Semi-retirement question - RV-Dreams Community Forum

Floridariz · RV-Dreams Family Member

Semi-retirement question

Papparazzi · RV-Dreams Community Member

Paula,

I am sure Howard will have plenty to say about this but I wanted to reply since I have a very strong opinion about "The Number" that so may of us are trying to attain. I will tell you the same thing I told Howard last year when he and Linda visted us here in Clearwater ... Forget about the number!!! It is a myth that has been conceived and perpetuated by wall street and is unattainable by the average American (who has less than $50,000 in savings).

I came to this conclusion after reading an article by Paul B. Farrell at www.marke****ch.com Jan. 23, 2006. I t was a review of a book called (drum roll) "The Number" by Lee Eisnenberg. Paul stated that you will open the book thinking

"Yes, yes, finally I'll find out MY number, how much I need to retire happy and financially free!"

Then, when reading it, a deep, booming voice will echo in your brain: "Sorry, but you are 'Numberless.' You don't have enough! And you will never, never have enough!"

It has taken me over a year to finally get up the nerve but March 31st I (Like Howard did before me) am walking away from a really good paying Corporate gig, getting into the motorhome with my wife and we intend to do and see many of the things that we have dreamed about for a lifetime. Yes I am older (59) than Howard when he left "The JOB" but if I listen to Corporate America and Wall Street I would never be able to do this before age 70 and until I reach "The Number."

The amount needed is going to be soooo different for everyone. It takes a lot of soul searching and research about your own situation, goals, tolerance for change, taking risks etc. but in the end, all that matters is what makes you happy.

As Howard told me months ago "Ron get out there" and I am finally heeding his advice. Making the decision to leave my job and do the things that I love, has lifted a huge weight from my shoulders. Everyone I talk to at work is so envious, may of them will be living vacariously though me the next few years like a lot of us have been doing with Howard and Linda.

Ron

Here is a link to the article from Marke****ch.com

http://www.marke****ch.com/news/story/there-no-number-guarantees-secure/story.aspx?guid=%7B59F4D678%2DC06E%2D42FD%2D90D7%2D55CB66EBC2C3%7D

-- Edited by Papparazzi at 10:26, 2007-03-14

-- Edited by Papparazzi at 10:32, 2007-03-14

-- Edited by Papparazzi at 12:56, 2007-03-14

-- Edited by Papparazzi at 12:59, 2007-03-14

-- Edited by Howard at 11:48, 2007-03-17

dreamjosie · RV-Dreams Family Member

I am 58 and Fred is 70. Fred pulled the plug on his high paying job 15 years ago, and I retired from a well paying commissioned sales job last year when we decided to go on the road. Between the two of us combined, we don't have even one magic number. But even had I continued to work another 5 to 10 years, we would never ever have that number accumulated. And I would just have had 5 to 10 more years of stress.

You don't know what tomorrow holds. You could develop a terminal illness, or even get hit by a bus. We're not going to live today worrying about tomorrow. You can always figure out what to do if you need to. If I have to live in one room, and eat cat food when I'm 90, I'll still have the memories of this wonderful life on the road.

Go for it!

Floridariz · RV-Dreams Family Member

Thank you for your responses! I mosied over to the blog of the guy who wrote "The Number" and found that pretty interesting. It is nice to know I am not the only one that thinks the whole thing is a lie. The concept of the American Dream and the Retirement Dream is all suspect.

I think I will do some more research in that direction, but as Howard told you, "just get on with it" is probably the wisest thing for me to do! All this hand wringing and worrying is making me even irritable with myself!

Thanks,
Paula in Florida

Readytogo · RV-Dreams Family Member

I am not worried so much about how much we have in an IRA or 401K. I worry about the cost of health insurance. I know we can live on much less than the so called experts say we need. If health insurance was not a factor I would seriously consider packing up now (if I could convince our son). I was talkng to a friend about this recently. He feels if we did not pay for our health insurance like Canada you would see a flock of people leaving their jobs. I think that is the only thing holding alot of us back.

There are calculators you can use inputting want you need a year in todays dollars and it will calculate what it will be in future dollars and how much you will need in your IRA/401K based off the years you have until you start withdrawing from account and your life expectancy.

I think if you input the amount you feel you need fulltiming it would come out alot less then what your are reading from the experts.

I don't have nearly as much as they say you should but I think I have more than enough for fulltiming.

Our plan is to start fulltiming in 5 1/2 years. I will be 55 and my husband will be 58. We both plan on workcamping. I just am concerned about the cost of health insurance.

flyone · RV-Dreams Family Member

I have said for a long time that, if we get Goverment sponsered health care in the good old USA, as some political parties want, the work force would lose 25% almost instantly. My wife and myself would be two, and I have a couple of brothers who would drop out of the work force as well. I think a lot of people in the 50 to 65 age bracket are working because of the health care insurance issue. To me the money is not as big of an aspect as is how to bridge the health insurance gap. As we all know that cost can be very high. What to do???

Flyone

Floridariz · RV-Dreams Family Member

We self insure because we are self employed...will that get harder and way more expensive as time goes by? I guess I should be able to answer that...our premiums go up between $75-100 per year. It 5 years we will no longer be able to afford insurance and dh will have to close his business and go work for someone!

Do you think the gov't has that figured out, about losing 25% of the work force if there is gov't sponsored health insurance?

Interesting!

Paula

Luvglass · RV-Dreams Family Member

Readytogo wrote:
Our plan is to start fulltiming in 5 1/2 years. I will be 55 and my husband will be 58. We both plan on workcamping. I just am concerned about the cost of health insurance.

Hi Readytogo,

FWIW, Jo is 58 and we pay $301 a month for her health insurance. I have Medicare and the supplement costs $140 a month. Yeah, it's more than we'd like to pay, but cheap when compared to staying working just to get health insurance.

It's a short time living and a long time dead, with no do overs.

Go for it!

Fred

RVDude · RV-Dreams Family Member

Death, taxes, and rising health insurance premiums all have something in common.

Howard and I (and maybe others) highly recommend eHealthInsurance.com to compare a wide variety of plans and options. The hard part is picking one. The harder part is the line above!

Here's this forum's cross post on the subject of health insurance.

TheBobGuy · RV-Dreams Family Member

Hi Paula!

You have a good question and I agree there is no "magic" number. But you can consider this and do "the math" on your own. Decide how much income you need to live on now, and how much you think you will need to live on "later"-- as in when you are much older and perhaps unable or unwilling to work. For example, you can live on $1800 per month ($21,600). If you have a nest egg of $400,000 you can realistically expect an income of, say 5.2% per year, which is about $21,303. So, you can almost live off the income generated by your funds. Provided you don't touch the principal, you'll still have the original $400,000 when you "get older", say 15 years down the road or so. (That same $400,000 invested and allowing the income to be re-invested, will be worth about $871,120 in 15 years) If you have some other source of income, say rental income, or a pension or Social Security, or part time work, that would make a difference in the amount of income you would need to withdraw from your investment earnings. Don't forget to factor in inflation, as that little bugger tends to erode the best of plans!!

So, just make your own worksheet and decide what works for you and what is comfortable for you. Don't forget to allow for replacing your MH or 5er and tow vehicle as it ages, or for going to a fixed abode at some point later down the road when you might not be able to travel, or whatever other things you may need to consider in your life. It's not the same answer for everyone as each of us have differing circumstances. Only you can determine what your "magic" number is--then go for it!

Best of luck to you!
Molly

Floridariz · RV-Dreams Family Member

This was the most succinct and understandable explaination of how money works that I have ever heard, Molly! Can I hire you to figure out a retirment plan for me?

Thank you for taking the time to answer my questions!

What if 300k of that 400k was in real estate? How does that work? Obviously, can't live on the interest so I am wondering, is leaving it 'sitting' in real estate and letting it appreciate AS GOOD as compounding??

Paula

Tim & Robyn · RV-Dreams Family Member

I wish I had such problems to wrestle with! On the real estate investment thing, wouldn't your property taxes eat up some of the appreciation in value each year? Do the property taxes go up as the property appreciates in value? That money has to come from somewhere. Also, wouldn't you also have to pay MORE taxes on your gain when you sell the property? Government - never missing a chance to put their hands in your pockets... sheesh...

Howard · Host

Hi Paula,

I guess I should chime in here since the category is "Ask Howard".

Most others have pretty much nailed what I will tell you. The short answer to "What will I need in 20 - 30 years? is "No one knows." Yeah, there are all kinds of calculators and supposed numbers. The bottom line is none of us know what inflation will cause, we don't know what healthcare will cost, we don't know what our investments will do, we don't KNOW anything.

We can make some educated guesses based on historical figures, but who knew 20 - 30 years ago we would be in a global war on terror and that people would be communicating across the internet in their RVs? Who knew in the 50s what we went through in the 80s? And things seem, to me at least, more unstable now than they have ever been before in my lifetime. It's very possible our historical trends will not continue.

So, I finally got over the wringing of hands and the worrying about having the "proper amount". How did I get over that? Well, I have talked to lots of full-timers in their 70s and 80s with a lot less money than we have. Things happen, people deal with those things, and they just move on. But they have no regrets even if they are living day-to-day.

It is not my intent to tell everyone to just start full-timing without any consideration of finances. But it IS my intent to get those that think they have marginal finances to get out on the road and do it. If you have 5, 10, 20 years of happiness following a dream it will be a lot better than having 40 years of "If only I had ....", "I wish we would've ....", etc.

Might we regret going on the road without enough money? Possibly. Would we regret NOT going on the road forty years from now? Assuming I lived through the stress, I can guarantee you the answer to that question would be "absolutely".

I, for one, prefer making memories and creating a new path, over following a well-trodden path paved with regrets.

Floridariz · RV-Dreams Family Member

Yes...."hand-wringing" would be my middle name, just ask my husband!

We put our house on the market starting tomorrow so I guess we will see what happens! If it sells, the answer is yes!

For now I guess we will keep the cabin and let it appreciate but I sure wouldnt mind some advice about whether it is better to keep it there or invest, understanding that we obviously would not benefit from any income while it is ours. Just a "place holder" . (We also have two homeschooled boys so we need to try this out and see how they do.)

Thanks, everyone!

TheBobGuy · RV-Dreams Family Member

Hi there Tim, and Paula!

Here's the way we look at real estate: Let's assume this is your home and primary residence and the property taxes are $2500/year. Homeowners Ins is $900/year. Let's say it costs about $360 month for utilities, cable, etc = $4,320/yr and allow $100/month or $1200/year for repairs and maintenance for a total yearly cost of $8920 (Assuming you have no mortgage to pay!).   If you sold the house for $395,000 and netted $365,000 after realtors fees & closing and invested that $365,000 at 5.2% you'd have about $18,980 in yearly income. So this house is "costing" you about $27,900 per year to keep (The $8,920 in costs and the $18,980 in interest income) Again, this assumes you have no mortage, so add that in if you need to.
In five years you'd have about $470,496, an incease on investment of $105,496. So see how this compares to the property appreciation less taxes, etc.

If the property is appreciating at a greater rate, then hang on to it! You'll need to analyze your market to determine this. In our area, RE prices are declining somewhat from the highs of the past two years.
Real estate is most often a good investment. Perhaps you can use the above analogy to help determine what is your best course of action.

The profit on the sale of your primary residence is tax free (up to $500,000), providing you have occupied it 2 of the previous 5 years.   If it is rental property you will pay 15% capital gains and depreciation recapture.

Hope this is a help to you! :)

Molly

Fly Buoy V · RV-Dreams Family Member

Hi Paula:

I sent you a "private message"...but wanted to put in my 2 cents worth here in this forum:

My husband and I know what you're going through. We've done more "hand wringing" than we care to admit to. We moved to The Villages in central Florida in November, 2005. We could have gone into fulltiming when we sold our Michigan house but instead we chose to come down here...I think we were playing our conservative card and were just too scared of the great unknown.

Since we've been down here, we've done a lot more research on everything to do with fulltiming and my husband has spent literally hundreds of hours on the computer doing very sophisticated spreadsheets on the "numbers" thing.

I don't know what we'll ultimately end up doing. The only thing I'm sure of is that #1 We're NOT getting any younger, #2 We could afford to fulltime, #3 We're both "wanderlusts" at heart and always want to know what's around the next bend and what's over that next hill.

Sooooooooo, you ask, why are we still setting here...in central Florida...in our stick-built house??????

..............Darn Good Question!!!! Wonder what others would say

Keep us all posted.

Janenne

Ken Cindy Ditka and Sox · RV-Dreams Family Member

We have been looking at firecalc on early-retirement.org as a benchmark. I'd be interested to know if anyone else as used that and has an opinion. It is based on the rise and fall of market since some time in the 1800's.

Anyone tried this? Howard?

Hugs, C

Luvglass · RV-Dreams Family Member

Janenne,

You have to ask yourselves, what's the worst that can happen if you can't, or don't want to continue fulltiming 6 months or a year from now.

With what we have invested, about 110K we figure we'd lose, probably no more than 15-20 thousand dollars - at the outside.

We'd take the loss and move on with our lives setting up a new stick residence, and asking the kids for our antiques back for a few more years.

If that kind of loss is devestating to you then you probably should be careful, but if it's not, and it sounds like it isn't, then what is holding you back??

You can't have wanderlust, unless you wander
.
Howards rationale is right on the money.

Gypsy Turtle 2 · RV-Dreams Family Member

I just went to the early-retirement.org site that Cindy mentioned and plugged in our numbers to their calculator. What an awesome site! Although we had done our own number crunching numerous ways and numerous times, it was nice to see this site agreed with us :)
It adjusts for inflation and the advanced version allows you to enter pension, social security etc.

Fun and easy to use...thanks, Cindy!

wmalefyt · RV-Dreams Family Member

We've been retired for almost 6 years, moved to Florida and bought a condo to be near the in-laws. Now, we want to go full-time, thanks to Howard and Linda's inspiration.

We don't have a million $ nest-egg, but we're not going to worry about it either. We know we can live a lot cheaper going full-time and be a lot happier to boot. We enjoy RV travel and want to see this great country at a slow, leisurely pace over the next 25 years

Our big problem is the real estate market here has dried up. This is the "busy season" here and there is little activity in real estate sales compared to previous years. From what we hear, 2008 will be much better, so I guess our plans will be delayed for a year. Come on you "baby boomers" and come to Naples, Florida to buy your retirement nest!

We can't wait to join the rest of you out there!

Tim & Robyn · RV-Dreams Family Member

I too just went to that early retirement website and plugged in our numbers. I sure hope it's accurate, because it told us that our plan has a 100% chance of success! The only downer is that it's predicated on selling some property in south Florida so that we can go fulltime debt free, and the real estate market there is in the dumper right now, so it's dicey as to whether or not we can be debt free. We certainly won't be rich... we're using Howard's numbers for planning purposes (I don't mean to imply anything by that Howard

). But other than that, it's looking good. Now all I have to do is pray that the job stress in the next 19 months doesn't do me in, or that I don't get laid off etc.

bago40 · RV-Dreams Family Member

I really like it when you all go into freedom mode! Don't get me wrong though, I know a certain amount of careful planning is needed but, worrying never helped or solved anything! It is just great to hear that life doesn't have to be lived in fear about what is next. biggrin My parents have gotten older and are still in good health, and have done very well financially but, Mom is not the fulltiming type blankstare . I happen to be blessed in that I get all my health care through the V.A. Now to the point. I have really been lightened by the fact that "YOU CAN'T TAKE IT WITH YOU!, so invest wisely and enjoy, most if all ENJOY! Last but certainly not least, thanks for all the great advice! I second that dream-josie! By the way, I have eaten dog buiscuts - they are not that bad. .

-- Edited by bago40 at 20:45, 2007-05-12

-- Edited by bago40 at 20:46, 2007-05-12