Re: CASE STUDY - Laid off - Can I retire now?

[OrganicRain]

Hi all, just got laid off from my job and wondering if I should pack it in. I asked this before but thought I would post a proper case study with greater detail...

Life Situation: Family of 5 -  3 girls 7,9 and 12.
Residence: Ontario Canada
Wife is a Stay at home mom

Assets:
Total NW $1,034,000.00   ($300k house plus $734,000 investments)

Investment breakdown:
15k cash
$719 invested (40% Bonds, 20% US, 20% CDN, 20% INT) Low cost Vanguard ETF's
$280,000 of the $719,000 is locked in til 55. However, there is a loophole that if we ran out of money we can apply every year to withdrawal to live on...

Expected Income in retirement:
10 months of EI payments of $2000 month starting mid September
Next 9 -10 years: Child tax credits are currently $400 month, next year should be at least $500 month because of our lower income.
Age 62 - 65 about $6700 in CPP payments
Starting at age 65 onward this goes up to - about $13,500.00 year in OAS and CPP combined
Additional fun Part time income if needed...


ER Expected Monthly Budget  =$2735
Groceries $800
Auto and Home Insurance $200
Home Property Taxes  $260
Misc Expenses (unexpected events) and eventual car replacement $250
Gas & Fuel $150
Home Improvement $150
Hydro/Water $160
Home Phone/Net/TV  $120
Clothing  $100
Natural Gas (home heating) $85
Mobile Phones $70
Alcohol & Bars $40
Fast Food $30
Coffee Shops $20
Travel $150
Kids activities $150
   
Can we retire? Or should I be looking for another FT job?  We are willing to generate some fun PT income as well.

Thanks in advance for your help

[JLee]

Can you knock that grocery bill down? That'd help a lot! : )

[OrganicRain]

Can you knock that grocery bill down? That'd help a lot! : )

Agreed, My wife does the spending on that and can't seem to gt it down any lower. I might have to take over on that one..

[mxt0133]

Looking at the numbers you are FI.  How confident are with those expenses?  Do you travel?  Do you plan on supporting your children with college/uni expenses?

If anything I would take 10 months off to spend time with your family and figure things out.  You do not have to figure it out overnight.  Don't make big decisions until you can think clearly especially after being laid off.

Enjoy your vacation and time off with your family!  Come back here after you are thinking clearly, we'll be ere. =)

[happy]

I think you're close but its a bit tight, especially with 3 kids.  You'd be good to go with regular part-time work though - cover your living and work expenses and leave the stash to grow.

[ShoulderThingThatGoesUp]

Sounds like your kids are all in school. If you and your wife both had part-time jobs you'd be more than set.

I wonder about your investment allocation. 40% bonds is a lot. How old are you and your wife - I'm guessing under 50?

[OrganicRain]

Sounds like your kids are all in school. If you and your wife both had part-time jobs you'd be more than set.

I wonder about your investment allocation. 40% bonds is a lot. How old are you and your wife - I'm guessing under 50?

Age 41 and wife is 43

Yes, kids are in school.
I was just offered a job, but its long hours (sales manager auto industry).  However, I may just collect EI for the next 10 months instead - then go to a nice relaxed PT job.  Wife is willing to work PT too.  Hopefully this will allow the stash to continue to grow so that we can stop working all together one day.  I have become adverse to working hard and long. Did that up til now and that is one reason why I am in the financial position I am in - but totally burnt out and want to spend more time with my kids because in 10 years they will be all close to adulthood.  Life is short.

I like to use 40% Bonds to reduce risk. I re-balance every year or after a big market move - automatically buying low and selling high.
The research I have read shows the reduced return is minimal than going with all stocks but the reduced risk is good. I believe many of the ER 4% models were based on retiring with a 50/50  bond/stock allocation.

[fb132]

It is true that many so-called financial experts do usually reccommend 60/40 AA. We are mustachians here, so we tend to be more aggressive towards our own AA. But I wouldn't worry about it. If you decided that 40% bonds is enough for you to sleep well at night, then go for it.

[gReed Smith]

Firecalc says you have an 86% chance of making it to 85 years old.  That's not bad. 

[OrganicRain]

Firecalc says you have an 86% chance of making it to 85 years old.  That's not bad.

Thanks for looking that up - then throw in some fun PT work and hopefully future online income.....

[OrganicRain]

More thoughts on my situation are welcome. What would you do if you were me?

[lostamonkey]

Enjoy your 10 months of EI, see how you like not working, and reevaluate once the EI payments stop.