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Retiring early - why, how, who, when

rkim291968

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After working 39 years since I was 14 years old, I am about to leave the work force for good.  The org. I work for has been always a politically toxic place led by a sociopath and his equally bad underlings (my peers).   For the last 2 years, I have been conning myself that I need to put up with the BS to pad my retirement fund to travel the world, play the best golf courses, eat the best food, i.e., live in style.   But the BS bucket is now full.  I can't stand another day of work.  I am mentally exhausted and no amount of golf is going to relieve the stress I get from work.   It is impacting my health.   Having lost a younger brother to cancer a few years ago, I know a life can be short, too short to shorten it with a stressful job.   My health over accumulating more wealth ...

Luckily, despite making a few bad financial decisions, we are ready financially to retire.  My wife and I saved like ants.   We lived  far below our means for all these years (until recently when we decided to splurge a little to see what it is like).   When others in my position were buying luxury cars and expensive houses, we bought Hyundai and lived in a relatively modest dwelling.   I knew my relatives were talking behind my back about my "stinginess."  We invested any and all disposable income and let the power of compounding do its job.  I didn't panic sell when stock market plummeted time after time.   

For others who may be reading this blog, I suggest you read The Millionaire Next Door: The Surprising Secrets of America's Wealthy Book by Thomas J. Stanley.   Anyone can be a millionaire over time holding down a regular job.  You too can retire early if you so desire.   I know some people need to work to live.  They can't separate work from life.  That's not me, and that's not many of us.  

So ... it's time to call my own bluff.   Write that resignation letter.   Kiss goodbye to the stock options which is yet to be vested.   Sign up for ACA.   Make the list of things to do in retirement.  Plan on practicing & playing more golf.   One more year working is one more year dying.   It's time.  


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Great blog post. Fantastic. Hell yes- retiring at age 53- that's awesome. Congrats to you and your wife. 

It's funny you mentioned "The Millionaire Next Door."  That's my favorite book. I read it several times and listened to the audio version each day during my 90-minute commute for 3-years. I wrote a handful of letters to the author and spoke to him on the phone several times. Sadly he was killed in a car crash earlier this year. He was a great man. I miss him.

And you're right- early retirement is possible for many. It's a shame that more people don't realize it.

I retired early six years ago at age 42. After 25 years of working, that's all I could take. Far too may people work at jobs they hate, to buy stuff they don't want, to impress people they don't like. Freedom from a job is the best thing ever. You're gonna love it, man. Enjoy.

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I am in the same mindset as you. I plan to retire in three years at 59. My wife and I have been very smart with our money (we live in a two family with close friends on the other side). I have two close friends that just retired and they are enjoying it. I look forward to it.

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My wife's a teacher and will retire when she hits 25 or 30 years (she started a few years later than some), and I enjoy my work so I don't know that I'll ever truly "retire."

Congratulations, though, to you.

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Don't forget the critical question: WHERE?

My wife and I are getting close as well, so we spend much of our free time thinking about all the reasons why certain parts of the country would not work for us.  While I'm a fan of making lists of pros and cons, the choice of where to live seems to be one where it's simply a gut feel for whether or not the location feels right. Sure you can eliminate various regions for obvious reasons with your lifestyle choices, but when it gets down to a specific city or state from many choices that otherwise fit, the choice can be intimidating because the options are so many and varied.

Congrats on your upcoming retirement! We'll be here to help with your golf addiction! You can save money on Game Golf and just use my crappy spreadsheets.:beer: Free 24x7 tech support with mine. Well ok 10x5 maybe. 

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To the OP,

I could have written your exact same post myself, word for word. I also retired at 53, and I've been at it for 5 years now. Not that these 5 years have taught me everything, I am still learning how to be retired, but here is a little bit of what I've learned in the past 5 years;

Live Humbly. I'm not sure God intended for us to live in excess, so even though you might not be able to live like Donald Trump after 30+ years of working, living humbly means one appreciates the good things when they come, one doesn't take things for granted, and by living humbly one knows one has some acorns stored away for the "cold winter months". These three things in combination bring a feeling of comfort and contentment that I think we all want to have in our retirement years.

Be productive. I have found that many people who retire have nothing to do, they have no plan, and they have little in their lives. Consequently many of them are always trying to impress you about themselves, and they always seem to over react to everything, and when there is something controversial...well....they just love that, and they hold on to it forever, no matter how little it is. Why? Because they have nothing to do. Many of them were not like this back when they were working. Why? Because they used to be somebody, they had purpose back then. These other little things were minutia back then. Now many of them can't wait to tell you who they used to be, what they used to do, how important they used to be. Why? Because they feel better when someone is impressed with them because they are so insecure with themselves now. Why? Because their life doesn't have purpose anymore. Don't become one of them.....Enjoy your downtime, yes. But when you feel you've done that to your satisfaction, get yourself a purpose, what ever that might be for you. Work at something you like doing this time. If you can't get paid for it, then volunteer, a lot of good people need a lot of help out there. Don't live your retirement years with no purpose in your life. It will make you old before your time as I've seen it do to many.  

Don't be Afraid. You have gotten this far and it wasn't by accident. What is it that is a dream of yours? A golfing trip to Ireland? Europe? Relocating to another area? A camp in the mountains? You know how to do this. Plan it. Do it. Don't go beyond your means, don't reach for the stars anymore, that's not for retired people. But assess whats within your grasp and then go enjoy it. Don't live the rest of your life wondering "what if".

Lastly, Go Golf! My handicap dropped 8 strokes after I retired. And this year at 58 I won "club champion", yup I even beat the young bucks this time, ah, and yes for the first time, maybe the last but I did it. This year I also won "senior club champion" but that was my second time winning that. Also this year I shot my first sub 70 round on a par 72 course, a 68. Yup, 2 under on the front and 2 under on the back. All after I retired because I had the time to work on my game. It was something I looked forward to and was able to do and I enjoy it all, silently and with great humility, but I really enjoyed it. .........Now I do know, in the grand scheme of things, these all mean nothing. It is just a game and nothing more. What does means something to me is being a good husband, a good father, a good grandfather, a good friend to those I call my friends, a good community member, and keeping my health up so that I can do those things for as long as possible. Those are the things that count to me because really, after those things there is nothing else that is really important.

SO GOOD LUCK AND ENJOY YOUR RETIREMENT!

IT'S GREAT AND I'VE NEVER LOOKED BACK!

 

Edited by HonestyPolicy
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Congratulations!

I sold my business last year and decided to use 2015 to decide if I will retire at 50.  The question wasn't financial but whether or not as a workaholic I could handle not working, I couldn't.  The first few weeks were a nice break, My wife and kids (19 & 16) did some traveling but overall I realized I'm someone that can't handle traditional retirement, at least not at 50.

I spent most of the year taking classes and reading books on stocks and options trading and probably put in 40 hours a week on education and trading.  I also started up a new business focused on marketing and business consulting for small businesses which leverages the experiences I gained from owning my business.  

My wife claims I work as much now as when I owned my business but I like the freedom this new life offers me as I can play golf pretty much whenever I want but have something to keep my mind active when I'm not at the range or on the course.

Edited by newtogolf
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Don't forget the critical question: WHERE?

My wife and I are getting close as well, so we spend much of our free time thinking about all the reasons why certain parts of the country would not work for us.  While I'm a fan of making lists of pros and cons, the choice of where to live seems to be one where it's simply a gut feel for whether or not the location feels right. Sure you can eliminate various regions for obvious reasons with your lifestyle choices, but when it gets down to a specific city or state from many choices that otherwise fit, the choice can be intimidating because the options are so many and varied.

 

Hi, Randy.   We did paper/on-line review of living in places like South America, and Florida to make our money go farther.   But after some thought, we dropped the idea in favor of working a few more years.   Basically, we are too  lazy and gutless to start new in another place.   It was the right decision for us.  So, we are staying put in Bay Area, CA, one of the costliest place to live in USA.   The good thing about this is, if market collapses for a long period of time, we can sell our house and move to a place where things cost half as much.   I have sizable equity in our house and that is my back up plan.  (  For those young ones here looking to retire, a word of advice - don't refinance often as I did.  Get a good rate loan and pay it off in 15, 20, or 30 years.  )

 

I spent most of the year taking classes and reading books on stocks and options trading and probably put in 40 hours a week on education and trading. 

After many years of conning myself that I can do well in the above, I simplified things into two areas.   One is, pick a list of diverse mutual funds which have proven long term record.   The other one is do short term trades with "OK to lose" money to generate cash.   I have found a very simple, near risk free way to do the latter.   I did this for a year and proved it works.  This will keep me busy for week day mornings :-).

 

And thanks all for your kind replies.

 

Edited by rkim291968
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The Millionaire Next Door, I read that book maybe 20 years ago.

And the million dollar question (or is it the 3 million dollar question?).  How much does one need to retire?

My simple and conservative formula:

AB / RR * 2 = TI

Where:

AB = Annual Budget in retirement

RR = assumed after tax rate of return

TI = Total Investments

For example

AB = $75,000

RR = 5%

Then

$75,000 / 5% * 2 = $3,000,000

So you would need 3 million in investments.  Under this scenario you'd theoretically never dip into your capital and just live off the earnings.  Actually your capital would grow over time.  The ( * 2) is to cover you in case of a stock market crash.  This simple model also assumes no social security earnings.  Social security earnings, should there be any, are just gravy.

 

 

Edited by No Mulligans
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I should have added to the above; TI = Total Income Earning Investments

I say this as the house you live in does not count as part of your investments because you need a place to live.

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I am sort of there with you ... I can plan most cost, but my biggest concern is health care.  It can be such a huge variable, and honestly the one area that keeps me on the job today. 

Can you share your thoughts on how you are handling health care?

 

 

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I am sort of there with you ... I can plan most cost, but my biggest concern is health care.  It can be such a huge variable, and honestly the one area that keeps me on the job today. 

Can you share your thoughts on how you are handling health care?

 

 

Yeah, me too.  Health care is the uncertainty.  Well health care and market conditions but health care worries me the most also.

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ACA made healthcare issue to be an easy one.   I intend to live off of my saving for some years which means my income reported to IRS will come below $50k for a couple.  This qualifies me for a subsidy for ACA.   Even if I don't qualify b/c I happened to dabble in short term trading, the maximum amount I'd pay for premium and out of pocket cost per year will be capped at about $20k.   I can live with that.

Go check it out.   It's really simple to understand.  

 

So you would need 3 million in investments.  Under this scenario you'd theoretically never dip into your capital and just live off the earnings.  Actually your capital would grow over time.  The ( * 2) is to cover you in case of a stock market crash.  This simple model also assumes no social security earnings.  Social security earnings, should there be any, are just gravy.

That depends on your yearly budget, and other factors.   $3M will be an overkill for vast majority, especially, if the end game is not to leave any money around when one dies.   YMMV.

Edited by rkim291968
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Congratulations on your retirement. I'm retiring in April 2016. Looking forward to the future and the many golf experiences I will have. Like many others before me, I'll play golf in many different places around the world. I'll share pictures of my travels. 

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ACA made healthcare issue to be an easy one.   I intend to live off of my saving for some years which means my income reported to IRS will come below $50k for a couple.  This qualifies me for a subsidy for ACA.   Even if I don't qualify b/c I happened to dabble in short term trading, the maximum amount I'd pay for premium and out of pocket cost per year will be capped at about $20k.   I can live with that.

Go check it out.   It's really simple to understand.  

 

That depends on your yearly budget, and other factors.   $3M will be an overkill for vast majority, especially, if the end game is not to leave any money around when one dies.   YMMV.

Regarding health care... I've had leukemia, chemo, extended hospital stays and a bone marrow transplant.  I have an excellent health plan from work.  But, if you think everything that you and your Dr. want to do as part of your treatment is covered fully by your health care plan, well your in for an unpleasant surprise when you have serious health issues.  For example, say you are 75 years old and the Dr. says the only way you can extend your life is from an extremely expensive bone marrow transplant.  Will an ACA plan cover that?  Or that $2,000 per month med that is not covered by your health plan at all (this happened to my mother).  

Even though the ACA helps in that without it I probably wouldn't be able to get health insurance at all when I retire because of pre-existing conditions, still, it won't solve the issue of some treatments not being covered.

Regarding an end game plan of not leaving any money around when one dies... How do you know how long you'll live?  That game plan is flawed unless you have enough to invest in a fixed lifetime annuity that will meet your spending budget but come saddled with low returns and high fees.

I'm happy that you are retiring and don't know your financial situations.  I just want to throw out things to consider.  Granted, I'm very financially conservative and a fan (and have largely lived by the lessons from "The Millionare Next Store").

Edited by No Mulligans
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I don't want to turn this blog post into what ACA can do or not do.  ACA is my option for now.  Later, I will be at the mercy of Medicare.   Pros and cons of those systems belong in another post or thread, but not this one.

As for your last comment on "How do you know how long you'll live," I think you are taking my comment about my "end game" literally.  I am just saying, not everyone is planning to keep their asset and just live off of money from investment return.  But I get your retirement philosophy of fail proofing it, even to a point of assuming that SS won't be there.   I am not one of those people.   Many happily live just on their SS payments including my parents.   Compare to those folks, I have far more and will count my blessing in my retirement.  

Edited by rkim291968
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  Compare to those folks, I have far more and will count my blessing in my retirement.  

True that.

I'm in the process of considering retirement and am very interested in this discussion and your blog.  And, congratulations.

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Congratulations to everyone that has decided to retire and is enjoying the relaxed life.   I'm throwing around the retirement idea also.   I'm 58 and have worked for General Motors for 39 years.    I will retire with a pension and have a small 401K.   My wife, a dental hygienist and substitute teacher does not.    I'm working now to bank more money into my 401k.

I've heard from Fidelity that I'll need 85% of my current income to maintain my life style when I retire.   That shouldn't be a problem.

I'm not sure about moving to a warmer, sunnier climate than Michigan or to become a snow bird.   The lack of sunshine here is depressing and after the last two winters of almost record cold and snow, I believe I need to get away from it.     Are there others that are snow birds or have moved after retirement to a warmer climate?

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After many years of conning myself that I can do well in the above, I simplified things into two areas.   One is, pick a list of diverse mutual funds which have proven long term record.   The other one is do short term trades with "OK to lose" money to generate cash.   I have found a very simple, near risk free way to do the latter.   I did this for a year and proved it works.  This will keep me busy for week day mornings :-)

The bulk of my money is diversified among different types of investments that will hopefully compound annually until I decide to fully retire in 15 years.   The money I invest is for income purposes and I try to net between $500 - $1000 a day depending on how the market is acting.  Once I hit those numbers, I shut down the trading platforms and do something else with my day, which is usually by 11am.  

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I've heard from Fidelity that I'll need 85% of my current income to maintain my life style when I retire.   That shouldn't be a problem.

That depends on how much $ you are spending for work related items.   I take company shuttle, pack my own lunch ... i.e., quitting my job will not reduce my spending by 15%.  In fact, it may slightly go higher as I have to pay for my own health insurance, dental, vision care, gym (if I wish to join vs using the company's), ...   So my retirement budget is set to higher than what I spend now :-(.  

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 The money I invest is for income purposes and I try to net between $500 - $1000 a day depending on how the market is acting.  Once I hit those numbers, I shut down the trading platforms and do something else with my day, which is usually by 11am.  

Thanks for sharing that.  I think takes a healthy dose of discipline to day trade within confines up max draw ups and draw downs. Have considered this when I retire (I am 40 and need to put 2 kids through college so will be at least another 15 years at best). Am interested in studying up micro level day trading (FOREX included) to dally into when I retire mainly to keep myself somewhat occupied. I hope you don't mind if I reach out at some point for a bit of guidance on your preparation leading to it. I feel like I would be a little lost without something similar to you.

 

Also, Congrats @rkim291968!

 

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 I think takes a healthy dose of discipline to day trade within confines up max draw ups and draw downs. Have considered this when I retire (I am 40 and need to put 2 kids through college so will be at least another 15 years at best).

There are ways to make money by short-term trading.  You need a proven method and as you stated above, a discipline.  If I were to add one more to the list, controlling your greed.  I don't try to time the market.  No one can't (over longer period of time).   You got 15 years to practice and come up with your own method, and make a little side income in your retirement. 

 

Edited by rkim291968
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Congrats! Sounds really good to retire. It'll be some time before I can with kids going to college etc. 

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I was lucky enough to retire at age 60.  I had several things going for me, including my wife, who is not only 11 years younger than me, but who worked her way into a great position financially during the 15 years between our wedding and my retirement.  When we got engaged, she had her own contract business and it was about to die, and we bought our first home on what I could qualify for on my machinist wages.  She was a job opportunity with a former employer just as her business was closing down, and the developed into yet another, better opportunity having a percentage of the company when her manager left to form his own investment group in the energy field. 

We lived well under our means during most of that time, investing all we could afford.  On my 60th birthday, she gave me early retirement as a birthday present, when her salary went to 6 figures.  Even with me retiring early and now her retiring at 54 when her company sold off their oil and gas assets as planned, we are comfortably well off, living in a very low cost of living area, and happily enjoying retirement.  

Our health insurance is fortunately covered by my retirement, as the company I worked for was owned by Alcoa for 12 years, enough to vest me in their retirement medical benefit, which gets hers in premedicare coverage as my spouse despite being a melanoma survivor.  She would have been rejected by virtually any other health insurance program because of that being considered a preexisting condition, even though she has been cancer free for nearly 10 years now.

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Have you actually given your resignation?  Or is the date scheduled for the end of the year?

Best of luck in your plans.  When you run across an interesting situation/problem we will all benefit from your willingness to share your experiences.

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Is it bad that I am 28 and considering retiring? haha Congrats to you and good luck! Hopefully your best golf awaits is ahead. 

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