Early retirement

At the moment I have no individual stocks. I am not against it, and have done ok with a few, but at the moment I am mostly in ETFs and Closed End Funds (CEFs).

 

My wife can start drawing from her IRA before me. Not saying she is older, of course, just ... well nevermind.

I have some Roth accounts that I can pull contributions from, a 403(b) that I can pull from, and can do a 72(t) from an IRA. All these are without penalty.

 

Question two: how do you convince younger folks that this day will come, and they will regret not having the option to retire in mid 50’s.?

I even set up a special 547 public safety plan that allows a pensioner to draw from it before 59.5 I doubt 25% have taken advantage.

Adding to another post; God promises tomorrow to no one. Plus consider the physical ability to do things and enjoy them.

If you have some skills such as plumbing or carpentry you can always find handyman work and set you own schedule, like “ Don’t call me December to May. Cash in pocket is pretty good money when no taxes are taken out.

 

BP - Work is over-rated. You won't miss it. I'm 58 and formally gave up the daily grind 2 years ago this month. My wife (also retired at 54) have been planning our early exit for at least 20 years. Fortunately, I won't have to tap SS or any of my 401K until age 67. I was a business owner and sold my interest. The sale was structured that I received 10% down and the balance is paid monthly for 10 years. Health insurance in ungodly expensive and comes out the wife's pension. Probably the biggest key to retiring early is to get out of debt as soon as you can. Once out of debt, Stay Out of Debt. At that point you can concentrate on savings and investment. Save, Save and then put a little bit more back. Its not if you can, you have to, period. We are still putting about 20% of our monthly income away.

As far as investment strategy. We are about 60% stock mutual funds. Mostly US stocks but also minor global, real estate and emerging markets. About 33% in bond funds, a mix of treasuries and corporate. The rest is cash. Its good to keep some powder dry.

I could never see myself going back to work. I've grown too accustomed to my daily routine. I sleep in til 7-7:30. Casually have my coffee and make breakfast and watch the news. Once the coffee kicks in I'm out the door to tackle whatever is on the days agenda. Some days that's yard work or the garden or bucking and splitting a tree. Sometimes its off to the lake or the tree stand. Some days it's hanging out with the grandkids or my 96 years young mother who stills lives on her own. After lunch I've gotten pretty good at taking a nap. We take a couple trips a year. Don't eat out much, never have. We are both good cooks so why bother.

 

Some people just won't do it. Sad, but too true. I gave up on trying to talk people into it a long time ago. When I retire (early), I am sure to hear about how "lucky" I am ...

 

Is the 547 something state funded?
I started with stocks when I was 12-13? My dad bought us kids a few hundred dollars of GE stock when he worked there.
Responsibility will install it in youth. Tell them the government actually won't take care of them...

If you save %10 a year and work, don't spend more than you make and stay out of debt you should be all set. Taking advantage of employer matched incentives etc...
When you are under 40 you can take big/bigger risks you technically have time to earn it back.
Some say by 35 you need twice your income saved, Wich is all relative and a silly statement...

I thought someone had some play money set aside with Ford. It's really tempting me as the price drops I just can't get behind them..

 

Lots of people say they have everything paid off when they retire. Wrong, you still pay property taxes, gas, food, clothing, electricity, water, car insurance ,house insurance, it goes on and on, and on. So, if you haven't really planned it out, you could end up just changing jobs instead of actually retiring. First time i thought about it, we went to a financial ''adviser'' when we left we were so depressed it was sad. Ended up talking to another one, and retired 3 yrs later. I was a laboring type guy, my wife a sales person, private type business, but, she knew how to save, and really managed our money. Just about every raise i got we tried to save it, we didn't / haven't done without anything, but, spend our money wisely. We do own 2 homes, our cars, etc, but,still have all the above other expenditures. The secret to the average person, save, save, save, and don't think you have to drive the best car's, pickups, etc, do with what you have and take care of what you have. It'll pay dividends in the future, i know it sure worked for us.

 

Actually

Actually, I transposed some numbers, it is a 457b plan for any employee of a Sheriff's Office, but a lot of it is catered to the patrol officer's pension.

I have been a Big Brother over the years, and my latest to turn 18 just started a job. I have been talking with him about getting started on a separate retirement plan in addition to the State plan. (he is employed at the university). The State plan will just keep you from starving; you can't survive on it alone. If he begins now, with a 7 figure goal, it will be dirt cheap- no catching up.

I am also maxing out my HSA, as I will need a bridge for a couple years after I retire, until Medicare qualified. HSA can also be used as an IRA at some point as well.

 

Gotchya. ...
10 percent of his paycheck into the bank...in a few years hit up a financial advisor with direct deposit and forget about it...CDs can be a good early savings plan you get a taste of money growth.

In NY, you take a pay cut compared to private sector but no cost top of the line healthcare and pension, good investment saving matching and acrued vacation etc can be worth it.
Police- COs-teachers etc all make well into 6 figures and retire with full salary pensions, then leave the state for cheaper cost of living areas.

The state has since been reducing retirement pension from 100-80-to 60 or 40 percent I can't remember but it's becoming not worth the pay cut. With boomers, if they stay past 30ys they actually loose money.....you make more staying home!

 

I've structured the sale of 2 businesses (both 5 year terms)this way since 1999 for tax reasons. It worked well.
Just curious ,,, how was the debt secured if at all?
I'm looking to sell again in 2-5 years and it will be about half my retirement nest egg. I'd like to secure it somehow .

 

NY and Illinois and possibly Wisconsin have been very generous to public employees to the point of bankruptcy. Appears NY is taking some responsibilty.

Yes, at a certain point, you have to figure how much you are actually working for when you become eligible. Some realize they shoepwing up for half pay.

We also have an otion for some who can, agree to leave in 3 years, on their 32nd anniversary. You draw your pension the last three years while working. and it goes into our supplemental program, waiting for you when you leave.

 

X 10

 

"So, those who have - what advice do you have to offer?" ... breath out... relax... you're way ahead of most, when it comes to planning anything, when it comes to personal finances.
You'll be fine. Retire. Don't look back. Enjoy. Every. Minute.

 

I retired at age 42 and do not regret it. I cannot start drawing on my pension until 55 year old, but I have been planning for this since I was a teenager too.

It has not been without a hitch. I did not plan on getting cancer, but property taxes doubling I did not expect either.

I would not put much stock (literally and figuratively) into financial advisors though. Many have offered me advice as I have met them these last two years, and I have always thought, "If you are so smart on this, why aren't you retired at age 42 and I am?"

 

A lot of people do not realize just how valuable time can really be.

Take the Tiny House that we are in now for example. When we started it was nearly condemnable since it had been vacant for 10 years. 5 years ago it was realtor appraised at a mere $40,000. Yet after spending 5 weeks rebuilding it, with only $1,800 in cash, now that we are living in it, is at least $60,000.

So after spending 200 hours working on it, spending $1800 for materials, I have added $20,000 to my net worth. That is $91 per hour. The great thing is that I am nowhere near done, this house will be worth well over $100,000 when it is finished. But it does not matter how those materials are achieved. I used a sawmill for instance to make siding, but as long as they are in good condition a home appraiser is not going to care, just that they are on the building. Now in all the other building materials.

But this is just one way of how early retirement should be calculated. I have people say, "It is not fair", but is it? Back when I was a Freshmen in High School I realized if I did not take a study hall, and added extra courses, in my Senior Year I would have all my required courses done and that I could take Vocational School all day, instead of half-a day. When I graduated I had 2 years of Diesel Technology and a year of welding. People said it was not fair, but they could have done the same thing, they just chose not to.

I realize not everyone has houses, but everyone has SOMETHING. I apply this same sort of logic to farming, logging, land purchases, etc.

Would I ever go back to a job? Darn right, in a heart beat...for the short term...anything to maintain cash flow so that the ultimate long term plan can be realized. When people say, "I would never", no matter what it is, they back themselves into a corner and limit their options.

 

Actually, Wisconsin has one of the best run and funded public pension plans in the nation. It is better than 99% funded. There are other states that have not done a good job with their public pension funding.

 

I'm 59 & 1/2, and I'm shooting to get out in two years @ 62, which is 29 months from now. I've got a 401k and a Roth. I figure I can always do a little work here and there on my terms as needed when I want to pick up some cash. We're not planning on touring the world, but know we can travel cheaply in the USA, campgrounds, sandwiches, etc. I can always sell firewood as well. Also we will be debt free. And the best part, I can make gtg's in the midwest.

 

Just Wood - The business was a corporation. I sold my shares of stock. The note is on the shares. They are the security. If there is a default, I get the shares back. That said, I'm not worried the business is doing as good if not better than ever.

 

I've got 10 months to get my full social security. I'm still gonna work as an appraiser (Lodged Tree-I'm coming to inspect that siding on your house), maybe slow down a bit but try to double dip for a year or two. I'm a big believer in high paying dividend stocks. (AT&T, BP, Verizon) They are less volatile when the market does dip.

 

There is another trick you must look into. You can convert your traditional ira into a Roth IRA. Yes, you will pay income tax on the conversion but after 5 years that converted amount becomes a Roth “contribution” which you can access penalty free. It’s called the Roth conversion pipeline because you convert one year’s expenses each year for use in 5 years. You can do the same thing with your 401k. Look into it.

I will be done in about 4.5 years, mid 40s. Current savings rate is 70% since lump sum paying off my mortgage at the peak of the market this January. I don’t normally time the market but got lucky that time!

I’m a follower of the 4% rule. Plus a bonus from my pension and our social security checks.

Health care is the wild card. It might get cheaper or it might go up. No idea.