When do you say "I've earned enough, its time to retire" and what do you do?

[Anonymous]

Couple of questions:

You mention stress being an issue, but is time also an issue? To me, nothing is more important than time: with friends and family but also time to pursue all of the fun things I enjoy i.e. skiing, windsurfing, travel etc.

If time is an issue, maybe continue working but work fewer hours at a less stressful position.

Just last night I asked my husband to begin thinking about our "next chapter". In 15 years he'll be 63 and both of our kids will be out of college. I doubt we'll have 10 million but our house will long be paid off and we've invested wisely. I'd like to see us continue working since we enjoy working, but maybe decrease our hours, and pursue our own interests more.

Out of curiousity...would you mind sharing what business you started?

[Anonymous]

Anonymous wrote:You should hire the other poster to do something. She's got a law degree and needs a job.

OP doesn't need a lawyer, she's looking for a chef

[Anonymous]

Anonymous wrote:Couple of questions:

You mention stress being an issue, but is time also an issue? To me, nothing is more important than time: with friends and family but also time to pursue all of the fun things I enjoy i.e. skiing, windsurfing, travel etc.

If time is an issue, maybe continue working but work fewer hours at a less stressful position.

Just last night I asked my husband to begin thinking about our "next chapter". In 15 years he'll be 63 and both of our kids will be out of college. I doubt we'll have 10 million but our house will long be paid off and we've invested wisely. I'd like to see us continue working since we enjoy working, but maybe decrease our hours, and pursue our own interests more.

Out of curiousity...would you mind sharing what business you started?

Do you mind sharing your wise investments and investment strategy? We've made a lot mistakes with our investments and yet we are not stupid people. I'm ready to take the bull by the horns and hire some professional help. DH doesn't like the idea of ANYONE knowing what his total worth/assets/debt are. Weird I know and it has hurt us in the long run.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You should hire the other poster to do something. She's got a law degree and needs a job.

OP doesn't need a lawyer, she's looking for a chef

I bet the lawyer poster would love a job as a chef. Sounds like she didn't like law.

[Anonymous]

Can you cut back on work hours? That is the first stage in my "retirement plan", although it is only feasible for me (I work in academia), not my husband. I'm planning on going half time within the next 10 years (I'm 41 now). Extended summer vacations with the kids, too.

[Anonymous]

"Do you mind sharing your wise investments and investment strategy? We've made a lot mistakes with our investments and yet we are not stupid people. I'm ready to take the bull by the horns and hire some professional help. DH doesn't like the idea of ANYONE knowing what his total worth/assets/debt are. Weird I know and it has hurt us in the long run."

I'm not the one to ask, unfortunately. DH is a lawyer but was a finance major and is really savvy. He's the one how manages our 401K and stock portfolios. But, here are some simple things we've done:

1. Bought investment property early on even though it was inconvenient and time consuming
2. Started investing in our 401ks and other stock early on (I was making less than 30k!) and always invest no less than 15% and choose aggressive and diversified
3. Paid down more on our mortgage whenever possible
4. Never carrying any kind of debt (beyond mortgage)--even cars, buy in cash or don't buy!

[Anonymous]

Once we have $4 million, hubby and I are quitting work. We will travel and volunteer. That's all we need. We've paid off our mortgage, the kids' college is almost saved for and we have no debt.

I'd quit in a heartbeat if we had $10 million and spend a lot of time volunteering if I couldn't travel due to having children in school. Congratulations!

[Anonymous]

Give money to your fellow DCUMers?

I kid, I kid (sorta).

You could retire now. Or, you could wait until your children are older and approaching college aged. I think there's positives and negatives to both.

I know when I retire my issue will be boredom. So that's something to consider. Travel, volunteer, take classes or take on a hobby, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Couple of questions:

You mention stress being an issue, but is time also an issue? To me, nothing is more important than time: with friends and family but also time to pursue all of the fun things I enjoy i.e. skiing, windsurfing, travel etc.

If time is an issue, maybe continue working but work fewer hours at a less stressful position.

Just last night I asked my husband to begin thinking about our "next chapter". In 15 years he'll be 63 and both of our kids will be out of college. I doubt we'll have 10 million but our house will long be paid off and we've invested wisely. I'd like to see us continue working since we enjoy working, but maybe decrease our hours, and pursue our own interests more.

Out of curiousity...would you mind sharing what business you started?

Do you mind sharing your wise investments and investment strategy? We've made a lot mistakes with our investments and yet we are not stupid people. I'm ready to take the bull by the horns and hire some professional help. DH doesn't like the idea of ANYONE knowing what his total worth/assets/debt are. Weird I know and it has hurt us in the long run.

OP here. I like real estate a lot. I wanted to buy investment property for years, but refused to do so if the rate of return was not at least 8% cash on cash (although at one point I talked myself into 6% cash on cash). As a result I bought nothing until 2008. Since then I have purchased 20+ properties. Most I kept as rentals. I have fixed mortgages on everything. I cash flow, after all expenses $10K+ per month. Most properties were purchased for far less than market value, as I paid cash (then I'd refinance for the amount I paid) and repeat. I will flip something only if it is a really, really good deal.

We also max out our 401Ks. We converted about $1M to Roth IRAs last year (the tax bill sucked), but it should have a profound effect long term.

I have a variable life insurance policy, which I max out annually, with about $600K cash value.

We have a brokerage account for stability, invested in mutual funds, through an advisor

We have real estate loans to others, earning 15-20% annual returns.

We have small shares in several restaurants.

We invest in small local developer's projects.

I own 3 closely related businesses, with a collective total of about 30 staff. My salary has never changed, but my bonuses have gone up.

We take calculated risk.

We have always spent our money in the following order (from the largest share to the least): Investments, taxes, experiences (ie vacations, going out to eat), house, savings, stuff.

[Anonymous]

NP here - very impressive. If its not too much trouble, can you explain in basic terms how you calculate the 8% cash on cash return? I don't really understand? ie - can you break it down how I would evaluate a potential purchase in excel?

Re: your original question, I would improve your quality of life by doing things that increase your time. If I were you, I might also do something charitable with my time - maybe some type of social entrepreneurship, or work on a cause that has a strong need. I don't think I would stop working, but then again, you mentioned you cash flow 10k/ month on rental real estate, so maybe I would dial back significantly.

[Anonymous]

OP here. Cash on cash, means that if I put down $100K I actually bring in, after all expenses $8K per year. My total return is likely higher, since the mortgage is being paid down as well. Perhaps $2K per year. $8K plus $2K is $10K or a 10% total return.

[Anonymous]

Anonymous wrote:How long do you plan to live? $10 million for 2 people over 40+ years -- that isn't a whole lot. I'd start by hiring a financial expert who specializes in retirement and understands retirement needs.

This is just silly. Without any earnings at all, that's $250,000 each year. If OP earns 2.5% per year (less than even the most conservative estimates), she can spend $250,000 each year and never touch the principal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How long do you plan to live? $10 million for 2 people over 40+ years -- that isn't a whole lot. I'd start by hiring a financial expert who specializes in retirement and understands retirement needs.

This is just silly. Without any earnings at all, that's $250,000 each year. If OP earns 2.5% per year (less than even the most conservative estimates), she can spend $250,000 each year and never touch the principal.

yes, but that is gross income. She'll be paying 35% in income tax, which leaves her with $162,500. Still a livable amount if you dont have a mortgage, but you do have property taxes which can be $20k a year in a nice place. And then there's inflation. And seriously, I wouldn't quit my job even if I had a guaranteed $160k/year - that's not very much to entertain yourself all day every day, certainly not enough to travel as much as I'd want to do in retirement, or join a nice golf club, or eat lunch with my girlfriends a lot. Not saying that some people wouldn't be happy staying close to home and just volunteering a lot, but it's worth thinking about.

[Anonymous]

Anonymous wrote:Once we have $4 million, hubby and I are quitting work. We will travel and volunteer. That's all we need. We've paid off our mortgage, the kids' college is almost saved for and we have no debt.

I'd quit in a heartbeat if we had $10 million and spend a lot of time volunteering if I couldn't travel due to having children in school. Congratulations!

We're approaching 50 yo and the $4mil number and like you, we're debt free and kids colleges are saved. DH feels he'll need to work (the same crazy amount he works now) til he's 65. Can you give me any guideline about how you came up with your "magic number" til you retire?

[Anonymous]

If that money were invested in tax free municipal bonds, then no, there would not be income tax on it. If you live in Maryland, then presumably, the thousands of bonds available from the state, county and cities like Baltimore should all be state and federal tax free. Most of these yield somewhere in the 2.5-5% range. With $10 Million in principle, it shouldn't be too hard. Keep in mind, inflation and things like property taxes will rise, so there is a little risk, depending on the size of the cushion.