New Here Need Advice

[HoleDigger]

Hello Board. This Forum is loaded with very good advice and I am hoping to get some also.

Here's my deal:

I am 42, have a fast food business that will sell for $2,300,000, have $1,575,000 in stocks and cash, and a house with equity of $1,300,000. After capital gains and buying a new house cash, I'd have approximately $4,100,000 to live on for the next 50 years.

I have the following questions:

1. Can I get $150,000 per year till I die and have enough to leave for my two children? What strategy?

2. Have people who retired early with teen children regretted them not seeing you work? What did you tell them? How did they do in their careers?

3. Based on your experience, was it better to stay in a job you hate, but make good money or just retire with a little less money than you hoped to accumulate?

Your responses are appreciated.

TL

 

[Dry Socks]

Hi TL,

I'm no expert, but, one thought did cross my mind. How much of that stash is in a retirement account ? If it's a big chunk, you might also want to check if the taxable accounts can support $150k/yr for 18 yrs.

Your question #2 is good. I look forward to reading comments from other posters.

 

[grumpy]

Answers to your questions:

1. How long do you plan to live? How much do you want to leave to your children? A 4% withdrawal rate will give you $164K per year with annual inflation adjustments. Depending on how your investments perform you could run out of money at a ripe old age or you could wind up with a large pile to leave to your kids.

2. Re kids seeing you work - it doesn't have to be all or nothing. You can work part time at something you enjoy or do volunteer work. If the kids see you actively engaged in something positive, your early retirement should not adversly affect their careers.

3. Definitely better to retire with a little less.

Good luck


Grumpy

 

[wabmester]

Congrats on the sale, TL!

Have you already run FIREcalc?   You can find it here:

http://fireseeker.com/

1) Based on market history, you should be able to withdraw $150K and have your portfolio survive.   The only caveat is that 50 years is a *long* time, so you might want to give yourself a cushion in case we see a new worst-case returns sequence.    Although, with $1M in home equity, you'll have a nice cushion if you need it.   And I'm sure you can find ways to cut discretionary spending if you had to.

2) My kid isn't quite 3 yet -- so far, she loves having me around.    Ask me again in 20 years how it affects her career choices.  

3) Personally, I stuck around an extra couple years due to an offer I couldn't refuse.   In retrospect, I regret the extra time wasted working, and I have no regrets about leaving a ton of money on the table.

I'd love to hear more about how you made your money.   Did you buy a franchise in a fast-growing locale?

 

[Nords]

1.* Can I get $150,000 per year till I die and have enough to leave for my two children?* What strategy?

Welcome to the board, TL. *

Um, ahem, you're attempting ER at an earlier age than most and with approximately an order of magnitude more resources than about 99.9% of this board's posters. *While you will get a variety of answers, not all of them will necessarily be helpful ones.

If you're saying that you have a $4.1M investment portfolio then yes, $150K/year is less than 4% and the portfolio should last a lifetime. *You might even leave more than $4.1M for your heirs. *But ye gods, man, I doubt our family could spend that much in two years, even including mortgage payments, let alone one year. *So you probably have plenty of room to cut your withdrawals back to 3% or even 2.5%, thereby raising the success rate from 90% to 99.99%. *No doubt many of the posters are curious what lifestyle sacrifices will have to be made should you choose to reduce annual spending from six figures to five. *However you'll earn very little from Social Security!

2. *Have people who retired early with teen children regretted them not seeing you work? *What did you tell them? *How did they do in their careers?

Consensus from the veterans is that not only do teenagers not even notice that you're ER'd, they couldn't care less. *As long as you're available to cater to their every whim then they don't give a hoot how you spend your spare time between their calls. *Our teenager thinks that we go into suspended animation when she leaves each morning for school, re-animating with just enough time to be in the kitchen baking cookies when she returns.

Our kid is very impressed that we're ER'd, although we show her that "what we do all day" isn't always surfing & fun frolics. *We share some of the financial info with her and we don't try to hide any of the ER lifestyle. *We tell her that maybe she'll find a career that she really enjoys and won't need to ER but that financial independence will give her the choice to make her own decision.

She's extremely happy to have us available to keep an eye on everything she does, see who her friends are, and watch where she goes every blessed minute of the day & night until she moves out and gets her own place cater to her every need. *Judging by the crowd that hangs out in our familyroom & kitchen, most of the rest of the neighborhood kids are glad that we're ER'd too. *Other ERs have kids in their 30s who seem to be doing fine. *I think ex-Jarhead has the most experience with that question.

3. *Based on your experience, was it better to stay in a job you hate, but make good money or just retire with a little less money than you hoped to accumulate?

Having done the former, I'm a big fan of the latter. *

We felt that if one of us left the military then the other one of us would immediately have been uprooted to Diego Garcia or Iceland. *In retrospect we had a lot of chances to learn more about the Reserves and to gradually make a transition to careers that would have let us stay in place and perhaps even earn more money. *So gazing into the glare of the golden handcuffs tends to blind you to all of your other (better) options.

 

[SteveR]

Um, ahem, you're attempting ER at an earlier age than most and with approximately an order of magnitude more resources than about 99.9% of this board's posters.  While you will get a variety of answers, not all of them will necessarily be helpful ones.

Actually, according to DanTiens Net Work poll, there out of 127 votes, 12 indicated a net worth of $5M or greater. That would be about 9.5% of the total people voting. That is a lot more than 0.1 % of the board. Of course the numbers in the poll only reflect those that actually voted and does not represent all members of the board.

. I doubt our family could spend that much in two years, even including mortgage payments, let alone one year.  So you probably have plenty of room to cut your withdrawals back to 3% or even 2.5%, thereby raising the success rate from 90% to 99.99%.  No doubt many of the posters are curious what lifestyle sacrifices will have to be made should you choose to reduce annual spending from six figures to five.  However you'll earn very little from Social Security!

I would say that there are a number of members here that spend as much or more than $150k per year. This assumes taxes and all other expenses are in this total. What would it be after subtracting out pre-retirement expenses like SS, higher taxes, IRA or 401k (or other retirement) expenses? I know my spending will drop by over 40% when I stop saving for retirement and stop paying SS and Medicare. My lower income will lower my tax bill to both Fed. and state and other minor working expenses will also go away.

$4M is a nice fat nest egg to start with. As Nords was saying, the less you spend the more you can keep and pass on to heirs. Being frugal is really relative to your current income needs and lifestyle. But, it would appear that you will be just fine with even a fairly conservative portfolio.