Author Topic: Getting your ducks in a row before you FIRE  (Read 3327 times)

FrugalZony

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Getting your ducks in a row before you FIRE
« on: August 20, 2014, 05:37:23 PM »
This is a question for those of you, who recently FIREd or are very close to FIRE.

What do you need to recommend to do / get done while still employed?
Or if you are already FIREd, what did you regret not having taken care of while still employed?

Not that I am that close to FIRE myself, but I often think about, what things can be done in preparation, once you are close.

Along the lines of:
Get all your checkups in while your good employer health plan still covers those (I often don't make time for this stuff, as I am too busy at work).
Secure a loan for a FIRE residence, as it may be harder to get one, once your income goes away...
Frontload your 401K, in case you are leaving early in the year, so you can take advantage of more tax advantaged savings!!
Take advantage of your employers gift matching program one more time and donate to your favorite charity.

etc....

What are your ducks? Big things, little things?
Would love to hear some ideas.


Another Reader

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Re: Getting your ducks in a row before you FIRE
« Reply #1 on: August 20, 2014, 06:23:17 PM »
Frankie's Girl is asking similar questions on her thread.  She's going to FIRE by the end of the year.

 http://forum.mrmoneymustache.com/ask-a-mustachian/re-fast-approaching-ducks-in-rows/msg371575/#msg371575

Malaysia41

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Re: Getting your ducks in a row before you FIRE
« Reply #2 on: August 20, 2014, 06:50:24 PM »
My official last day of wage-slavery is a week.  It has dragged out as I've used up my vacation to hang on until they find a replacement (per the request of my management).  They haven't, and I'm done.

- We had LTC insurance but I let it lapse.  I'm thinking I should've kept it.  I may call tomorrow and see if we can recover.
- Got the college kid onto her own health plan (we live out of country so ACA does not apply to us).
- We are in progress of moving 17yr old over to her mother's health plan (we're cutting it close - makes me uncomfortable).
- Ramped up lendingclub.com investment to supply consistent income for that date in time when our savings account gets low (that'll be a while - we're WAY to high in cash right now).  Will increase next year when our AGI is low.
- Worked closely with the property manager for our apartment complex to do what needs to be done to generate consistent income.
- Did the math over and over and over and over to convince myself that retiring is okay (I still get fearful about this).
- when I get back to Malaysia we will get catastrophic medical insurance.  (I've been dragging feet on this).
- mentally shifted to not feeling 'entitled' to $300-$500 of new clothes every month.
- Got used to spending time on every money decision from fifty cents to fifty dollars.
- Learned (still learning) to bite my tongue in conversations where money comes up and people clearly don't want to hear what I think.
- Have spent a lot of time considering the next goal post.  Work on my book? Help my hubby with his new venture? Accept the position of Marketing director at a startup?  All three?  IDK - still mulling.
- Bought a reliable and low milage used car for $3400 and returned the leased vehicles the company had been paying for under our expat deal.
- Extended the rental terms for current tenants in our CA house -  but planning on increasing the rent by approx $25% in a year.  Getting ready for that marketing / transaction.
- Paid off 2nd mortgage completely (it was at 4.25%) so that the house rent covers all expenses plus majority of principle (15 yr mortgage). 
- Increased our 401k contributions from 7% to 12% like we should have been doing for years.  I feel like such an ass-hole having only contributed 50% over the company match and not maxing these out.  But I needed to buy clothes at Nordstrom!  Oops. 
- I'm sure there is other stuff, but, well that's all I got for now.
« Last Edit: August 20, 2014, 06:56:49 PM by Malaysia41 »

FrugalZony

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Re: Getting your ducks in a row before you FIRE
« Reply #3 on: August 20, 2014, 10:23:04 PM »
Frankie's Girl is asking similar questions on her thread.  She's going to FIRE by the end of the year.

 http://forum.mrmoneymustache.com/ask-a-mustachian/re-fast-approaching-ducks-in-rows/msg371575/#msg371575
Thanks I had not seen this one! I have been out of the loop for a while, as you know.
I did a search before I left, but did not think about doing a new one.

Mods if you feel the threads should be combined, please combine them.

However, I wanted to make a more generic collection of "to do" things, whereas FG is asking for suggestions pertaining to her specific situation.

My official last day of wage-slavery is a week.  It has dragged out as I've used up my vacation to hang on until they find a replacement (per the request of my management).  They haven't, and I'm done.

- We had LTC insurance but I let it lapse.  I'm thinking I should've kept it.  I may call tomorrow and see if we can recover.
- Got the college kid onto her own health plan (we live out of country so ACA does not apply to us).
- We are in progress of moving 17yr old over to her mother's health plan (we're cutting it close - makes me uncomfortable).
- Ramped up lendingclub.com investment to supply consistent income for that date in time when our savings account gets low (that'll be a while - we're WAY to high in cash right now).  Will increase next year when our AGI is low.
- Worked closely with the property manager for our apartment complex to do what needs to be done to generate consistent income.
- Did the math over and over and over and over to convince myself that retiring is okay (I still get fearful about this).
- when I get back to Malaysia we will get catastrophic medical insurance.  (I've been dragging feet on this).
- mentally shifted to not feeling 'entitled' to $300-$500 of new clothes every month.
- Got used to spending time on every money decision from fifty cents to fifty dollars.
- Learned (still learning) to bite my tongue in conversations where money comes up and people clearly don't want to hear what I think.
- Have spent a lot of time considering the next goal post.  Work on my book? Help my hubby with his new venture? Accept the position of Marketing director at a startup?  All three?  IDK - still mulling.
- Bought a reliable and low milage used car for $3400 and returned the leased vehicles the company had been paying for under our expat deal.
- Extended the rental terms for current tenants in our CA house -  but planning on increasing the rent by approx $25% in a year.  Getting ready for that marketing / transaction.
- Paid off 2nd mortgage completely (it was at 4.25%) so that the house rent covers all expenses plus majority of principle (15 yr mortgage). 
- Increased our 401k contributions from 7% to 12% like we should have been doing for years.  I feel like such an ass-hole having only contributed 50% over the company match and not maxing these out.  But I needed to buy clothes at Nordstrom!  Oops. 
- I'm sure there is other stuff, but, well that's all I got for now.

Wow, that's a ton of info!
Thanks for sharing!

dragoncar

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Re: Getting your ducks in a row before you FIRE
« Reply #4 on: August 20, 2014, 10:40:52 PM »
Frankie's Girl is asking similar questions on her thread.  She's going to FIRE by the end of the year.

 http://forum.mrmoneymustache.com/ask-a-mustachian/re-fast-approaching-ducks-in-rows/msg371575/#msg371575

What is it with people and their ducks today?

bluecheeze

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Re: Getting your ducks in a row before you FIRE
« Reply #5 on: August 21, 2014, 06:21:05 AM »
One thing I thought of was checking to see if you have enough credits for Social Security.  Still don't know enough about this, but from what I understand you have to have a certain number of credits to claim once you hit 100+ years old like we will probably need to be by the time I officially reach government retirement age.  SS website shows you how many credits you have earned and your SS taxable income for your career.

Another Reader

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Re: Getting your ducks in a row before you FIRE
« Reply #6 on: August 21, 2014, 08:13:56 AM »
Another site that's useful in answering these questions is the forum over at early-retirement.org.  Lots of folks with checklists there.

One of the key themes there is running various retirement calculators to see how confident you can be in your projections.   One question you will want to resolve if you are going to decumulate over time is what safe withdrawal rate makes you comfortable.  Many researchers now suggest that 4 percent is too high and something in the low to mid-3 percent range is "safe."  Determining your comfortable safe rate in those last couple of years before you RE is key to your success.  You may need to adjust things to feel confident.

Expenses are also important.  Have you accurately accounted for all your anticipated spending in retirement?  If you are going to reduce expenses to make retirement "work," will you be satisfied with the resulting lifestyle?  One suggestion is to live on your proposed retirement budget for a year or even two before you actually pull the plug.

Have a good idea what you want to do with your time.  Getting away from the grind and an unpleasant work environment is one thing, figuring out how you want to spend/invest your time is another.  You already do a lot of volunteering, so that's probably going to increase.  List what you want to accomplish and make a plan.  This was a mistake I made.  I wasted a lot of time in the first few years not knowing what I really wanted to do.  If I had a list of things I wanted to accomplish in the first year or two, I would have been much better off.

Set up your post retirement asset allocation.  It is often suggested that you put aside one to three years of expenses in cash or other low risk accounts.  This insulates you somewhat from sequence of returns risk.  If you do this, you may need to spend some time reallocating.

Establish any lines of credit you may need in retirement.  Stabilize your mortgage situation, get a HELOC, apply for credit cards, and so on.  As I have mentioned elsewhere, banks do not like to see "retired" in the employment box on a credit application.  There are fairly rigid requirements in place now for banks to determine your ability to repay debt.  Social Security and pension income are counted. Most lenders either do not count or heavily discount asset based income.  They may make an exception for rental income, as long as it is stable and has appeared on your last two tax returns.  It depends on the lender.  If you are liquidating paper assets to eat, you may have serious issues getting credit.

Health insurance and estimating your SSA benefits have already been mentioned.  Understand that you are anticipating a long retirement, so these are guesses at best.  I was 9 years away from the first possible SSA check when I retired.  I looked into it to make sure the earnings were correct, and I estimated the benefit.  I did not need the money, so I considered it a nice annuity that could be used for enhancing lifestyle or could be invested when it appeared.  If the annuity is important in your calculations, consider various scenarios and integrate them into your calculations as you approach RE.

Finally, you can try to negotiate your separation from work so that you get some extra money.  The Financial Samurai negotiated a layoff with severance.  He was so successful, he wrote an e-book about the process.