painting outdoors
3) Reading, fiction and non-fiction
4) Bird watching
5) ...etc. etc. etc.

Perhaps think back to what you enjoyed as a young person. Try out various things and be patient with yourself. Many activities require you to move up a learning curve to get to some satisfactory level that you determine.

 

[eytonxav]

My plan B is as follows -- instead of planning a full ER at (say) 50 or 55, I may plan a career change doing something I find a bit more enjoyable until (say) age 60 or so.

I can pull the plug on the Megacorp rat race sooner if I'm willing to work longer and for lower pay doing something different and somewhat fulfilling.

And the more I watch my retirement portfolio melt down, the more I'm thinking I may need a plan C...

I essentially followed that path. I initially retired at 54, but found I was not quite ready for RE lifestyle, so went back to work at a lower pay and more enjoyable type job. With 2 kids going through college, one still there, I've hung on a bit longer than I originally anticipated (will be 63 in June), but it is a little more comforting to have an extra $ cushion as a result. No plans to go back after this year is done.

 

[heirloom]

FRUGAL: I love the idea you have a condo with an ocean view. Hubby and I were watching Americas Home Auction for the last year and "talk" about purchasing. He wants a home and I want a condo, but I'm afraid of the monthly fees and how much they may go up when my pension will remain flat. Congrats!!

W2R: Cramer just talked today on CNBC how real estate is definfately rising in Florida. He's right, because we can't touch homes now for what they went for last year. As a matter of fact, he is on his way down there this week to look at homes. Melissa accidently mentioned the area. Here in Pittsburgh, our assessments are skyrocketing! As a matter of fact, the mayor told everyone not to pay taxes on the newly accessed prices, pay last years. He is going to the state legislature to fight the assessments. They showed some of the homes and how much the new accessed value was, ridiculous! A home from the 30's is accessed for more than some of the newer homes. I think Pittsburgh is trying to tax people out of the area so they sell properties to businesses.

 

[Andre1969]

I've been slowly evolving my plans over the past few years. Intially, my "Plan A" was to retire at 45, which would be 2015. But, the great recession helped bring me back to reality. Plus, I've gotten a few fairly good raises over the years, and if I ever quit and then had to go back to work, it would hard to get a new job paying as well as the current one.

So, I pushed back my goal just a bit, to 2016, and instead of total ER, figured I might just try to start taking more vacation time, and perhaps cut back my employment to the bare minimum to still be considered full-time.

So, I guess Plan A, rev 1, is now Semi-FIRE in 2016, at age 46.

Plan B is simply to push it back a bit, and keep working until I feel financially comfortable.

 

[Lagniappe]

My Plan A was to retire at 45. That should have happened two years ago.

Plan B - moved to a slightly lower cost area, retire at 47 or 48. Depends on the market, but fingers are still crossed. If that doesn't work...

Plan C1 - Semi retire in new area, with part time low stress job, or
Plan C2 - work at current job until 50.


Plans D-Z mostly involve different ways of cutting back on lifestyle to live on less.

 

[SlowTwitcher]

Plan B: Las Vegas (insert your city of preference) hotel room.
That $50 a night covers a lot of bills I currently pay:

mortgage, insurance, prop tax, repairs, replacing worn out things.
auto note, ins, gas, repairs/maintenence
electric, gas, cable, internet, water, garbage, phone
gym membership, maid, concierge

 

[Chuckanut]

Plan B is simple. If the market goes South and stays there, I can live comfortably, though not lavishly on my SS and pension. No traveling, no new sports cars, no flashy blondes hanging on my arm. But, I should be able to visit the local cafe and enjoy reading the paper and talking with friends.

 

[racy]

Plan A: live off my investments
Plan B: if it all tanks, buy an Immediate Annuity

 

[martyb]

Plan A:
Retire in 1 yr, at age 55 & begin drawing my pension. Keep (younger) wife working for 3 additional years, when she retires at 55. (No pension, only smallish 401k) Begin drawing military reserve retirement at age 60. Wife begins SS at 62.

Plan B:
Similar to Plan A, but I work till 56 or 57, then retire. Wife shortly thereafter. Everything else is the same.

Both plans leave us trying to decide how/when to take withdrawals from my TSP & her 401k. We have some decisions to make in those areas, regardless of which plan.

 

[Ed_The_Gypsy]

If you'd go to Mexico, might as well keep going a bit further until you arrive in San Ignacio, Belize.

We visited San Pedro last year. I LIKE Belize. But when we got there, Jerry Jeff advised, If you come here, you have to have something to do.

We may be back on Plan A. I have good work overseas today and a reset may be possible.

 

[clifp]

I just thought I'd point out that this thread was started on Feb 9,2009
At the time the S&P closed at 869.89. The S&P is up just under 50% and the total market is up 53% since this time.

Sticking with Plan A and rebalancing into a a portfolio of 50%+ equities and the rest in total bond fund would have seen increase over 35% since the thread started. I suspect no need for a Plan B with these type of returns.

 

[obgyn65]

My plan B is to either 1) go back to Europe - where I have a condo on the beach or 2) spend 6 months a year in Central America giving free heatlhcare to people while living on $2 a day for food !

 

[RetireBy90]

Plan A is DW retires from county in 2 years, I retire in Dec 15. Live off pensions and 401K till 66/67 and live off pensions and SS.

Plan B is move to Reno where we have a rental and cost of living is less than Northern VA. Lower costs and can either sell this house or use rental income to suplement other income.

 

[Chuckanut]

I just thought I'd point out that this thread was started on Feb 9,2009
At the time the S&P closed at 869.89. The S&P is up just under 50% and the total market is up 53% since this time.

Sticking with Plan A and rebalancing into a a portfolio of 50%+ equities and the rest in total bond fund would have seen increase over 35% since the thread started. I suspect no need for a Plan B with these type of returns.

Don't confuse me with facts. I would rather moan and groan about "what if" problems.

 

[teejayevans]

I'm about to execute my plan B....I have no plan C
TJ

 

[Ronstar]

Plan A is to work as little as possible (work remotely and delegate everything) through 2012 and 2013 and retire at the end of 2013.

Plan B is to retire immediately when boss tells me that he doesn't like Plan A.

 

[grasshopper]

Gee now I need plan C. I retired in 2006.


12/2006 Vanguard Prime MM 5.23% compounded annual yield. Today .04%
12/2006 Vanguard Total Bond Market Fund 5.05% 30 day yield. Today 2.28%

I have taken a lot more risk in this market than I should be 65/35, it should be the other way around. But for me the new bond space is in fact Hi Dividend stocks.

 

[Lsbcal]

...(snip)...
I have taken a lot more risk in this market than I should be 65/35, it should be the other way around. But for me the new bond space is in fact Hi Dividend stocks.

Have seen articles on this sort of thinking and some comments referring to dividend stocks as a replacement for bonds. Some of the best performing Vanguard funds had "dividend" in their name. I wonder if this is a trend that will last.

I too am 65/35 equity/bonds. But this graphic shows that dividend stocks don't behave like bonds in a business downturn:

 

[grasshopper]

Have seen articles on this sort of thinking and some comments referring to dividend stocks as a replacement for bonds. Some of the best performing Vanguard funds had "dividend" in their name. I wonder if this is a trend that will last.

I too am 65/35 equity/bonds. But this graphic shows that dividend stocks don't behave like bonds in a business downturn:

Thanks that's an eye opener. I started putting some $ in VYM Vanguard High Dividend Yield ETF in 2010, thinking bond yields could only go up. We all saw that thought was flawed. Than I thought I could easily beat MM rates returns on my yearly living expense $, even if I took 2-3% and bailed. Well Quicken says I have a total return of about 13% on my investment. With a 3.28% yield, I will stick with one for a while or at least until the EOY when I may bail, at the last of the 0% LTCG's. Hey I am never afraid of taking a profit.

 

[FreeAtLast]

Plan A - Work till 65 and retire.
Plan B - Get laid off and realize 59 was close enough to 65 and realize I no longer had to work.