Can I retire comfortably?

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Can I retire comfortably?

Postby soccerdad12 » Thu Feb 07, 2013 10:11 am

Here is the situation that I am confronted with....

Can I retire comfortably at age 44 with $4M? 3.5M is in after-tax accounts.

I would not want to go back to work after I retire... instead probably help out with non-profits, etc... If I felt there was a chance I would have to go back to work, I would just wait for a couple of years to retire.

At time of retirement at 44:
I would have 5 years left to completely pay off my house.
I would have both kids college funds completely funded (1 would already be in college and the other 2 years away from college).
No debt.

Funds are invested very bogleishly. I know there are a ton of factors (economy, interest rates, etc...) that could impact things, but I am not sure of the rule of thumbs people use.

I would probably need $100k / year to live comfortably.

My spouse and I are both pretty healthy, but one of my biggest concerns is the unknown of health care costs. We would be far away from medicare age.

This is obviously a huge decision and I thought the wonderful knowledge here would be a great sounding board.
Last edited by soccerdad12 on Thu Feb 07, 2013 10:22 am, edited 1 time in total.
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Re: Can I retire comfortably?

Postby Grt2bOutdoors » Thu Feb 07, 2013 10:16 am

How is your portfolio currently structured?
How easy or hard would it be to obtain employment if you really needed to (things don't work out scenario?)
Have you priced health insurance for your family today and is your $100K living expenses including that expense?
Can you sleep at night if you were retired, your portfolio drops by 25% overnight and takes years to recover?

Sounds like you can easily retire on $4MM. I would try and answer those questions above before pulling the plug, though. Always good to have a mental backstop and backup plan in case things don't go as planned.
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Re: Can I retire comfortably?

Postby ShowMeTheER » Thu Feb 07, 2013 10:21 am

Yes, you should be fine. Enjoy!
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Re: Can I retire comfortably?

Postby dbr » Thu Feb 07, 2013 10:23 am

My reaction is that very generally this is possible within the parameters you listed.

The issue is that fifty years or so of possible retirement encompasses huge uncertainties in all aspects of what happens in a lifetime. The danger is that if your plan does end up in trouble, it may be difficult to recognize what is happening until it is too late to do anything about it (frog in boiling water syndrome).

Working an extra two years is not going to make any difference. A better plan is to start out with more contingencies available until the time line gets a little shorter. That could mean not spending quite as much money as you see how asset growth is going and retaining the ability to return to work if prudent.
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Re: Can I retire comfortably?

Postby hand » Thu Feb 07, 2013 10:30 am

Is payoff of the house included in the $100k/yr?

Assuming not, is the remaining house debt significant?

I'd suggest the simplest way to address this is think of your taxable accounts net of the remaining house debt.

After Tax + Taxable - Outstanding Debt = "Retirement Assets"


In fact, with $3.5M in taxable, you might want to consider selling bonds and paying off home loan now - I can't imagine you're making more with your bonds than you're paying in interest (net of tax benefits) on the loan.
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Re: Can I retire comfortably?

Postby soccerdad12 » Thu Feb 07, 2013 10:33 am

Currently I am about 75% stock/25% bonds.

Although I look at the stock market about once per week, swings up and down don't bother me a bit.

The $100k/year includes all of our living expenses.

Working a couple of extra years actually could make a large difference to me. I max out all of my retirement accounts and spouses as well. Additionally, I save another $100k in after tax money outside of retirement accounts each year.

My main question is.... DO I need to wait or am I being overly paranoid?

I could get another job if I wanted to, but if I am retired for 10 years and 55 years old, how employable would I really be?
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Re: Can I retire comfortably?

Postby RadAudit » Thu Feb 07, 2013 10:46 am

You might want to take a look at this link with it's video. It makes an interesting comment about ability to take risk, asset allocation in retirement which may or may not impact your annual portfolio return, and your ability to retire.

viewtopic.php?f=2&t=110474&newpost=1606964
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Re: Can I retire comfortably?

Postby Grt2bOutdoors » Thu Feb 07, 2013 10:46 am

On the employment - exactly my point.

On the portfolio - the equity portion of your portfolio could theoretically decline by 37.5% (75/2) - are you comfortable with a potential portfolio value of 62.5% or 2.5MM? If that occurred you'd be bumping up against a 4% WR vs. the current projected 2.5% draw.

If you could bank another $100-$200K each year and your health is not an issue, I'd work another 5 years (the kids would be out of school, home paid off) and you'd have some more flexibility and have a better handle on what healthcare costs may be for a 50+ year old couple (retired), then pull the plug.

If it were me, I'd make hay while the sun shined. It's quite another thing if you didn't have a choice - and depending on how things play out, you could pull the plug even sooner than 5 years.
Last edited by Grt2bOutdoors on Thu Feb 07, 2013 10:48 am, edited 1 time in total.
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Re: Can I retire comfortably?

Postby dbr » Thu Feb 07, 2013 10:49 am

soccerdad12 wrote:
Working a couple of extra years actually could make a large difference to me. I max out all of my retirement accounts and spouses as well. Additionally, I save another $100k in after tax money outside of retirement accounts each year.

So, $4.0M goes up to $4.1M. Relative to all the other uncertainties, that is no difference at all. Actually, the effect of shortening your retired lifespan by two years out of forty is bigger, which is actually the largest factor in the end.

My main question is.... DO I need to wait or am I being overly paranoid?

No, you do not NEED to wait. I don't know if you are overly paranoid. If you are going to go crazy with fear in retirement, that doesn't sound like a very good idea. A long retirement like this is more about flexibility and confidence than it is about money.

I could get another job if I wanted to, but if I am retired for 10 years and 55 years old, how employable would I really be?

If you stay active many opportunities can materialize. You can reinvent yourself. You may end up better off than before. If those prospects are beyond visualization and you want absolute security, then maybe this plan is not for you.

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Re: Can I retire comfortably?

Postby K-Bogle » Thu Feb 07, 2013 10:52 am

$100k/yr includes all expenses - what will that be when the house is paid off? That's a factor to consider as well.
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Re: Can I retire comfortably?

Postby soccerdad12 » Thu Feb 07, 2013 11:05 am

Here is the real rub of the whole thing....

I only have about $1.5M currently. The other $2.5-$3M (after tax) would come from the sale of my business. I could sell it easily and get that amount right now. It has grown every year for 10 years and based on current conditions I don't see the growth stopping. It could be worth 50% more in 5 years or worth quite a bit less if business falls off- who the heck knows. I am making mid-high 6 figures (wages + dividends) each year in it, but taxes are killing me.

Even if the company shrunk to half its current size I would still make low 6 figures and I am not worried about it going away.

It is a matter of cash in now and take the money and run or wait it out a bit longer. I am only willing to cash out now if I can retire comfortably the rest of my life without having to work again. If I can't do that then I will wait another couple of years.

Like I said, this is the biggest financial decision on my life. I want to be very careful with it.
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Re: Can I retire comfortably?

Postby NYBoglehead » Thu Feb 07, 2013 11:12 am

K-Bogle wrote:$100k/yr includes all expenses - what will that be when the house is paid off? That's a factor to consider as well.


+1

I think you CAN retire now, but think that waiting another few years will make a profound impact. If you need 100k/yr from $4 million, that is only 2.5%. You can reasonably expect to get ~2% from dividends/interest, so you really don't need that much growth.

How much is left on your mortgage? If you are saving 100k/yr per year AFTER maxing out retirement accounts, working another 2-3 years can pay off the mortgage early and provide the cash you need for Year 1 in retirement (without touching your portfolio in Year 1).
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Re: Can I retire comfortably?

Postby soccerdad12 » Thu Feb 07, 2013 11:18 am

I have about $200k left on the mortgage. I could pay it off in the next month if I wanted (it is dividend time), but for some reason I hesitate to do that.
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Re: Can I retire comfortably?

Postby ResNullius » Thu Feb 07, 2013 11:19 am

You most certainly should be able to retire now and live comfortably for the rest of your life. Is there a 100% guarantee for this? No! Many things could happen, but most of those things would have the same or greater impact even if you continued to work in your business. A major financial collapse usually means a major collapse in the overall economy, as we saw in 2008-2009, but life usually returns in a few years or so. You'll have to invest your $4M in a reasonably diversified portfolio. Absent a major collapse, this should take care of you and your family for life, plus leave a nice inheritance for the kids. It's really up to you. If you have the slightest doubt, I would continue working, but you'll still live with the risk that your business could collapse at some point in time, regardless of how small that risk might seem at the moment. Good luck.
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Re: Can I retire comfortably?

Postby dbr » Thu Feb 07, 2013 11:23 am

soccerdad12 wrote:Here is the real rub of the whole thing....

I only have about $1.5M currently. The other $2.5-$3M (after tax) would come from the sale of my business. I could sell it easily and get that amount right now. It has grown every year for 10 years and based on current conditions I don't see the growth stopping. It could be worth 50% more in 5 years or worth quite a bit less if business falls off- who the heck knows. I am making mid-high 6 figures (wages + dividends) each year in it, but taxes are killing me.

Even if the company shrunk to half its current size I would still make low 6 figures and I am not worried about it going away.

It is a matter of cash in now and take the money and run or wait it out a bit longer. I am only willing to cash out now if I can retire comfortably the rest of my life without having to work again. If I can't do that then I will wait another couple of years.

Like I said, this is the biggest financial decision on my life. I want to be very careful with it.


Yes, that is quite the dilemma. This is nowhere near as straightforward as your initial post suggested. A major concern is that staying in the business may risk your ability to liquidate the asset for as much as you want.

The critical condition is " . . .retire comfortably the rest of my life without having to work again . . ." There are no guarantees in life. Your situation is definitely in the range of what many people would call "retire comfortably," but the judgement is yours to make. $100K to live on per year is a fortune for some people and a pittance for others. "Comfortably" is undefined. If it were me the deciding factor would be what is the satisfaction in life of this business compared to alternative opportunities. Why are you limiting yourself to not earning money doing something else? I still urge consideration of the idea that this is not about money.
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Re: Can I retire comfortably?

Postby K-Bogle » Thu Feb 07, 2013 11:23 am

soccerdad12 wrote:Here is the real rub of the whole thing....

I only have about $1.5M currently. The other $2.5-$3M (after tax) would come from the sale of my business. I could sell it easily and get that amount right now. It has grown every year for 10 years and based on current conditions I don't see the growth stopping. It could be worth 50% more in 5 years or worth quite a bit less if business falls off- who the heck knows. I am making mid-high 6 figures (wages + dividends) each year in it, but taxes are killing me.

Even if the company shrunk to half its current size I would still make low 6 figures and I am not worried about it going away.

It is a matter of cash in now and take the money and run or wait it out a bit longer. I am only willing to cash out now if I can retire comfortably the rest of my life without having to work again. If I can't do that then I will wait another couple of years.

Like I said, this is the biggest financial decision on my life. I want to be very careful with it.


Now that's a tough call. I worked for a company back in the mid-2000s that received a mid 8-figure buyout offer. CEO rather emphatically turned the offer down assured we'd get 9 figures in a year or two. One wicked 2008 crash later, a ton of new competition, and it eventually sold for mid 7-figures in the late 2000s. I recall all of this quite vividly. We were CERTAIN we'd be offered twice as much in a year and instead got 1/10 of the original offer.

All businesses are different. And this isn't advice, just relaying a story.

I hope to be where you are in 10 years when I'll also be around 44. But even if I'm a $million short, I'm still stopping. I sincerely believe that when I'm on my deathbed I'll appreciate the decision. To fail with $4 million implies some pretty wretched economic times over the next 40-50 years.
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Re: Can I retire comfortably?

Postby 209south » Thu Feb 07, 2013 11:39 am

I'm going through a similar decision process but am 10 years older. The good news is I have accumulated more capital (~$6.5mm net worth, well-diversified and liquid) and have fewer years to fund. The bad news (other than having fewer years to live!) is that I've accumulated more expensive hobbies and will want to spend $200k + per year in retirement (two homes, 2+ golf clubs, nice vacations...). Bottom line is I enjoy my career enough to keep pushing this decision out a few years, providing more cushion against unknowns like 'what will it really cost to have good health care in the next 30+ years'? I know many, many guys who retired in their 40s and ended up going back to work either because their financial situation changed, or because they just got bored. If I disliked my job I'd likely bail, but am keeping at it for the time being.
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Re: Can I retire comfortably?

Postby NYBoglehead » Thu Feb 07, 2013 11:41 am

If you can get that for the business I'd sell it and retire. As the poster above noted, if you can't make it with $4 million than something has gone seriously wrong for an extended period of time.

I'd sell it tomorrow, take the cash and retire. Maybe you can get a part-time job to supplement your income and erase some zeros for Social Security calculation purposes.

Now that I know that you're counting 62.5% of this $4 million from the sale of the business, my recommendation would be to take it while you can get it, as there are no certainties in life and you are only one new competitor, lawsuit or new regulation away from having the value of your business change dramatically.
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Re: Can I retire comfortably?

Postby rickmerrill » Thu Feb 07, 2013 1:34 pm

My main question is.... DO I need to wait or am I being overly paranoid?


Overly paranoid. When I weigh the risks of owning a small business, working for someone else or having control of 4 mil in assets I'll take the latter.

I think your cautious side is telling you to wait, it's a survival thing, quite handy human instinct up to a point. The real question you have to figure out, for yourself, is what is it that is making me hesitate. Once you identify and consider every issue you'll know your answer.
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Re: Can I retire comfortably?

Postby MoonOrb » Thu Feb 07, 2013 2:07 pm

If you assume 5% annual growth and 3.1% inflation, you could withdraw about $127k (in today's money) each year for the next 46 years, until you are 90. Not sure what the impact of taxes will be, though, and how much that will eat into your growth. This was according to an online calculator, I didn't do the math myself. This also assumes a $4M balance. If you do better than 5% annual growth, you're fine. But, only sort of, because that assumes a smooth rate of growth. If the market were to take a 20% dip in your mid-50s and then go through a roaring bull market as you approach age 90 to reach that average of 5%, you'd end up the poorer for it.

So I actually think it's a pretty close call. Is it possible to sell the business and still work for the next 5 years or so? Because if you could meet all of or most of your expenses by working for 5 years, you'd allow your money to grow for those 5 years (and shorten the period for which you needed the money) and dramatically increase the odds of this working out.

It seems like there should be a financial advisor who can run this type of analysis for you and it would be worth it to find that person and pay them.
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Re: Can I retire comfortably?

Postby K-Bogle » Thu Feb 07, 2013 2:43 pm

I guess this may be the wrong forum to talk like this, but if you need $100k of today's dollars for every year you live in your 80s and 90s (we're talking $300+k nominal dollars per year in your 80s assuming 3% annual inflation), good for you and I applaud your future health and vigor. Question I have is would you rather spend the next 5 years spending that $100k doing whatever you'll be doing in your 40's and cut back later if necessary in your 70s and 80s should things financially not quite go as planned.

Sometimes I'm a little surprised that age/quality of life isn't given more consideration in these discussions. It becomes so mathematical that the big picture may be missed. In a nutshell, to say it's a "pretty close call" surprises me a bit. But I haven't been around long enough I guess.
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Re: Can I retire comfortably?

Postby wjo » Thu Feb 07, 2013 2:53 pm

Why is this an either/or situation?

If I were you, I would cash out and find another paid position in a line of work that is more enjoyable. If you have grown your business to the size you say, well, why wouldn't a charity want to employ you? You have the ability to reinvent who you are -- sell you business and get involved in something else that pays less but gives you more flexibility. Could be part time. At 44, I wouldn't leave the work world entirely - too easy to be bored. Some kind of remuneration would allow you to stretch the money basically forever with little risk.
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Re: Can I retire comfortably?

Postby NYBoglehead » Thu Feb 07, 2013 2:55 pm

MoonOrb wrote:If you assume 5% annual growth and 3.1% inflation, you could withdraw about $127k (in today's money) each year for the next 46 years, until you are 90. Not sure what the impact of taxes will be, though, and how much that will eat into your growth. This was according to an online calculator, I didn't do the math myself. This also assumes a $4M balance. If you do better than 5% annual growth, you're fine. But, only sort of, because that assumes a smooth rate of growth. If the market were to take a 20% dip in your mid-50s and then go through a roaring bull market as you approach age 90 to reach that average of 5%, you'd end up the poorer for it.

So I actually think it's a pretty close call. Is it possible to sell the business and still work for the next 5 years or so? Because if you could meet all of or most of your expenses by working for 5 years, you'd allow your money to grow for those 5 years (and shorten the period for which you needed the money) and dramatically increase the odds of this working out.

It seems like there should be a financial advisor who can run this type of analysis for you and it would be worth it to find that person and pay them.


Don't forget Social Security at 62/66/70. Probably makes the most sense for the OP to wait until 70 since he has a nice portfolio to live on between now and then. I'll reiterate my recommendation to work part-time for a few years to eliminate some of the zeros in the SS benefit calculation and to stay a little busy/provide a little income to supplement the portfolio.

Sell the business and enjoy your retirement!!
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Re: Can I retire comfortably?

Postby vital15 » Thu Feb 07, 2013 2:58 pm

Can you find a buyer that would want to keep you on as an employee for a couple of years and continue leading the business?
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Re: Can I retire comfortably?

Postby MoonOrb » Thu Feb 07, 2013 3:00 pm

NYBoglehead wrote:Don't forget Social Security at 62/66/70. Probably makes the most sense for the OP to wait until 70 since he has a nice portfolio to live on between now and then. I'll reiterate my recommendation to work part-time for a few years to eliminate some of the zeros in the SS benefit calculation and to stay a little busy/provide a little income to supplement the portfolio.

Sell the business and enjoy your retirement!!


It seems like several of us agree that while it might be a good idea to sell the business now, there are significant upsides if the OP continues to work for the next several years, right?
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Re: Can I retire comfortably?

Postby soccerdad12 » Thu Feb 07, 2013 3:02 pm

vital15 wrote:Can you find a buyer that would want to keep you on as an employee for a couple of years and continue leading the business?



That is definitely what they would want to do, but not what I would want to do.

I never said I didn't like my work or that I needed something less demanding. To tell you the truth I think I have about the best gig I could ever imagine with total flexibility. To me the issue is if I should take my chips off the table now or not and if I did take the chips off, would that be enough.
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Re: Can I retire comfortably?

Postby NYBoglehead » Thu Feb 07, 2013 3:07 pm

soccerdad12 wrote:
vital15 wrote:Can you find a buyer that would want to keep you on as an employee for a couple of years and continue leading the business?



That is definitely what they would want to do, but not what I would want to do.

I never said I didn't like my work or that I needed something less demanding. To tell you the truth I think I have about the best gig I could ever imagine with total flexibility. To me the issue is if I should take my chips off the table now or not and if I did take the chips off, would that be enough.


I think if you took the chips off the table now you'd have enough chips. That is a lot of money, and you said you've only got another 5 years left on the mortgage, which will lower your expenses in the not too distant future.
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Re: Can I retire comfortably?

Postby freebeer » Thu Feb 07, 2013 3:21 pm

To me the bigger issue here is not whether you could exit your business now and be essentially set for life - I think you can if your projection about sale price are realistic.

But a more important issue may be the likely trajectory of the business and your interest in staying part of it. Is this a very stable business that you can be pretty sure of selling for similar amount 3, 5, 10 years from now? Or (like most businesses) is there a chance that it could go downhill, or conversely explode into something much larger? If you are on a growth ramp now then presumably much of the value factoring into a sale price would be the buyer's expectation of growth... what if that doesn't come through? Also how much of the value of the business is provided by you personally? I'm a tech guy so in my world whether you are a startup or established everything is very dynamic... if I were looking to get "set" financially then I might be very tempted to "sell while the selling's good".

Another option is to bring in private equity. I know another bootstrapped company founder who did that and has stayed on in his CEO role. You get liquidity and financial stability without giving up the job you love and retain upside if you can keep things growing. OTOH he seems to be under even more stress now re: company performance.
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Re: Can I retire comfortably?

Postby btenny » Thu Feb 07, 2013 3:28 pm

I have a good friend who was in the same position as you. He had a great CPA practice and was offered a buyout for one of the BIg 4. He decided to start a software company to see if that was more fun. He did that for 3ish more years and then sold that as well as the CPA deal. He is now one of the key guys in a national charity and working just as hard as ever (and getting paid but not as much) but in another city. He could not set around and wanted to help others. Are you sure you will really want to retire or do you have other ideas and thoughts? In my view those other ideas or plans may be more important than how much money you have. Remember you only a have a few years to do what you really really want. So what do you really want to do next year?

Your choice.
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Re: Can I retire comfortably?

Postby Clearly_Irrational » Thu Feb 07, 2013 3:34 pm

Yes, you can retire on $4M no problem, however given your age, income preference and passivity requirement should you?

Given your age I wouldn't recommend a depleting withdrawal rate, the time period is too long and there are too many variables. A good estimate of the non-depleting withdrawal rate is dividends + interest on your portfolio. At your age an appropriate stock/bond mix would be 56/44 so that produces roughly 2.34% at today's rates. With your income preference and portfolio size you need 2.5% so I'd say hang in there for just a bit longer. Pay off your house, grow the business a bit and around $4.3M or so you're golden. Obviously this is a pretty trivial analysis and you should do something much more detailed before making your final decision.
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Re: Can I retire comfortably?

Postby NYBoglehead » Thu Feb 07, 2013 3:44 pm

Clearly_Irrational wrote:Yes, you can retire on $4M no problem, however given your age, income preference and passivity requirement should you?

Given your age I wouldn't recommend a depleting withdrawal rate, the time period is too long and there are too many variables. A good estimate of the non-depleting withdrawal rate is dividends + interest on your portfolio. At your age an appropriate stock/bond mix would be 56/44 so that produces roughly 2.34% at today's rates. With your income preference and portfolio size you need 2.5% so I'd say hang in there for just a bit longer. Pay off your house, grow the business a bit and around $4.3M or so you're golden. Obviously this is a pretty trivial analysis and you should do something much more detailed before making your final decision.


I'd take the money if that's what you could get for it today. As I've posted several times on this thread, doing something else for a short period of time or working part-time for a few years will help provide a ballast against draining your portfolio too early and it will eliminate some zeros in the calculation of your social security benefits when the time comes.
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Re: Can I retire comfortably?

Postby Watty » Thu Feb 07, 2013 3:56 pm

You can run your numbers in Firecalc to see how you would have done historically.

http://www.firecalc.com/

One thing to keep in mind is if you want to spend $100,000 a year then you will actually need more income to have that much after paying your taxes, maybe $125K or more so be sure to use a higher figure in your calculations.

If you are planning on paying for your kid's college then you should also subtract out the college funds from your retirement calculations.
You should likely have at least three income targets; While the kids are at home, from when they leave until Social security and Medicare start, and after Medicare and Social security start. At some point you may also want to move to a smaller house.

I would also look at what your "plan B" is in case you run short of funds after being retired for a while. With a paid off house I would think that you could still live very comfortably on say $75K if you had to if that meant you didn't have to go back to work. Being able to cut back significantly is a huge advantage since it means that you can use a more aggressive withdrawal strategy since you can cut back if your need to.
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Re: Can I retire comfortably?

Postby soccerdad12 » Thu Feb 07, 2013 5:15 pm

I already have the kids college paid for. That isn't an issue. My youngest will be in college within 4 years, so I have already incurred most of the costs for the kids. Social security is another issue. I don't want to get political, but I am not counting on any as it very well could be means-tested at that point. Hope I am wrong, but that would be a nice bonus to get. Lord knows I paid a ton into it.
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Re: Can I retire comfortably?

Postby michaelsieg » Thu Feb 07, 2013 5:49 pm

I think the financial aspects are only one aspect of your problem/decision. The decision what you want to do (and it really depends on what you want) also depends if you like the work you are doing. I assume that your business was very successful and you spent a huge amount of your energy and time to build it. If you went full blast for years putting all your efforts in your business, there is a possibility that coming to a dead stop all at once could be difficult to cope with. It might be a good idea to slow down gradually, even if financially you might not need to do that. I am not sure about the line of business you are in, but maybe you could consider something between the all or nothing approach (i.e. working at full speed or fully retire), maybe you could hire someone to run the business and you stay on part time. That would give you time to engage in whatever activities that you like to do and you would soon find out if you are ready to completely retire. On the financial side one thing that has not been mentioned is the cost of grad schools, should your kids decide to go that route after college.
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Re: Can I retire comfortably?

Postby BolderBoy » Thu Feb 07, 2013 9:37 pm

soccerdad12 wrote:Social security is another issue. I don't want to get political, but I am not counting on any as it very well could be means-tested at that point. Hope I am wrong, but that would be a nice bonus to get. Lord knows I paid a ton into it.


sscritic can tell you more, but if you retire at 44, even if you maxed the wage base out since you started working, you'll not get much back when it comes time and your number is up. Consider that the payment you get back is based on your highest 35 years of earnings and you are going to have a lot of years of ZERO to be factored in.

It takes some fiddling, but you can use the SS calculator at ssa.gov to show just how little you'll get.

Soooooo, in your case it most definitely makes sense to assume you'll see ZERO from SS (even if you see some) for purposes of your calculations.

As an aside, I'm not the expert the others are about this, but my take is that virtually no one should "enter retirement" with big debts still underfoot - such as your mortgage. Work another year (the taxes be damned) in this job you say is "the best gig you can imagine", become completely debt free, then skip off into the sunset.
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Re: Can I retire comfortably?

Postby wesleymouch » Thu Feb 07, 2013 9:40 pm

I am 57 and would like to retire. I have about a $6.4 mill net worth and we spend $70,000 per year. That does not include health insurance costs in retirement. I am struggling with whether to work another 2 to 3 years just to make sure I have enough. Personally I would be hesitant to retire that young in such uncertain economic times. I would sell the business and take the cash. I have relatives who had multimillion dollar businesses that became worthless (one is in Venezuela).
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Re: Can I retire comfortably?

Postby K-Bogle » Thu Feb 07, 2013 10:09 pm

wesleymouch wrote:I am 57 and would like to retire. I have about a $6.4 mill net worth and we spend $70,000 per year. That does not include health insurance costs in retirement. I am struggling with whether to work another 2 to 3 years just to make sure I have enough. Personally I would be hesitant to retire that young in such uncertain economic times. I would sell the business and take the cash. I have relatives who had multimillion dollar businesses that became worthless (one is in Venezuela).


57 years old, $6.4 million, and $70k yearly expenses...now I've seen it all. Strikes me your social security + medicare alone should cover all potential medical costs. That leaves $6.4 million to last what, 40 years? Let's say we average 3.5% inflation over the next 40 years, my calculations say you'd still only spend about $6 million. That means you have enough right now with no growth whatsoever to cover all of your inflation-adjusted costs for the next 40 years.
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Re: Can I retire comfortably?

Postby BHCadet » Thu Feb 07, 2013 11:22 pm

I would use http://www.immediateannuities.com/ as one of the benchmarks to help me to make my decision.
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Re: Can I retire comfortably?

Postby Watty » Thu Feb 07, 2013 11:27 pm

wesleymouch wrote:I am 57 and would like to retire. I have about a $6.4 mill net worth and we spend $70,000 per year. That does not include health insurance costs in retirement. I am struggling with whether to work another 2 to 3 years just to make sure I have enough.


It would be good to find a fee only financial advisor that charges by the hour to give you an opinion on if you can safely retire now if you want to. I think you will be pleased with what they say about your situation.
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Re: Can I retire comfortably?

Postby soar » Fri Feb 08, 2013 12:02 am

soccerdad12 wrote:
vital15 wrote:Can you find a buyer that would want to keep you on as an employee for a couple of years and continue leading the business?

That is definitely what they would want to do, but not what I would want to do.

Why not? if you can answer that question it might help you make a decision.
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Re: Can I retire comfortably?

Postby AQ » Fri Feb 08, 2013 1:58 am

Nobody commented on OP's question about uncertainty on health care cost? OP and his wife are very healthy but isn't insurance for unexpected?

I have about 4mm in investable assets and several years older than OP, but are afraid to quit yet. The biggest concern is health care cost. According to my W-2, my employer paid more than 20K for my insurance. I imagine I'd pay more if I buy an individual policy myself (for a family of 3)..
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Re: Can I retire comfortably?

Postby NYBoglehead » Fri Feb 08, 2013 8:39 am

I think we get a little overboard sometimes about what [i]could[i] happen. $4 million is a lot of money, even if the OP buys what for most would be an insanely expensive insurance policy he still will have a ton of money.

On the Social Security front, while he will have quite a few zeros his earnings during the working years were high and OP you should definitely run the numbers on your anticipated benefit. Not to be repetitive, but I have advocated several times on this thread to work part-time for a few years to eliminate some zeros for Social Security benefit purposes...just saying.

To the poster with $6.4 million at 57, I'd put in your retirement papers tomorrow.
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Re: Can I retire comfortably?

Postby Mitchell777 » Fri Feb 08, 2013 9:05 am

The "Can I retire" questions interest me. It often seems like the real question is "How much of a worrier are you". Yes, there are situations where everyone would say yes you can retire or no you cannot. However, most of the time reasonable people could disagree. Some will be comfortable saying 4% withdrawls (e.g. Trinity), indexed for inflation, is OK. Others may say it should be 3% if you feel you may live 40 more years (vs. 30). Others may look to the recent work of Dr Pfau that uses both stock and bond returns that MIGHT more reflect what will occur in the future (i.e. low returns). That work, if you only feel comfortable with a very low equity allocation may have you at ~ 2% withdrawls. In the end it depends on your comfort level and how much you'll worry as negative events hit you in retirement
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Re: Can I retire comfortably?

Postby Clearly_Irrational » Fri Feb 08, 2013 1:16 pm

wesleymouch wrote:I am 57 and would like to retire. I have about a $6.4 mill net worth and we spend $70,000 per year. That does not include health insurance costs in retirement. I am struggling with whether to work another 2 to 3 years just to make sure I have enough. Personally I would be hesitant to retire that young in such uncertain economic times. I would sell the business and take the cash. I have relatives who had multimillion dollar businesses that became worthless (one is in Venezuela).


You have more than twice what you need at even a super conservative withdrawal rate, if you feel like retiring then do so. In fact you have enough that increasing your spending might be a good idea.
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Re: Can I retire comfortably?

Postby MoonOrb » Fri Feb 08, 2013 1:29 pm

To be fair to the poster with the $6m+ net worth, he did say "net worth," so there could be liquidity issues that could provide more context for his feeling that he should continue to work. That all being said, if there is EVER a time I get to a $6M+ net worth, I'm finding a way to get it sufficiently liquid if I feel like I want to retire at that point.

Although this is likely in the category of "problems I wish I might have, but never will."
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Re: Can I retire comfortably?

Postby BolderBoy » Fri Feb 08, 2013 10:08 pm

NYBoglehead wrote:On the Social Security front, while he will have quite a few zeros his earnings during the working years were high and OP you should definitely run the numbers on your anticipated benefit. Not to be repetitive, but I have advocated several times on this thread to work part-time for a few years to eliminate some zeros for Social Security benefit purposes...just saying.


This is good advice. Compare it with missing X quizzes out of Y total that make up Z% of your total grade. Anything that can be done to elevate a zero helps quite a bit in the long run.
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Re: Can I retire comfortably?

Postby soccerdad12 » Wed Feb 13, 2013 11:45 am

To complete the loop I thought I would post back what I have decided to do.

I am going to ride it out for 2-3 more years. I will be able to have very high income for a couple more years and very sure that I can increase my personal payout on the business by an additional $1M in that time as the revenue of the business grows even larger.

One other note... I know I am very lucky to have this flexibility and I have decided as an interim step to only work 3 days / week. I think that is pretty good option while not make any final decisions either way.

Thanks to everyone for their great advice.

PS. Firecalc is about the best tool I have ever seen!
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Re: Can I retire comfortably?

Postby Clearly_Irrational » Wed Feb 13, 2013 1:08 pm

soccerdad12 wrote:I am going to ride it out for 2-3 more years. I will be able to have very high income for a couple more years and very sure that I can increase my personal payout on the business by an additional $1M in that time as the revenue of the business grows even larger.

One other note... I know I am very lucky to have this flexibility and I have decided as an interim step to only work 3 days / week. I think that is pretty good option while not make any final decisions either way.


Given your situation that sounds like a great plan.
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Re: Can I retire comfortably?

Postby NYBoglehead » Wed Feb 13, 2013 1:36 pm

Best of luck with the plan you have chosen, best wishes for continued success in your business.
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Re: Can I retire comfortably?

Postby travellight » Thu Feb 14, 2013 1:31 am

Good decision.... that's what I would have done too.
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