ER - Am I ready?

[robls]

What do you think about my chances on ER'ing now?

50-year old, single male
$400,000 in IRA/401k accounts
$70,000 in savings
No mortgage-own home free and clear
Property taxes are $1,600 per year
No car payment-2003 Toyota Highlander paid off early
No credit card debt-I only have one card that I pay off each month
Currently live on about $15,000 per year. Probably can cut this down considerably.
But with paying my own health insurance it will be about the same.
Am I missing anything?

Thanks.

Rob

 

[brewer12345]

If you really do live on $15k a year, this would be do-able except for the fact that health insurance will probably be a budget buster. How about a part time job at Starbucks, Costco or one of the other places that offers benefits?

 

[acg]

If it feels right, why not Sounds like you saved some money and have figured out a plan on the back of an envelope (as many of us do!) You can always go back to work if the urge or need strikes. Barring no catostrophic illness. That is probably the best reason for wanting to ER. To enjoy the time that is left for the more important stuff.

My last day (one more time) at work is tomorrow (48).

I jumped off the bridge before and lived to tell about it!

 

[dex]

What do you think about my chances on ER'ing now?
Am I missing anything?
I think you are missing a lot.
First, RE should be about enjoying life (in my opinion) can you enjoy life on 15K a year or are you just existing?
Second, Financially you are in good shape if you continue working. But you have 12+ years until Social security. You will need to spend down your 70K after tax savings and then eat into your retirment savings. You retirement savins will most likely be hit with a early withdrawl penity if you withdraw before 59 1/2.

I'm guessing your house is worth apx 100K so you have a net worth of $570K but no mention of a pension or other income streams.

Others have mentioned that they figured a minimum of $20K for their annual expenses and still others will chime in that they RE'd with less than you.

 

[acg]

Dex, "you are passing through Fearsville".

Isn't FIRE also a "state of mind" ? More than just about money and security

Security also has a price which I have paid dearly. I am also in a similiar situation to Robls, having made the decision to RE, and have always "LBYM" without sacrificing quality of life issues. (no more need for all the material stuff). People can enjoy life without $$$. Money is an excellent servant, but a terrible master. Don't get me wrong.

What's the point of socking it away? Why not "Feel the Fear and Do It Anyway"? Take time while your young enough to enjoy the fruits of your labors...rather that waiting till it is too late. Build a legacy, yes, but for what? and whom? Those are the next pressing questions. The answers are in the cards and will be revealed at some point in the game.

It is a difficult decision to make. You are scaring me!

All ER is afterall, is a new beginning. Right?

 

[robls]

If you really do live on $15k a year, this would be do-able except for the fact that health insurance will probably be a budget buster.  How about a part time job at Starbucks, Costco or one of the other places that offers benefits?

I plan on getting a part-time job at one of the many places you mentioned. Or doing some under the table work-I do have some leads there. So, I guess I am not really ER'ing completely.

I think you are missing a lot.
First, RE should be about enjoying life (in my opinion) can you enjoy life on 15K a year or are you just existing?
Second,  Financially you are in good shape if you continue working.  But you have 12+ years until Social security.  You will need to spend down your 70K after tax savings and then eat into your retirment savings.  You retirement savins will most likely be hit with a early withdrawl penity  if you withdraw before 59 1/2.

I'm guessing your house is worth apx 100K so you have a net worth of $570K but no mention of a pension or other income streams.

Others have mentioned that they figured a minimum of $20K for their annual expenses and still others will chime in that they RE'd with less than you.

On that amount I went to, two NHRA drag racing events this summer. Purchased books that I love to read. Yes I live LBYM. I watch what I spend. Don't eat out much. Plant and work a garden for salads, and other vegetables.
Regarding the early withdrawal penalty, I plan on using the 72(t) SEPP distributions.
No pension. I answered the other income stream above.

 

[ProfHaroldHill]

I think that your situation is marginal. You could live a long time, during which a lot can happen. Also, cars need to be replaced eventually, roofs on houses, teeth, and so forth. Who can even guess what the cost of medical care will be in just a few years? Medicare has a much larger unfunded liability than SS has, and will need to be changed fairly soon, I'm afraid.

OTOH, a lot of posters to forums like this one have the attitude of "go for it -- you only live once." The thing is, it's easy to retire early -- for a while -- if you have some savings and investments. The question is whether you personally, as a marginal ER (in my view), are willing to risk living in poverty when you are old.

I would urge you to get a copy of J. K. Lasser's "Your winning retirement plan" by Henry Hebeler, and to read it very carefully before pulling the pin on ER.

Good luck, in any case -- HH

 

[brewer12345]

Hey, robls, don't let all the doom and gloom get you down. There are lots of ways to skin a cat and it is a lot easier to skate through with a smaller portfolio since you are single. For example, check out what Andy Baird did: http://www.andybaird.com/travels/fulltime/index.html

Then there are the kaderli's, who are perpetual www.retireearlylifestyle.com travellers living on peanuts a day.

If you are creative it definately can be done. Just make sure you will be happy living the life you will be living.

I can't even consider a whole swath of possibilities because I am responsible for my family. I'll need a far larger portfolio before I can check out, unfortunately.

 

[retire@40]

Currently live on about $15,000 per year.

I'd love to see the breakdown of this budget.

 

[haha]

I'd love to see the breakdown of this budget.

Me too. People write about their $24,000 for a couple budgets that "could in a pinch be adjusted down", then in a later thread we are talking about health insurance and hip surgery for dogs.

I am as cheap as I can handle being, and my food alone, grocery, not eating out, is always somewhere between $350 and $400 a month. For me alone. Every month I think I am going to scrape by at @ $2000 or less, some damn thing happens that gives me an unexpected expense. If my dog gets cancer, lo siento, pero adios. Yet I still spend over $1000 a year on him- vets, food, supplements. My computer gear and much of my electronics toys are hand me downs or outright new gifts from my kids. I own my home, use catastrophic health ins, don't have any ongoing pharmacy needs, yet If I keep it under $30,000 I feel pretty good. And if I travel, it's almost always a low key trip within Washington, or maybe to see my family. So no or little hotel. Oh yeah, I almost never eat out.

I mean what if your city decides the sidewalks need to be repaired? This is usually little more than a grab for the homeowners money, but you pay it or you get a lien on your house. Or what if utility costs keep going up? It wouldn't be absolutely out of the question would it? Or what if you get sick? Even now, before they mess with it too much, even Medicare is pretty expensive once you add the various supplemental coverages that many prudent people will want.

This board has a well known and well loved proponent of “Leap, don't look.” But he recently posted that he owes more than he has on deposit to pay it; he is holding his breath till he gets SS; and he needs a reverse mortgage ASAP! Oh yeah, I forgot, his wife works.

So while I suppose robls could do it, I am not clear about why he would want to. I would rather stress about my boss than stress about an inexorable descent into real poverty. By many definitions, $15,000 a year is poverty.

IMO, these budgets are gettin' curioser and curioser.

Ha

 

[robls]

I'd love to see the breakdown of this budget.

I'm not going to go into finite details about my budget.
My yearly salary before taxes has been between $28K to $35K for the last 15 years.
I have tried to put away as much 401K and IRA money as possible.
25 years ago, using money from the sale of my parents home, I (along with the help of friends) constructed my own home. There were some things I had contractors do, but for the most part it was a do-it-yourself project. Yes, my parents who are now passed away, moved into the new home. My father was retired at the time with a pension. My mother still worked at a minimum wage job. So, that helped towards my savings.
Hope this helps in explaining some of your questions.

Rob

 

[Dawg52]

I'm not going to go into finite details about my budget.
My yearly salary before taxes has been between $28K to $35K for the last 15 years.
I have tried to put away as much 401K and IRA money as possible.
25 years ago, using money from the sale of my parents home, I (along with the help of friends) constructed my own home. There were some things I had contractors do, but for the most part it was a do-it-yourself project. Yes, my parents who are now passed away, moved into the new home. My father was retired at the time with a pension. My mother still worked at a minimum wage job. So, that helped towards my savings.
Hope this helps in explaining some of your questions.

Rob

Sounds like you have done a very good job of savings based on your income numbers. When I first read your post, I thought that you might be playing it a little to close for comfort. But if you are willing to work part-time, I think you will be fine. Be sure to find a "fun" part time job. Don't  retire and then do something that you will not enjoy for less money.  As far as your budget goes, I am also single and live on a budget similar to yours. I play golf and do everything that makes me happy. I do plan to travel some when I retire so that will increase the budget some, but overall.......I'm a pretty cheap date. 

 

[wildcat]

Dog51, your avatar changed to reflect your pre-retirement mental breakdown?

Just my thoughts. I think robls is straight up on everything. Many of us are just accustomed to making more money so we tend to have bigger budgets. People who make less get by on less. Nice job saving and planning robls. Still hanging onto the Highlander?

But with paying my own health insurance it will be about the same.

As many have pointed out this is the only clause I see.

 

[kat]

Rob, it all looks terrific to me and I hope you enjoy it! I like your attitude toward money. My expenses are very low without trying, with my favorite activities being free -- hiking in the Adirondack mountains and cross country skiing and reading. (Already have all the gear.)

I appreciate hearing what you've shared and hope it all goes great for you.

Kate

 

[SteveR]

If you can live and be happy on $15k then go for it. I would not want to do that and have no plans on being that fugal. The poverty line per the US Census numbers is about $9500 for a single person. The median household income for 2004 was about $35,000. If you can maintain your desired lifestyle at this income level and be happy then go for it. As long as your health is good you can supplement this with some part-time work.

It would not be my choice of a desired lifestyle but if it works for you, then it works.

 

[Andre1969]

I just ran up a quick budget for myself, and it was a real eye opener.  Something that I probably should have done awhile back, but I've usually had a second job, roommates, or both, so I usually just tried to make sure that I was bringing in more than I was spending, and that I put as much as possible into retirement or other investment/savings.  Fortunately, except for a few rough patches, I've been able to do pretty well.

However, I have gotten lazy about budgeting.  Here's something quick and dirty that I threw together though...

HELOC: $600/month.  I'm at the point now that I only have to pay the interest.  However, I'd usually try to round up to the nearest $100.  With the way rates have been creeping, chances are this will go to $700/month soon, if I continue to round up.
Homeowner's insurance: ~$68/month ($800/year)
Property taxes: ~$217/month ($2600/year, and will most likely go nowhere but up   )
Electric: ~$115/month
Oil: ~$125/month (probably overexaggerating here, but I'd rather err on the side of caution, and with the way prices are going, who knows?)
Directv: ~$86/month (two Tivos, extra channels, etc)
Home phone: ~$60/month
Cell phone: ~$110/month (my two roommates are on my plan where we share minutes, and they chip in for their part of this)
Car insurance: ~$170/month (this sounds bad, but I have 7 cars, with some of them on an antique policy.  Will probably go down, as I plan on switching one or two of them from my regular policy to the antique one)

So throw that all together, and that comes out to around $1550 per month.  However, that's before I've counted one bit of food, gasoline, repairs to the cars, home repairs, etc.  And then, if I were to retire, there's health insurance to consider.  But on the plus side, most likely the HELOC would be paid off by then!

Still, throwing this quickie budget together sure was a wakeup call for me!  I'd imagine that gasoline runs close to $200 per month.  Food's hard to put a finger on, though, because my roommates buy most of it.

 

[retire@40]

I'm not going to go into finite details about my budget.
My yearly salary before taxes has been between $28K to $35K for the last 15 years.
I have tried to put away as much 401K and IRA money as possible.
25 years ago, using money from the sale of my parents home, I (along with the help of friends) constructed my own home. There were some things I had contractors do, but for the most part it was a do-it-yourself project. Yes, my parents who are now passed away, moved into the new home. My father was retired at the time with a pension. My mother still worked at a minimum wage job. So, that helped towards my savings.
Hope this helps in explaining some of your questions.

I never questioned what you saved or how you saved it. I was only interested in your $15K a year budget because even with a paid off home, it appears lower than what most people need to live on.

 

[Dawg52]

Dog51, your avatar changed to reflect your pre-retirement mental breakdown? 

Yeah....pretty much. My job gets the best of me some time so that avatar reflects how I feel at work from time to time. BTW, that is Jack Nicholson in the movie "The Shining" when he was busting through the bathroom door trying to get at his wife with an axe. You got to love old Jack.  

The little guy on my signature symbolizes my retirement attitude.  

 

[Jarhead*]

Dex, "you are passing through Fearsville"

It is a difficult decision to make. You are scaring me!

All ER is afterall, is a new beginning. Right?

acg:  First off, if you think you can come to this, (or any other forum), and expect to have "approval" from all posters, on your situation or any other situation, that's not going to happen.

In the second place, you have about as much in common with Dex, as I have with Brad Pitt. ;
(He was a former six-figure plus salary type, where you have mentioned that your income has been around 30,000 before taxes.  (Which indicates to me that you could probably give him lessons on survival.)

Thirdly, you're a young guy (at least by my standards)  If things don't work out, you should be able to supplement your finances with part time work.

From what I have understood from your posts, you have only yourself to be responsible for.

Whatever decision you make, I hope it will be your decision, and not overly influenced by a forum that, in the final analysis, has not a whole lot in common with your situation.

Good luck, Jarhead

 

[justin]

If you can live and be happy on $15k then go for it. I would not want to do that and have no plans on being that fugal. The poverty line per the US Census numbers is about $9500 for a single person. The median household income for 2004 was about $35,000. If you can maintain your desired lifestyle at this income level and be happy then go for it. As long as your health is good you can supplement this with some part-time work.

It would not be my choice of a desired lifestyle but if it works for you, then it works.

The median household income for 2004 was around $44,000 according to the US Census.

 

[robls]

I never questioned what you saved or how you saved it. I was only interested in your $15K a year budget because even with a paid off home, it appears lower than what most people need to live on.

I wasn't trying to be a pain-in-the-you-know-what. Everyone is different on how they spend and save.

HELOC: $600/month. I'm at the point now that I only have to pay the interest. However, I'd usually try to round up to the nearest $100. With the way rates have been creeping, chances are this will go to $700/month soon, if I continue to round up.
Homeowner's insurance: ~$68/month ($800/year)
Property taxes: ~$217/month ($2600/year, and will most likely go nowhere but up )
Electric: ~$115/month
Oil: ~$125/month (probably overexaggerating here, but I'd rather err on the side of caution, and with the way prices are going, who knows?)
Directv: ~$86/month (two Tivos, extra channels, etc)
Home phone: ~$60/month
Cell phone: ~$110/month (my two roommates are on my plan where we share minutes, and they chip in for their part of this)
Car insurance: ~$170/month (this sounds bad, but I have 7 cars, with some of them on an antique policy. Will probably go down, as I plan on switching one or two of them from my regular policy to the antique one)

Andre1969 broke down his budget. I will give some comparables in my case:
Property taxes $133/month.
Electric $60/month.
Gas $85/month. Sure it will go up.
Basic cable. $75/month
No cell phone.
Broadband. My company pays for this. Big saver here. I sometimes work from home, and they pick up the tab.

Rob

 

[robls]

The median household income for 2004 was around $44,000 according to the US Census. 

I am assuming this is "two" people living in the same household Possibly with children

 

[SteveR]

I will give some comparables in my case:
Property taxes $133/month.
Electric $60/month.
Gas $85/month. Sure it will go up.
Basic cable. $75/month
No cell phone.
Broadband. My company pays for this. Big saver here. I sometimes work from home, and they pick up the tab.

Rob

How about food, water, sewer, phone, insurance, medical, Rx, car repairs, home repairs, entertainment, gas (for car), taxes, other?  Also, when your boss stops your broadband are you going to get it on your own?

Not trying to be a pain the rear here...just trying to focus on the true cost of living.  

 

[SteveR]

The median household income for 2004 was around $44,000 according to the US Census. 

I guess I need to be more specific when I post approx. values. The intent was to show an average of male and female earnings for 2004 for "real" median household income. This is from the US Census website.

"Real median earnings of men age 15 and older who worked full-time, year-round declined 2.3 percent between 2003 and 2004, to $40,798. Women with similar work experience saw their earnings decline by 1.0 percent, to $31,223. Reflecting the larger fall in the earnings of men, the ratio of female-to-male earnings for full-time, year-round workers was 77 cents on the dollar, up from 76 cents in 2003. "

The $35,000 approx. figure was a rough estimate based on this data.

 

[justin]

household = people living together as one economic unit. The average household size was 2.59 people per household in 2000. Per capita incomes are less than the household income. That 2.59 might include one or more parents, and children or fifty-nine one hundredths of a child.

Also, robls, I believe you 100% re: living good on $15k/yr. Health care will be an increasing expense, but there are ways to save. Don't be discouraged by those here who think it is impossible to live on that much. Just because they live on $50-100k/yr (for two people) doesn't mean you can't do it for much less. Look at the bottom rung of our social ladder. Somehow they're making ends meet on $15k per year (or less).

SteveR,
I don't want to be trite, but you're citing the average individual income for a working male or female, the average of which is $35k (ballpark). That isn't household data. The average working household (that would have greater than one and less than two income earners, on average) would combine incomes from both income earners (if applicable) to arrive at the household income. In this case though, we ought to discuss individual income levels, since robls is a household of one person.