Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

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firefighter973
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Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

Windfall has me very heavy in cash right now. I'm mid 30s and want to retire in 12 months and live on a 2-4% withdrawal rate. I'll be selling my house then. I'm able to adjust spending down to 2% in bear markets and up to 4% in bull markets.

Does my planned allocation look ok? Too low on bonds? Should I just dump the cash in lump sum? DCA? I'm scared of buying in at record highs (But I also know you can't time the market etc)

Current Allocation
Cash 67.9% 1,660,000
Stocks USA 8% 196,000 VTSAX
Stocks International 4.7% 114,000 VTIAX
Bonds USA 3.3% 80,000 VBTLX
House Equity 11.1% 272,000
Crypto 5% 122,000
Total $2,450,000

Planned Allocation
Cash 2%
Stocks USA 53.3% VTSAX
Stocks International 26.7% VTIAX
Bonds USA 10% VBTLX
REIT 3% VGSLX - Because I won't own a personal home and feel VTSAX is underweighted in real estate
Crypto 5%
Total $2,450,000

Budget
Image
Last edited by firefighter973 on Fri Jan 15, 2021 2:02 pm, edited 1 time in total.
KlangFool
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by KlangFool »

OP,


A) What is your current annual expense?


B) My standard advice would be to keep 1 to 3 years of expense in CASH and at least 10 years of expense in fixed income/bond.


C) Skip REIT.


KlangFool
Topic Author
firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

KlangFool wrote: Fri Jan 15, 2021 1:42 pm OP,


A) What is your current annual expense?


B) My standard advice would be to keep 1 to 3 years of expense in CASH and at least 10 years of expense in fixed income/bond.


C) Skip REIT.


KlangFool
Current annual expense $30k. Plan to increase this to $50k-$95k in a bear/bull market, and travel the world. Willing to live in cheaper countries like Vietnam, Thailand, Mexico, Colombia for bear markets where $50k is still a ton of money.

The 2% cash in proposed plan would be 1 years of expenses.
magicrat
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by magicrat »

firefighter973 wrote: Fri Jan 15, 2021 1:45 pm
KlangFool wrote: Fri Jan 15, 2021 1:42 pm OP,


A) What is your current annual expense?


B) My standard advice would be to keep 1 to 3 years of expense in CASH and at least 10 years of expense in fixed income/bond.


C) Skip REIT.


KlangFool
Current annual expense $30k. Plan to increase this to $50k-$95k in a bear/bull market, and travel the world. Willing to live in cheaper countries like Vietnam, Thailand, Mexico, Colombia for bear markets where $50k is still a ton of money.

The 2% cash in proposed plan would be 1 years of expenses.
Are you including healthcare, taxes, and large, infrequent expenses in these numbers?
Topic Author
firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

magicrat wrote: Fri Jan 15, 2021 1:48 pm
firefighter973 wrote: Fri Jan 15, 2021 1:45 pm
KlangFool wrote: Fri Jan 15, 2021 1:42 pm OP,


A) What is your current annual expense?


B) My standard advice would be to keep 1 to 3 years of expense in CASH and at least 10 years of expense in fixed income/bond.


C) Skip REIT.


KlangFool
Current annual expense $30k. Plan to increase this to $50k-$95k in a bear/bull market, and travel the world. Willing to live in cheaper countries like Vietnam, Thailand, Mexico, Colombia for bear markets where $50k is still a ton of money.

The 2% cash in proposed plan would be 1 years of expenses.
Are you including healthcare, taxes, and large, infrequent expenses in these numbers?
Yes I've included those. Here is my budget I've made depending if I'm in a low, mid, or high cost country: Image
Nebraska_Drought
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Nebraska_Drought »

Someone beat me to it, but I was also thinking about healthcare for 30+ years and taxes during this time too. It may be best to sit down with a retirement planner, at least for a consultation, and make sure you have all your bases covered as you will be in it for a very long haul (retirement that is). Also, how would you pivot in case you got married and started a family?
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

Nebraska_Drought wrote: Fri Jan 15, 2021 1:59 pm Someone beat me to it, but I was also thinking about healthcare for 30+ years and taxes during this time too. It may be best to sit down with a retirement planner, at least for a consultation, and make sure you have all your bases covered as you will be in it for a very long haul (retirement that is). Also, how would you pivot in case you got married and started a family?
I have no interest in marriage or kids, I did include healthcare and taxes in my budget above :)
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simplesimon
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by simplesimon »

No one can tell you what the "correct" allocation is, but yours doesn't look unreasonable. I prefer the simplicity of a 3-4 fund portfolio.

Since you have multiple budgets and seem like a planner, I'm sure you'll be fine. Good luck with everything.
ponyboy
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by ponyboy »

Keep working. You currently do not have enough.
Nebraska_Drought
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Nebraska_Drought »

firefighter973 wrote: Fri Jan 15, 2021 2:00 pm
Nebraska_Drought wrote: Fri Jan 15, 2021 1:59 pm Someone beat me to it, but I was also thinking about healthcare for 30+ years and taxes during this time too. It may be best to sit down with a retirement planner, at least for a consultation, and make sure you have all your bases covered as you will be in it for a very long haul (retirement that is). Also, how would you pivot in case you got married and started a family?
I have no interest in marriage or kids, I did include healthcare and taxes in my budget above :)
$125 to $275 a month, even for a single person, does not seem adequate for healthcare (I guess I am assuming healthcare insurance) even if you were part of a group plan, it would be more. How are you accomplishing healthcare/coverage for such a cheap rate?
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Wiggums
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Wiggums »

Congratulations. You put a lot of thought into your budget.

taxes on capital gains from your large taxable portfolio?

I don’t know the answer to this, but will you be able to manage your brokerage account from a foreign country? how Do you get you’re spending cash from the broker to you? Just curious
Last edited by Wiggums on Fri Jan 15, 2021 2:20 pm, edited 2 times in total.
Topic Author
firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

Nebraska_Drought wrote: Fri Jan 15, 2021 2:15 pm
firefighter973 wrote: Fri Jan 15, 2021 2:00 pm
Nebraska_Drought wrote: Fri Jan 15, 2021 1:59 pm Someone beat me to it, but I was also thinking about healthcare for 30+ years and taxes during this time too. It may be best to sit down with a retirement planner, at least for a consultation, and make sure you have all your bases covered as you will be in it for a very long haul (retirement that is). Also, how would you pivot in case you got married and started a family?
I have no interest in marriage or kids, I did include healthcare and taxes in my budget above :)
$125 to $275 a month, even for a single person, does not seem adequate for healthcare (I guess I am assuming healthcare insurance) even if you were part of a group plan, it would be more. How are you accomplishing healthcare/coverage for such a cheap rate?
Health insurance outside the USA is very cheap, I've gotten quotes from Cigna for it. I plan to travel the world full-time, only returning to the USA for a week every 5 years.
flyingaway
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by flyingaway »

If it were me, I would have about 30% in fixed income.

Looks like you plan to have an expat and early retiree lifestyle. As far as I know, some of them have blogs or Youtube channels to make some money. When you are bored, that might take some of your boring time and make some money for you.
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
Looking at my budget, I think I have much more than needed already.
1andDone
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by 1andDone »

ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
lol, seriously? Only in this crazy Bogleheads bubble world is $2.5M not enough to retire on with a $50k/year mid-range budget.
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

My first 3-5 years of retirement will be around 45-50k annual expenses in low cost countries.

Afterwards, I'll increase to my upper budget of 90k and start living in higher cost countries (Amsterdam, Tokyo)
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Da5id »

Nebraska_Drought wrote: Fri Jan 15, 2021 2:15 pm
firefighter973 wrote: Fri Jan 15, 2021 2:00 pm
Nebraska_Drought wrote: Fri Jan 15, 2021 1:59 pm Someone beat me to it, but I was also thinking about healthcare for 30+ years and taxes during this time too. It may be best to sit down with a retirement planner, at least for a consultation, and make sure you have all your bases covered as you will be in it for a very long haul (retirement that is). Also, how would you pivot in case you got married and started a family?
I have no interest in marriage or kids, I did include healthcare and taxes in my budget above :)
$125 to $275 a month, even for a single person, does not seem adequate for healthcare (I guess I am assuming healthcare insurance) even if you were part of a group plan, it would be more. How are you accomplishing healthcare/coverage for such a cheap rate?
Assuming he can get a heavily subsidized ACA plan he could pay in that range. Maybe even qualify for Medicare?
Grt2bOutdoors
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Grt2bOutdoors »

firefighter973 wrote: Fri Jan 15, 2021 2:17 pm
Nebraska_Drought wrote: Fri Jan 15, 2021 2:15 pm
firefighter973 wrote: Fri Jan 15, 2021 2:00 pm
Nebraska_Drought wrote: Fri Jan 15, 2021 1:59 pm Someone beat me to it, but I was also thinking about healthcare for 30+ years and taxes during this time too. It may be best to sit down with a retirement planner, at least for a consultation, and make sure you have all your bases covered as you will be in it for a very long haul (retirement that is). Also, how would you pivot in case you got married and started a family?
I have no interest in marriage or kids, I did include healthcare and taxes in my budget above :)
$125 to $275 a month, even for a single person, does not seem adequate for healthcare (I guess I am assuming healthcare insurance) even if you were part of a group plan, it would be more. How are you accomplishing healthcare/coverage for such a cheap rate?
Health insurance outside the USA is very cheap, I've gotten quotes from Cigna for it. I plan to travel the world full-time, only returning to the USA for a week every 5 years.
Funny thing about health insurance companies or rather insurance companies in general, they can reprice their insurance book of business rather quickly. Others have suggested that you keep working and in that same plane I suggest you build in a buffer of 20 percent on top of your overall detailed budget for the “high” cost. You’re running too lean.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
mikejuss
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by mikejuss »

You're in your mid-30s, with a plan to live on a fairly frugal budget for the rest of your life. The fact is that no one--not even you--can predict what changes will happen in your life over the next 40 or 50 years. (For example, perhaps you'll change your mind about marriage and children.) I'd keep working (maybe part-time) for a few years and take stock of your priorities again at 40. If you want to take time off from work now, post-windfall, go for it! But I wouldn't recommend planning your retirement at this point.
Last edited by mikejuss on Fri Jan 15, 2021 2:46 pm, edited 6 times in total.
hnd
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by hnd »

1andDone wrote: Fri Jan 15, 2021 2:19 pm
ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
lol, seriously? Only in this crazy Bogleheads bubble world is $2.5M not enough to retire on with a $50k/year mid-range budget.

i giggled too. He could move it all to cash and spend 100k a year and it would take him 25 years to eliminate his nest egg. factor in even a 2 % return on investment puts him at 30 years, 3% at 47 years. I'd take that bet.
boogiehead
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by boogiehead »

What about retirement accounts (i.e. ira, 401k, pension, etc...)? I would strategically try to allocate some money there if you are planning for early retirement for more tax friendly options down the road.
thedane
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by thedane »

Go travel! I like your style.

I do however suggest to carefully review the various (travel) insurance policies and what they actually cover. What if you get a major illness (cancer for example) while abroad? Will that cover ongoing treatments, and long term treatments?
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Watty
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Watty »

Being just 10% bonds is way too aggressive for retired person even if you are relatively young.

For comparison the Vanguard Retirement income fund is about 70% bonds.

https://investor.vanguard.com/mutual-fu ... olio/vtinx

All but the most aggressive Life Strategy funds are at least 40% bonds.

https://investor.vanguard.com/mutual-fu ... trategy/#/

In that budget chart you have all sorts of details but you are missing taxes in your budget for the lower and mid options. Even if you you will not be spending a lot of money it is overly optimistic to think you will not have to pay any income taxes.

Those will need to be paid just like any other spending line item.
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

Watty wrote: Fri Jan 15, 2021 2:56 pm In that budget chart you have all sorts of details but you are missing taxes in your budget for the lower and mid options. Even if you you will not be spending a lot of money it is overly optimistic to think you will not have to pay any income taxes.

Those will need to be paid just like any other spending line item.
0 taxes in those budgets, because it will be long term capital gains on up to $52,950 per year. 0% state tax also.
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Gattamelata
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Gattamelata »

I'm having trouble understanding your budget.

Why does your health insurance cost go up depending on how much you expect to be able to withdraw safely from your portfolio? I've never had an insurance plan that worked that way.

Is this a budget for the first year of retirement, or all years of retirement? I think you need to factor in that the cost of health insurance increases as the insured ages (and, historically, over time even factoring out the age of the insured), and it's not a linear increase. This seems to me to be major flaw in the budget moving forward.

You mentioned in a reply that you included taxes, but I only see a long term capital gains tax in the Upper End budget. Am I missing something? Are you expecting to pay no taxes under the first two spending schemes?

I agree with KlangFool that the REIT slice is unnecessary. Even given your premise (that VTSAX lacks proper real estate weighting), how do you see that 3% slice acting in your portfolio? Will you rebalance into and out of it? Do you see a $75,000 REIT position providing enough ballast in your asset allocation to save your portfolio in the event of some even that crushes your other asset classes? I don't see how it's big enough to save you in that case. I'd say the same for the crypto slice, although I know that's currently a popular speculation right now. I wouldn't call it a part of your asset allocation, though.

In any case, do you want to be slicing and dicing while living your expat life? I certainly wouldn't, and I'd want the simplest possible portfolio so that I don't have to check it constantly or monitor different financial sectors during retirement, but maybe that's something you'll enjoy.

Congratulations on finding yourself in this position. I think even if you are persuaded that you can't retire in a year, you're not far off.
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

boogiehead wrote: Fri Jan 15, 2021 2:51 pm What about retirement accounts (i.e. ira, 401k, pension, etc...)? I would strategically try to allocate some money there if you are planning for early retirement for more tax friendly options down the road.
Current retirement accounts
Traditional 401k $234,000 - bond fund will go here
Roth IRA $151,000 - REIT, USA and International stock funds
HSA $22,000 - USA stock funds
Taxable - USA and International stock funds
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

Gattamelata wrote: Fri Jan 15, 2021 3:07 pm Why does your health insurance cost go up depending on how much you expect to be able to withdraw safely from your portfolio? I've never had an insurance plan that worked that way.

Is this a budget for the first year of retirement, or all years of retirement? I think you need to factor in that the cost of health insurance increases as the insured ages (and, historically, over time even factoring out the age of the insured), and it's not a linear increase. This seems to me to be major flaw in the budget moving forward. - Cigna insurance, it's worldwide (except USA) insurance. Very good policies, includes full cancer treatment and everything. The different amounts are just whether I pick the $5k deductible plan, or $0 deductible plan.

You mentioned in a reply that you included taxes, but I only see a long term capital gains tax in the Upper End budget. Am I missing something? Are you expecting to pay no taxes under the first two spending schemes? - Long term capital gains is 0% tax on the first $52,950 per year.
gougou
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by gougou »

Skip Crypto. Pure bubble. Otherwise looks OK to me.
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

gougou wrote: Fri Jan 15, 2021 3:16 pm Skip Crypto. Pure bubble. Otherwise looks OK to me.
A 1% crypto, 99% cash portfolio has outperformed S&P at mostly any point over the past decade.

Image
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Gattamelata
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Gattamelata »

firefighter973 wrote: Fri Jan 15, 2021 3:13 pm Cigna insurance, it's worldwide (except USA) insurance. Very good policies, includes full cancer treatment and everything. The different amounts are just whether I pick the $5k deductible plan, or $0 deductible plan.
And do they not charge higher premiums for a 55 year old than for a 35 year old? That's what I was calling out with that specific comment. Premiums will go up as you age. This budget doesn't appear to account for that.
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sergeant
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by sergeant »

Are you a firefighter? You should have some sort of pension. I don't see it listed. I think there is no reason for the crypto or Reit fund but you have already made up your mind. If you were my son asking this I would recommend a 70/30 AA with three years of expenses in cash. Good luck with your retirement.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by QuirkyEar »

KlangFool wrote: Fri Jan 15, 2021 1:42 pm OP,


A) What is your current annual expense?


B) My standard advice would be to keep 1 to 3 years of expense in CASH and at least 10 years of expense in fixed income/bond.


C) Skip REIT.


KlangFool
Why skip REIT? Aren't they useful for portfolio diversification?
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

sergeant wrote: Fri Jan 15, 2021 3:41 pm Are you a firefighter? You should have some sort of pension. I don't see it listed. I think there is no reason for the crypto or Reit fund but you have already made up your mind. If you were my son asking this I would recommend a 70/30 AA with three years of expenses in cash. Good luck with your retirement.
Not a firefighter. My uncle is. Previous post history is related to his financials.
Thank you!
KlangFool
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by KlangFool »

QuirkyEar wrote: Fri Jan 15, 2021 3:45 pm
KlangFool wrote: Fri Jan 15, 2021 1:42 pm OP,


A) What is your current annual expense?


B) My standard advice would be to keep 1 to 3 years of expense in CASH and at least 10 years of expense in fixed income/bond.


C) Skip REIT.


KlangFool
Why skip REIT? Aren't they useful for portfolio diversification?
QuirkyEar,

The simple answers are

A) Public listed REIT is not big enough to represent the overall REIT. Private REIT is much bigger than Public listed REIT by several times.


B) When the Public REIT is overpriced, more private REIT will be publicly listed.


C) When the Public REIT is undervalued, it is taken private.


Essentially, Public REIT is the worse deal in terms of the overall REIT market.


KlangFool
BW1985
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by BW1985 »

firefighter973 wrote: Fri Jan 15, 2021 2:19 pm
ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
Looking at my budget, I think I have much more than needed already.
You do. People on this site are conservative to a fault, IMO.
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
aristotelian
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by aristotelian »

For any allocation you can find a failsafe historical withdrawal rate, so it really depends on where you have the most flexibility and risk tolerance. Do you have a set budget, or can you cut back on discretionary spending? Which would you prefer, a more aggressive withdrawal rate allowing more spending power, or a more conservative portfolio that helps you sleep at night?

For long retirements, equity heavy portfolios are the most likely to stay ahead of inflation. This is especially true the more aggressive your withdrawal rate. On the other hand, equities are most volatile and vulnerable to sequence of returns risk. Bonds are less volatile, but have lower return and reduce long term success rate. The higher your bond allocation, the more you should lower your withdrawal rate due to the lower expected return of your portfolio.

If you can really tolerate 50% fluctuation in your budget, then you could use VPW and be guaranteed not to run out of money, ever, regardless of your allocation.

If you do crypto, don't count it in your allocation, at least for the purposes of Safe Withdrawal Rate. There is no way to assess its value, and there is no way to predict how it will play with other asset classes over time.

I am planning to retire early (or at least have the capacity to do so) around Age 50. I currently have 75/25 allocation and will probably bring it down to 70/30 or 66/33.
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firefighter973
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by firefighter973 »

aristotelian wrote: Fri Jan 15, 2021 4:33 pm
If you can really tolerate 50% fluctuation in your budget, then you could use VPW and be guaranteed not to run out of money, ever, regardless of your allocation.

I will have no heirs. Should I buy part of a single fixed income annuity? Dying with a near 0 networth is the goal.
BW1985
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by BW1985 »

1andDone wrote: Fri Jan 15, 2021 2:19 pm
ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
lol, seriously? Only in this crazy Bogleheads bubble world is $2.5M not enough to retire on with a $50k/year mid-range budget.
Yeah lol. 3% is a very conservative SWR. That's $75k/year, more than the median HHI in the US. :confused
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
aristotelian
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by aristotelian »

firefighter973 wrote: Fri Jan 15, 2021 4:39 pm
aristotelian wrote: Fri Jan 15, 2021 4:33 pm
If you can really tolerate 50% fluctuation in your budget, then you could use VPW and be guaranteed not to run out of money, ever, regardless of your allocation.

I will have no heirs. Should I buy part of a single fixed income annuity? Dying with a near 0 networth is the goal.
Inflation is the biggest issue with those. You should definitely check out VPW (Variable Percentage Withdrawal). Unfortunately it doesn't really allow you to retire any earlier but you will be able to spend more the older you get.
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Da5id »

firefighter973 wrote: Fri Jan 15, 2021 4:39 pm
aristotelian wrote: Fri Jan 15, 2021 4:33 pm
If you can really tolerate 50% fluctuation in your budget, then you could use VPW and be guaranteed not to run out of money, ever, regardless of your allocation.

I will have no heirs. Should I buy part of a single fixed income annuity? Dying with a near 0 networth is the goal.
Staying flexible is good. You are in your 30s, goals could easily change. I hope the retired life works for you if travelling gets old, as your peers will all be working.
flyingaway
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by flyingaway »

thedane wrote: Fri Jan 15, 2021 2:52 pm Go travel! I like your style.

I do however suggest to carefully review the various (travel) insurance policies and what they actually cover. What if you get a major illness (cancer for example) while abroad? Will that cover ongoing treatments, and long term treatments?
I guess the OP can come back to the U.S. and get a medicaid or ACA with pre-existing conditions.
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by 2tall4economy »

firefighter973 wrote: Fri Jan 15, 2021 2:21 pm My first 3-5 years of retirement will be around 45-50k annual expenses in low cost countries.

Afterwards, I'll increase to my upper budget of 90k and start living in higher cost countries (Amsterdam, Tokyo)
Good luck to you. I think you're fine right now, but you've got a LONG road ahead and a partner and potentially kids have a way of happening even to those who don't want / didn't plan for it.

Nothing wrong with travelling the world for a bit but honestly you don't want to end up in a position where you're unemployable because you haven't worked for so long and don't already have a side business (like youtube), have an unexpected life event and then feel like you're destitute...

On a side note, you're kidding yourself if you think you can live reasonably on $90k per year in Tokyo. Or Seoul, or New York, or Singapore or any other HCOL city. Unless you plan on having roommates of course. Nothing wrong with that for a while but eventually you won't want roommates around...
You can do anything you want in life. The rub is that there are consequences.
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by TravelGeek »

I personally wouldn’t bother with crypto and REITs (and don’t), but I suspect it isn’t really going to make a significant difference.

Overall, I think your plan should work from a budget perspective. Some things to consider:

- do you have any experience living abroad and/or traveling for long periods of time? If not, it might not turn out to be as much fun after a while as it reads in blog articles.

- do you have enough credits for social security and Medicare?
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by CoAndy »

TravelGeek wrote: Fri Jan 15, 2021 5:20 pm I personally wouldn’t bother with crypto and REITs (and don’t), but I suspect it isn’t really going to make a significant difference.

Overall, I think your plan should work from a budget perspective. Some things to consider:

- do you have any experience living abroad and/or traveling for long periods of time? If not, it might not turn out to be as much fun after a while as it reads in blog articles.

- do you have enough credits for social security and Medicare?
+1
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by Strayshot »

I would go 100% crypto. Don’t lose your private key and you will be fine!
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by geerhardusvos »

ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
Utter BS. OP financially independent.

OP, I recommend keeping it simple. You don’t need crypto or reits... just stick with a three fund portfolio.

You can spend ~$70K per year for the rest of your life increased with inflation each year. That’s bulletproof, and you can likely spend more in a great market.
VTSAX and chill
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by geerhardusvos »

firefighter973 wrote: Fri Jan 15, 2021 4:39 pm
aristotelian wrote: Fri Jan 15, 2021 4:33 pm
If you can really tolerate 50% fluctuation in your budget, then you could use VPW and be guaranteed not to run out of money, ever, regardless of your allocation.

I will have no heirs. Should I buy part of a single fixed income annuity? Dying with a near 0 networth is the goal.
You don’t need an annuity. In fact, you won’t do any better than 80% VTSAX, and 20% in your favorite bond fund.
VTSAX and chill
deanmoriarty
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by deanmoriarty »

ponyboy wrote: Fri Jan 15, 2021 2:13 pm Keep working. You currently do not have enough.
Could you substantiate your claim with numbers or a bit more content?
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slow n steady
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by slow n steady »

To make this work you need two things, money and flexibility. Money looks good and it sounds like you're ready to be flexible.

Now start a YouTube channel so I can live vicariously through you.

Good luck!
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Re: Retiring early from windfall, mid 30s, what is the correct asset allocation to use?

Post by radiowave »

OP, what a great plan, I wish you well, safe travels, please check in with us from time to time.

A practical question, have you thought how you will manage your funds while abroad and manage withdrawals and cash flow?
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