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Still Want to Retire…

Four years ago, I posted a response to another blogger who wrote about wanting to go to work whether he had the money to retire or not.  Thousandaire had asked the question below.  He answered that he would want to keep going to work every day.

If you had millions in the bank, would you retire at 46? I don’t mean retire where you go work another job. I’m talking where you spend the rest of your life pursuing hobbies and spending time with family.

My Retirement Plans in 2010

Back in 2010, I responded with my retirement plans checklist (scroll down further) and these paragraphs:

I know a few people who define themselves through their jobs.  I also know a couple of people who have found their dream job and enjoy waking up to it every morning.  I do understand that those people may not want to retire until they physically cannot get out of bed anymore.  More power to them.

For the rest of us though, retirement is the ultimate dream, right?  It is definitely what gets me up on weekday mornings.  I blog because I enjoy it, but I go to my “real” job everyday to keep up our retirement savings, lol.  Here’s to hitting our early retirement goal by age 52 or less!!!

Retirement

This just made me laugh.

Four Years Later

Looking back at my response at age 27 from my 31 year old eyes, I’ve only changed my perspective a little.  I’ve actually hit most of my list since our self-employment has been a little like retirement minus some odd working hours:

  • 2010 – Most of my friends are 15-25 years older than me, so it will be nice to be able to hang out with them as soon as they retire too.
  • 2014 – We have more friends our age now, but I wouldn’t mind being retired before they are if that is how it works out.
  • 2010 – I’d finally have the time during the day to deliver lunches for Meals on Wheels.  Up to this point, I’m only available on Saturdays when they need help.
  • 2014 – I have since volunteered regularly for Meals on Wheels and figured out that it wasn’t as fulfilling as I was looking for.  I then tried hospice care volunteer work, and burned myself out.  In early retirement, I would be throwing even more time into SMART Rescue, the animal rescue that I foster animals for right now.
  • 2010 – I’d also be able to grow all 3 of my blogs at the same time.  It could be argued that blogging would be my job, but it is my hobby first and foremost.  The income it makes me is AWESOME but I would do it for free.
  • 2014 – I have figured out that I would not blog more if I had more free time.  I’d blog less and spend more time with volunteer work, travel, and friends.  Blogging is still a hobby that I love, but not as much as helping others or snorkeling on cheap off-season cruises.
  • 2010 – I would totally run my errands during the day when traffic is nicer and less people are out and about.
  • 2014 – I do that now in fact.
  • 2010 – I could have lazy days where I watch whatever-I-want marathons and have snack food attacks at will (I’d space these out so I don’t get too unhealthy to enjoy everything else of course).
  • 2014 – Yep, this is still in the plans and I fit mini-marathons in already.
  • 2010 – TRAVELING.  My husband and I would finally be able to take a trip during the school year!
  • 2014 – We’ve been doing this for 3 years and truly enjoy cheap travel.
  • 2010 – I’d finally have enough time to pursue other hobbies that I’ve put aside in favor of blogging.  I want to join a volunteer choir or singing group of some sort.  Maybe we could tour senior citizen centers.  I also have been trying to find the time to finally put together 10 years worth of photo albums.  I would even be able to try out things just for fun – maybe a few dance classes or kick boxing.  It’s harder for me to allow myself to just “try” things right now since my time is so freaking priceless…
  • 2014 – If we retire with a little to spare, I may hire a voice coach since I enjoy singing but it would be nice to sound amazing too.

So, not much has changed.  I have found that I enjoy time with others – friends, family, and volunteer work more than everything else.  I also have zeroed in on a certain charity that I like volunteering for, SMART Rescue.  I love cheap cruises and inexpensive trips to Las Vegas and New Orleans.  And I have learned that with more time doesn’t necessarily come more productivity.  Overall though, I am still highly pro-retirement versus working forever.

Would you retire at 46 if you could?

 

Current Retirees

If you haven’t heard about it yet, MoneyTips principal Michael Dubrow and FinCon founder Philip Taylor are hosting the Retiree Next Door social movement today!  There are more than 70 bloggers and podcasters participating – all hoping to bring some attention to retirement planning.  You can download the Retiree Next Door eBook free of charge from now through September 30, 2014.

Retirement

This is one of my pet sitting clients – Meiko. I call him my grumpy cat…

The Current Retiree at a Glance

Moneytips sent over the survey results that they gathered from more than 500 retirees from all over the United States.  Here were the most interesting results to me:

  • 81% are fully retired
  • 54% have net worths between $500,000-$5,000,000
  • 58% are male
  • 48% are 70-79 years old
  • 46% have a graduate degree
  • 85% rely on Social Security in some way
  • 73% carry Medicare
  • Their top concern overall is healthcare costs
  • 66% had a Traditional IRA
  • 23% regretted a stock decision at some point
  • 44% spend less than their monthly income, which means that 56% spend more!
  • Only 14% were self-employed
  • 52% lived on a monthly budget
  • 36% never calculated what they needed to save before they retired
  • 51% didn’t save for retirement before their 40’s!
  • 10% still bring in rental property income

My Plans

That’s a lot of statistics – there was even more, lol.  But based on those results, I don’t think my overall retirement plans have changed much.  My personal retirement info so far and future plans:

  • Aiming to retire by age 52
  • Would like to be self-employed until then.
  • Are aiming to have a net worth around $3,000,000 by the time we retire
  • Not planning on getting a graduate degree, but Mr. BFS has one
  • We hope we get about 50% of what we should from Social Security
  • I’m trying to stay healthy to keep healthcare costs lower.
  • We each have a Roth IRA instead of a traditional one.
  • I am sure my hubby regrets at least one stock decision.
  • We do have a monthly budget that we try to stick to…
  • We do spend less each year than we make (monthly is a bit different)
  • I calculated what we needed to retire in my mid-20’s
  • I hope we definitely have rental property income throughout our golden years.

Okay, so maybe I’m not planning to be the “classic” retiree, but when have I ever tried to be normal?  ;-)

What do you think about their survey results?

Retirement Savings Laziness

When I read 11 Retirement Saving Tips for Twentysomethings (& Older Folks Too) over at Len Penzo, I realized that Mr. BFS and I are not impressing ourselves now as much as we did in our 20’s.  We were 20-somethings that were amazingly proud of our grasp of the future.  But now that we are actually content with our jobs – the online business and our hobby jobs – we stopped counting down the days until retirement.

Retirement

This just made me laugh  :-)

My View of Our Retirement Savings

I’m very happy with my 20-something self and a little disappointed with my early-30′s self. I started my first “real” job at 22 – one month after I graduated from college and 3 weeks after I got married.  I vaulted into my 401k as soon as they allowed it after 90 days, putting in 6% to get their maximum matching.  When I was 25, I opened a Roth IRA and have been maxing it out every year since then.  At 27, I convinced my hubby to open and max out a Roth IRA annually too.

But now that we are both self-employed and happy, we still only max out our Roth IRA’s and make a few stock investments every year. At age 29-30, we threw the majority of our extra cash into paying off our rent house and putting 20% down on our long-term home.  I consider our rental income as a reward for those moves, but we don’t put it all towards retirement.

Changes?  Probably Not.

We should probably be throwing more into a SEP IRA or something…we just have too large of a monthly nut plus other savings goals to tackle anything else right now without giving up something…and our priorities aren’t geared towards opening another retirement account.  That means, in my opinion, we are doing the bare minimum to fund our retirement.  Yet I am happier now than when we felt like we had retirement by the horns.

Contentment is an odd drug – I still strive to stay busy and grow my side hustles, but early retirement isn’t the end all, be all for us anymore.

How do you save for retirement?  Do you feel like you were great at it in your 20’s?  Or was there a missed opportunity?  And how does your career contentment affect your retirement savings overall?

Our Stock Portfolio and Retirement Investments – 2013 Update

I just realized that I hadn’t posted an update of our stock portfolio holdings for about a year and a half!   Stocks and market stats still seem foreign to me, so Mr. BFS does most of our direct investing.  We sold about half of our holdings late last year when we bought our new home.  So here are the current stocks we are investing in via Scottrade, their current dividend yield, and what Mr. BFS said about them:

Scottrade Holdings

Conoco Phillips (COP) – 3.93% Yield – “They still have a good dividend based on what rate we bought at.  And they haven’t had to spend the money on exploration that other companies have, so they put that money back into share repurchases and dividend growth.”

Intel Corp (INTC) – 3.92% Yield – “Good yield and a solid company.  They’ve gotten a lot better in the last year or two with competing with their major competition, AMD, with their processors.  They are still the #1 installed chip in pre-built computers.  As long as they have that market share, we’re in.”

Johnson & Johnson (JNJ) – 3.04% Yield – “Bought it at a steal and has great payouts.  We managed to buy when they were going through the Tylenol recall stuff and they’ve bounced back.”

People’s United Financial Inc (PBCT) – 4.55% Yield – “They have a fairly good dividend and regional banks are doing very well – better than national banks.  Although this bank hasn’t done as well as I’d have hoped, but their dividend is keeping us in a holding pattern.  We may sell since their financials have not done as well as I thought they would.”

PepsiCo Inc (PEP) – 2.83% Yield – “Great price at the time and we’re getting an excellent return.”

Retirement Accounts

So there you go for straight-up stocks.  :-)  My 401(k) is in the Vanguard 2035 target date mutual fund and was fully vested before I quit in July 2011, so it’s staying put for now and growing at about 11% per year.

One of our Roth IRA’s is in the Fidelity 2040 target date mutual fund that I selected (it’s returning about 12% a year), and Mr. BFS uses our other Roth IRA to invest in more dividend stocks (these dividends are auto-reinvested).  Here are those:

Energy Transfer Partners (ETP) – “They are an energy pipeline company that are big players in the Trans-American pipeline.  They also have an amazing yield.”

General Mills (GIS) – “I purchased this during the big crisis, so I assumed they wouldn’t suffer as much.  It worked.  They also had a good yield and they’re a solid company.”

Johnson & Johnson (JNJ) – “Solid company at a solid price when I bought in here too.  I saw the huge price drop and said YES, PLEASE!”

Coca-Cola (KO) – “This is the most recent one that I’ve bought.  It seems to be getting into the healthy drink options side of soda more than other companies – like Coke Zero is more successful than other diet sodas, and they have Vitamin Water.  We also already had Pepsi in Scottrade…J&J was too hard to pass up twice, but I decided to branch out here.”

Microsoft (MSFT) – “When I bought it, the next generation consoles were going to be released.  Then they flubbed with the Xbox 1.  But they’ve recovered.  Windows 8 was also a really big push into the mobile market (yeah, I know it sucks).  But they are also on about 80-90% of home computers, so they’re worth keeping.”

Nokia (NOK) – “Nokia had taken a lot of flack and their stock plummeted, so I jumped on it at $6 a share.  I bought it as a speculation bet on the idea that is had been oversold.  That didn’t quite work.  It was delayed a year and I am basically hoping to break even at least.  I’ll give it another 3-6 months to see what happens after this new Nokia phone release.”

Walmart (WMT) – “This was another recession play.  Even when people are broke, they shop at Walmart.  And they had a great yield when I bought in.”

What are you investing in lately?

**This post is not to be used as a suggestion for investments. This is simply what we own. Make up your own mind and don’t whine to me if something tanks, thanks!**

Property Empire in Our Future?

Mr. BFS and I would love to diversify our investments for retirement, and the rental property we have is making us crave more.  We’re looking at our buying options and finances right now to see if we really need to wait until next year like we originally planned.  Here is how it is looking.

Rental Property

Our Targets

I was browsing foreclosures in our area last week and noticed two in our old neighborhood.  That area is perfect for rental property!

  • Homes built in 2004 and 2005.
  • $110,000 to $130,000 foreclosures with 3-4 bedrooms and 2.5-3 baths.
  • The homes need less than $10,000 in repairs and basic renovations before renting.
  • Great school district.
  • A solid market for tenants at $1300-$1500 per month since the area is nice (safe suburbia close to groceries and entertainment).
  • Well built homes (we have had very low maintenance costs on our first house in these last 6 years).
  • Affordable property taxes ($2500-$3000 a year).
  • No home owner’s association.  Score!
  • 5 miles away from our new house (10-20 minute drive depending on the time of day).  That’s close enough to keep an eye on our properties but far enough away that we won’t be physically visited by our tenants very often.

The only thing holding us back is the cash on hand needed to buy another house.

Foreclosure

The Financial Picture

At 4% interest, a 30 year mortgage after putting 20% down for one of the foreclosures available right now would run about $450-$500 a month plus about $300 a month for property taxes and home insurance.  That’s $800 a month for a property that can easily rent for $1300 right after it’s fixed up.  That looks to be a great investment!

Plus, even in the no-tenant months, we can cover $800 extra without risking our overall financial health.  It would bring our monthly nut including taxes to $8000 again like late 2012 instead of the $7200 it is at right now.  We have been hitting that income target for 2 years.  We also only have one debt – the $205,000 mortgage we have left on our current house.  So this would bring our debt up to about $300,000, but our properties would be valued at a combined $500,000.

BUT, buying another house right now would also mean we would need the cash on hand for 20% down, closing costs, and renovations.  A realistic estimate on the high side of all of that would be $40,000.  We do have a little more than $40,000, but that would pretty much wipe out most of our cash savings.  We never would do that since padding is just plain necessary when you are self-employed.

Our Options

  • Wait until next year and see how much cash we can save up by then.  The risk here is that there won’t be any foreclosures available in our old neighborhood by next year.  We may have to expand outside of our comfort zone or pay $130,000-$150,000 for a non-foreclosure.
  • Take out a home equity loan on our paid off rental home to cover that $40,000 needed around closing.  But then we’d have two more loans on top of our current mortgage.
  • Look into loans that don’t require 20% down.  We do have 2 years of self-employed tax returns now, so finding a loan will be easier than it was last year hopefully.  But self-employment may simply mean that banks will want 20% down.  We’ll visit a couple and see what they suggest.
  • Ignore rental properties completely and open up a SEP IRA as soon as possible instead.  I just can’t see retirement accounts making the interest that would make them more profitable than $1300-income rental properties that only cost $800 a month.  Property values in this area are still pretty low and make for great long-term investments (there aren’t many places where you can get a 2000 square foot home for $110,000).

We’re leaning towards talking to some banks and seeing what our loan options would be.  If 20% down is necessary, we’ll probably wait until next year.

What would you be leaning towards in our position?  What obvious options have I missed?  :-)

Re-Finding the Balance Between Saving, Investing, and Fun

For the past year, we really haven’t been able to stick to a specific plan for saving, investing, and putting aside money for fun.  From April through October 2012, we were stashing away as much cash as possible just to close on our new house that was being built.  From October through December 2012, we were rebuilding cash reserves and making an attack plan to pay off our rent house mortgage.  And from January to early April 2013, we were redirecting all extra money towards that mortgage which is now paid off.  So, for the first time in a year, we could really use a plan that isn’t all-or-nothing.

The New Plan

Mr. BFS really misses the balance that we had up until this time last year between paying our bills, saving for our future, and budgeting in the fun stuff .  He wants to get back on track.  I agreed that it was time to step back and breathe a little.  So here is our new spending and savings plan…

Step One – Cover the Stuff in Our Budget

Here is our current budget of necessary expenses, chosen luxuries, and the new-to-us car savings goal that we need to be able to cover every month no matter what…

  • Income Taxes – $2500
  • New-to-Us Car Fund – $500
  • Home Mortgage – $990
  • Home Insurance/Property Taxes/HOA – $750
  • Rent House Home Insurance/Property Taxes – $275
  • Health Insurance – $360
  • Life Insurance – $30
  • Car Insurance – $55
  • Electricity – $175
  • Water – $60
  • Natural Gas – $40
  • Gasoline – $150
  • Eating Out – $250
  • Groceries – $250
  • Sprint – $150
  • Cable/Internet (DSL) – $120
  • Medicines – $20
  • Toll Roads – $25
  • Housekeeping – $175 (average over the year)
  • Lawn – $80 (average over the year)
  • Miscellaneous – $200
  • Cash – $100
  • Total Expenses = $7255

Then comes the fun part.  :-D  We bring in about $8000 a month from the business and at least $2000 from rent house and reffing income that Mr. BFS brings in.  So, in a normal month, it looks like we’ll have about $3000 extra to leverage how we wish.  Here is what we came up with.

Percentage Breakdown

Here is how we are allocating the monthly extra until our 2013 Roth IRA’s are taken care of:

  • Roth IRA’s – 60%
  • Emergency Fund – 10%
  • Rental Property Maintenance Fund – 10%
  • Mortgage Payoff – 10%
  • Vacation Account – 5%
  • Fun Money Accounts – 5%

Long Term Plans

We aren’t 100% on all of our long-term plans, but we do know we want to be financially independent as soon as possible.  That mostly means that we want to work towards complete debt freedom and funneling more into our retirement planning.  With that in mind, when the Roth IRA’s are fully funded, we will be opening a SEP IRA and Mr. BFS will start investing in some of our favorite stocks again.  In fact, we may end up doing it this way every year – fully fund all of the Roth IRA’s and then move on to putting as much into the SEP IRA and stocks as we realistically can while still having fun with 10-20% of the extra too.

Anyway, thanks for reading along as we figure stuff out.  How have you been doing?  Anything you want to just let out?

Our Current Retirement Preparations

Ever since we started attacking the rent house mortgage with a vengeance, we sort of put our early retirement plans on auto-pilot.  We’re nearing the end of that goal (yay!), so now we have to take another look at our retirement planning.

Our Current Retirement Savings Vehicles

Okay, so I just turned 30.  When I started this blog 3 years ago, we were aiming to retire at age 52.  That is still the goal on paper, but we are honestly trying to reach financial independence as soon as humanly possible since self-employment only has one huge downside in my opinion – not knowing for sure when it’ll be a big month and when it’ll be a lean one.  Financial independence would give us the freedom to do our jobs without worrying so much.  Here is how we are saving for retirement so far:

  • 401k – I still have money growing in my old 401k in a target date mutual fund
  • My Roth IRA – We fully fund this every year and use a different target date mutual fund
  • Hubby’s Roth IRA – We fully fund this every year too and he selects individual high yield dividend stocks
  • Scottrade account – Hubby invests this money in high dividend yield stocks too.  He makes sure to diversify the investment niches though.
  • Rental property – We rent out our first home and plan to do so into retirement.

Future Plans

As of right this second, this is where our retirement planning has ended.  Hubby is already a varsity sports official and plans to continue until he physically can’t do it anymore.  I would love to blog or do whatever replaces blogging in the future.  I also love volunteering for charities, so I will at least have a free hobby.

But, good enough doesn’t help my brain turn off the worry train.  So after we do pay off the rent home’s mortgage, we will be looking at other options like a self-employment IRA and/or seeing how much more we can squirrel away for possible other rental properties.  Rental income is pretty dang addictive.  ;-)Overall, the possibilities may be endless, but we’ll choose a path when we know what we have to work with…isn’t that always how it is?

How are you planning for retirement?  Any suggestions or questions?

This post was inspired by Genworth, but I just ran with the topic since I needed to update you all anyway.  :-)  All of this is 100% Crystal.