Author Topic: Practicing Early Retirement or Is It Time to Early Retire?  (Read 2761 times)

xQuizx

  • 5 O'Clock Shadow
  • *
  • Posts: 6
Practicing Early Retirement or Is It Time to Early Retire?
« on: April 19, 2014, 10:50:53 PM »
So the unexpected occurred last month.  I was laid off.

Fortunately all through my working career I've always dilly dallied in side gigs to grow my investments and in turn create side income.

I've been thinking about early retiring in 8 years when all of my debt has been paid off.  I have debt in my primary residence, a commercial building, apartment and one rental property.  My original goal was to use my investment income to pay off those debts using a snowball method.  We have enough capital through stocks, cash and selling properties to eliminate all of our debt, but it would decrease our income.  Short term I do plan on paying off our apartment to increase our monthly revenue by $1,600 ($19,200 Annually).

My numbers are below:

Source                       Principal/Value     Income    Notes
Rental Properties                               $17,500    
Apartment                                               $20,000    Mortgage is $1,601, Will Pay Off in 2014
Commercial Property                                 $50,000    
Current Residence                              $(24,012)   $1,251 Mortgage, $750 Taxes
Annual Expenses                                $(22,988)   
Stocks                                  $210,000                     No Draw Down
Inherited IRA                    $400,000      $8,000    Forced Withdrawals (IRS)
401K                                    $200,000                       Can't Move out of Plan for 1 Year
Bank Accounts                 $200,000       
Annuity Inherited                                $25,200    Expires in 2017
Unemployment                                  $11,096    $569 a Week Before Taxes (25%) for 26 Weeks
Healthcare/COBRA                              $(18,000)   Found ACA Gold Plans for $1,000 a Month
Tithes/Donations                                $(15,000)   Varies Due to Investment Income $12k Base
Total                              $1,010,000     $51,796    


I'm 31 years old, married to the love of my life, we have a 2 year old and expecting a baby in a few months.

I look at our numbers and I see that we can make it, but I feel that the cushion is not great enough.  Being laid off was not part of the plan to early retirement, so I think that has me second guessing my numbers.

I have been enjoying retirement by getting healthier (lost 10 pounds so far), fixing things around the house and most importantly spending time with family.  I'm still looking for work, but know finding a job could take a while.

I've got some questions for the forums.
  • Are my numbers realistic enough to ER?
  • When do you know to push the button?
  • Is it worth it to keep working to acquire more wealth so you can give more?
  • How do you deal with friends/family when you're retired and they're not?

Thanks for reading my rant! =)

Cheers![/list]

libertarian4321

  • Handlebar Stache
  • *****
  • Posts: 1372
Re: Practicing Early Retirement or Is It Time to Early Retire?
« Reply #1 on: April 20, 2014, 05:51:35 AM »
    So the unexpected occurred last month.  I was laid off.

    Fortunately all through my working career I've always dilly dallied in side gigs to grow my investments and in turn create side income.

    I've been thinking about early retiring in 8 years when all of my debt has been paid off.  I have debt in my primary residence, a commercial building, apartment and one rental property.  My original goal was to use my investment income to pay off those debts using a snowball method.  We have enough capital through stocks, cash and selling properties to eliminate all of our debt, but it would decrease our income.  Short term I do plan on paying off our apartment to increase our monthly revenue by $1,600 ($19,200 Annually).

    My numbers are below:

    Source                       Principal/Value     Income    Notes
    Rental Properties                               $17,500    
    Apartment                                               $20,000    Mortgage is $1,601, Will Pay Off in 2014
    Commercial Property                                 $50,000    
    Current Residence                              $(24,012)   $1,251 Mortgage, $750 Taxes
    Annual Expenses                                $(22,988)   
    Stocks                                  $210,000                     No Draw Down
    Inherited IRA                    $400,000      $8,000    Forced Withdrawals (IRS)
    401K                                    $200,000                       Can't Move out of Plan for 1 Year
    Bank Accounts                 $200,000       
    Annuity Inherited                                $25,200    Expires in 2017
    Unemployment                                  $11,096    $569 a Week Before Taxes (25%) for 26 Weeks
    Healthcare/COBRA                              $(18,000)   Found ACA Gold Plans for $1,000 a Month
    Tithes/Donations                                $(15,000)   Varies Due to Investment Income $12k Base
    Total                              $1,010,000     $51,796    


    I'm 31 years old, married to the love of my life, we have a 2 year old and expecting a baby in a few months.

    I look at our numbers and I see that we can make it, but I feel that the cushion is not great enough.  Being laid off was not part of the plan to early retirement, so I think that has me second guessing my numbers.

    I have been enjoying retirement by getting healthier (lost 10 pounds so far), fixing things around the house and most importantly spending time with family.  I'm still looking for work, but know finding a job could take a while.

    I've got some questions for the forums.
    • Are my numbers realistic enough to ER?
    • When do you know to push the button?
    • Is it worth it to keep working to acquire more wealth so you can give more?
    • How do you deal with friends/family when you're retired and they're not?

    Thanks for reading my rant! =)

    Cheers![/list]

    If the early retirement thing doesn't work out, you can always go back to work. 

    Dealing with friends/family:  Just tell them you are an unfortunate victim of the economic downturn.   You were laid off and forced onto funemployment/early retirement.  Blame Obama.  Or Bush.  Or Both.  :)

    aj_yooper

    • Handlebar Stache
    • *****
    • Posts: 1091
    • Age: 8
    • Location: Chicagoland
    Re: Practicing Early Retirement or Is It Time to Early Retire?
    « Reply #2 on: April 20, 2014, 06:45:18 AM »
    I like how you show the cash flows over time.  They do look good!  But, of course, your household budget determines if you are there yet.  What are your taxes looking like for the next 8-10  years, especially if you have no mortgages on the rentals? 

    Cheddar Stacker

    • Magnum Stache
    • ******
    • Posts: 3714
    • Age: 41
    • Location: USA
    Re: Practicing Early Retirement or Is It Time to Early Retire?
    « Reply #3 on: April 21, 2014, 02:54:30 PM »
    I've got some questions for the forums.
    • Are my numbers realistic enough to ER?
    • When do you know to push the button?
    • Is it worth it to keep working to acquire more wealth so you can give more?
    • How do you deal with friends/family when you're retired and they're not?

    1) Your numbers appear solid to me. Not counting the annuity and unemployment which will both expire, your income is $95,500 and your expenses are $80,000. This is without counting a single thing from Stocks, 401K, and Cash which total $610K. At 4% SWR that's an extra $24,400 and at 3% SWR that's an extra $18,300. Also, you are only taking an RMD of 2% from the inherited IRA which is bound to go up.

    2) This is a personal choice. Financially you're ready. Take some paternity leave until the second child is at least 6 months old. That should be a long enough trial period.

    3) I would rather reduce spending or try to increase investment gains in order to give more, but I don't really enjoy a structured work environment.

    4) I haven't had to deal with this yet. I'm still working on a strategy myself, but I think I will be fairly open with them and offer guidance to help them do the same.

    Congrats on the layoff, the FI, and the second child. Good luck!

    Thegoblinchief

    • Guest
    Re: Practicing Early Retirement or Is It Time to Early Retire?
    « Reply #4 on: April 21, 2014, 03:55:39 PM »
    I would enjoy the time off with the young kiddos. If you feel the need to resume working in a year, so be it, but your numbers are solid.

    If you don't read it, check out RootofGood's blog. He retired early after being laid off and is loving it.