The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: OrganicRain on August 14, 2015, 06:05:41 AM
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Hi all,
Details:
Expenses are 2700/month (once i sell one vehicle)
House 300k paid off
Investments 736k
Receive child tax benefit payment of $400 month
No debt
Since I lost my job, I will be collecting $2000 a month in unemployment premiums for the next 10 months or so.
Would you retire on this?
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You're so close. It's a gamble, mathematically. Big market downturn and you're screwed. Lower your expenses or good market returns and you're set. How long do you get the child tax credit? I probably would work a few more years, at least part time, in your circumstances.
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That would be too tight for me. How long will you receive the Child Tax Credit? Is it possible to downsize from your home (now or once the child has moved out)? Is the child expecting any help for post-secondary schooling? Will your expenses go down now that you aren't employed? (or up?)
Are you open to part time work while "retired"? A few hundred dollars a month will make a big difference.
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I would, and after 10 months I would find some part time work. Just working 10-20 hours a week could give you a significant boost.
I would also considering downsizing homes. It would make you more liquid, AND potentially lower taxes/utilities in a smaller home.
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Those unemployment premiums - you've got to be actively looking for work to continue collecting those, right? And if something appropriate comes up don't you have to take it? The answers to these questions will affect your decision(s) here I think.
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Nope. I would not.
But I would take the unemployment and the next 10 months off and take RE for a "test run". Play with the budgets, enjoy hobbies - or get some, do some slow travel, spend quality time with family and get a few things done on the house. Then I'd get back to work and sprint to the finish!
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How long do you get the child tax credit?
With expenses at $32,400/yr, but $4,800 in the credit, that leaves $27,600 to cover from investments.
$27,600 * 25 = $690,000. You've got $736,000.
Either cut expenses or, like, 2Birds1Stone says find some PT work in a while to get where you need to be when the credit stops and I don't see the concern. Get free :-)
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I wouldn't. That is pushing it for me. But could you lower your monthly expenses? 2700/month seems very high for someone not paying a mortgage. If you could get those down, then I would consider it heavily!
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It depends. If you said your monthly expenses aren't going up ever then you meet the 4% rule with your home equity and investments. But I don't know your asset allocation. If you're investing heavily in bonds or something that will yield a lower return long term then that might be an issue. This also depends on whether your comfortable counting your home equity in your net worth.
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Some questions.
How old are you? What are your expected SS payments like?
How old are your children? And when they go to college are you planning on helping them out in any way?
The answers to these questions seem to me to be important as to how risky RE would be at this point.
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Give it a test run, it's the perfect time to do it! The new normal might involve a part time job anyway.
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Not enough information.
Are investments all taxable/untaxable/capital gains?
What is your age (how many years to Medicare?), how many in your family?
How will you pay for health insurance and how much will it be if you quit?
Will you work or not and how much do you think you will make?
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I would consider myself FI and I would take the 10 months off to figure out what I wanted to do next. For me personally, I know I will most likely continue to earn some sort of money after FI.
Depending on your age, I wouldn't retire if I was you. You haven't thought about income. How are you going to be accessing your investments.
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OP, maybe you can get the confidence you need in 10 months if you cut your expenses. Do a case study and you'll have 10 months to improve your chances.
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/
First thing you might consider is, with a 300k paid off house and a kid, could you downsize the house? Investing the cash you save.
Are you married?
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I think expected SS is the wild-card here. You can draw more than 4% if you're getting a decent SS payment in a reasonable amount of time. The thing that makes me most leery in these situations is whether or not you're accurately predicting your expenses. You may spend $2,700 most months, but are you accounting for expenses like a new car, new roof, big medical bill, insurance premiums, etc. that come up rarely but predictably.
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Thanks for the responses, you guys are awesome!
More info:
Married with 3 kids. Wife is a SAHM but could pick up a PT job
The $400/month child credit would end in about 10 years
SS - not sure how much I would get to be honest. Be getting some for sure of course.
I may be able to cut about $100 month out of the budget.
Asset allocation - 40% bonds, 30% US INDEX, 30% INT INDEX with annual re-balancing > All Vanguard low cost ETF's
I am open to considering:
1) retiring
2) semi retiring with wife and/or I working PT
3) Taking a year off then go back at it FT or PT (would have collected $2000 month in EI premiums for 10 months)
4) Landing another FT job asap - work for another 4 years or so til my investments hit 1MM
Thoughts?
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What do you intend to provide your kids in the way of higher education funding?
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What do you intend to provide your kids in the way of higher education funding?
My thought was to enable them to work PT and in the summer, so that they can save and earn their way through it. Additionally, if they had to take out some loans, then they would - but I plan on teaching them to live frugally and resourcefully, enabling them to pay it off asap.
I would help where I can however.
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If you are pretty confident the $2,700 / month is a long-term figure, I'd retire but leave open the possibility of working again if needed / wanted.
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Absolutely, without a doubt, walk away from it all. Use the ten months to ease into it and fine tune the budget. You have enough.
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If just to get a clear mind and body for 10 months sure. But I think you would have to go back to the workforce in some capacity.