Retiring at 32

[Ready]

Since this is a forum of relatively conservative investors who have practiced LBYM their entire lives for a chance to reach FI and ER, it certainly does not surprise me that the general consensus is to do a prenup. A younger person who hasn't reached FI yet, or hasn't gone through the pain and devastation of divorce, focuses on different things, or simple doesn't have the life experience to know why it's an important step to take.

I used to think I didn't need a will or a trust. I reasoned that as long as I don't have one, I won't have to worry about dying. But as soon as I put one together, I'm all ready to go! So I figured the best way to stay alive was to avoid the documents completely.

Now that I've aged a bit, I see the error of my ways. But we've all had silly thoughts when we were young and naive.

[gozer]

Quote:

Originally Posted by Ready When both individuals come into the marriage with similar levels of assets, this seems like less of an issue. But if one person is quite wealthy, it does not seem unreasonable for the person to ask for a prenup. And if the less wealthy person refused, I would question their intentions. After all, a prenup doesn't leave the less wealthy person destitute in the case of a divorce. It simply doesn't allow them to become mega-millionaires simply because the marriage failed. I can't imagine why this would seem unreasonable.

+1

I have never been divorced and my wife and I started with nothing so there was no prenup. But, I have seen far too many end up in this situation. Very few I have seen are amicable in the divorce. It is usually an extremely hostile asset grab situation on both sides.

[Elbata]

What a pleasure to know about this forum. Damn you folks make some great comments.

Now if OP would come forward again, I'd love to know if we've given him something to think about, or it's all nonsense.

[dtbach]

Anyone who has accumulated $5.5 million in assets at 32 has no reason to ask anyone on this board about anything. He has it made. If he only makes 2.5% a year on that he will have $138K a year to spend.

Sounds doable.

[travelover]

Quote:

Originally Posted by dtbach Anyone who has accumulated $5.5 million in assets at 32 has no reason to ask anyone on this board about anything ...........

I think that you are confusing wealth with wisdom. I'm a lot wiser now than I was at age 32, regardless of portfolio size.

[InParadise]

Quote:

Originally Posted by Walt34 There was a time when I would have agreed with you. That was before my divorce....

My first marriage was 6 years of hell, and a divorce that had the ex threatening to go for my future wages since "he put me through college." Was I ever glad that I had insisted on declaring the income on the house cleaning business I had started to pay my way through, and of course had all the loans to show I paid my way. He was an a$$, changing when the ring went on my finger, to the point where I knew we were in trouble on my honeymoon.

Yet, when current DH asked me to marry him, I asked myself if I still believed in the institution of marriage. It was simple, if I did not, if I focused more on ending the relationship than beginning it, I would say no. That was over 20 years ago, and though it has been a good marriage, like any relationship there are bumps in the road that may have resulted in us not getting over them together if there were an easy out.

IMO when you prepare to fail you are much more likely to fail. I see the "well look at how many divorces there are today" argument, but suspect the ease of divorce today has much to do with the lack of motivation to take the time to make the right decision in the first place, (3 mos the first time, 2 years the second,) or to fight towards each other when hurdles appear in front of you.

Now that there are kids in the picture, if anything happened to DH followed by my wanting to remarry, I would simply discuss the issue with my intended. DH and I worked together to build these assets, with the goal in mind that if we don't use them up, they were going to the kids. My kids will be the beneficiaries of my accounts. It would be disrespectful to DH to leave the money to you, though certainly I will draw funds from these accounts while alive for us to use. That would be acknowledging my past relationships, explaining who I am, and what would happen when our relationship ended via my predeceasing him. If need be I would set up my assets as a trust for the kids with life benefits for me. It is so theoretical, given DH is hopefully not going anywhere, that I have not put together details.

What I would not do is say if we don't work out, I keep what's mine. This is what you would get for your years of servicing me. Really, how do you make that sound respectful?

Doubt I would ever get married again anyway. If no kids are involved I think there is a lot to be said for serial monogamy, and since I am not a big believer in organized religion, I have no real constraints to convince me that marriage as we know it is all that natural. I do however believe that my word is worth something, and as long as I have someone like DH who is willing to fight with me as opposed to against me to keep our relationship vibrant and caring, then I am in it for the long haul.

[Spanky]

Quote:

Originally Posted by dtbach Anyone who has accumulated $5.5 million in assets at 32 has no reason to ask anyone on this board about anything. He has it made. If he only makes 2.5% a year on that he will have $138K a year to spend. Sounds doable.

+1. Why would anyone with that kind of financial success at age 32 ask for an advise on money management or investment in this forum? Nevertheless, the discussion has been very interesting and entertaining, the protection of assets is especially provocative.

[MooreBonds]

Quote:

Originally Posted by Spanky +1. Why would anyone with that kind of financial success at age 32 ask for an advise on money management or investment in this forum? Nevertheless, the discussion has been very interesting and entertaining, the protection of assets is especially provocative.

While there's always the risk of people joining the forum and making up fantastically wealthy portfolios out of thin air and throw a post out there for their own mentally messed-up kicks and grins, there are also many successful people who don't know squat (or know very little) about investments.

In many financial topics, we (a majority of members of this forum) easily forget how we are literally LIGHT YEARS beyond the end of the investment/personal finance bell curve we are. We may say that we know that the average American (or other country's citizens for the international members among us) isn't too financially astute, but it's easy to forget how far that intellectual chasm is that separates the average member on this forum from "everyone else". Just like with musicians, actors, and professional athletes who make buku bucks but then managed to run through it like water in just a few years' time - the only difference between them and the average consumer is that they have a hell of a lot more of money to start with, and a higher plateau to fall from.

And just as those people are fiscally unaware/uneducated, there can be quite a few financially successful people (in terms of salary and/or net worth) whom you might assume magically have instantaneous knowledge of investments just because they worked hard to achieve a high salary or build a business (doctors, lawyers, entrepreneurs, etc), but don't. Being able to earn a high salary or grow a business doesn't require astute financial knowledge of investments, just like having astute financial knowledge of investments doesn't guarantee a high salary or being able to grow a company.

My father was fairly successful in the construction industry. If you looked at his portfolio, you'd slap your head and shout "Oh my God! How could someone make such frequent and crazy/stupid investment decisions?!?!?" Yet, in spite of this, my parents have managed to accumulate a respectable nest egg.

[Ready]

Quote:

Originally Posted by MooreBonds While there's always the risk of people joining the forum and making up fantastically wealthy portfolios out of thin air and throw a post out there for their own mentally messed-up kicks and grins, there are also many successful people who don't know squat (or know very little) about investments.

I have to agree. I see little correlation between being successful in a career and having good investment knowledge. NBA players make millions of dollars every year. It doesn't mean I will be seeking their investment advice.

[retiredat32]

Thank you all so much!

Many of you are right. I know nothing about investing, retiring etc. I do have a CPA who helped me with some investment ideas in general, but when he referred me to a specialist, it was more like a high pressure invest with me game. So I wanted to come here where no one has skin in the game and wanted some general opinions. I realize the number is enough. I just didn't know if at my age, future family etc, if it will be. But after reading all of this and analyzing more, I think I will be just fine if I'm smart with it. Thanks again for all the tips.

Regarding the prenup - we had a talk a couple days ago about it. It didn't go we'll at all hah. Almost gave the ring back. She says she's upset about not being a partner and that it will divide a wall between us. Not protecting the assets part. But I told her its what I need and am willing to form an agreement with her before even approaching attorneys. So the compromise so far is all real estate and investments owned prior to marriage is separate property. Bank accounts, primary house etc can be marital. It will be wise of me to make sure almost all my wealth is tied up and the primary house is already bought and is a modest home before actually doing the wedding. I'll just never put any proceeds from a house if I sell it into our joint accounts. It kinda sucks that's how it has to be, but I'd be so unbelievably mad at myself if it didn't protect myself and I got screwed.

Any more tips, please bring me on, thanks again!

[MooreBonds]

Quote:

Originally Posted by retiredat32 Regarding the prenup - we had a talk a couple days ago about it. It didn't go we'll at all hah. Almost gave the ring back. She says she's upset about not being a partner and that it will divide a wall between us. Not protecting the assets part. But I told her its what I need and am willing to form an agreement with her before even approaching attorneys. So the compromise so far is all real estate and investments owned prior to marriage is separate property. Bank accounts, primary house etc can be marital. It will be wise of me to make sure almost all my wealth is tied up and the primary house is already bought and is a modest home before actually doing the wedding. I'll just never put any proceeds from a house if I sell it into our joint accounts. It kinda sucks that's how it has to be, but I'd be so unbelievably mad at myself if it didn't protect myself and I got screwed. Any more tips, please bring me on, thanks again!

Wow - congrats on bringing up that sensitive topic! I personally keep going back and forth on it - I do see how it is "planning for failure before something even starts"...but at the same time, I made pretty big excessive sacrifices that almost no one else my age would have made with the opportunities I've had, and I'll be damned if someone might take half (or more!) of all of that.

Just one bit of advice: make 110% sure you completely understand how courts typically rule on things that are spelled out in a pre-nup, regarding assets which are later sold (like if you sell a rental home and redeploy the assets elsewhere, whether it's in real estate or equity/bond investments). You'd probably need to have a separate company formed with its own checking account, CPA, etc., in order to do your best to keep it as separate as possible.

Also - as I've noted before, there's a LOT we don't know about your and your fiance's exact relationship, but you must pay attention to various clues and behavior. Remember that communication is more NON-verbal than verbal. If she demanded a $1MM house, know that she's likely going to be no different on other tastes/expenditure decisions later on.

And replay how the pre-nup talk went in your head to analyze it. You say "she almost gave the ring back" - pay close attention to how you brought it up, what she said, how she said it, what words/actions she used, and whether it was just a ploy to try and manipulate you into caving and reneging on the pre-nup, or if it is truly just an honest girl who has no ulterior motives and was only looking at it from a romantic perspective. Did she simply emotionally react and try to steamroll you into submission...or did she initially react, and then somewhat calmly discuss the topic with you? Did you have to grit your teeth and barely suggest some things inbetween her outbursts and demands, or was she open to going back and forth with what would be "yours" and what would be "marital property"? There are many honest people out there, but also many manipulators and users (male as well as female). If she has any idea of the assets you have, it shouldn't have come as a surprise to her at all that you brought the subject up. If you had just $200k, yes, it could be a surprise, since most of your earnings would come after marriage...but for someone with an $8MM portfolio who is looking to retire soon after (or even before) getting married, it shouldn't be a shock at all - unless you had previously told her that you don't believe in pre-nups.

IMO, a truly loving, understanding potential spouse (who would truly be your teammate in life) would at least be half aware that such an apparent HUGE disparity between your assets and hers would beg the topic of a pre-nup at some point. It's not like you'd be the 10th couple in the history of the world with a pre-nup. Just as she was 'offended' at you even bringing up the subject of a pre-nup, YOU have every right to equally be 'offended' that someone with apparently zero assets would balk at (and even get the point of almost giving back your ring!) relinquishing rights to seizing half of your assets down the road if she walked.


I am a little confused at your statement about

Quote:

She says she's upset about not being a partner and that it will divide a wall between us. Not protecting the assets part

Was she trying to argue that she's offended by a pre-nup strictly on the grounds of it making the two of you "not partners", and that her offendedness has nothing to do with you protecting your assets

HA! (sorry, couldn't help myself)....was the topic of your pre-nup discussion about other requirements (like "the pre-nup would allow me to take a 2 month long vacation without you once a year" and you'll have to put up with it), or was the pre-nup discussion strictly centered around your assets? If the later, I don't really see what her offense was, if her displeasure with a pre-nup has nothing to do with your assets...since that's ALL it's about! Again, I know pretty much nothing about you nor your fiance....but if someone tries to use the line of "A pre-nup offends me because it puts a wall between us, and it has nothing to do with your assets", I would be a little wary - because a prenup (in most cases) is precisely all about your assets and only your assets (unless you had children you were bringing into a marriage, for instance). For her to say "I don't want your money, and I don't care about your money....but a pre-nup would put a wall between our partnership" is only trying to manipulate you into changing your mind, IMO, because all the pre-nup is about is your financial assets.

[joebloe]

.

[Walt34]

Quote:

Originally Posted by InParadise What I would not do is say if we don't work out, I keep what's mine. This is what you would get for your years of servicing me. Really, how do you make that sound respectful?

I think your post was well thought out and articulate. Well done!

As others have pointed out, I also think that given the apparent huge difference in assets and incomes going into the marriage, and that so many marriages do fail, it would be unwise to put at risk what many people do not accumulate in their lifetimes.

When my ex told me that she was moving out I was completely blindsided by that. I didn't see it coming at all. Six months before she had wanted to have a baby. Later, when I asked why, if she was going to move out, she said she thought it would "bring us closer together". At the time I was simply confused by that but later realized the issue was one of her immaturity and unwillingness to defer immediate gratification for long-term gain. High school girls get pregnant for that reason, not supposedly mature 31-year-old women.

In spite of that the divorce was actually one of the more amicable ones I've ever heard about. We both had almost identical incomes and pensions coming, no kids so nothing to argue about there, just distribute the things acquired during the marriage and go on from there. My main thought was that I was lucky to get out of it without having the pay alimony and child support (we've all heard those horror stories!) so I didn't argue about the petty details that wouldn't matter the next year.

My point here is that a marriage can end when either half decides it is going to. And the other half may not see it coming. There are no guarantees.

[aida2003]

Well, I just read your intro and didn't have time to read replies of others to your questions. The 1st thing that jumped at me is that your fiancé already has a totally different view of money than you. You want a $500k house vs. she wishing for a $1mln house. So, when you offer her a Lexus, she'll want a latest Mercedes model. Well, if we follow her recipe, I'm afraid you're not set to fully retire unless she pulls $300k+. If you were 60 or so with the same expense, then perhaps it's doable.

[Ready]

It feels like we are drawing a lot of conclusions about the OP's fiancé based on very little information. The fact that she may want a $1M home just doesn't mean that much without having more context. I could show you some $500K homes in parts of California that even the neighborhood gangs would stay away from. I think the OP has taken good steps to discuss the prenup and other financial expectations, but I just don't know that we have enough information here to jump to some of the conclusions I'm seeing in this thread.

[SVHoper]

Hi,

I believe in marriage, shared assets, community property and have been married for well over 20 years.

However, my sense of fairness urges you to not only do the prenup but also ensure that those assets stay separate.

According to the quick Google, this article points to the potential danger of community funds on pre-marital assets blurring the lines : Protect Assets With No Premarital Agreement | California Divorce Guide
I think this points to ensuring rental income is separate so it can pay for rental expenditure... and these remain separate.

Unless you are careful, I would not be surprised to see a family of four double your current budget. Just in the way your fiance's idea of house expenditure is double yours current idea of house cost. I didn't check your budget line by line but I have lived the life of 3 kids and money just flows out. There will be many new categories of expenditure: Cars (eventually for kids), vacation camps for kids, child care, after school care, sports fees, ballet lessons, cell phone plans and some categories will go up by more than 4: e.g. clothing, vacations.

I think it would be very wise to ensure LBYM lifestyle values for the entire family from the very start... may be a few difficult conversations at first, but the reward (like the prenup) will be huge. Fiance may see your relative net worth as rich and equate that to easy spending... this is nothing negative about fiance.... perhaps if she sees it in terms of how much effort would take for her to earn the extra $500k she wants to spend on the house - the incremental costs will mean more.

Again this is not a judgement about fiance current values... just a warning to align values.

[scrinch]

Quote:

Originally Posted by Ready It feels like we are drawing a lot of conclusions about the OP's fiancé based on very little information. The fact that she may want a $1M home just doesn't mean that much without having more context. I could show you some $500K homes in parts of California that even the neighborhood gangs would stay away from. I think the OP has taken good steps to discuss the prenup and other financial expectations, but I just don't know that we have enough information here to jump to some of the conclusions I'm seeing in this thread.

Agreed. It could have been as simple as:
Him: "I was thinking we might live in Santa Clara."
Her: "I'd kind of like to live closer to the city...maybe in Foster City."

There's the difference in cost right there, and no evil or greed involved. I think the OP has begun the discussion of money with his fiancee, and that is a good first step. I know that my DW and I had very different ideas about money when we first got married (although neither of us had really thought about it too much), but we're both card-carrying tightwads now, 29 years later.

[MooreBonds]

Quote:

Originally Posted by scrinch Agreed. It could have been as simple as: Him: "I was thinking we might live in Santa Clara." Her: "I'd kind of like to live closer to the city...maybe in Foster City." There's the difference in cost right there, and no evil or greed involved.

I have said in my comments previously that I could be misinterpreting everything about this relationship, but there are a few points to make:

1) Yes, California real estate is insanely high to people like me in the flyover states. However, just as a $500k home could be (in your opinion) a "slum" in some parts of CA, the same could be said about a $1MM home in some parts of CA (in Beverly Hills, for example). So that argument doesn't hold much water.

2) I think I'm willing to go out on a limb and venture a guess that a man who was able to work up a business and sell it for many millions of dollars, presumably on his own, and who currently lives in a $1.9MM home, would not be so foolish as to try to cut corners and move to a $500k slum and risk his and his future family's safety. Stranger stories have surfaced about people living like paupers with $7MM in gold in their garage, but I hope we can rule that out here.

3) As with the previous assumption regarding the OP's sensibility on the safety of the homestead, I'm also willing to grant him the benefit of the doubt that he can at least cut to the chase while also being somewhat able to communicate effectively and accurately. Sometimes, what ISN'T said can be just as important as what IS said (assuming there isn't intentional omission of facts).

The only things he has said regarding housing budgets was that his fiance wants a $1MM home, and he was looking for a $500k home. Again, I'm inferring here, but given some other (very limited) info he's shared to shed some light on things (like the short recap of the pre-nup discussion), I'm willing to hazard a guess that his fiance did not go to realtor.com, look around at homes that met various criteria she had, and e-mail him links with notes about "these are the only homes that looked good to me in the XXXXX and YYYYY areas, and which have 3 bedrooms and an updated kitchen" - all of which just so happened to be around $1MM.

In fact (again, going out on a limb), I'm willing to bet that not only does she not want to compromise on the housing budget, but also that she hasn't even offered different qualities on what to look for or what she would want in a home - I'm willing to bet that she merely threw out the $1MM figure after hearing that the OP was thinking of a $500k budget for the home, without having any variables or criteria on just what kind of home she wanted, and what that specific kind of home might cost. I think that if there were house features/location that was the primary driver of the budget, the OP would have mentioned that....but even if location was 90% of the factor driving the budget difference, it still shows that there's a major rift in their views. On top of the fact that she hasn't apparently saved up a single dime, yet wants to live a lifestyle (including home location, if that's a factor) that her own abilities and ambitions would never ever be able to attain.

I hope for the OP's sake that my theory is dead wrong...because if I am right, it's going to be a long struggle for their household with frequent unpleasant discussions regarding money (By the way, since she has no children and presumably has a job, I'm imagining that she's just spending all of her money that she makes now, since there was never any reference to her assets staying in her name? If so, you better blow up her discretionary expenditures budget to equal whatever her annual income is now, because I don't see her expecting to trim anything from her current annual budget.

Oh, you did show her that budget, didn't you? Because I think that'll really be the test in the relationship, and given what I'm imagining her attitudes and spending habits are like, I fear she'll have a very difficult time accepting it.

I combine my intuitiveness with personal, direct experience from relationships with 2 women that were terribly manipulative and use whomever however they can. No, I don't think every woman (or some men) are like this - but I (along with some other posters on the forum) can see very distinct parallels in some things that we have witness before.

Just like every so often when a new member posts on the ER forum, and after a few posts (sometimes even after just 1 post!) some of the veteran members are already grabbing their boxes of popcorn and pulling up a chair to see the latest version of another poster like __________ (fill in the blank with your favorite notorious former ER forum member).

Quote:

Originally Posted by scrinch I know that my DW and I had very different ideas about money when we first got married (although neither of us had really thought about it too much), but we're both card-carrying tightwads now, 29 years later.

4) Yes, but one of you wasn't retired, living in a $1.9MM home with a net worth of $5MM (in 2014 dollars), while the other had (presumably) ZERO assets, with absolutely no expectations of ever working to help pay the bills and instead just playing housewife. Developing a tightwad attitude can really be benefited by having to work together for your own expenditures, as well as being financially liable and accountable for your actions to others (maybe kids); I would venture to guess that there are different incentives and motivators for some people when they see all this wealth sitting there in front of them, and know they'll never have to work another day in their life. Of course, if someone has bad ulterior motives from the get-go, it's obviously a different matter altogether.


So, OP - just what criteria does your fiance want in a home (which you don't need to have in a home) which is driving her budget to be double yours? And what are her thoughts and feelings on that annual expenditure budget you had worked up and posted on the forum?

[retiredat32]

Sorry all, got sidetracked with some comments I made. I should have elaborated. We actually both agreed on a max budget of 1M a few months ago, for what a future home would be. Upon running the numbers more, I became a little worried that maybe 500-600k might be financially wiser.

She responded with she didn't know if we'd be "happy" moving into a house 1/3 the cost/size, and said let's go look but we'll probably be happier at 1M max budget. I think she'd be on board with 500-600k if that's what I really wanted. And that I suppose is something I need to determine for sure. Number wise, I absolutely think it's smarter. But putting it in her own words, we'll be spending almost all our time at home, maybe it should be a nice one. Regardless of cost, if that's $500k or $900k we just have to love it. I'm now probably leaning towards right in the middle, maybe $700k as a compromise.

Regarding some more specific details - she's actually a very successful woman, she's 30 and in 2013 AGI was slightly over $100k. She'll be quitting her primary job and doing her side job as more of a hobby (which accounted for a third of her income). She's definitely unlike other women I've dated, she's actually very driven.

Anyway, regarding the assets - she owns a house as well, that she intends to rent out (she'll keep in her name as well). Her family is semi wealthy, and when the day comes will inherit a decent amount of money, and this was mentioned in rebuttal to the prenup, that it will need to be protected as well, since I'm trying to protect mine. She's been pretty level headed about all of it, and I really do think she is/was just insulted that I didn't trust her or it could prevent the feeling of a team. I could also be naive, who knows!

Regarding my rentals - they are all owned and titled in individual LLC's. Most of them are in TN. But all my homes are spread out in three states. Noting in CA . That's crazy expensive there.

I've got a few other homes not counted in those 13 that are held in my name free and clear, but between the debt service on them and the current market value, it's pretty much a wash. The free and clear homes owned by the LLC's, I'm told if they are owned prior to marriage they will always be considered separate property. Unless, I sell them and co-mingle the funds, or unless spouse helps improve/manage/etc them and could claim a stake. A little bit of me wishes I didn't have to have a prenup, as it definitely takes the romance out, but I suppose it's the only bulletproof way. Even then though, I still need to watch co-mingling, letting her have any kind of role etc. It sucks it needs to be so cut and dry. But I'm meeting my lawyer tomorrow to go over all the details, make sure it's whats needed etc.

But in her own words, the deal she said, was when we are 75 with grandchildren, rocking on the front porch she's going to make me eat that prenup hah. I hope she's right

[AnIntentionalRoad]

Quote:

Originally Posted by retiredat32 A little bit of me wishes I didn't have to have a prenup, as it definitely takes the romance out, but I suppose it's the only bulletproof way.

It is probably the closest thing to being bulletproof but nobody is forcing you to have a pre-nup. I think it would be very smart to do on some form. That is a decision that you and she need to make. Additionally, you both need to agree on how it is structured and what assets will be protected. It doesn't have to include all assets. There can still be some co-mingled assets to add back the romance. :-)

Good luck! It sounds like both of you have the right attitude to have a long and successful marriage.