MoneyIsMyHobby
Dryer sheet aficionado
- Joined
- May 2, 2018
- Messages
- 46
For me, retirement is more about financial independence, and the ability to be retired, rather than actually retiring at a certain age... the reason being, that I don't really know what I'd want to do in retirement anyway... so I might keep working until I can't, so long as I'm enjoying what I do. I love money management and investing (and research of each). I've been looking for a while for somewhere to talk to others about this (I even considered a financial adviser just for someone to talk to) ... I recently found early-retirement.org, and think this might be just the place for me.
When I first started working, I figured I'd retire around 65 (or at least want to be able to if I felt so inclined.
Somewhere along the way, I figured I'd like to be able to retire around 59 (that is when my 30 year mortgage comes to term, and both of my kids will be out of college (actually, I'm expecting kids out of college closer to 52).
Recently, I thought to myself that I want to be more intentional with my money. Saving for the sake of saving and investing for the sake of investing seems somewhat silly at this point. I feel like I should have some goals for my money (other than to build wealth) even if those goals are actually spending more! In thinking about that, I realized that I might actually be able to retire by 45 with my current standard of living. That is a pretty scary idea for me, particularly considering my kids won't be out of college yet, and I'm expecting health insurance to be roughly $40k per year in my 50s... based on what so of my coworkers are reporting their quotes to be in their late 50s today.
So, I have unclear goals right now, other than knowing that I'm not interested in tracking every receipt for budgeting purposes... and I'm expecting that will become more clear as I spend time on this site.
I'm a small business owner with extremely variable income. The last two years I made about $250k-$275k (pretax) and my DW does not work outside the home. We live on around $125k-$150k (after tax) depending on various factors. This is effortless, and I'm quite certain I could bring this number down some with little effort or bring it down lots with more effort, but I'm not sure it is worth it. I use PersonalCapital.Com to track my net worth and estimate likelihood of meeting retirement goals. I'm a big fan of the site. I currently have scenarios laid out to retire at 45 and 55, both figuring no Social Security will be available (assuming the gov't will tax it all). Honestly, with enough effort, I might be able to retire today, but I'm not sure my wife would be happy with the standard of living we could afford, nor that I would feel safe and secure in my financial future. I certainly don't believe in ER@45 with a 4% WR. From what I've read, that WR is based on 35 years of draw... plus I'd like to leave a legacy to my heirs.
Cash on Hand: $23k
Kid's 529s: $74k
Roth IRAs: $680k
SIMPLE IRA: $32k
General Investments: $97k
Subtotal: $906k
Home Equity: $100k (I have a $90k HELOC with a $0 balance for emergencies if you're concerned about my cash on hand)
Investment Property Equity: $90k
Business Equity Estimate: $850k (although I would have significant taxes and brokerage fees if/when I sell it... plus it could become worthless overnight if the wrong circumstances hit)
Subtotal: $1,040k
Total NW Estimate: $1,946k (but of course, still have kids college to pay for and house to pay off).
To retire at 45, I'm looking at investing roughly $100k/year over the next 10 years. $50k of that would go in index-based mutual funds (or ETFs) including retirement accounts (limited to $12.5k/yr) and 529 plans (limited to $6k/yr/kid for maximum tax benefit), and $50k of that would go into investment properties (one new property per year, so incurring a lot of debt in the process as $50k is roughly a down payment on a $250k investment property). That $100k/year was a totally random number I chose based on feeling like I could come up with that with little effort based on my current earnings.
I currently owe $160k on business debt (technically $250-$90k in the bank, no including operating capital)... and my focus for 2018 is to try and pay off the business debt, forgoing the $100k in new investments this year.
I generally like business ownership, but it can be tiring and stressful at times, which is part of my FIRE motivation. I have twice the opportunity to LBYM of most people, in that I can do it in the business (thereby increasing my take-home) and of course personally (thereby increasing my savings rate).
I do have some minor concerns about the social implications of FIRE, in that we need productivity, as a country, to fuel our Country and economic growth (including our investments' growth). But I haven't put a ton of thought into that, it is just in the back of my mind.
If I follow the plan outlined above, that puts me at a NW of approximately $4M at age 45. That gives me a 56% likelihood of success (which also considers the likelihood of having $4M at 45) with retirement spending of $100k, plus putting the two kids through school based on using this net worth, plus $40k/year in healthcare costs from 45 to 65... and it figures $0 social security (I'm pretty much of the mindset that they'll figure out a way to tax it all away from someone in my shoes once they reform).
I have almost all of my securities money in Vanguard Total Market Index balanced by my real estate investments, rather than bonds or REITS. I used to hold some money in REITS, until I purchased my first investment property. I'm not convinced that PersonalCapital has great models for considering the return on the Investment Property... but I'm not too worried about that yet. I basically expect each property to yield about $20k/year in spendable or investable cash in today's dollars, after they are paid off (I do 20 year mortgages on each)... plus they should be appreciating in value as well, building the nest egg further. That is based on doing most maintenance and repairs and improvements myself, which I enjoy doing. My DW and I also manage the properties ourselves, which I don't mind, but she hates.
It is nice to meet you all, and I'm interested to hear anyone's thoughts. I know I'm going about this somewhat differently than most of you (unclear goals in mind and a more expensive lifestyle and possibly more conservative assumptions) but I'm extremely interested in your thoughts and sharing my own on this forum.
MoneyIsMyHobby
When I first started working, I figured I'd retire around 65 (or at least want to be able to if I felt so inclined.
Somewhere along the way, I figured I'd like to be able to retire around 59 (that is when my 30 year mortgage comes to term, and both of my kids will be out of college (actually, I'm expecting kids out of college closer to 52).
Recently, I thought to myself that I want to be more intentional with my money. Saving for the sake of saving and investing for the sake of investing seems somewhat silly at this point. I feel like I should have some goals for my money (other than to build wealth) even if those goals are actually spending more! In thinking about that, I realized that I might actually be able to retire by 45 with my current standard of living. That is a pretty scary idea for me, particularly considering my kids won't be out of college yet, and I'm expecting health insurance to be roughly $40k per year in my 50s... based on what so of my coworkers are reporting their quotes to be in their late 50s today.
So, I have unclear goals right now, other than knowing that I'm not interested in tracking every receipt for budgeting purposes... and I'm expecting that will become more clear as I spend time on this site.
I'm a small business owner with extremely variable income. The last two years I made about $250k-$275k (pretax) and my DW does not work outside the home. We live on around $125k-$150k (after tax) depending on various factors. This is effortless, and I'm quite certain I could bring this number down some with little effort or bring it down lots with more effort, but I'm not sure it is worth it. I use PersonalCapital.Com to track my net worth and estimate likelihood of meeting retirement goals. I'm a big fan of the site. I currently have scenarios laid out to retire at 45 and 55, both figuring no Social Security will be available (assuming the gov't will tax it all). Honestly, with enough effort, I might be able to retire today, but I'm not sure my wife would be happy with the standard of living we could afford, nor that I would feel safe and secure in my financial future. I certainly don't believe in ER@45 with a 4% WR. From what I've read, that WR is based on 35 years of draw... plus I'd like to leave a legacy to my heirs.
Cash on Hand: $23k
Kid's 529s: $74k
Roth IRAs: $680k
SIMPLE IRA: $32k
General Investments: $97k
Subtotal: $906k
Home Equity: $100k (I have a $90k HELOC with a $0 balance for emergencies if you're concerned about my cash on hand)
Investment Property Equity: $90k
Business Equity Estimate: $850k (although I would have significant taxes and brokerage fees if/when I sell it... plus it could become worthless overnight if the wrong circumstances hit)
Subtotal: $1,040k
Total NW Estimate: $1,946k (but of course, still have kids college to pay for and house to pay off).
To retire at 45, I'm looking at investing roughly $100k/year over the next 10 years. $50k of that would go in index-based mutual funds (or ETFs) including retirement accounts (limited to $12.5k/yr) and 529 plans (limited to $6k/yr/kid for maximum tax benefit), and $50k of that would go into investment properties (one new property per year, so incurring a lot of debt in the process as $50k is roughly a down payment on a $250k investment property). That $100k/year was a totally random number I chose based on feeling like I could come up with that with little effort based on my current earnings.
I currently owe $160k on business debt (technically $250-$90k in the bank, no including operating capital)... and my focus for 2018 is to try and pay off the business debt, forgoing the $100k in new investments this year.
I generally like business ownership, but it can be tiring and stressful at times, which is part of my FIRE motivation. I have twice the opportunity to LBYM of most people, in that I can do it in the business (thereby increasing my take-home) and of course personally (thereby increasing my savings rate).
I do have some minor concerns about the social implications of FIRE, in that we need productivity, as a country, to fuel our Country and economic growth (including our investments' growth). But I haven't put a ton of thought into that, it is just in the back of my mind.
If I follow the plan outlined above, that puts me at a NW of approximately $4M at age 45. That gives me a 56% likelihood of success (which also considers the likelihood of having $4M at 45) with retirement spending of $100k, plus putting the two kids through school based on using this net worth, plus $40k/year in healthcare costs from 45 to 65... and it figures $0 social security (I'm pretty much of the mindset that they'll figure out a way to tax it all away from someone in my shoes once they reform).
I have almost all of my securities money in Vanguard Total Market Index balanced by my real estate investments, rather than bonds or REITS. I used to hold some money in REITS, until I purchased my first investment property. I'm not convinced that PersonalCapital has great models for considering the return on the Investment Property... but I'm not too worried about that yet. I basically expect each property to yield about $20k/year in spendable or investable cash in today's dollars, after they are paid off (I do 20 year mortgages on each)... plus they should be appreciating in value as well, building the nest egg further. That is based on doing most maintenance and repairs and improvements myself, which I enjoy doing. My DW and I also manage the properties ourselves, which I don't mind, but she hates.
It is nice to meet you all, and I'm interested to hear anyone's thoughts. I know I'm going about this somewhat differently than most of you (unclear goals in mind and a more expensive lifestyle and possibly more conservative assumptions) but I'm extremely interested in your thoughts and sharing my own on this forum.
MoneyIsMyHobby