Close to ER in flyover country

[Fean]

Greetings! I’ve been lurking here religiously for the past two years and it is liberating to finally make my first post. I can’t express how grateful I am to this community. This forum has literally changed my life

I was raised in a LBYM environment and had the great fortune to marry my incredible DW whose support and LBYM attitude has made ER an attainable goal. Fortune has (quite undeservedly) also smiled on me throughout my career. I was involved with two successful businesses early in my career and proceeds from those businesses gave our family a solid jumpstart toward ER.

DW and I are in our late thirties and plan to pull the ER trigger when I hit forty. I am a firm believer of retiring to something as opposed to simply retiring from something. Although I intend to run some technical side projects for fun (and to keep my skills up-to-date in case of a financial emergency), my primary focus post-retirement will be home schooling our DD. I have always enjoyed teaching and consider it a true privilege to have the financial freedom to spend time teaching my daughter. Hopefully she will feel the same way

I owe a great debt to a former financial advisor who taught me an important lesson of investing: “Financial advisors do not share your agenda and goals even if they work for you.” Roughly ten years ago, I handed my portfolio over to my advisor and assumed that he would have my portfolio’s best interest at heart. Wow, I was naïve. It was a hard lesson to learn (2% fees for the privilege of sub-market performance!?!?) but after a few years I finally came to the conclusion that I needed to learn to handle my own finances. Thinking about all of those wasted fees is easier when I try to think of them as tuition for a financial school of hard knocks…

My investment philosophy is pretty straightforward and will be familiar to many people on the forum. I’m an indexer who rebalances when my AA gets outside of a 5% band. My current portfolio is (roughly) as shown below. I’ll switch out the VMIUX tax exempt bonds for TBM once I retire and drop to a lower tax bracket. Roughly 10% of the portfolio is in tax-deferred accounts with the remaining 90% in taxable accounts.

• 55% equities (VTSAX, VTIAX, VGSLX)
• 35% bonds (VWIUX, VFSUX, VAIPX, I-bonds)
• 10% cash (MM, long-term CDs)

Other data points:

• No debt
• No pension
• Emergency fund with 6 months living expenses
• I have tracked every penny in Quicken for over 3 years and know our budget well
• Expected budget will use 2.6% WR (includes moderate budget cushion)
• I'm planning for an indefinite retirement (55+ years, maybe more with medical advances!)
• Plan doesn’t rely on SS, but SS at 70 would be a nice bonus
• DD’s 529 plan is (relatively) well funded and is not included in my portfolio figures
• Plan B: If the market isn’t co-operative, I may ladder small SPIAs to bump up my WR
• Plan C: If the market completely tanks for the first several years of retirement, I may go back to w*rk while my skills and social network are still current
• I survived 2008 without panicking (at least outwardly) and I followed my plan and rebalanced into equities so hopefully I’ll have the fortitude to handle future crashes too. Of course, I’m sure things will feel different once I no longer have a paycheck arriving every two weeks…

My main concerns are:

• Medical: I've run all the online health care cost calculators and it looks like we should be fine. However, there is still a lot of uncertainty around the ACA and I'll feel a lot better (or worse!) once we see actual costs of bronze and silver plans instead of relying on estimates.
• Mental & emotional adjustment: I think that I'm ready to leave the grind and focus on my own interests and DD's schooling. I've always been self-motivated and I don't see that changing in the future. However, I still see this as a risk that I'll need to monitor -- especially once the novelty of leaving work fades. Or does it fade?
• LTC for parents / in-laws: Neither my parents nor my in-laws have long-term care insurance. My plan has a buffer that would allow us to help out with some of that, but we may be in trouble if all four needed care concurrently.

So, that’s me. I welcome any advice or comments on my plan and I look forward to interacting with all of you on the boards!

Fean

 

[obgyn65]

Welcome, Fean. Have you entered your numbers in Firecalc ?

 

[WM]

Welcome! It sounds like you're in great shape, congrats!

 

[Live And Learn]

Welcome and congratulations on a well thought out plan and achieving a long term goal ! There will always be risks we can't account for in our retirement plans - one just has to hope that the puts and takes average out in the long run.

 

[Fean]

Welcome, Fean. Have you entered your numbers in Firecalc ?

Firecalc reports 100% success even when I increase my projected expenses by another 45%. I don't expect the future to be quite as rosy as the last century, but I think that the buffer is enough to let me sleep at night. It also gives us some wiggle room for unexpected expenses and/or LTC for parents or in-laws.

-Fean

 

[Midpack]

• Mental & emotional adjustment: I think that I'm ready to leave the grind and focus on my own interests and DD's schooling. I've always been self-motivated and I don't see that changing in the future. However, I still see this as a risk that I'll need to monitor -- especially once the novelty of leaving work fades. Or does it fade?

Welcome into the light, it's a great community here.

I won't add to the $ aspects because:

• $ is the simple but not easy part.
• There are hundreds of books & articles on $ and a whole industry to "help" as you well know.
• Your $ plans look solid, sensible and well thought out.

The mental/emotional adjustment of leaving an active, rewarding career were the last obstacle for me. What helped me leave with no anxiety:

• Doing the Get-A-Life Tree exercise in the book How to Retire Happy, Wild & Free by E Zelinski. Though not great writing, the content of the book was helpful to me, the whole book is mostly about the non-$ aspects of retiring, far fewer books written on those aspects. But if nothing else, check it out from a library and do the one exercise. It took me about 15 minutes, though I revisited and added to the results a few minutes here and there. I was amazed at all the things that might interest me in retirement once I really thought about it, about 50 activities! After 19 months retired, I haven't needed list - but I might one day, and it reassured me before I pulled the plug.
• I consciously forced myself to join groups, against my nature. I don't over think those opportunities, I just join anything that might be of interest. Sitting home wondering 'what if I don't like it' is a waste of time IMO, just try it and find out. What's the saying, 'half of life is just showing up.' If I like the group, great. If I don't or tire of the group, I just stop showing up. Even if the group doesn't appeal to me, I might meet someone that leads to something else.
• And I haven't ruled out an encore career. I was definitely tired of my first career, and fortunately FI, but if I get bored with retirement I can go back to work full time, part time, seasonal, whatever. I wouldn't have to find a career in a high paying field anymore. So knowing that I could go back to work at a second, very different career without worrying about $, was mildly liberating.

Best of luck, your concerns are very common and understandable, and again you're well prepared when your stars align. And I'm in flyover country too...

 

[Fean]

The mental/emotional adjustment of leaving an active, rewarding career were the last obstacle for me. What helped me leave with no anxiety:

• Doing the Get-A-Life Tree exercise in the book How to Retire Happy, Wild & Free by E Zelinski. Though not great writing, the content of the book was helpful to me, the whole book is mostly about the non-$ aspects of retiring, far fewer books written on those aspects. But if nothing else, check it out from a library and do the one exercise. It took me about 15 minutes, though I revisited and added to the results a few minutes here and there. I was amazed at all the things that might interest me in retirement once I really thought about it, about 50 activities! After 19 months retired, I haven't needed list - but I might one day, and it reassured me before I pulled the plug.

Thanks for the book recommendation. I'll definitely grab a copy. I already have a spreadsheet with a prioritized list of over 30 topics, activities, and skills that I'd like to pursue in retirement so the exercise you mention sounds very interesting to me.

-Fean

 

[Midpack]

Thanks for the book recommendation. I'll definitely grab a copy. I already have a spreadsheet with a prioritized list of over 30 topics, activities, and skills that I'd like to pursue in retirement so the exercise you mention sounds very interesting to me.

-Fean

After reading your first post, I might have guessed you'd be one step ahead on the non-$ aspects of retirement. Sounds like the Get-A-Life exercise may be redundant.

You're going to do fine whatever you decide, you're far better prepared than most IMO. Best...