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

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Bankai
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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).

classical_Liberal
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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.

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 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.

IlliniDave
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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.

7Wannabe5
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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:

IlliniDave
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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.

7Wannabe5
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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 ;)

IlliniDave
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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.

IlliniDave
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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.

7Wannabe5
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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.

IlliniDave
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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. :)

7Wannabe5
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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.

ffj
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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.

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

Post by classical_Liberal »

Regarding social security, it seems to me it would be most beneficial to keep an open mind about when to being drawing it. Obviously there's the longevity argument. So, if health begins to decline earlier than expected, I'd go for it. However, it can also be used to offset any sequence issues that may occur. Like, if at I-Dave age 64, there is a large market correction that causes a 20-30% draw down in your assets, and it does not recover at all by the time you plan to take you next withdrawal, why not start social security then? It prevents excess withdrawals at the worst time, so even if you end up living to 95, you're still wealthier because you reduced withdrawals exactly when it mattered most. I view SS as an 8 year sequence of return risk reduction window. If it doesn't happen in that window, great, then you get max benefits.

Edit to add: In general I agree with @ffj, by you own admission earning more money at this stage won't change much. It's time to change focus to how to make the transition to RE in the best way possible, without consideration of finances. I think this is gonna be really tough for you, to stop thinking in terms of WR 1.8 vs 1.9% and start thinking in terms of creating the best quality of life without work. How to transition without going into some kind of emotional shock, or becoming too sheltered from other people, etc. I've only been watching my spreadsheets for a third the time you have and I have found this transition really hard.

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

Post by IlliniDave »

7Wannabe5 wrote:
Sat Jan 18, 2020 12:46 pm
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.
I'm going with the "math" and so 50/50 I hit 78, and the odds of exceeding 85 are small enough I don't really plan beyond 80 aside from wanting to avoid deliberately depleting resources. If I make it to my seventies with enough good health that the expected outcome is I'll spend some time as an octogenarian, might have to tweak things at that time.

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

Post by IlliniDave »

ffj wrote:
Sat Jan 18, 2020 12:50 pm
"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.
I didn't go back and check the context, but typically of late I would make that statement when contemplating arrival at the point where, if things go roughly according to plan, I can get by with trivial or no taxing of the stash for normal living expenses. I'm just beginning to enter that point. I appreciate the reminder. I could probably come close to doubling my wealth if I kept on working to full retirement age, but it would mean 12 more years working. One or 1.25 seems okay, but not 12. However, there are days when even finishing out the current week seems silly.

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

Post by IlliniDave »

classical_Liberal wrote:
Sat Jan 18, 2020 4:02 pm
Regarding social security, it seems to me it would be most beneficial to keep an open mind about when to being drawing it. Obviously there's the longevity argument. So, if health begins to decline earlier than expected, I'd go for it. However, it can also be used to offset any sequence issues that may occur. Like, if at I-Dave age 64, there is a large market correction that causes a 20-30% draw down in your assets, and it does not recover at all by the time you plan to take you next withdrawal, why not start social security then? It prevents excess withdrawals at the worst time, so even if you end up living to 95, you're still wealthier because you reduced withdrawals exactly when it mattered most. I view SS as an 8 year sequence of return risk reduction window. If it doesn't happen in that window, great, then you get max benefits.

Edit to add: In general I agree with @ffj, by you own admission earning more money at this stage won't change much. It's time to change focus to how to make the transition to RE in the best way possible, without consideration of finances. I think this is gonna be really tough for you, to stop thinking in terms of WR 1.8 vs 1.9% and start thinking in terms of creating the best quality of life without work. How to transition without going into some kind of emotional shock, or becoming too sheltered from other people, etc. I've only been watching my spreadsheets for a third the time you have and I have found this transition really hard.
In general for my numerical planning I've used delaying until 70 as the baseline, largely as a way to stress test viability of annuity+stash (this all started ~8 years ago when both were much smaller). I used to run what-ifs taking SS at different ages but don't any more. I always looked at it from the perspective that as soon as I got an indication that exceeding median life expectancy was unlikely I'd start taking it. I never considered it wrt sequence of returns--that's actually a really interesting idea.

In past years I've given a lot of thought to pursuits during retirement, and have a list of sorts that should keep me reasonably engaged for the first few years, at which point I can just keep going if all is well or switch over and try some secondary ideas if the first set isn't working out. But you're right that it will be a big change and I can't say how I'll respond with any sort of certainty. There are moments when the prospect is intimidating I have to admit.

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

Post by IlliniDave »

Parting Thoughts, Part I

Well, this thread is coming up on it's sixth birthday, and all things considered I think I'm going to wind it down. Most of what I'm focused on in my present day-to-day, and what I'm focused on in terms of transition to the next phase, really doesn't have much to do with ere, ER, or FIRE. Financially I'll be okay, and I think I have a pretty good plan to launch into active and fulfilling golden years when the time comes.

Anyone that's read the earlier entries here knows the story. My journey started from a place of fear of losing my job in the depths of the post-2008 mess, grew into a realization that I could twist that fear into an opportunity to pursue some of the things I dreamed of doing as a boy searching for meaning in the Rust Belt, which I then dovetailed with some family-related considerations that emerged over time.

I get good-naturedly gigged a lot for dragging my feet (well deserved in some respects) and perhaps ironically some of that foot-dragging is related to family considerations. Now that my youngest daughter has purged her irrational wanderlust, returned, and married, I've got her, a grandson, and step-granddaughter here now. Three states away I've got an aging dad living alone and a sister in declining health (currently in a nursing home recovering from an awful surgery).

So yeah, those of you that know me, I'll still be pitchforking cash into the stash until early next year. I've also got a music project I'm working on with my son-in-law. Maybe I talked a little about that before, but long story short we both dusted off an old composition that we're collaborating on updating and recording (he basically grew up in a recording studio, and I'm trying to pick his brain to bolster some of my golden year plans). That's the basic focus of my productive/self-improvement/fun time these days. The sad news in all of this is that I'm abandoning all but one sheet of the iDaveSim spreadsheet once I get the 2019 data all buttoned up. It's 7 years old and it'll be sort of like losing a pet. :)

Referring to the title above, I thought before this thread sinks so far down into silt on the bottom of the sea of inactive zombie threads I'd take some time to reflect on my time here while it was active and share what I learned along the way. Some I learned specifically in this context, some just coincided with the window in time. They were meaningful to me and my path. YMMV Most have been stated here before.

So, to get to the point ...

*The one that leaps to mind first I condensed into the statement: "The stash exists to serve me, I don't exist to serve the stash." The point was that digging out of a vulnerable place (divorce + recession + shaky employment situation) and building the stash was a high priority and I caught myself in a place where I was dedicating too much of my life to accumulating financial resources, and the actual living part of life was withering. It can be a fine line.

*On a regular basis think through what it is you really want to do with life. Make lists, journal, whatever. Try to get down to what you really want without letting how you want others to view you drive the train. I suppose a person at her/his deepest core might want to be perceived a certain way more than anything, fair enough. I've had the best luck finding a zone below worded thought and above my reptile brain to mine, after giving myself permission ahead of time to keep it private.

*Similarly, have an idea what your value heirarchy is. Family/friendships, career, leisure, inner development, outer development, might all have a place somewhere, but when options have to be narrowed one must prioritize.

*Both/and is often a superior path than either/or. Not always, but it's a good idea to consider alternatives to binary thinking.

That's all for today. More to follow.

Jason

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

Post by Jason »

IlliniDave wrote:
Wed Jan 22, 2020 4:15 pm
I think I'm going to wind it down. .
I'm getting weepy.

I think in your honor a one year increase of $300K in net worth should now be referred to as an "Illinois Dave." So a $150K increase would be "1/2 of an Illinois Dave" and so on. I doubt it will reach the universalism of a "Jacob" but you never know. And come to think of it, getting divorced should be referred to as "Getting "uo'd." But that should probably wait until his shit gets finalized. Anyways, good luck.

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

Post by McTrex »

I’d be sorry to see you leave these boards, but I wish you the very best in your future endeavours!

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