Will I be in trouble retiring early?

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venkatdabri
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Will I be in trouble retiring early?

Post by venkatdabri »

Hello,
I am 43 single with no kids and intend to stay that way. My total net worth is $2.628 million however $1.12 million is my home where I live in the Bay Area(California). $74k in IRA. $207K in 401k. $1.4 million investments with 75% stock vs 25% bond split. I worked for Amazon and never sold the stock I got as RSUs and there 40% of my investment is in that stock. My expenses are not very high and I believe that with about $400/month for health insurance, $200/month for home + auto + umbrella insurance, $300/month utilities and $500/month for food should put me at about $1400. Property tax and HOA is another $1000/month. So overall that puts me at close to $2500/month. My home mortgage still has $175k left. I will have to pay $2750/month for the next 5 years to pay of my home. If I calculate 4% of $1.7 million investments then it comes to about $68k per annum which is $5666/month. That makes it very close for the next 5 years while I am paying my mortgage. Should I sell my house and move to a cheaper location in the USA? That way I don't have to pay my HOA and property tax that forms the bulk of my expenses? Are there any expenses that I am not thinking about?
Mike Scott
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Re: Will I be in trouble retiring early?

Post by Mike Scott »

If you sell your house and move to a LCOL location you are OK now. Can you find a LCOL location you are willing to live and are you really ready to retire now? If not, I would work to payoff the mortgage and then rethink this again. The rest of your life is a long time to need everything to go right. Do you really want 40% of your investments in Amazon for the long haul?
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22twain
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Re: Will I be in trouble retiring early?

Post by 22twain »

venkatdabri wrote: Mon Sep 27, 2021 2:16 pm If I calculate 4% of $1.7 million investments
A 4% withdrawal rate is too high at age 43. The "4% rule" is for a 30-year retirement, which gets you to only age 73. Social Security will help a little, but not enough to get you to, say, 90.

Many people here would say at your age you should go no higher than a 3% initial withdrawal rate. Based on $1.7 million, that gives you about $51k per year or $4250 per month.
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Marseille07
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Re: Will I be in trouble retiring early?

Post by Marseille07 »

If you can move to LCOL then I think it's doable. In the Bay Area and your home equity all tied up, it seems risky.
MAKsdad
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Re: Will I be in trouble retiring early?

Post by MAKsdad »

I'm usually saying "go for it" in these threads, but this one seems too close for my comfort. If you're dead set on early retirement, I'd definitely sell the house, put 50%+ into your investments and the remainder into a reasonable place in a LCOL location. I think it's doable that way, but I still wouldn't want to cut it that close (but I'll admit I have no desire to live on $50-60k per year of expenses).
Ramjet
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Re: Will I be in trouble retiring early?

Post by Ramjet »

I'd move to a LOC part of the U.S.
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HomerJ
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Re: Will I be in trouble retiring early?

Post by HomerJ »

Sell the Bay Area house, buy a far nicer house on a lake in a lower-cost state, get a boat and a jetski, probably still have $300,000 left over to add to savings, and retire today.

With no mortgage. And a jetski. Did I mention the jetski?

Otherwise, keep working.

Oh, and sell at least half of that Amazon stock. 40% in one stock is pretty risky.
Last edited by HomerJ on Mon Sep 27, 2021 3:20 pm, edited 2 times in total.
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Normchad
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Re: Will I be in trouble retiring early?

Post by Normchad »

Can you just work another year or two, and hurry up paying off the house?
Escapevelocity
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Re: Will I be in trouble retiring early?

Post by Escapevelocity »

Get your Amazon stock down below 15% as soon as possible subject to tax considerations.
Tooth
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Re: Will I be in trouble retiring early?

Post by Tooth »

MAKsdad wrote: Mon Sep 27, 2021 2:50 pm I'm usually saying "go for it" in these threads, but this one seems too close for my comfort. If you're dead set on early retirement, I'd definitely sell the house, put 50%+ into your investments and the remainder into a reasonable place in a LCOL location. I think it's doable that way, but I still wouldn't want to cut it that close (but I'll admit I have no desire to live on $50-60k per year of expenses).
Not making fun of you but what is undesirable about living on 50-60 per year? We spend under that and when we get more, we just end up investing it. I guess I don't have taste or don't know what I'm missing. If that's the case, maybe better not to know :greedy
SnowBog
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Re: Will I be in trouble retiring early?

Post by SnowBog »

venkatdabri wrote: Mon Sep 27, 2021 2:16 pm $400/month for health insurance
Is that what you are paying now, or what you'd pay on the open market after retiring? Do you plan on getting ACA subsidies (and have worked out how to stay below "the cliff")?

I personally haven't priced out single plans, but at least in my state I'm expecting to pay far more per person for our health insurance (in a family plan for 3 people).
HomerJ wrote: Mon Sep 27, 2021 3:18 pm Sell the Bay Area house, buy a far nicer house on a lake in a lower-cost state, get a boat and a jetski, probably still have $300,000 left over to add to savings, and retire today.

With no mortgage. And a jetski. Did I mention the jetski?

Otherwise, keep working.

Oh, and sell at least half of that Amazon stock. 40% in one stock is pretty risky.
+1 - especially the Amazon stock... Nothing against Amazon themselves - but 40% of your savings in a single company is a risk I wouldn't want to take...

I'm guessing you have a lots of gains on those now, so selling might be painful... But I'd leverage any TLH you can and unwind any Amazon you can as a result. I'd also turn off dividend reinvesting if you haven't yet, and I'd start selling any new shares as they vest and/or are purchased through ESPP.

If you can't bring yourself to pay the taxes on selling, then maybe look at aggressively selling it after you retire. I have a larger position of a former employer stock than I'd care to have (not 40% - but not 5% either...), and that's my plan. Use up any 0% LTCG room you might have (maybe even dip into the 15% bucket), until you get any stock concentration ideally below 10-15% (then I'd keep doing any 0% LTCG if possible until below 5%).
jfave33
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Re: Will I be in trouble retiring early?

Post by jfave33 »

Personally I think you have more than enough (provided your expenses are as listed). Others are thinking quite linearly as if you had the mortgage all your life or would never move or ever have social security etc.

You could for example think like this. If you take out $175k for the house and pay it off right away then your $1.5m is now $1.325m but to cover $2500/month. That is more than enough even with any taxes to pay.

As others have said being concentrated in amazon stock isn't wise. But whether you can reduce that depends on tax considerations.

But yes I would also consider moving to somewhere cheaper if you want to and make life easier. But you don't have to.
invest4
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Re: Will I be in trouble retiring early?

Post by invest4 »

22twain wrote: Mon Sep 27, 2021 2:41 pm
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm If I calculate 4% of $1.7 million investments
A 4% withdrawal rate is too high at age 43. The "4% rule" is for a 30-year retirement, which gets you to only age 73. Social Security will help a little, but not enough to get you to, say, 90.

Many people here would say at your age you should go no higher than a 3% initial withdrawal rate. Based on $1.7 million, that gives you about $51k per year or $4250 per month.
+1
HomerJ wrote: Mon Sep 27, 2021 3:18 pm
Oh, and sell at least half of that Amazon stock. 40% in one stock is pretty risky.
+1 Also agree there is considerable risk in having that concentration in your portfolio.


As noted by others, it may be possible to retire early if you move to LCOL area, etc. Personally, I would be more inclined to continue working to provide more protection for myself against known and unknown risks during a potentially very long retirement. YMMV.
SnowBog
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Re: Will I be in trouble retiring early?

Post by SnowBog »

jfave33 wrote: Mon Sep 27, 2021 3:43 pm You could for example think like this. If you take out $175k for the house and pay it off right away then your $1.5m is now $1.325m but to cover $2500/month. That is more than enough even with any taxes to pay.
+1

And viewed this way (again assuming your estimates are correct), that's a withdrawal rate of around 2.3%. That is a very healthy withdrawal rate!

If you don't have ties to your location, your money goes much further in other locations. But I don't think you "need" to move if you don't want to.
badger42
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Re: Will I be in trouble retiring early?

Post by badger42 »

What I'd actually suggest is paying off the mortgage ASAP, then you are good to go with a substantial margin of safety.

Instead of $1.7m you have $1.5m investments

Instead of $5250/mo your expenses become $2500/mo

That gives you a withdrawal rate of 2%. You could increase your spending (after paying off the mortgage) by 50% and still have a very safe perpetual withdrawal rate.

Your remaining mortgage is too small to have any meaningful value as shared risk, and the small amount of arbitrage is not worth the large amount of mitigated sequence of returns risk.
lostdog
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Re: Will I be in trouble retiring early?

Post by lostdog »

Tooth wrote: Mon Sep 27, 2021 3:29 pm
MAKsdad wrote: Mon Sep 27, 2021 2:50 pm I'm usually saying "go for it" in these threads, but this one seems too close for my comfort. If you're dead set on early retirement, I'd definitely sell the house, put 50%+ into your investments and the remainder into a reasonable place in a LCOL location. I think it's doable that way, but I still wouldn't want to cut it that close (but I'll admit I have no desire to live on $50-60k per year of expenses).
Not making fun of you but what is undesirable about living on 50-60 per year? We spend under that and when we get more, we just end up investing it. I guess I don't have taste or don't know what I'm missing. If that's the case, maybe better not to know :greedy
Could be living in a very high HCOL area that is out if the norm to the rest of the world.
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Ron Ronnerson
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Re: Will I be in trouble retiring early?

Post by Ron Ronnerson »

venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Should I sell my house and move to a cheaper location in the USA? That way I don't ha anve to pay my HOA and property tax that forms the bulk of my expenses? Are there any expenses that I am not thinking about?
You should sell your house and move to a cheaper location if that's what you want. It probably will be good financially but that isn't the only thing to consider. If you have strong ties to the Bay Area (family/friends), you may be happier over the long term just to put in a little more time (maybe another couple of years) at your job and stay in the area. Only you can decide what you prefer.

As for other expenses, if your home has appreciated more than $250k since you bought it, you'll have to pay capital gains tax on the amount above $250k in gains. That tax bill may or may not be substantial. Also, there are costs to sell a $1.12m house and then buy another place elsewhere. Lastly, keep in mind that if you move after age 55, you can keep your property tax base if you move to another home in California. You're still a dozen years away from that age so maybe it isn't really all that relevant to your case. However, if you purchased your place a while back at a much lower price and intend to stay in the state, this could be worth consideration, particularly if your current home meets your needs and you're happy there.

And yes, you have too much invested in one stock!
Parkinglotracer
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Re: Will I be in trouble retiring early?

Post by Parkinglotracer »

venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Hello,
I am 43 single with no kids and intend to stay that way. My total net worth is $2.628 million however $1.12 million is my home where I live in the Bay Area(California). $74k in IRA. $207K in 401k. $1.4 million investments with 75% stock vs 25% bond split. I worked for Amazon and never sold the stock I got as RSUs and there 40% of my investment is in that stock. My expenses are not very high and I believe that with about $400/month for health insurance, $200/month for home + auto + umbrella insurance, $300/month utilities and $500/month for food should put me at about $1400. Property tax and HOA is another $1000/month. So overall that puts me at close to $2500/month. My home mortgage still has $175k left. I will have to pay $2750/month for the next 5 years to pay of my home. If I calculate 4% of $1.7 million investments then it comes to about $68k per annum which is $5666/month. That makes it very close for the next 5 years while I am paying my mortgage. Should I sell my house and move to a cheaper location in the USA? That way I don't have to pay my HOA and property tax that forms the bulk of my expenses? Are there any expenses that I am not thinking about?
Any idea what you will do for the rest of your life and who you will do it with? New cars, home maintenance, leisure activities and travel, dental and vision care, clothes, are a few things to consider.
Congrats on your success to date.
Beefriendly
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Re: Will I be in trouble retiring early?

Post by Beefriendly »

Your budget seems to be missing transportation, fun (vacations, entertainment), future long term care savings, charity and gifts. Please budget more for medical. I am an early retiree who is paying for health insurance I budget $12,000 year My plan costs $460+ per month with a $3k dedectible and a $6k max out of pocket. Vision in not covered. I don't always hit that $12k, but know that it wouldn't be hard to get there. Premiums will rise. I live in a very low cost of living area. Insurance choices vary wildly among states.
Home/auto insurance costs will rise as climate change effects become more severe. Please look to see if you feel adequately protected from inflation in certain sectors of your spending.
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Wiggums
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Re: Will I be in trouble retiring early?

Post by Wiggums »

Parkinglotracer wrote: Mon Sep 27, 2021 5:09 pm
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Hello,
I am 43 single with no kids and intend to stay that way. My total net worth is $2.628 million however $1.12 million is my home where I live in the Bay Area(California). $74k in IRA. $207K in 401k. $1.4 million investments with 75% stock vs 25% bond split. I worked for Amazon and never sold the stock I got as RSUs and there 40% of my investment is in that stock. My expenses are not very high and I believe that with about $400/month for health insurance, $200/month for home + auto + umbrella insurance, $300/month utilities and $500/month for food should put me at about $1400. Property tax and HOA is another $1000/month. So overall that puts me at close to $2500/month. My home mortgage still has $175k left. I will have to pay $2750/month for the next 5 years to pay of my home. If I calculate 4% of $1.7 million investments then it comes to about $68k per annum which is $5666/month. That makes it very close for the next 5 years while I am paying my mortgage. Should I sell my house and move to a cheaper location in the USA? That way I don't have to pay my HOA and property tax that forms the bulk of my expenses? Are there any expenses that I am not thinking about?
Any idea what you will do for the rest of your life and who you will do it with? New cars, home maintenance, leisure activities and travel, dental and vision care, clothes, are a few things to consider.
Congrats on your success to date.
Very good advice here. You definitely need a more detailed retirement budget. Our healthcare costs rise every year. We just replaced the HVAC systems and HWH in the past two years. Expected, but still a big hit to the checkbook.
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chem6022
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Re: Will I be in trouble retiring early?

Post by chem6022 »

I am around 5 years older with similar investments and considering a test or even full retirement by next year. I have no house, but live in a rent controlled apartment based on 2005 rental rates that rise at just under inflation levels. I will likely stay in SF at first, but may move to a LCOL area in the future. So in summary I am thinking about a lot of similar things!

From my perspective, you are golden but should really look to refine your expense estimates. In addition to what others have suggested I would look at what healthcare would cost if you pretend to be 64, as your expenses will grow towards that or more. Also, what about lumpy expenses like home maintenance and vehicles.

What is the interest rate on the mortgage? I might pay it off as others suggest depending on the rate and how much better it will make you feel about staying put if you want to.

How much social security will you receive at 70? That should help make you feel more confident in your plan in the case of longevity.

I would drop Amazon stock below 10% and increase fixed income to 30-35%+.

I personally plan on 3.33% (30x) withdrawal rates to start using an adjustable amortization-based withdrawal (ABW) method.
calwatch
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Re: Will I be in trouble retiring early?

Post by calwatch »

There is a very real risk that having earned that much money in the past you will never find anything that pays close to that amount in the future, once you've been out of the work force for a while. I think paying down the home mortgage and diversifying away from Amazon would be a good start to give yourself assurance. You should also be aware if your HOA will have special assessments coming down the pike. If you like the rest of the country that's fine too but being in California now it is highly unlikely you will be able to move back and have a similar standard of living.
Jovby
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Re: Will I be in trouble retiring early?

Post by Jovby »

Here’s a fun calculator that can help you see what would happen given historical returns.

https://www.firecalc.com/
EnjoyIt
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Re: Will I be in trouble retiring early?

Post by EnjoyIt »

SnowBog wrote: Mon Sep 27, 2021 4:54 pm
jfave33 wrote: Mon Sep 27, 2021 3:43 pm You could for example think like this. If you take out $175k for the house and pay it off right away then your $1.5m is now $1.325m but to cover $2500/month. That is more than enough even with any taxes to pay.
+1

And viewed this way (again assuming your estimates are correct), that's a withdrawal rate of around 2.3%. That is a very healthy withdrawal rate!

If you don't have ties to your location, your money goes much further in other locations. But I don't think you "need" to move if you don't want to.
The way I understand, $2500 is just bare bones. Does it account for replacing expensive items such as car, roof, HVAC? Does it take into account Paying a health care deductible if needed? Does it account for fun activities?

So yeah maybe all that adds up to an extra $1.5k a month and OP may still be ok.
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Re: Will I be in trouble retiring early?

Post by Vanguard User »

22twain wrote: Mon Sep 27, 2021 2:41 pm
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm If I calculate 4% of $1.7 million investments
A 4% withdrawal rate is too high at age 43. The "4% rule" is for a 30-year retirement, which gets you to only age 73. Social Security will help a little, but not enough to get you to, say, 90.

Many people here would say at your age you should go no higher than a 3% initial withdrawal rate. Based on $1.7 million, that gives you about $51k per year or $4250 per month.

At 73 with 4%. He will run out of all liquid cash?
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Re: Will I be in trouble retiring early?

Post by Vanguard User »

By the way. What major city in the USA offers Bay Area, CA type weather year around?
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HomerJ
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Re: Will I be in trouble retiring early?

Post by HomerJ »

Vanguard User wrote: Mon Sep 27, 2021 10:14 pm By the way. What major city in the USA offers Bay Area, CA type weather year around?
You mean fog and drizzle and slightly chilly most of the year?

My city doesn't have a "fog-tracker" weather app.
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Metsfan91
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Re: Will I be in trouble retiring early?

Post by Metsfan91 »

venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Will I be in trouble retiring early?
Yes. Your spending will go up once you retire. You'll have a lot of free time. You'll find new hobby and stuff which usually cost money (unless you decide go fishing everyday then it won't cost much. And you may be able to eat what you catch). If you are able to hang on for a couple of more years, you'll be in great shape!

With full 2 cents,
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Re: Will I be in trouble retiring early?

Post by BernardShakey »

Vanguard User wrote: Mon Sep 27, 2021 10:14 pm By the way. What major city in the USA offers Bay Area, CA type weather year around?
San Diego, CA -- only the weather is even better :D
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SnowBog
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Re: Will I be in trouble retiring early?

Post by SnowBog »

Vanguard User wrote: Mon Sep 27, 2021 10:08 pm
22twain wrote: Mon Sep 27, 2021 2:41 pm
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm If I calculate 4% of $1.7 million investments
A 4% withdrawal rate is too high at age 43. The "4% rule" is for a 30-year retirement, which gets you to only age 73. Social Security will help a little, but not enough to get you to, say, 90.

Many people here would say at your age you should go no higher than a 3% initial withdrawal rate. Based on $1.7 million, that gives you about $51k per year or $4250 per month.

At 73 with 4%. He will run out of all liquid cash?
In case you missed it - the 4% was only for the first 5 years until the mortgage was paid off...

As was later pointed out, if they paid off the mortgage, the WR was closer to 2.3% (based on $2.5k/month expenses without mortgage).

There are some questions whether their $2.5k/month expenses are accurate, but considering a 2.3% WR - they should have some room for flexibility.
Zeno
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Re: Will I be in trouble retiring early?

Post by Zeno »

venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Hello,

Are there any expenses that I am not thinking about?
It might be worthwhile for you to get a handle on your expenses before you make any decisions. You can go back through your credit card, checking and related records to get a handle on the recent past, then going forward you might consider using any of the free budgeting/expense tracking apps that are available.
MAKsdad
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Re: Will I be in trouble retiring early?

Post by MAKsdad »

Tooth wrote: Mon Sep 27, 2021 3:29 pm
MAKsdad wrote: Mon Sep 27, 2021 2:50 pm I'm usually saying "go for it" in these threads, but this one seems too close for my comfort. If you're dead set on early retirement, I'd definitely sell the house, put 50%+ into your investments and the remainder into a reasonable place in a LCOL location. I think it's doable that way, but I still wouldn't want to cut it that close (but I'll admit I have no desire to live on $50-60k per year of expenses).
Not making fun of you but what is undesirable about living on 50-60 per year? We spend under that and when we get more, we just end up investing it. I guess I don't have taste or don't know what I'm missing. If that's the case, maybe better not to know :greedy
I mainly threw that in to add context to my initial comment about being reluctant to retire in OP's situation.

If you, or anyone, is happy living on $50k a year, then carry on and just ignore me. Personally, I could just never live my desired life at that level of spending. And even if I could, it seems to me that it leaves very little cushion to deal with a bad retirement event (bad returns, significant unforeseen expense, etc.).
Last edited by MAKsdad on Tue Sep 28, 2021 7:58 am, edited 1 time in total.
LeftCoastIV
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Re: Will I be in trouble retiring early?

Post by LeftCoastIV »

I'd suggest thinking through your likely taxation on the annual withdrawals. As a single filer, you're deduction is smaller and you will hit thresholds faster, so worth thinking about the cap gains you'll pay on the withdrawals (including the AMZN stock) and include that in your withdrawal amount.
Ron Ronnerson
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Re: Will I be in trouble retiring early?

Post by Ron Ronnerson »

HomerJ wrote: Mon Sep 27, 2021 10:47 pm
Vanguard User wrote: Mon Sep 27, 2021 10:14 pm By the way. What major city in the USA offers Bay Area, CA type weather year around?
You mean fog and drizzle and slightly chilly most of the year?

My city doesn't have a "fog-tracker" weather app.
The Bay Area has lots of microclimates. I’m in the East Bay and in my inland town, the weather is warm, it’s never foggy, and we don’t get drizzle. The only thing that falls on us these days is ash in the late summertime as the sky turns a surreal shade of orange. And don’t be silly - of course those aren’t clouds up above but merely smoke. Our masks are dual-purpose! Can the rest of the country say that? In all seriousness, it really can be quite lovely here when there isn’t fire or smoke nearby. People’s weather preferences vary, though. If you like snow, for example, it’s definitely not the place to be.
alfredwallace
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Re: Will I be in trouble retiring early?

Post by alfredwallace »

I wonder if those planning early retirement who are single and have no children consider the cost of caretaking in old age. Yes, just because you have children doesn't mean that there will be someone to look out for you when your mind and body goes, but most people who say that are the ones who don't have kids. Siblings won't be there because they will be old and have their own problems to deal with or they may die before you do. Nieces and nephews aren't children and when the end comes, there is usually a big difference. I'm sure this could be a thread of its own, but do those that sail into retirement childless and single keep an extra amount in the bank to cover the care at the end of life? I'm taking care of my aging parents now with mental and physical infirmities and have saved them a bundle on care. My mom can't write checks anymore and my dad has a failing heart. The kids divide up the duties easy enough and check in regularly. What are the plans for the single retiree without kids?
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Re: Will I be in trouble retiring early?

Post by sailaway »

alfredwallace wrote: Tue Sep 28, 2021 8:44 am I wonder if those planning early retirement who are single and have no children consider the cost of caretaking in old age. Yes, just because you have children doesn't mean that there will be someone to look out for you when your mind and body goes, but most people who say that are the ones who don't have kids. Siblings won't be there because they will be old and have their own problems to deal with or they may die before you do. Nieces and nephews aren't children and when the end comes, there is usually a big difference. I'm sure this could be a thread of its own, but do those that sail into retirement childless and single keep an extra amount in the bank to cover the care at the end of life? I'm taking care of my aging parents now with mental and physical infirmities and have saved them a bundle on care. My mom can't write checks anymore and my dad has a failing heart. The kids divide up the duties easy enough and check in regularly. What are the plans for the single retiree without kids?
Know thy relationships. My Mom and I have often stepped in where people thought they would be relying on their own kids. Build relationships in the community and the extended family. Spend time volunteering with organizations that provide these services.
fortunefavored
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Re: Will I be in trouble retiring early?

Post by fortunefavored »

alfredwallace wrote: Tue Sep 28, 2021 8:44 am I wonder if those planning early retirement who are single and have no children consider the cost of caretaking in old age. Yes, just because you have children doesn't mean that there will be someone to look out for you when your mind and body goes, but most people who say that are the ones who don't have kids. Siblings won't be there because they will be old and have their own problems to deal with or they may die before you do. Nieces and nephews aren't children and when the end comes, there is usually a big difference. I'm sure this could be a thread of its own, but do those that sail into retirement childless and single keep an extra amount in the bank to cover the care at the end of life? I'm taking care of my aging parents now with mental and physical infirmities and have saved them a bundle on care. My mom can't write checks anymore and my dad has a failing heart. The kids divide up the duties easy enough and check in regularly. What are the plans for the single retiree without kids?
There have been past threads on this and the answer is 'there is no good answer' - but, as you point out, there are many many people with kids in the same boat. When I would visit the nursing home my father stayed in, I'd say at least 50% had no one checking on them ever. Basically the plan/hope is "rely on the kindness of strangers." Heck, many of them outlived all their kids!

We plan to buy into a CCRC in our early 70s if we're still around/hale enough to do so, but obviously that is no guarantee either.

Like anything in life, there are no guarantees and no 100% safety. You live your life and takes your chances.

I think the OP should spend a year or two polishing up their expense forecast (ie, actually live on it and track every dollar) and make a plan to unwind that amazon position. But they seem like they'll do fine.
ThankYouJack
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Re: Will I be in trouble retiring early?

Post by ThankYouJack »

WyomingFIRE wrote: Tue Sep 28, 2021 6:23 am
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Hello,

Are there any expenses that I am not thinking about?
It might be worthwhile for you to get a handle on your expenses before you make any decisions. You can go back through your credit card, checking and related records to get a handle on the recent past, then going forward you might consider using any of the free budgeting/expense tracking apps that are available.
I agree. That seems like a necessary first step to get a better feel for things. I don't even think the OP would need to itemize or budget anything, simply add up to to see how much is coming out of his checking account every year (assuming all bills and credit card are paid from his checking account). Then add anticipated health care/insurance cost and anticipated taxes. This is what I've done the last 5+ years and I keep it on my finances spreadsheet. Only takes about 3-5 minutes a month.
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Re: Will I be in trouble retiring early?

Post by EnjoyIt »

ThankYouJack wrote: Tue Sep 28, 2021 10:16 am
WyomingFIRE wrote: Tue Sep 28, 2021 6:23 am
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Hello,

Are there any expenses that I am not thinking about?
It might be worthwhile for you to get a handle on your expenses before you make any decisions. You can go back through your credit card, checking and related records to get a handle on the recent past, then going forward you might consider using any of the free budgeting/expense tracking apps that are available.
I agree. That seems like a necessary first step to get a better feel for things. I don't even think the OP would need to itemize or budget anything, simply add up to to see how much is coming out of his checking account every year (assuming all bills and credit card are paid from his checking account). Then add anticipated health care/insurance cost and anticipated taxes. This is what I've done the last 5+ years and I keep it on my finances spreadsheet. Only takes about 3-5 minutes a month.
I would also add an amortized cost of replacing things like cars, roofs, HVAC, etc.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
ThankYouJack
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Re: Will I be in trouble retiring early?

Post by ThankYouJack »

EnjoyIt wrote: Tue Sep 28, 2021 10:49 am
ThankYouJack wrote: Tue Sep 28, 2021 10:16 am
WyomingFIRE wrote: Tue Sep 28, 2021 6:23 am
venkatdabri wrote: Mon Sep 27, 2021 2:16 pm Hello,

Are there any expenses that I am not thinking about?
It might be worthwhile for you to get a handle on your expenses before you make any decisions. You can go back through your credit card, checking and related records to get a handle on the recent past, then going forward you might consider using any of the free budgeting/expense tracking apps that are available.
I agree. That seems like a necessary first step to get a better feel for things. I don't even think the OP would need to itemize or budget anything, simply add up to to see how much is coming out of his checking account every year (assuming all bills and credit card are paid from his checking account). Then add anticipated health care/insurance cost and anticipated taxes. This is what I've done the last 5+ years and I keep it on my finances spreadsheet. Only takes about 3-5 minutes a month.
I would also add an amortized cost of replacing things like cars, roofs, HVAC, etc.
Ideally, if the history of expenses goes back far enough, those things will automatically get baked in (my last two cars, roof, expensive "toys" have been included in mine). But yeah, if those aren't included, it makes sense to add some projections for the big lumpy expenses.

One thing that I also do is subtract things I sell from my expenses. For example, say I sell a used car for $10k and buy a new one for $30k. I only treat that as a $20k expense.
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Re: Will I be in trouble retiring early?

Post by aristotelian »

How much do you have left on the mortgage? For the purposes of calculating my FI number I would consider your mortgage payment separate from expense because it is in part building equity and at some point you expect it to disappear. At the same time, do count your mortgage balance as a debt against your investments.

Say you have $1.5M house with $1.4M equity and $1.1M in investments. It would not make sense to calculate your FI number on a mortgage payment that is going to go away soon. In this case your net invested assets would be $1M so you could retire if your non mortgage expense was under $40k.

I am surprised more comments aren't focused on the large % of Amazon stock. I think you should ignore the worth of the stock until it is sold, otherwise you are taking too much risk.
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Re: Will I be in trouble retiring early?

Post by superbobbyg »

With all due respect to the other responders, I think at age 43 and only $2.6 million this is not a money question.
You are too young to know what twists and turns life will present. You may decide to get married, purchase some more luxuries, etc.

If we were talking a magnitude more than I would say go for it.

You have many more years; now is not the time to drop out. Have you even decided what you will do with your time if retired?

Won't beat the drum over and over, just saying you need to do some more soul searching before making a drastic decision.

Good luck.
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Re: Will I be in trouble retiring early?

Post by milktoast »

If insurance and property tax are included in the mortgage, don't forget to add them into the after payoff expenses.
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Re: Will I be in trouble retiring early?

Post by willthrill81 »

HomerJ wrote: Mon Sep 27, 2021 3:18 pm Sell the Bay Area house, buy a far nicer house on a lake in a lower-cost state, get a boat and a jetski, probably still have $300,000 left over to add to savings, and retire today.

With no mortgage. And a jetski. Did I mention the jetski?

Otherwise, keep working.

Oh, and sell at least half of that Amazon stock. 40% in one stock is pretty risky.
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Re: Will I be in trouble retiring early?

Post by Vanguard User »

HomerJ wrote: Mon Sep 27, 2021 10:47 pm
Vanguard User wrote: Mon Sep 27, 2021 10:14 pm By the way. What major city in the USA offers Bay Area, CA type weather year around?
You mean fog and drizzle and slightly chilly most of the year?

My city doesn't have a "fog-tracker" weather app.
The typical dry air, sunny and cool. I grew up in San Jose, CA.
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Re: Will I be in trouble retiring early?

Post by Vanguard User »

BernardShakey wrote: Mon Sep 27, 2021 10:55 pm
Vanguard User wrote: Mon Sep 27, 2021 10:14 pm By the way. What major city in the USA offers Bay Area, CA type weather year around?
San Diego, CA -- only the weather is even better :D
Warmer there year around. Any other outside of CA?
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Re: Will I be in trouble retiring early?

Post by Doubleeagle4me »

Dude, you obviously have had a successful career and worked hard to get to where you are. Now at the earlier age of 43 you are going to be a slacker? You are going to live a long time. I was in your situation when I was 50. Played golf for a year til it got old. Then got involved in a few businesses and quadrupled My net worth in 10 years. Nothing worse than not having a purpose and a goal. The fact that you are asking for advice tells me you are not ready to call it quits.
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HomerJ
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Re: Will I be in trouble retiring early?

Post by HomerJ »

Doubleeagle4me wrote: Tue Sep 28, 2021 7:28 pm Dude, you obviously have had a successful career and worked hard to get to where you are. Now at the earlier age of 43 you are going to be a slacker? You are going to live a long time. I was in your situation when I was 50. Played golf for a year til it got old. Then got involved in a few businesses and quadrupled My net worth in 10 years. Nothing worse than not having a purpose and a goal. The fact that you are asking for advice tells me you are not ready to call it quits.
And now what do you? Play golf?

Or are you going to quadruple your money again over another 10 years? Unless you die first, of course.
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Re: Will I be in trouble retiring early?

Post by Katietsu »

You could retire and it could work out. I do think you have underestimated your expenses. You could be retired 50 years. If you own a home for any chunk of it, that could be a couple roofs and a couple furnaces. Clothing? Dental, vision, hearing aids? Even if you spend little for transportation now, will that be true if you move to a LCOL area or as you get older?

I also think you have underestimated the risk of having so much of your wealth tied into a single piece of real estate and a single stock.

Have you thought about your reasons that you want to retire? Is there a retirement lifestyle and activities, apparently free ones based on your budget, that you want to pursue? Or should you be considering a job change instead? It is one thing to manage on a limited income out of necessity but may feel differently if your budget turns out to be less than desirable after an elective choice.

Have you read through other threads here where someone was contemplating retirement at fortyish? They might give you even more to think about.
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Re: Will I be in trouble retiring early?

Post by HomerJ »

Katietsu wrote: Tue Sep 28, 2021 8:16 pmI do think you have underestimated your expenses.
I do agree with this.
So overall that puts me at close to $2500/month.
$2500 a month is pretty low with almost no margin for error.
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