Just joined - looking for Accountants in the DC Area

[bearkeley]

Hi there - this forum is great! We are definitely learning a lot by reading all your posts (and also learning that we need to learn more before we can retire!)

I am looking for recommendations on a great accountant - if you have someone you can recommend, I really would appreciate it.

We are about 2 1/2 years away from being able to retire (international destination - Costa Rica - Nicaragua - or very simple lifestyle if we stay in the US) -- we're both in our late 30s and can do so if things go as planned...just need someone to help us confirm it. I hire accountants for a living, but they specialize in business tax issues - it would be great to find someone who has experience with early retirement planning...

Thanks!

 

[Nords]

Hi there - this forum is great!  We are definitely learning a lot by reading all your posts (and also learning that we need to learn more before we can retire!)

I am looking for recommendations on a great accountant - if you have someone you can recommend, I really would appreciate it.

We are about 2 1/2 years away from being able to retire (international destination - Costa Rica - Nicaragua - or very simple lifestyle if we stay in the US) -- we're both in our late 30s and can do so if things go as planned...just need someone to help us confirm it.   I hire accountants for a living, but they specialize in business tax issues - it would be great to find someone who has experience with early retirement planning...

Thanks!

Welcome to the board, Bearkeley.

You would think that any decent accountant with experience in ER planning would promptly ER. The most difficult challenges of ER are healthcare and a portfolio designed to outperform inflation, and I wonder how much experience accountants have with either of those areas. I doubt any of them know how to find affordable healthcare and most of them are trained to follow a much more conservative investing style.

You also mention the "very simple lifestyle" which throws up a warning flag about an undercapitalized portfolio. (Not that there's anything wrong with that.) You may have trouble with volatility swings in a small, high-equity portfolio even if you're limiting yourself to 4% withdrawals. Again most accountants would caution against that scenario and wouldn't even want to touch it.

I went through the same "confirmation" search just before I ER'd and I had your same frustrating results. None of the financial "experts" had any ER experience and several of them didn't want to touch an informed investor who'd ask a lot of bothersome questions. One of them finally suggested withdrawing 3% annually from our retirement portfolio and not worrying about the detailed number-crunching. Overall my time would have been better spent in reading & educating myself than in searching for someone trustworthy to educate me.

In one aspect the search was successful-- I learned that I'd thought of all the issues and covered all the bases because these alleged "experts" couldn't answer the questions I was asking. I guess that's more of a negative confirmation but it gave me the confidence I needed to stop worrying about the little surprises.

No one is as expert on your ER portfolio as you can become and you may want to do some more reading outside this forum. Both the Kaderlis and the Terhorsts have been ER'd for a number of years in the perpetual traveler lifestyle. (That's their reunion photo on the Kaderli's website.) Their CD and their book are a wealth of lifestyle & financial info.

Another classic on designing your retirement portfolio is Bernstein's "Four Pillars", but that won't help you with healthcare. John Greaney's website has a number of articles & book recommendations to tackle that subject.

 

[Martha]

And of course there is this forum. People touch on a wide variety of issues faced by early retirees and retirement planning issues.

I know some accountants that for a fee, ranging from $1500 to $3000 will look over your financial situation and help you decide whether you can retire in the next few years. They don't recommend investments and they don't really have a clue about expenses, which can very widely depending on different circumstances. Waste of money in my mind.

I would stay away from that route, maybe read some books recommended here, and ask all the questions you want.

 

[bearkeley]

Re: Just joined - Trusting Non-RE Investments

Thanks a lot - I see your point...I actually do our own tax returns because I didn't feel that the accountants that I knew could really add value to it...had purchased 3 rentals and sold one with an exclusion ...I'm a psychology major and the IRS hasn't come knocking on my door to tell me I screwed it up!

Hearing you both validate the importance of doing your own research and this forum's offer to be of help is really great. I'll be sure to check out your recommendations. You also said to use this forum for questions, so I'm asking away...

Question: Trusting Non-RE Investments   

One of our biggest issues right now is having enough trust in investments outside the RE Market.  We currently have about 200k in 401ks + 2k pension after my husband reaches retirement age, but all our other assets are in RE.  We figured that by Spring of '08, we would have, in addition to the retirement money 20+ years from now,  2k cashflow from rental properties; 1M in cash and approx 500k (current market price that is expected to hold or increase, in equity with our two rentals.    It seems as though most of the posts are from individuals who have a lot of trust in the return on their non-RE investments (I see Vanguard a lot)....can you relate to our situation?  How did you overcome it? (Note: our RE investments are all very conservative - true, we got lucky with the RE boom, but we're highly confident that even when it fully bursts, our current projections are on target)

Thanks!

 

[justin]

Two things I noticed. First, where is the $1 million cash coming from? You have already saved that? You said all assets (except the $200k in 401k) are in Real estate. If you have a spare million lying around, that certainly changes your financial condition.

Second, if you're planning on living in Costa Rica or elsewhere international "on the cheap", are you planning on using managers only for your rentals? Is this a feasible plan? Or are you planning on selling the rentals?

 

[bearkeley]

Thanks for caring enough to ask! Hope this helps clarify...

We don't have the cash but have a specific timeline for selling off most of our RE assets + 2 1/2 yrs of working to get it. If we sell all our real estate except for 2 rentals, we will have the 1M in 2008 from equity plus 2 fully paid-off rentals (current value at 500k total).

I know that this sounds like we are counting on the RE market a little too much, so we made sure that we are conservative in our estimates.

* We have a minimum of 50% equity in all our RE investments (we got lucky and bought a long time ago, before the crazyness of RE) - not the smartest use of financing but again...didn't know where else to put the money in other than more real estate!
* The 1M is actually 1M - 1.2M given current values of the homes, but we prefer to again, be more conservative in our calculation just in case the market drops (highly unlikely despite a crash, given the choices we've made on the purchases)

The 2k income from the rental properties also already figures an 8% property management fee, taxes, insurance, 5% vacancy rate and repair.

We figured that in Costa Rica or somewhere international, we'll be ok with 50k a year income (no kids planned, just dogs that like a lot of treats!) and still be able to do the traveling we want and not HAVE to work (although we're already looking at business opportunities -- yes, more RE purchases!)

If we stay in the US, then yes, we'll most likely need more in order to pay for healthcare....

We would love to be able to retire now if we can, but we're scared we won't have enough. We will also we'll miss out on the cap gains exclusion for 250k (we can get it on the 500 but will need to wait 2 years for the other one)...not to mention, not wanting to leave RE to put it in stocks/etc, that might not be as safe! Help

 

[Billy]

Nords said:

No one is as expert on your ER portfolio as you can become and you may want to do some more reading outside this forum.  Both the Kaderlis and the Terhorsts have been ER'd for a number of years in the perpetual traveler lifestyle.  (That's their reunion photo on the Kaderli's website.)  Their CD and their book are a wealth of lifestyle & financial info.

Thanks for the mention, Nords. We appreciate it.  When we retired, it was long before any of the computer Money-style programs to monitor spending in categories were available, long before Safe Withdrawal Rates were recognized, and long before the path to ER was as paved as it is now.

It took a great deal of creativity, desire, large cahunas  and personal willingness to risk.

That being said, the value of one's personal input into one's own retirement is immeasurable. 8)

Akaisha
Author, THE ADVENTURER'S GUIDE TO EARLY RETIREMENT
RetireEarlyLifestyle.com

 

[Martha]

We would love to be able to retire now if we can, but we're scared we won't have enough. We will also we'll miss out on the cap gains exclusion for 250k (we can get it on the 500 but will need to wait 2 years for the other one)...not to mention, not wanting to leave RE to put it in stocks/etc, that might not be as safe! Help

We were in the same situation with the bulk of our assets in rental properties and only my 401(k) holding other investments. We phased out over several years. My husband educated himself on the stock and bond market, being early retired, and has been successful in transitioning into new types of investments.

Nords idea of reading the Four Pillars book is excellent. A number of people here invest in a mix of mutual funds successfully. Vanguard funds are popular options.

Real estate may feel less risky to you because you know real estate. Once you understand other investments better, the risks won't seem so uncomfortable.

 

[MooreBonds]

The 2k income from the rental properties also already figures an 8% property management fee, taxes, insurance, 5% vacancy rate and repair.

Congratulations on accumulating a nice portfolio.

One question about your rentals - you mention that you have budgeted amounts for 'repairs' during your retirement...are you currently doing your own repairs or do you sub it out? If you're out of the country, who would be responsible for finding a contractor and keeping everything honest? While everyone's mileage varies, I've read a few articles and posts on this forum about people hiring property managers who didn't care a whim about your total return/minimzing expenses...

--Peter

 

[bearkeley]

Martha - glad to hear that we're not alone! Stocks, funds I guess aren't as exciting as real estate to us, but it does make sense to do so....and, I think you're right -- we just don't know enough about it to feel comfortable, so we'll try learning more... Everyone seems to like Vanguard. Are they the best deal re: rates or do they have a special program for newbies like us?

Peter- you're right about the mgmt fees -- we manage our own now (so we make the 8% profit that's in our calcs for the prop mgr). We are shopping around for good managers now to make sure we get someone trustworthy. We're fortunate that one of the two rentals we want to keep has a soon to be retired government worker who has set-up a direct deposit payment plan -- she plans to live in the property forever and have the Fed's pension keep paying the rent.

As far as repairs - we started doing our own repairs, then decided to get cheap labor but after lots of wasted hours and about 5k in losses from trying to do things "cheap", realized that it just didn't make sense for us to keep doing that. So we have started to build up a network of service providers who provide good honest service -- it was cheaper in the long run to take the costs off our income...now we have more time to spend fishing on the weekends!

I've got a good chunk of cash coming from a bonus at work -- I'll be sure to learn enough about non-real estate investments and aim for investing it in vanguard or something else.....thanks again!

 

[justin]

bearkeley,

Looks like you are in good financial shape. Good luck entering the stock market and non real estate investing! I love vanguard too. They have about the lowest expenses around. I like their online services - no need to call during business hours to make transactions. I have my investments set up on autodraft so there is no discretion or market timing required on my part. The minimums for each investment are fairly low - usually $3000, sometimes $10,000 for tax managed funds. Read four pillars too. Pretty quick read, and it will give you some confidence in investing.