A Journey of Mindfulness--the Remaking of Life in Midstream.

Where are you and where are you going?
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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by jacob »

@7wb5 - That's what 13% ROI will do over three decades.

Scott 2
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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by Scott 2 »

Where do you find the motivation to fix cash outflow, when net worth grows like that? It's an overwhelming amount of money.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by 7Wannabe5 »

The motivation is internal but won’t necessarily translate to next generations. That is why trust funds and family wealth management and preservation become primary focus. My friend is currently reading a book on the topic by James Hughes which he highly recommends.

IlliniDave
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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

Scott 2 wrote:
Wed Jan 01, 2020 12:55 pm
Where do you find the motivation to fix cash outflow, when net worth grows like that? It's an overwhelming amount of money.
A couple reasons.

1) Next year it could go down by $300K.
2) My whole journey to FI was based on determining an optimum spending level and sticking with it and I would like to preserve that habit.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by classical_Liberal »

The second reason makes a lot of sense to me, the first does not, given that you self report being that much ahead of the game from your expectations anyway.

Genuine curiosity here.... Now that you've become wealthy beyond measure for your personal needs, do you find yourself focusing less on financial thoughts (fears, strategies, ect), or more? I suppose a third option is the thoughts are equal in quantity, but have changed in quality (ie legacy and preservation vs accumulation).

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

classical_Liberal wrote:
Wed Jan 01, 2020 6:04 pm
The second reason makes a lot of sense to me, the first does not, given that you self report being that much ahead of the game from your expectations anyway.

Genuine curiosity here.... Now that you've become wealthy beyond measure for your personal needs, do you find yourself focusing less on financial thoughts (fears, strategies, ect), or more? I suppose a third option is the thoughts are equal in quantity, but have changed in quality (ie legacy and preservation vs accumulation).
Overall I'd say I think about financial and related things less, an accelerating trend, and within such thoughts the focus has shifted pretty much in line with what you stated in your third option. I'm getting sporadic about keeping my numbers current, and I'm increasingly having misgivings about keeping up this journal thread.

I certainly don't feel wealthy beyond measure though.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by Scott 2 »

I'm very interested to see how you manage the cash outflows.

I'm having a hard time with it, especially when numbers that I used to think of as "big" regularly appear in my accounts. It was far easier when $100 felt like a lot of money. You've got even stronger financial disincentive.

I don't think I'd feel wealthy, until there was enough money to thrive through a fully catastrophic medical incident, including ongoing long term care. It'd be a lot, well beyond any reasonable definition of FI.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by Bankai »

Which makes me think that US healthcare system is perfectly set up to keep the masses working forever and hence unlikely to ever be fixed since it benefits everyone (government, corporations, healthcare professionals, pharma industry).

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by classical_Liberal »

IlliniDave wrote:
Wed Jan 01, 2020 7:21 pm
I certainly don't feel wealthy beyond measure though.
Thanks for the reply! The above comment is really the crux of my thoughts on the matter. It seems every time one financial milestone is reached, then I can see the next road sign up ahead. I'm just trying to figure out where my personal exit sign should be if the road never ends.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

Scott 2 wrote:
Wed Jan 01, 2020 7:43 pm
I'm very interested to see how you manage the cash outflows.

I'm having a hard time with it, especially when numbers that I used to think of as "big" regularly appear in my accounts. It was far easier when $100 felt like a lot of money. You've got even stronger financial disincentive.

I don't think I'd feel wealthy, until there was enough money to thrive through a fully catastrophic medical incident, including ongoing long term care. It'd be a lot, well beyond any reasonable definition of FI.
I'm interested to see how I manage it too, haha. A large fraction of the "overspending" was spending I'd planned at a future date, just for various reasons I opted to pull it forward. That's the sort of stuff I need to be wary of. Simply delaying optional expenses is a good way to filter out impulsiveness. A lot of things that get on my list of desired future purchases wind up getting scratched off because the desire does not persist. And in general it just seems more prudent to let myself get settled in Phase III for a time and get a better picture of my situation and financial standing from that perspective.

This year or early next year I'll still have a bit of a bump for things related to relocating and getting my house on the market--things I've been setting aside money to cover for a while now.

And you're right, there's the distortion of perspective/relativity. When an optional expense that would put you 20% or so over an annual spending target corresponds to tenths of a percent of your net worth, it's pretty easy to shrug it off as inconsequential. To combat that I'm going to try reminding myself on a regular basis how I got to where I am and what the values and priorities were that got me here. Hopefully that will curb things before tenths of percents become percents then become tens of percents.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

classical_Liberal wrote:
Wed Jan 01, 2020 9:23 pm
Thanks for the reply! The above comment is really the crux of my thoughts on the matter. It seems every time one financial milestone is reached, then I can see the next road sign up ahead. I'm just trying to figure out where my personal exit sign should be if the road never ends.
Yep. I think many if not most of us go through that. I know I've raised the bar on myself a couple of times. Part of that was because in the beginning there was an air of urgency--the possibility of a career cut short at a time not of my choosing. Then for a while there was a big dose of euphoria when I realized it was possible for me to opt out of the rat race much sooner than I'd believed and still have a good life. In time the euphoria waned and determination rose in its place, and from it I began to pull on threads regarding how I could avoid potential paths to failure (within reason, 100% bullet-proof is too high a bar). The last phase has been looking at what I might want in the out years that might enrich life, and to what extent, if at all, a bit more money might enable some of those things. The marginal cost of squirreling away a little more $ for the future is pretty low at the moment, and I just have to remind myself that "one more year" means giving up the youngest, and presumably healthiest/most vigorous year of my retirement.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by 7Wannabe5 »

Apologize if I came off a bit out-of-the-box above. I was over at my uber-wealthy friend's house not watching football yesterday, so I was primed to recommend the book collection on the topic of multi-generation wealth conservation by Hughes that he was reading, since I know that is also one of your concerns. I read a few chapters myself while not-watching-football and it is very good, because actually systems oriented and based on original critical thinking. Hughes maintains that family wealth consists of human capital, intellectual capital, and financial capital, and one of the biggest mistakes made by members of second or third generation is focusing on short term financial results while neglecting growth in human and/or intellectual capital. He also notes that reaffirmation of family identity or "differentiation" among all members of same generation who are only horizontally related to each other is key.

I was also slightly meaning to tease you about your continued lack of active retirement by noting that my uber-wealthy friend did not have to achieve 13.5% on returns only, because he is still working at age 80. IOW, it is now my stance that no matter what any of the slackers around here say, you MUST NOT retire because your new goal should be to beat my uber-wealthy friend :lol:

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

7Wannabe5 wrote:
Thu Jan 02, 2020 8:50 am

I was also slightly meaning to tease you about your continued lack of active retirement by noting that my uber-wealthy friend did not have to achieve 13.5% on returns only, because he is still working at age 80. IOW, it is now my stance that no matter what any of the slackers around here say, you MUST NOT retire because your new goal should be to beat my uber-wealthy friend :lol:
Haha. I figured out long ago that I'll never be able to compete with any member of your network of male companions in any dimension to which a positive superlative might be applied. And Mr. UberBucks might be the one, in his domain, who outdistances my hypothetical best efforts by the most lengths. :lol:

Actually, as things evolved I thought you were talking more to someone else than to me, which is fine, no apologies necessary.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by 7Wannabe5 »

Don't sell yourself short. That was an awful big fish ;)

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

I spent some time revising some of my forward-looking data recently. I general I don't spend a lot of time mentally frolicking in waking nightmares of apocalypse. But I do think high asset prices correspond to an expectation of muted long-term returns. To get a faux median I assume equity PE's will be lower in 15 years. I don't know the path the decline will take, so I just spread the decline evenly over the time period. Not realistic but it gives a sense of the overall trend. For bonds I just use the current aggregate index yield (for bonds the return over time is pretty closely correlated to the yield you buy them at). I mentioned in another thread that my faux median projection is about 1.8% real return.

Overall I'm at a point where something like firecalc would show most of my results shooting upward over time, and even at 1.8% I show a subdued positive slope for the stash.

Of course I would like it to be steeper, but am not willing to take on any more risk (I've slowly/systematically been lowering risk for ~3 years now).

Working longer helps a little, mostly because retirement bene's inch up meaning less leaning on the stash, but that's a distasteful option and by the end of the year the small bump in stash slope isn't enough return for the time.

The one thing that does make a meaningful difference, the big knob you might say, is spending. And the whole purpose of this entry is just a self-reminder that there is one variable that I do have a pretty good amount of control over. My notional plan has a pretty high (for me) burn rate baked in, so it's reasonable to believe I can dial it down. So my next task is to relook at my future spending plans and sharpen the pencil there. As I ratchet down spending I become a net saver again, and small compounding + small accumulating > small compounding - moderate withdrawals.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

Optimizing the Exit--Thinking Out Loud

I've been thinking about how to optimize my exit. For two reasons I'm starting to look at March of 2021 instead of 12/31/20.

One is that my employer has started a new incentive bonus plan to replace the older profit-sharing plan. The new plan potentially pays higher than the old plan. It's supposed to pay in February so I'll see at that time how it works out for me. If it's decent this year it would motivate me to hang around until March 2021 (put in my notice after the bonus for 2020 is paid).

The other reason is that some of my colleagues know I'm planning to exit ~EOY20 and one (employed by my customer) who is sort of the lead on a project that starts this coming May has asked me to consider hanging around until it finishes in March.

If that happens and I leave in March '21 I'll have a year with fairly low W-2 income. I believe I can delay the start of my annuity by at least 6 mos and maybe a year. That would have the benefit of saving some tax money short-term and a higher monthly annuity payment at the expense of potentially more income tax later and digging into my savings to fund the rest of the year.

Regarding the annuity it's the standard trade where if I live past 78 waiting for a higher monthly payout puts me ahead, and if I don't I come out behind. It's likely to be pretty much "in the noise", but I can't help myself in trying to optimize.

Regarding taxes it's hard to assess because future tax rates are unknown. But my instincts tell me I'm liable to end up paying more total taxes over time based on the assumption that at some point taxes will go up.

Anyone thought through this? My conclusion is that it doesn't really matter. Holding off on the annuity until 2022 gets me to the point where on paper I won't need to do any non-mandatory withdrawals from the stash once it starts (will probably need $10K-$20K to get through the balance of 2021). There's a modest emotional appeal to that, I admit, and maybe that alone is enough to justify it.

The same colleague that wants me to stay thought next march is also close to retirement (he's 61 or 62 right now) made a comment that's sort of stuck in my head. We were talking about delaying SS. He said, "I don't see why I should spend money I have while waiting on a promise of more money from the gov't when I don't think the gov't is going to pay me what they are promising anyway. So I might as well take money from the gov't while they are still paying and hang on to the money I know I have." I couldn't really argue with that.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by 7Wannabe5 »

Some other factors to consider would be likelihood that you will remarry combined with likelihood that survivor's benefit based on your earnings would be more than her own personal benefit, and whether or not you are likely to take yourself out if quality of life becomes greatly reduced. So, for example, if you marry somebody who averaged $10,000/year as a jewelry crafter and you are opposed to suicide even if your lifestyle has been reduced to getting your diapers changed by the jewelry crafter then it would likely be best to delay taking benefits as long as possible. However, if you are resolute in your bachelorhood and determined to take yourself out if/when you can no longer operate a chainsaw safely then it would likely be better to take benefits earlier.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by IlliniDave »

Ha, well, suicide isn't part of my plan. And you're exactly correct, when thinking ahead about timing of benefits it's often a longevity gamble, but sometimes family circumstances weigh in.

Remarriage is TBD but as each day goes by it seems less likely. At this juncture it seems wisest to plan assuming it will never happen, which puts a premium on hoarding money since I won't be able to pawn off post-death SS checks to get my diapers changed, but will have to cough up my own money for that service. :)

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by 7Wannabe5 »

It's grim to consider, but it seems to me that the diaper risk goes way up right around 80, so I am basing my own calculations on 50/50 making it to 90, but less likelihood of making it to 90 without diapers. So, at 85, maybe 1/4 of future 7WB5s will be dead, 1/2 will be doing well enough, and 1/4 will/would be in diapers if not offed by self. Therefore, I've got only around 30 years life expectation post maximum S.S. dispensation adjusted for diaper-causative suicide.

I don't plan on marrying again either, so not fretting about that.

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Re: A Journey of Mindfulness--the Remaking of Life in Midstream.

Post by ffj »

"I just have to remind myself that "one more year" means giving up the youngest, and presumably healthiest/most vigorous year of my retirement."

I'm projecting here, but this was a huge motivator for checking out early for myself. I can't remember how old you are but nobody is promised tomorrow or their health. Sometimes I reflect at the money I left behind by retiring early (it was substantial), but nothing can replace the freedom I've experienced since.

No judgement, but something to consider.

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