Author Topic: Reality Check  (Read 1999 times)

cambeiu

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Reality Check
« on: May 30, 2016, 05:28:15 PM »
Hi,

I am new to the MMM website, although I am somewhat of a veteran in this wonderful FI journey. As a way to introduce myself to this community, I would like to share my current status and see what you guys think. As someone who suffers from a lot of anxiety and somewhat of a "bunker mentality", it is hard for me to evaluate in an objective way if I could retire or not. Honest feedback greatly appreciated.


42 years old male. Married. No kids and no plans on having any.
Pre-tax household income: $284,000. (High COL area)
Debt (mortgage\credit card\auto\student loans\etc...): $0
Total monthly expenses (including maintenance of primary + rental home): ~$4,000.00
Assets:
Cash - $214,000.69 (@1.05% APY)
US Treasury Bonds - $40,000 (@multiple rates)
401K - $383,000.00 (@Vanguard Target Retirement 2035)
Vanguard Standard Investment Account - $42,000 (@VSMGX)
Sharebuilder - $317,000 (@multiple ETFs)
Lending Club - $61,000 (@7.3% APY)
Roth IRA - $37,000.00 (@multiple ETFs)
RSUs - $212,000.00
Primary home - ~$500,000 (100% paid off)
Rental home- ~600,000 (100% paid off) - generates $3,000/month gross income.

Murse

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Re: Reality Check
« Reply #1 on: May 30, 2016, 06:01:18 PM »
The answer is yes if you living expenses are correct. Judging by your income/ assets it doesn't seem your living expenses are what you say they are, unless you haven't had that income very long.

Cassie

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Re: Reality Check
« Reply #2 on: May 30, 2016, 06:02:02 PM »
You need to figure out what you want to spend yearly in retirement?  that will go far in figuring out how much is enough.

cambeiu

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Re: Reality Check
« Reply #3 on: May 30, 2016, 06:05:01 PM »
The answer is yes if you living expenses are correct. Judging by your income/ assets it doesn't seem your living expenses are what you say they are, unless you haven't had that income very long.

Yes, my income has increased significantly in the past 3 years or so.

cambeiu

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Re: Reality Check
« Reply #4 on: May 30, 2016, 06:05:47 PM »
You need to figure out what you want to spend yearly in retirement?  that will go far in figuring out how much is enough.

If I can keep my current living expenses, adjusted for inflation, I'll be happy.

Murse

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Re: Reality Check
« Reply #5 on: May 30, 2016, 06:07:06 PM »
The answer is yes if you living expenses are correct. Judging by your income/ assets it doesn't seem your living expenses are what you say they are, unless you haven't had that income very long.

Yes, my income has increased significantly in the past 3 years or so.

So what was your income 4 years ago?

cambeiu

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Re: Reality Check
« Reply #6 on: May 30, 2016, 06:10:14 PM »
The answer is yes if you living expenses are correct. Judging by your income/ assets it doesn't seem your living expenses are what you say they are, unless you haven't had that income very long.

Yes, my income has increased significantly in the past 3 years or so.

So what was your income 4 years ago?

About half of what it is now. Why?

Rezdent

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Re: Reality Check
« Reply #7 on: May 30, 2016, 06:13:00 PM »
The answer is yes if you living expenses are correct. Judging by your income/ assets it doesn't seem your living expenses are what you say they are, unless you haven't had that income very long.

Yes, my income has increased significantly in the past 3 years or so.

So what was your income 4 years ago?

About half of what it is now. Why?
Because it isn't so much about the size of your stash.  It's more about what you spend - you need that number to know if your accounts can cover you for retirement.

cambeiu

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Re: Reality Check
« Reply #8 on: May 30, 2016, 06:15:41 PM »

Because it isn't so much about the size of your stash.  It's more about what you spend - you need that number to know if your accounts can cover you for retirement.

I am confused. My total monthly expenses today are $4,000/month. That was listed on my first post. Not sure how my income of 4 years ago impacts my expenses moving forward. What am I missing? 

EnjoyIt

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Re: Reality Check
« Reply #9 on: May 30, 2016, 06:22:33 PM »
Let me get this straight?  Your rental gives you $3K/month.  You spend $4k/month.  You are asking if your assets of $1.3 million can cover the remaining $1K/month?

Do you really need someone to answer that question?

human

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Re: Reality Check
« Reply #10 on: May 30, 2016, 06:28:39 PM »
I can't speak for others but many people do not really know what their spending is or do not take the time to really calculate them properly. 250k a year is a ton of money with no kids, since you made half that 4 years ago it seems your net worth (at least to me) is damn impressive. Almost 2.4 million in net worth, 1.3 million of that in cash or investments, 3k a month in passive income and 48k a year in expenses. You should easily be covered to retire a few years ago.

The magic number thrown around is yearly expenses x 25, in your case that's 1.2 million, plus you own two homes outright. If you like playing landlord and think you can maintain the income of the rental you can keep the rental, if it were me I'd sell the rental and invest the cash.

Just curious why so much in cash? That's 4 times your annual expenses . . .

cambeiu

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Re: Reality Check
« Reply #11 on: May 30, 2016, 06:32:22 PM »

Just curious why so much in cash? That's 4 times your annual expenses . . .

Combination of fear, paranoia and a desire for diversification (no having all eggs on the equity/bonds basket).

human

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Re: Reality Check
« Reply #12 on: May 30, 2016, 07:38:16 PM »
Not sure how long it took to put together that much cash but at least you are getting 1% not really enough to keep up with inflation. 20% of your asset allocation (outside of real estate) is cash, that's a lot!!