Preparing for retirement in mid 30s

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TomatoTomahto
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Re: Preparing for retirement in mid 30s

Post by TomatoTomahto »

tibbitts wrote: Thu Sep 17, 2020 8:13 am Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range.
Did they stop looking at assets? Unlikely to be tuition free with $1.5M in assets, nor imo should it be.
Okay, I get it; I won't be political or controversial. The Earth is flat.
runner540
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Re: Preparing for retirement in mid 30s

Post by runner540 »

tibbitts wrote: Thu Sep 17, 2020 8:04 am
runner540 wrote: Thu Sep 17, 2020 6:51 am ...call it a sabbatical or something, before you completely pull the plug. Test out the budget, lifestyle change and location change will work for your whole family.
You can call it anything you want but you employer will likely call it "resignation." Very, very few employers have any kind of provision for anything approaching a "sabbatical." So in effect you are completely pulling the plug.
Of course. I meant resign, take a break (call it that externally), then decide if you want to announce to your network that you “retired”. If you need to, Coming back to the job market after a year “Self funded sabbatical” is going to be a lot easier than 5 years after “retiring”
vtjon02
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Re: Preparing for retirement in mid 30s

Post by vtjon02 »

lecithar wrote: Wed Sep 16, 2020 8:21 pm
TxAg wrote: Wed Sep 16, 2020 7:55 pm I agree with public college. Is that cost included in the $45k/yr?
When my wife and I die, they will inherit a good chunk of money. It will be roughly equivalent to an inflation-adjusted 1.5M today. Because my retirement plan is to only spend 3% plus inflation and counts on portfolio growth of 3% plus inflation, the true value remains the same forever.
OP a real return of 3% is ambitious.

You are also taking a huge risk related to healthcare costs. 15 years ago there was no ACA or related subsidies. Our political environment is volatile and things could easily change.

Strongly suggest you not do this until you have enough funds to pay cash for a home in a LCOL area plus 2 years of projected living expenses beyond current savings. Then would suggest that you rent a home in the LCOL area for two years and see if you and your family can comfortably live on your projected living expense budget. I'd suggest working during this trial period so that you have health insurance but also can qualify for a mortgage.

If the plan fails, it was a sabbatical and your credentials should still be relevant to find a new job. The money from your expected home purchase will help establish you again in a higher COL area where you can go back to your prior work. If you succeed, buy a home with 20% down, get a mortgage to hedge inflation risk over such a long retirement period, and enjoy life. Use the 80% of the home purchase fund as a cash buffer since your equity allocation will be high for a retiree.

Lastly, I'd strongly recommend diversifying into international equities.
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Orbuculum Nongata
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Re: Preparing for retirement in mid 30s

Post by Orbuculum Nongata »

lecithar wrote: Wed Sep 16, 2020 5:40 pm
"Do you see any big problems with our plan?" YES, THIS > "we cannot fail."
ANY plan has to be able to fail.
I think I can > I believe I can > I did
absolute zero
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Re: Preparing for retirement in mid 30s

Post by absolute zero »

lecithar wrote: Wed Sep 16, 2020 10:08 pm My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.
I read this and simultaneously thought:
(1) That’s a strange comment
and
(2) That describes ME exactly

I guess we have similar personality types. :beer
sailaway
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Re: Preparing for retirement in mid 30s

Post by sailaway »

Orbuculum Nongata wrote: Thu Sep 17, 2020 8:58 am
lecithar wrote: Wed Sep 16, 2020 5:40 pm
"Do you see any big problems with our plan?" YES, THIS > "we cannot fail."
ANY plan has to be able to fail.
Don't worry, if they are wrong about their budget they will just eat rice and beans!

The numbers work. The more questions the OP answers, the less plausible it seems that this will work for them. They claim to like to think about things, but not this does not seem to be one of the things they have put much thought into.
FoolMeOnce
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Re: Preparing for retirement in mid 30s

Post by FoolMeOnce »

marcopolo wrote: Thu Sep 17, 2020 4:24 am
TheTimeLord wrote: Wed Sep 16, 2020 6:05 pm
Tingting1013 wrote: Wed Sep 16, 2020 6:01 pm
TheTimeLord wrote: Wed Sep 16, 2020 6:00 pm
BolderBoy wrote: Wed Sep 16, 2020 5:49 pm
Sorry but I find it very hard to believe that firecalc reported a 0% chance of failure through age 100. Did you use wildly optimistic numbers? I've had friends with larger portfolios, somewhat higher spending and starting at age 55 who couldn't get a 0% failure rate.

I'd be very careful in accepting that result when you are in your mid-30s with the financials you provided.
I just ran the numbers in Firecalc. $1,5000,000 portfolio, 90/10 AA for 65 year retirement and here is what I got (much to my surprise I might add). People feel free to double-check.
A spending level of $51,965 provided a success rate of 100.0% (85 total cycles, of which 0 failed). This spending level is 3.46% of your starting portfolio.
I assume OP has some SS coming to them so it’s probably even better than that
It gets weirder. I keep thinking I must be doing something wrong but if I am I don't see it.
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 85 possible 65 year periods in the available data, starting with a portfolio of $1,500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 85 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,500,000 to $83,169,968, with an average at the end of $35,437,211. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 65 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.
Input Data for this model
Withdrawals 45,000
Plan End 65
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 48
Starting Portfolio 1,500,000
Percent in Stocks 90%
Expense Ratio 0.03%
Retirement Year* 2020
Contributions until then* 0
Social Security* 0
Starting in* 2033
Spouse Social Security* 0
Starting in* 2035
Other withdrawal change* +0
Starting in* 2023
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2025
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2029
Inflation adjusted* yes
Lump sum change to portfolio* +0
In year 2023
Lump sum change to portfolio* +0
In year * 2033
Lump sum change to portfolio* +0
In year * 2038
Inflation Rate selected* CPI
Fixed income model * T5
Override start year* 1871
Terminal Value* 0
US Micro Cap** 10
US Small** 10
US Small Value** 10
S&P 500** 40
US Large Value** 40
US LT Treasury** 10
LT Corporate Bond** 15
1 Month Treasury** 5
* - Used in Advanced FIRECalc
What do you find weird? 45k/1.5m = 3% WR. For US equities that has essentially been the perpetual withdrawal rate.
So, FireCalc seems to be providing reasonable answers.

I Would be more concerned about estimated expenses, kids can get expensive.
I'm not whom your response was aimed at, but it's weird that the minimum ending balance is exactly the same as the starting balance. I recall getting that result when I played around on FIRECalc a while back, but frankly I can't remember if I ever found out why it sometimes spits that out.
Luke Duke
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Re: Preparing for retirement in mid 30s

Post by Luke Duke »

lecithar wrote: Wed Sep 16, 2020 10:08 pm
Wannaretireearly wrote: Wed Sep 16, 2020 7:55 pm Mind sharing your career background area?
What else do you plan to do? I.e. what hobbies do you have?
I have a software engineering background. Out of college I made low six figures and it steadily increased to 250k/yr. Then several years ago I decided to switch to a lower stress job that pays 180k/yr.

As a single person I saved half of my after-tax income. Now that I have a family (single income) I save a third. I always invested in after-tax brokerage because my work places did not offer matching.

My family expenses are reliably 90k/yr in a VHCOL area (renting). So I think 45k/yr will work for us in a VLCOL area.

My hobby is I like to just think about stuff. Seriously. I want to spend all day thinking about random topics that have caught my attention. This is why I think a job is not ideal for me, because it limits the time I have each day to just think.
I think that you need to try living on the $45k/yr budget for a while and see if it's feasible for your family. You currently spend ~$165k/yr and seem to think that your expenses will fall to $45k by moving to Iowa or Kansas.
Ilikesparklers
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Re: Preparing for retirement in mid 30s

Post by Ilikesparklers »

tibbitts wrote: Thu Sep 17, 2020 8:13 am
quantAndHold wrote: Thu Sep 17, 2020 1:54 am Have you actually checked the price of public college? It sounds like you think it’s free.
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
Keenobserver
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Re: Preparing for retirement in mid 30s

Post by Keenobserver »

Some of the gloom and doom repsonses sound funny to me. Some seem bitter, other overly cautious. Some of course seem genuine and wise. What if there is 50% drop? Why not a 100% drop? Ok then he will be like the most of humanity and work whatever job to make a living. Should he give up.his dreams at the remote chance of an undefined calamity at uncertain time line some time in the near or far away future? Or maybe not? Such thinking will only paralyze. We are only this planet for a few decades. All of the what ifs dont just apply to OP but to everyone. He just happens to know what he wants and has the plan to execute. What if the $1.5 mil is stolen by hackers? What if USA no longer recognizes dollar as legal tender? what if the stock market shuts down? What if we have to canablize to survive? What if ? Guranteed thing is that OP will die and so will we. Clock is ticking so try to live the life you want as much as possible. Life is unpredictable and there will always be unknowns. In NY, medicaid is based on your income, not assests. You can have millions saved and still qualify for free healthcare if low income. I plan to do somwthing similiar, but not dully retire. I would like to work maybe 20 hrs a week. My savings are lower, but I do own a house. Will be sending kids to public colleges and hopefully educate them to select the right majors. There are many paths to success other than post grad degrees in this new world. Some 2 year certiricates come to mind. I would say go for it, and if it doesnt pan out, the worst case scenario is you might have to work for a living. Best of wishes
cableguy
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Re: Preparing for retirement in mid 30s

Post by cableguy »

Don't do it. Take a break. Take a long break. Clear your head. But prepare to work again. If you didn't have 2 kids I'd say you have a chance. With 2 kids.....no chance.....
runner540
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Re: Preparing for retirement in mid 30s

Post by runner540 »

Ilikesparklers wrote: Thu Sep 17, 2020 10:10 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am
quantAndHold wrote: Thu Sep 17, 2020 1:54 am Have you actually checked the price of public college? It sounds like you think it’s free.
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
But OP has all or most of his savings in taxable investments. I thought most Need based college Aid will look beyond income, and not give a free ride when the family has $1.5 mm.
Normchad
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Re: Preparing for retirement in mid 30s

Post by Normchad »

The OP is considering a pretty low withdrawal rate. There is a very good chance that his stash of cash will grow substantially over time.......
Grt2bOutdoors
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Re: Preparing for retirement in mid 30s

Post by Grt2bOutdoors »

runner540 wrote: Thu Sep 17, 2020 10:45 am
Ilikesparklers wrote: Thu Sep 17, 2020 10:10 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am
quantAndHold wrote: Thu Sep 17, 2020 1:54 am Have you actually checked the price of public college? It sounds like you think it’s free.
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
But OP has all or most of his savings in taxable investments. I thought most Need based college Aid will look beyond income, and not give a free ride when the family has $1.5 mm.
The OP is going to be paying for school or his kids are going to need hefty school loans to pay for it. People are fooling themselves if they think that someone with $1.5 million is going to get reduced tuition. I welcome anyone to go to the website of any public/private school and fill out a mock application as a test run. The OP is going to have a high EFC. They won’t care if he’s retired, they will see that pot of gold and say you have the money, you need to pay your fair share.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Mr.BB
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Re: Preparing for retirement in mid 30s

Post by Mr.BB »

As previously mentioned, OP should work for 1 more year and live on the $45,000 and see how it works. In the mean time they can save a little more money and really give their idea a test run; the key here is they have to be focused on tracking all of their expenses (especially what they pay cash for).
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
Keenobserver
Posts: 466
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Re: Preparing for retirement in mid 30s

Post by Keenobserver »

Grt2bOutdoors wrote: Thu Sep 17, 2020 10:52 am
runner540 wrote: Thu Sep 17, 2020 10:45 am
Ilikesparklers wrote: Thu Sep 17, 2020 10:10 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am
quantAndHold wrote: Thu Sep 17, 2020 1:54 am Have you actually checked the price of public college? It sounds like you think it’s free.
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
But OP has all or most of his savings in taxable investments. I thought most Need based college Aid will look beyond income, and not give a free ride when the family has $1.5 mm.
The OP is going to be paying for school or his kids are going to need hefty school loans to pay for it. People are fooling themselves if they think that someone with $1.5 million is going to get reduced tuition. I welcome anyone to go to the website of any public/private school and fill out a mock application as a test run. The OP is going to have a high EFC. They won’t care if he’s retired, they will see that pot of gold and say you have the money, you need to pay your fair share.
So kids can go to public schools, work part time.and cover most if not all of their tutition. Not to mention scholarships. I did just that when I went to school and had zero debt upon graduation and I mean both under grad and grad school Where does it say that a parent cannot rest until he/ she secure a quarter million $ each child for college? How do children other middle class kids go to college?
cableguy
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Re: Preparing for retirement in mid 30s

Post by cableguy »

2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
marcopolo
Posts: 3507
Joined: Sat Dec 03, 2016 10:22 am

Re: Preparing for retirement in mid 30s

Post by marcopolo »

FoolMeOnce wrote: Thu Sep 17, 2020 9:27 am
marcopolo wrote: Thu Sep 17, 2020 4:24 am
TheTimeLord wrote: Wed Sep 16, 2020 6:05 pm
Tingting1013 wrote: Wed Sep 16, 2020 6:01 pm
TheTimeLord wrote: Wed Sep 16, 2020 6:00 pm

I just ran the numbers in Firecalc. $1,5000,000 portfolio, 90/10 AA for 65 year retirement and here is what I got (much to my surprise I might add). People feel free to double-check.

I assume OP has some SS coming to them so it’s probably even better than that
It gets weirder. I keep thinking I must be doing something wrong but if I am I don't see it.
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 85 possible 65 year periods in the available data, starting with a portfolio of $1,500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 85 cycles. The lowest and highest portfolio balance at the end of your retirement was $1,500,000 to $83,169,968, with an average at the end of $35,437,211. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 65 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.
Input Data for this model
Withdrawals 45,000
Plan End 65
95% Rule from WorkLess, Live More*
Percentage used for 95% Rule* 0
Bernicke Spending Reductions*
Current Age (for scheduling Bernicke spending reductions)* 48
Starting Portfolio 1,500,000
Percent in Stocks 90%
Expense Ratio 0.03%
Retirement Year* 2020
Contributions until then* 0
Social Security* 0
Starting in* 2033
Spouse Social Security* 0
Starting in* 2035
Other withdrawal change* +0
Starting in* 2023
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2025
Inflation adjusted* yes
Other withdrawal change* +0
Starting in* 2029
Inflation adjusted* yes
Lump sum change to portfolio* +0
In year 2023
Lump sum change to portfolio* +0
In year * 2033
Lump sum change to portfolio* +0
In year * 2038
Inflation Rate selected* CPI
Fixed income model * T5
Override start year* 1871
Terminal Value* 0
US Micro Cap** 10
US Small** 10
US Small Value** 10
S&P 500** 40
US Large Value** 40
US LT Treasury** 10
LT Corporate Bond** 15
1 Month Treasury** 5
* - Used in Advanced FIRECalc
What do you find weird? 45k/1.5m = 3% WR. For US equities that has essentially been the perpetual withdrawal rate.
So, FireCalc seems to be providing reasonable answers.

I Would be more concerned about estimated expenses, kids can get expensive.
I'm not whom your response was aimed at, but it's weird that the minimum ending balance is exactly the same as the starting balance. I recall getting that result when I played around on FIRECalc a while back, but frankly I can't remember if I ever found out why it sometimes spits that out.
Oh. Thanks. I had not noticed that.
That is weird.

I thought the commentary was on the surprise a few posters states about Firecalc showing 100% success rate.
Once in a while you get shown the light, in the strangest of places if you look at it right.
kayli69
Posts: 53
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Re: Preparing for retirement in mid 30s

Post by kayli69 »

I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis

If you were single or DINKS, your plan could possibly work. With a family of two small children, you are really cutting it close in my opinion and have very little cushion
stoptothink
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Re: Preparing for retirement in mid 30s

Post by stoptothink »

cableguy wrote: Thu Sep 17, 2020 11:08 am 2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
Kids cost as much as you allow them to cost.
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TomatoTomahto
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Re: Preparing for retirement in mid 30s

Post by TomatoTomahto »

stoptothink wrote: Thu Sep 17, 2020 11:23 am
cableguy wrote: Thu Sep 17, 2020 11:08 am 2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
Kids cost as much as you allow them to cost.
Yeah, who needs teeth that line up?
Okay, I get it; I won't be political or controversial. The Earth is flat.
FoolMeOnce
Posts: 986
Joined: Mon Apr 24, 2017 11:16 am

Re: Preparing for retirement in mid 30s

Post by FoolMeOnce »

kayli69 wrote: Thu Sep 17, 2020 11:21 am I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis
Wow. Also unknown is how many years you have left. What is known is that you can't buy extra on the back end, but it looks like you have more than enough to buy some extra time right now.
ktd
Posts: 191
Joined: Mon Mar 10, 2014 8:19 am

Re: Preparing for retirement in mid 30s

Post by ktd »

kayli69 wrote: Thu Sep 17, 2020 11:21 am I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis

If you were single or DINKS, your plan could possibly work. With a family of two small children, you are really cutting it close in my opinion and have very little cushion
Some people value time over money.
frugalecon
Posts: 404
Joined: Fri Dec 05, 2014 12:39 pm

Re: Preparing for retirement in mid 30s

Post by frugalecon »

Congratulations on saving a boatload of money in a short time. You have created a lot of options for yourself. One is certainly to pursue the course you are set on, namely downscaling to a LCOL area and living simply based on your nest egg.

An observation I have is that you seem pretty convinced that you will be content to spend very little for the rest of your life. This may be true, but there is always the chance that you will eventually feel differently. That might be far in the future, e.g., when you or your spouse might need expensive continuing care b/c of dementia or the like. But it could be sooner, perhaps related to an opportunity you wish you could provide your child. I might consider working somewhat longer to fund this kind of use. Your income has a very high option value that you give up if you retire at your age. (It sounds like your largest asset is your human capital, which you would cease monetizing under your plan.)
stoptothink
Posts: 8378
Joined: Fri Dec 31, 2010 9:53 am

Re: Preparing for retirement in mid 30s

Post by stoptothink »

TomatoTomahto wrote: Thu Sep 17, 2020 11:25 am
stoptothink wrote: Thu Sep 17, 2020 11:23 am
cableguy wrote: Thu Sep 17, 2020 11:08 am 2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
Kids cost as much as you allow them to cost.
Yeah, who needs teeth that line up?
If there is one thing I have learned as a parent, it's that the horror stories about the costs of children are (for the most part) self-inflicted. Yeah, clubs, dance, travel teams, want for travel and other extra-curricular...all of those things are necessary for appropriately raising a young child :confused. I wouldn't generalize the experience of parents who are in the 1% of income earners to the entire population.
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

SchruteB&B wrote: Thu Sep 17, 2020 7:43 am This is essentially what this blogger did: https://rootofgood.com/

Retired in 30s with 3 kids in a LCOL area on a $40k per year budget. He goes into a lot of detail on ACA subsidies.
How much income does he get from his blog?
OP does not have plans for that kind of income.
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Re: Preparing for retirement in mid 30s

Post by TomatoTomahto »

stoptothink wrote: Thu Sep 17, 2020 11:31 am
TomatoTomahto wrote: Thu Sep 17, 2020 11:25 am
stoptothink wrote: Thu Sep 17, 2020 11:23 am
cableguy wrote: Thu Sep 17, 2020 11:08 am 2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
Kids cost as much as you allow them to cost.
Yeah, who needs teeth that line up?
If there is one thing I have learned as a parent, it's that the horror stories about the costs of children are (for the most part) self-inflicted. Yeah, clubs, dance, travel teams, want for travel and other extra-curricular...all of those things are necessary for appropriately raising a young child :confused. I wouldn't generalize the experience of parents who are in the 1% of income earners to the entire population.
I get that line of thought for prom, travel hockey, private school, etc. I think it’s a different tug on the parents when it’s orthodontia, or a learning disability, or something I’m reluctant to mention. Then, that $1.5M is going to look a lot like a piggy bank. And if it doesn’t to OP, it might well to his spouse.

Many marriages break up over finances. The one thing OP’s plan assumes is an ongoing successful marriage. The numbers are too tight for 2 households.

Just saying.
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Re: Preparing for retirement in mid 30s

Post by cableguy »

stoptothink wrote: Thu Sep 17, 2020 11:31 am
TomatoTomahto wrote: Thu Sep 17, 2020 11:25 am
stoptothink wrote: Thu Sep 17, 2020 11:23 am
cableguy wrote: Thu Sep 17, 2020 11:08 am 2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
Kids cost as much as you allow them to cost.
Yeah, who needs teeth that line up?
If there is one thing I have learned as a parent, it's that the horror stories about the costs of children are (for the most part) self-inflicted. Yeah, clubs, dance, travel teams, want for travel and other extra-curricular...all of those things are necessary for appropriately raising a young child :confused. I wouldn't generalize the experience of parents who are in the 1% of income earners to the entire population.
4 iphones and their monthly subscriptions could be 5% of the OP's monthly income. Or maybe he'll make his kids pay for their phones? But you get it. kids = big bucks.
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Re: Preparing for retirement in mid 30s

Post by FrugalProfessor »

Artful Dodger wrote: Thu Sep 17, 2020 4:17 am
lecithar wrote: Wed Sep 16, 2020 7:27 pm
sailaway wrote: Wed Sep 16, 2020 6:47 pm The biggest flaw I see is your ability to control your taxable income and how that may affect your plans for medical. You are in danger of too little for ACA subsidies, but too many assets for Medicaid.
Good point about ACA. I will need to figure out how the ACA system works. Maybe dividend and bond income is enough to qualify. If not I can realize some capital gains. I have been very good at performing tax-loss harvesting, for example I have never had to pay tax on capital gains.
Here’s the skinny on the ACA. It depends on the state you’re in, and whether it did or did not expand Medicaid under the ACA. I believe to date about 35 have with 3 in process of adoption. Subsidies are based on your income relative to the federal poverty rate. The 2020 federal poverty rate for a family of 4 is $26,200.

To quality for a subsidized ACA plan in a state that has expanded Medicaid, your income must be greater than 138% of poverty, or for you roughly $36,500. So, if your MAGI is over that you’ll get a good ACA plan with a substantial premium subsidy. If you’re in one of the states that did not expand Medicaid, you’re eligible for a subsidized ACA plan if your income is greater than 100% of poverty or the current $26,200 level.

If you live in one of the expansion states and MAGI is less than 138% of poverty you’ll be eligible for Medicaid at no cost. The main downside to Medicaid is in many states you have a more limited choice of providers compared to a traditional insurance plan. There is no assets test for Medicaid under the ACA expansion, so your $1.5M won’t hinder your enrollment.

If you live in one of the states that didn’t expand Medicaid, and your income falls below $26,200 MAGI, you’re not eligible for ACA credits and Medicaid Is tricky because benefits for adults are more limited. you’ll possibly qualify under one of the pre ACA plans like AFDC. Your kids likely will qualify. There are a few weird twists depending on which state you’re in. For example Wisconsin didn’t expand Medicaid but has coverage for those below 100% of poverty.
I didn't read the whole thread, but Artful Dodger's response is spot-on. In retirement, you have full discretion on managing your AGI (for ACA or medicaid purposes).

You mentioned you have no tax-advantaged investments, so all of your income will be derived from taxable brokerage accounts. The nice thing about your situation is that you have (almost) complete control over your AGI based on which securities you sell. If you're trying to stay below 138% of FPL, for example, you can minimize your AGI by selling securities with high cost basis (and thus incur the lowest capital gains taxes). If you bought something for $100 and it's now $150, that's only $50 of taxable income that goes towards that 138% FPL despite withdrawing the full $150 from your brokerage account.

Somewhat relatedly, in this blog post I document how a household with 2 kids can have $129,817 in (mostly investment) income and pay $0 in federal taxes: https://frugalprofessor.com/5-kids-1698 ... e-0-taxes/. If you did this, it would obviously would put you over the 138% FPL line but would certainly be viable < 400% FPL to give you access to ACA subsidies while "tax gain" harvesting, thereby decreasing your future tax liability through the costless (and repeated) increasing of your cost basis over time. The strategy suggested in this paragraph is likely more legislatively precarious than that outlined in the preceding paragraph because it wouldn't take much to undo the favorable tax treatment of investment income (relative to labor income).
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Re: Preparing for retirement in mid 30s

Post by FrugalProfessor »

TomatoTomahto wrote: Thu Sep 17, 2020 8:33 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range.
Did they stop looking at assets? Unlikely to be tuition free with $1.5M in assets, nor imo should it be.
I'm not terribly informed, but most of the means testing aid at universities I've read about is primarily income-based, not asset-based (not dissimilar to medicaid)

Warren Buffet could qualify for Medicaid with $83B in net worth if he paid himself less than 138% of FPL. Given that he lives a frugal lifestyle with a paid off house (excluding property taxes), perhaps he could pull that off! Given that Berkshire doesn't pay dividends, he wouldn't have dividends counting towards his AGI.
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Re: Preparing for retirement in mid 30s

Post by TomatoTomahto »

FrugalProfessor wrote: Thu Sep 17, 2020 11:53 am
TomatoTomahto wrote: Thu Sep 17, 2020 8:33 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range.
Did they stop looking at assets? Unlikely to be tuition free with $1.5M in assets, nor imo should it be.
I'm not terribly informed, but most of the means testing aid at universities I've read about is primarily income-based, not asset-based (not dissimilar to medicaid)
The FAFSA gives a parental asset protection allowance up to $9,500 (if there is only one parent), and up to $18,900 (if there are two parents). The amount of parental asset protection allowance will be determined based on the age of the oldest parent. Anything above the determined asset protection allowance threshold, is assessed at 12% of the net value of the parental assets that count toward your EFC.
I think you are confounding the higher percentage of income they will tap and the lower percentage of assets that they consider fair game in determining EFC. 12% of $1.5M is $180k. Hard to plead need, but loans and/or merit scholarships are an option.
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Re: Preparing for retirement in mid 30s

Post by Grt2bOutdoors »

Keenobserver wrote: Thu Sep 17, 2020 11:00 am
Grt2bOutdoors wrote: Thu Sep 17, 2020 10:52 am
runner540 wrote: Thu Sep 17, 2020 10:45 am
Ilikesparklers wrote: Thu Sep 17, 2020 10:10 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
But OP has all or most of his savings in taxable investments. I thought most Need based college Aid will look beyond income, and not give a free ride when the family has $1.5 mm.
The OP is going to be paying for school or his kids are going to need hefty school loans to pay for it. People are fooling themselves if they think that someone with $1.5 million is going to get reduced tuition. I welcome anyone to go to the website of any public/private school and fill out a mock application as a test run. The OP is going to have a high EFC. They won’t care if he’s retired, they will see that pot of gold and say you have the money, you need to pay your fair share.
So kids can go to public schools, work part time.and cover most if not all of their tutition. Not to mention scholarships. I did just that when I went to school and had zero debt upon graduation and I mean both under grad and grad school Where does it say that a parent cannot rest until he/ she secure a quarter million $ each child for college? How do children other middle class kids go to college?
They could but if you had a “high potential” kid would you still insist they attend a public when they may need a more suitable institution to be able to realize their full potential? The OP is free to do what he wants but must realize there is a price to be paid.
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Re: Preparing for retirement in mid 30s

Post by MindBogler »

marcopolo wrote: Thu Sep 17, 2020 4:47 am If this were true, landlords would not exist. When you rent, you are paying for all of those things in your rent.
Except on Bogleheads where the only known free lunch is renting in perpetuity. :oops: :confused
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Re: Preparing for retirement in mid 30s

Post by FootballFan5548 »

I'm the same age as you (36), My wife (36) and I have 2 kids like you do, 5 and 3.

We have more net worth, roughly $2M. And respectfully, (not trying to be a jerk) I think you're insane. This is a poor plan. Who cares what some online retirement tool says.

Work another ten years, retire still very early at 45, sock away some extra money and buffer, and then retire much more comfortably.

Or, if you're so hellbent on leaving your current job, go get a job at starbucks or a gas station or something, working 25 hours per week, and making $15/hour... it would add another $20k/year to your spending which would help you a ton. If times are tight, you could work some more hours... if times are good, you could shed a few hours...

Trying to live off 45k/year for 4 people, and actually enjoy life to me is really poor planning.

I don't want to work either... it stinks... but ya gotta do it for your family.
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Re: Preparing for retirement in mid 30s

Post by Grt2bOutdoors »

ktd wrote: Thu Sep 17, 2020 11:30 am
kayli69 wrote: Thu Sep 17, 2020 11:21 am I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis

If you were single or DINKS, your plan could possibly work. With a family of two small children, you are really cutting it close in my opinion and have very little cushion
Some people value time over money.
Some will find out their time has run out because the money ran out faster.....YMMV
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Re: Preparing for retirement in mid 30s

Post by il0kin »

I think you should consider looking into consulting work where you can take a 2-4 month contract here and there and enjoy many of the perks of retirement without having to tap your 1.5M.

You should EASILY be able to find $100/hr contracts and likely more.
40 hr billed week x $100/hr = $4,000 per week - you only need to work roughly 3 months of the year to meet your spending goal and account for taxes.

Seems pretty doable to me and minimizes a LOT of the totally valid risks people are discussing here while allowing you to enjoy a lot of down time.

IMO - work another year, purchase a 150-200k house within an hour of a major Midwest metro airport to lock in housing while being available for contract work, work a couple 1-2 month contracts per year and enjoy you much lower stress lifestyle while keeping your coding skills up to date. If something goes wrong along the way and you need to return to full time work, you can easily explain it by saying to chose to pivot to contract work for a period of time due to XYZ reason (spend time with kids, medical reason, etc etc - they'll never dig into that in an interview)
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Re: Preparing for retirement in mid 30s

Post by AerialWombat »

Grt2bOutdoors wrote: Thu Sep 17, 2020 10:52 am
runner540 wrote: Thu Sep 17, 2020 10:45 am
Ilikesparklers wrote: Thu Sep 17, 2020 10:10 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am
quantAndHold wrote: Thu Sep 17, 2020 1:54 am Have you actually checked the price of public college? It sounds like you think it’s free.
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
But OP has all or most of his savings in taxable investments. I thought most Need based college Aid will look beyond income, and not give a free ride when the family has $1.5 mm.
The OP is going to be paying for school or his kids are going to need hefty school loans to pay for it. People are fooling themselves if they think that someone with $1.5 million is going to get reduced tuition. I welcome anyone to go to the website of any public/private school and fill out a mock application as a test run. The OP is going to have a high EFC. They won’t care if he’s retired, they will see that pot of gold and say you have the money, you need to pay your fair share.
Or maybe he'll tell his kids, "I'm not paying for your college education." There is zero obligation for him to do so.

In my opinion, threads like this clearly illustrate how out of touch the "Boglehead bubble" is with regular American life.
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

Grt2bOutdoors wrote: Thu Sep 17, 2020 12:09 pm
ktd wrote: Thu Sep 17, 2020 11:30 am
kayli69 wrote: Thu Sep 17, 2020 11:21 am I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis

If you were single or DINKS, your plan could possibly work. With a family of two small children, you are really cutting it close in my opinion and have very little cushion
Some people value time over money.
Some will find out their time has run out because the money ran out faster.....YMMV
The post this was in response to says the have $7.5M in just their taxable accounts, owns their home, and presumably has tax-advantaged accounts. So, perhaps approaching $10m in net worth, in a LCOL area.

You are worried they might run out of money!?!
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Preparing for retirement in mid 30s

Post by AerialWombat »

cableguy wrote: Thu Sep 17, 2020 11:08 am 2 teenage kids eat a lot.....a lot. They also play sports, dance, gymnastics, religion, join clubs, travel teams, want to travel, want new clothes, shoes, go to a ball game, a movie, a friends birthday party, etc. Get ready! Sure you can tell the kids to pay their own way......let us know how that all works out....
...and there are millions upon millions of American families that tell their kids, "No, we can't afford that." And thus, they don't pay, it doesn't get spent, and life goes on.
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Re: Preparing for retirement in mid 30s

Post by absolute zero »

marcopolo wrote: Thu Sep 17, 2020 11:39 am
SchruteB&B wrote: Thu Sep 17, 2020 7:43 am This is essentially what this blogger did: https://rootofgood.com/

Retired in 30s with 3 kids in a LCOL area on a $40k per year budget. He goes into a lot of detail on ACA subsidies.
How much income does he get from his blog?
OP does not have plans for that kind of income.
siteworthtraffic.com estimates that he gets $2 per day from his blog. So apparently, not much.

That being said, I have aspirations for a super early retirement but no way in heck would I pull the plug at $1.5MM.

$2MM? Now we’re getting in the ballpark.
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Re: Preparing for retirement in mid 30s

Post by ktd »

Grt2bOutdoors wrote: Thu Sep 17, 2020 12:09 pm
ktd wrote: Thu Sep 17, 2020 11:30 am
kayli69 wrote: Thu Sep 17, 2020 11:21 am I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis

If you were single or DINKS, your plan could possibly work. With a family of two small children, you are really cutting it close in my opinion and have very little cushion
Some people value time over money.
Some will find out their time has run out because the money ran out faster.....YMMV
All people who saved like the OP or on this board will find out their time ran out faster than their money.
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

AerialWombat wrote: Thu Sep 17, 2020 12:17 pm
Grt2bOutdoors wrote: Thu Sep 17, 2020 10:52 am
runner540 wrote: Thu Sep 17, 2020 10:45 am
Ilikesparklers wrote: Thu Sep 17, 2020 10:10 am
tibbitts wrote: Thu Sep 17, 2020 8:13 am
Although i'm not enthusiastic about the OP's plan, in fact public colleges and universities may be at least tuition-free for a family in the proposed income range. In my state any of the public universities would be tuition-free, and I believe some have fee assistance plans. Of course there are academic and other requirements for admission. And you would presumably want to select a location to live where it would be possible to commute for education - although for all we know by then virtually all education will be online.
Agree. I don't think college tuition should be a major concern. With the OP's income, his kids would likely qualify for financial aid. And if his kids are good students, scholarships/grants are available. I grew up knowing my parents could not afford to pay for college. I was always a very good student, and I never worried about how I would pay for college (though maybe I should have). Back in '01 when I applied to colleges, many of them provided very generous financial aid/scholarships. I chose a top 10, need-blind liberal arts college far from home, and I graduated with $20k in federal loans all in. Paying them off was quite manageable.

I would imagine financial aid and scholarship opportunities like that still exist, and I wouldn't let the concern over paying for your kids' colleges deter you from retiring early. I think the OP should go for it. You can always reassess your plans after a year or two, when finding another well-paying job would likely be quite doable.
But OP has all or most of his savings in taxable investments. I thought most Need based college Aid will look beyond income, and not give a free ride when the family has $1.5 mm.
The OP is going to be paying for school or his kids are going to need hefty school loans to pay for it. People are fooling themselves if they think that someone with $1.5 million is going to get reduced tuition. I welcome anyone to go to the website of any public/private school and fill out a mock application as a test run. The OP is going to have a high EFC. They won’t care if he’s retired, they will see that pot of gold and say you have the money, you need to pay your fair share.
Or maybe he'll tell his kids, "I'm not paying for your college education." There is zero obligation for him to do so.

In my opinion, threads like this clearly illustrate how out of touch the "Boglehead bubble" is with regular American life.
How could it be anything but disconnected from average Americans? This site is largely about investing efficiently, and using those investments to improve quality of ones life.

The average American has little or no investments. If this site only dispensed advice suitable for the average American, it would be pretty useless for its main purpose.

It is impossible to be all things to all people.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Preparing for retirement in mid 30s

Post by absolute zero »

frugalecon wrote: Thu Sep 17, 2020 11:31 am An observation I have is that you seem pretty convinced that you will be content to spend very little for the rest of your life. This may be true, but there is always the chance that you will eventually feel differently.
+1

When I was 23, I made a bucket list of things I wanted to do in life. I remember looking at that same list 5 years and, for many items on the list, thinking “why the heck would I want to do that??”

Of course, some of the aspirations I had still apply to this day. But there are studies out there that demonstrate pretty convincingly that people underestimate how much they will change in the future, and this applies to people of all ages. The OP may have completely different desires in 5 years, and some of them may require a lot more than $40k per year.
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Re: Preparing for retirement in mid 30s

Post by marcopolo »

absolute zero wrote: Thu Sep 17, 2020 12:21 pm
marcopolo wrote: Thu Sep 17, 2020 11:39 am
SchruteB&B wrote: Thu Sep 17, 2020 7:43 am This is essentially what this blogger did: https://rootofgood.com/

Retired in 30s with 3 kids in a LCOL area on a $40k per year budget. He goes into a lot of detail on ACA subsidies.
How much income does he get from his blog?
OP does not have plans for that kind of income.
siteworthtraffic.com estimates that he gets $2 per day from his blog. So apparently, not much.

That being said, I have aspirations for a super early retirement but no way in heck would I pull the plug at $1.5MM.

$2MM? Now we’re getting in the ballpark.
That site says MMM makes about $10k/yr.

There have been numerous posts here indicating he is making mid 6 figures. Not sure which is correct.

But, I agree $1.5M at that young age with kids seems risky.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Preparing for retirement in mid 30s

Post by cheapskate »

FootballFan5548 wrote: Thu Sep 17, 2020 12:09 pm I'm the same age as you (36), My wife (36) and I have 2 kids like you do, 5 and 3.

We have more net worth, roughly $2M. And respectfully, (not trying to be a jerk) I think you're insane. This is a poor plan. Who cares what some online retirement tool says.

Work another ten years, retire still very early at 45, sock away some extra money and buffer, and then retire much more comfortably.

Or, if you're so hellbent on leaving your current job, go get a job at starbucks or a gas station or something, working 25 hours per week, and making $15/hour... it would add another $20k/year to your spending which would help you a ton. If times are tight, you could work some more hours... if times are good, you could shed a few hours...

Trying to live off 45k/year for 4 people, and actually enjoy life to me is really poor planning.

I don't want to work either... it stinks... but ya gotta do it for your family.
+1

Please don’t do it. Work at least till you are 40. I also want to point out that by working (even in a job that you aren’t thrilled about) you are being a good role model for your little kids. Showing them by example your work ethic, willing to do what it takes for your family etc.

And of course, trying to live on 45K/year with spouse and 2 kids is not going to be enjoyable. In the US.

The only way this might work is if you go and live in another low cost country - parts of Asia, parts of Mexico or Central America where lots of retired American expats live very well on $3500/month.
Tingting1013
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Re: Preparing for retirement in mid 30s

Post by Tingting1013 »

cheapskate wrote: Thu Sep 17, 2020 12:35 pmI also want to point out that by working (even in a job that you aren’t thrilled about) you are being a good role model for your little kids. Showing them by example your work ethic, willing to do what it takes for your family etc.
My dad was never around when I was growing up because he was “willing to do what it takes for the family.”

It wasn’t until I became an adult that I realized for most white-collar professionals, grinding at work for decades on end was more about satisfying one’s own ego than much to do with what the family needed.
Grt2bOutdoors
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Re: Preparing for retirement in mid 30s

Post by Grt2bOutdoors »

marcopolo wrote: Thu Sep 17, 2020 12:18 pm
Grt2bOutdoors wrote: Thu Sep 17, 2020 12:09 pm
ktd wrote: Thu Sep 17, 2020 11:30 am
kayli69 wrote: Thu Sep 17, 2020 11:21 am I am appx 10 yrs older than the OP, have 5x his assets in taxable alone, own my home with no mortgage and no other loans, live in a LCOL area, and have 3 small children. I am still nervous about calling it quits. There are so many unknowns, especially with small children. In my line of work, I see unplanned catastrophes devastate families and derail the best of plans on almost a daily basis

If you were single or DINKS, your plan could possibly work. With a family of two small children, you are really cutting it close in my opinion and have very little cushion
Some people value time over money.
Some will find out their time has run out because the money ran out faster.....YMMV
The post this was in response to says the have $7.5M in just their taxable accounts, owns their home, and presumably has tax-advantaged accounts. So, perhaps approaching $10m in net worth, in a LCOL area.

You are worried they might run out of money!?!
My bad, I mistakenly believed it was in reference to the OP. The person with $7.5 million should not believe they are in danger of running out of money. Of course, no pot will last forever if spending is out of control.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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gr7070
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Re: Preparing for retirement in mid 30s

Post by gr7070 »

I wouldn't want to plan for 45k expense needs in retirement. Not that my vote matters.

Regardless of that, one thing posts here seem to miss is potential future income after, say, a 10 year sabbatical. I don't doubt that it would be difficult to get a job making a $200k inflation adjusted income after 10 years off; as many here have posted.

However, no one has mentioned that one with quality skills today could reasonably find a lower paying job in the field and ramp up ones skills, responsibilities, and income quite quickly; easily within two years.

Even an entry level pay job in the tech field pays well. Add 15 years experience, if outdated, plus a quality foundation; and the OP would not be left driving buses. They'd be in a high end field on the fast track to more than quality income within a more than reasonably short time.
random_walker_77
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Re: Preparing for retirement in mid 30s

Post by random_walker_77 »

TomatoTomahto wrote: Thu Sep 17, 2020 12:04 pm I think you are confounding the higher percentage of income they will tap and the lower percentage of assets that they consider fair game in determining EFC. 12% of $1.5M is $180k. Hard to plead need, but loans and/or merit scholarships are an option.
You probably know this, but wanted to clarify for those who don't know: even if you qualify for need-based aid, a lot of it is in the form of subsidized loans and on-campus jobs. 43% of federal aid dollars, according to the collegeboard
rgs92
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Re: Preparing for retirement in mid 30s

Post by rgs92 »

$45,000 seems impossible even for a single person. That's about the equivalent in the year 2000 of $29,000, and I was making about $75,000 then and was barely getting by (no travel, Toyota Camry, modest housing cost, cooked at home, NJ suburbs fairly far from NYC).
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