When to retire?

[Nocturnal]

I'm in that awkward point right now where I technically have enough to retire but that would mean cutting down my TSLA investment a little to reduce risk. I have at least another 3 months on my current contract and it's an easy WFH gig that pays very well so I'll probably hold on until at least then. I'm starting to decide what my asset allocation should look like in retirement. I'm planning on using the 5% rule, but I'm betting I can hit 20% returns on average. As an independent consultant if I do retire and say the market tanks, it wouldn't be too hard for me to pick up another gig so I have some security there.

My current allocation is 67% TSLA
8% SpaceX
3% real estate (equity)
3.5% ARKG/ARKQ
2.5% apple/amazon/google
3.5% misc EV type stocks
and 8% general index funds.

I think at retirement I'll probably decrease TSLA to at least 60%, probably 50%. That will let me buy a rental property, and to increase my ARK funds and probably some into AAG.

 

[cusetownusa]

I use the 4% rule as a thumb to the wind that maybe it's time to have conversation(s) with family and financial planners. I wouldn't use it as a specific plan for how to do things.

If nothing else in my case, about 1/2 of our portfolio is in retirement accounts, and those aren't accessible for another 8 years. Living on the remaining 1/2 by selling it down, and then switching to the retirement accounts later would be ... tough ... for us. Continuing to work for a paycheck would be tougher for me though, so a specific plan is needed (and I've got one).

There are easy ways to access "retirement" accounts. You are probably already aware, but just in case you weren't.

How to Access Retirement Funds Early

 

[juanmedina]

I'm in that awkward point right now where I technically have enough to retire but that would mean cutting down my TSLA investment a little to reduce risk. I have at least another 3 months on my current contract and it's an easy WFH gig that pays very well so I'll probably hold on until at least then. I'm starting to decide what my asset allocation should look like in retirement. I'm planning on using the 5% rule, but I'm betting I can hit 20% returns on average. As an independent consultant if I do retire and say the market tanks, it wouldn't be too hard for me to pick up another gig so I have some security there.

My current allocation is 67% TSLA
8% SpaceX
3% real estate (equity)
3.5% ARKG/ARKQ
2.5% apple/amazon/google
3.5% misc EV type stocks
and 8% general index funds.

I think at retirement I'll probably decrease TSLA to at least 60%, probably 50%. That will let me buy a rental property, and to increase my ARK funds and probably some into AAG.

My allocation is
62% Tesla
8% Real estate (rental)
22% Index funds (401Ks)
8% Cash (from closing out recent options and looking to reinvest in Tesla or ???)

I would love to invest in SpaceX.

We have enough to retire but like you my job is easy, pays well and I am probably going to get promotion although I spend 80% of my work time staring at TSLA lol.

 

[Nocturnal]

My allocation is
62% Tesla
8% Real estate (rental)
22% Index funds (401Ks)
8% Cash (from closing out recent options and looking to reinvest in Tesla or ???)

I would love to invest in SpaceX.

We have enough to retire but like you my job is easy, pays well and I am probably going to get promotion although I spend 80% of my work time starring at TSLA lol.

Isn't it weird knowing that you can just walk away if you want? I honestly didn't expect to be in that position until another 10 years from now. Lots of luck and some hard work can actually change your life! ha.

 

[adiggs]

There are easy ways to access "retirement" accounts. You are probably already aware, but just in case you weren't.

How to Access Retirement Funds Early

That's good stuff, and thank you for posting. I've already got a massive Roth IRA (sheer dumb luck, not planning, put my original TSLA purchase in 2012 in my Roth; sometimes we get lucky ).

I'm personally planning to make use of the SEPP to retrieve some of that for living expenses between now and full access.

 

[juanmedina]

Isn't it weird knowing that you can just walk away if you want? I honestly didn't expect to be in that position until another 10 years from now. Lots of luck and some hard work can actually change your life! ha.

Yeah it is really strange. My boss keeps asking me to do stuff that I don't want to do and I just tell him sorry I can't do that.... he is probably wondering WTF is he thinking. We have been maxing out our 401Ks for 7 years and IRA's; our goal when I was 28 was to have 1M at 35 in investments but I thought it was a very steep goal. Now we are here and we blew past our goal and we have no idea what to do .

 

[Nocturnal]

Yeah it is really strange. My boss keeps asking me to do stuff that I don't want to do and I just tell him sorry I can't do that.... he is probably wondering WTF is he thinking. We have been maxing out our 401Ks for 7 years and IRA's; our goal when I was 28 was to have 1M at 35 in investments but I thought it was a very steep goal. Now we are here and we blew past our goal and we have no idea what to do .

"I'm not going to quit, I'm just going to stop going."

 

[Causalien]

TSLA 28%
1st big project 64%
Fixed income 7%
RE 3%

At one point tsla make up 80% of my net worth. It is only down to 30% because my own project is more succesful.

Now, I was about to expand the RE portion to further diversify my income stream, but the Pandemic caused me to take a wait and see approach because I believe the gov will have to increase taxes to make up for the damag. The easiest and most readily available to tax should be real estate.

I did take this opportunity to vultch on a downtown condo as principal residence. This time not compromising on any of my requirements.

Diversification has proven to be a long and arduous process. I think this is the difference between old money and new money (and part of the reason I resent kids from old money). Old money already got their assets and income diversified so they don't suffer from huge tax losses while maneuvering assets around. Also, ppl seem to have discovered getting loans from assets on this forum. But even using that method. Banks are only willing to lend about 15 cents for every dollar you have in this environment. Another reason to resent old money. Because I have to explore and discover all these myself while they just get the contacts from mommy and daddy.

 

[Nocturnal]

Another reason to resent old money. Because I have to explore and discover all these myself while they just get the contacts from mommy and daddy.

Yup. If my parents had been nearly as financially savvy as I am (not that I'm claiming that, but relatively) I would be worth 10x what I am now. My kids are 6 and 8 and they are already getting lessons about stock and aside from their 529s have custodial IRAs that are already worth a few grand just from me skimming birthday cash here and there and investing it for them.

 

[Featsbeyond50]

I resent kids from old money

I cannot say I'm in alignment with this. My personal approach in life is to worry about myself and stay out of the business of others. I'm sure not going to begrudge someone for their wealth, I'm going to be happy for them regardless of how they came to it.

The other reason I'm not in alignment is, when I hear that, I'm sniffing Inheritance Tax. Some people might say, "Yeah, all for inheritance tax". Then what else is there that some people resent? Maybe they'll resent you for your gains in the stock market. You didn't earn it after all, you just got lucky and picked Tesla. No great genius, no blood sweat or tears, just luck. Let's implement a wealth tax. This kind of thinking snowballs to the point where California is proposing to chase people around for ten years after they leave the state.

 

[Causalien]

I cannot say I'm in alignment with this. My personal approach in life is to worry about myself and stay out of the business of others. I'm sure not going to begrudge someone for their wealth, I'm going to be happy for them regardless of how they came to it.

The other reason I'm not in alignment is, when I hear that, I'm sniffing Inheritance Tax. Some people might say, "Yeah, all for inheritance tax". Then what else is there that some people resent? Maybe they'll resent you for your gains in the stock market. You didn't earn it after all, you just got lucky and picked Tesla. No great genius, no blood sweat or tears, just luck. Let's implement a wealth tax. This kind of thinking snowballs to the point where California is proposing to chase people around for ten years after they leave the state.

On any normal day, I don't think about them. It's when I cross swords with a pompous ass who has no skills do I do the resentment thing.
But even in your logic I pass cause I went through the proper way of sweat and blood and paid my taxes.
The ones who has the means to escape gov taxing are also these old money. You don't set up a caymen island tax shelter without the proper contacts, nor do you get a French chalet in a trust for you at 20 without old family money. So I actually support the wealth tax.

Of course there are always exceptions. Those who start with millions and manages to get billions has proved themselves. Those who left home without family support and started their own business gets a pass. But often time, I'd later find out that they got a $300k starting capital from dad. That's like 600k in prettax income. How many years does that take to save up with normal wage? Not to mention the feeling of security knowing that you have a safe nest to return to if you fail.

 

[nwdiver]

When to 'retire'? IMHO... never... you just work when you want, where you want to make the world a better place in whatever way you see fit instead of working for money.

 

[Featsbeyond50]

I actually support the wealth tax

So you're okay with people having to pay tax on unrealized gains? You're okay with having to sale holdings to pay for the gains in equities? What will you think if you have to do that, then the market drops by 30%?

I'd later find out that they got a $300k starting capital from dad. That's like 600k in prettax income. How many years does that take to save up with normal wage? Not to mention the feeling of security knowing that you have a safe nest to return to if you fail.

So what, life's not always fair. I don't come from money but my parents were able to get me through college. I know I wouldn't have had the discipline to get myself through college by working (I did the last year but my class load was lighter, it was basically mop-up duty with the end in sight). Should I pay more taxes than a guy who waited tables for 6 years to get himself through college? Would it be right for that guy to resent me because I had it much easier than he did? Where to we draw the line for resenting people? Believe me, I'm no Zen Buddhist or anything but I know that's not healthy.

 

[Causalien]

Yep. It's fine. Switzerland does that and it's ok. The problem is with old money who has much better protection and wealth that cannot be tracked.
So a tax like that will end up taxing new money.like I said, I din't think about them at all. So my health is not affected. It only comes up when I have to face off against a cimpetitor with such backgrounds.

As for the core stock holding problem. A solution can be found easily. Weigh it against income. If you have 0 income or 0 cashflow from loans, then no tax. We can work towards tightening up fringe cases from here.

When I was starting a business in LA, I bootstrapped against a competitor with 10 mil in daddymoney. Made me realize that family wealth is really unfair. If everyone start off life at the same level. A.k.a generational wealth transfer is taxed to death. Then it will be true meritocracy, part of the reason why tesla aligns with me as it is mostly a meritocracy. Is it possible to make such a dramatic change? Probably not.Als,the example of you and the waiter guy is much too far down the line in terms of problems. But in a meritocratic society, ya that inequality at the start need to disappear. However, let's tackle the situation where a nobody with no money have to face off against millions in daddy money funding first.

 

[dakh]

When to retire really depends on your job. Let me tell you one truth: early retirement is boring after a while.
If you have a job that fulfills your sense of worth and doesn't deteriorate your health, consider dialing back the working hours to around 2~3 days a week.

That said, there are several stages to the retirement strategy.

There looks to be a huge variety of attitudes to this stuff. Personally I have gotten to a point where my happiness barely depends on external factors other than basic health. So I don't expect any material possessions, persons, occupations (or absence of them) to make much of a dent in my happiness. I'm just curious to experience this other way of living. For sure I don't think material possessions would make me any happier. In fact, we pretty much live in a dream house right now (it's a freakn castle in the woods for f's sake, for realz) and I am having second thoughts about ditching that and renting a condo, just because house ownership takes some life energy and I might be better off putting it elsewhere. I also have a good dozen of hobbies/projects already going for many years so no job will simply shift my time/energy allocation, nothing really drastic.

I do think though that it is at this point not possible for me to extract myself out of my daily grind enough to really see what I want to be doing with my life. Job is good and all that but after doing this for 20+ years, I think I'm not capable of seeing many other opportunities that exist. I am pretty sure the current setup is a local maximum and there's much higher highs available. But I'd have to get unstuck from the current setup first, which will take some time. Another way of doing this is to just make a drastic maneuver in life, like a career change, but at this point I do put a bit of a premium on comfort and stability

Personally I think if I believed that a better house or a boat or some such would make a big difference, I'd probably spend that money on a shrink or shaman then that boat to get this idiotic idea out of my head. If I wanna go sailing, there are plenty of ways to do it without getting a boat or spending a crapton of money.

 

[Christine69420]

So you're okay with people having to pay tax on unrealized gains? You're okay with having to sale holdings to pay for the gains in equities? What will you think if you have to do that, then the market drops by 30%?

In Norway we have this tax. But it is controversial. Small business owners often have to sell down their ownership in the business they started to pay the wealth tax. Which is really unfair IMHO.

And the wealth tax on housing is much lower. So Norwegians tend to put all their money into their homes and not into stocks. Which also hurts the business owners when trying to finance their companies.

 

[Causalien]

There looks to be a huge variety of attitudes to this stuff. Personally I have gotten to a point where my happiness barely depends on external factors other than basic health. So I don't expect any material possessions, persons, occupations (or absence of them) to make much of a dent in my happiness. I'm just curious to experience this other way of living. For sure I don't think material possessions would make me any happier. In fact, we pretty much live in a dream house right now (it's a freakn castle in the woods for f's sake, for realz) and I am having second thoughts about ditching that and renting a condo, just because house ownership takes some life energy and I might be better off putting it elsewhere. I also have a good dozen of hobbies/projects already going for many years so no job will simply shift my time/energy allocation, nothing really drastic.

I do think though that it is at this point not possible for me to extract myself out of my daily grind enough to really see what I want to be doing with my life. Job is good and all that but after doing this for 20+ years, I think I'm not capable of seeing many other opportunities that exist. I am pretty sure the current setup is a local maximum and there's much higher highs available. But I'd have to get unstuck from the current setup first, which will take some time. Another way of doing this is to just make a drastic maneuver in life, like a career change, but at this point I do put a bit of a premium on comfort and stability

Personally I think if I believed that a better house or a boat or some such would make a big difference, I'd probably spend that money on a shrink or shaman then that boat to get this idiotic idea out of my head. If I wanna go sailing, there are plenty of ways to do it without getting a boat or spending a crapton of money.

And you now have the choice to change if you want.

Personally, I find house work too much for me. I can see that happening though if I decided having a family and settle down is what I want. Definitely will try to prep for zombie apocalypse with tesla products if that's the way.

 

[4chi]

I've been playing with my net worth spreadsheet a decent amount these days and just added a new "retirement scenarios" tab this weekend so finding this thread is good timing!

I'm 50, married, two teen high school aged kids with ample 529s that should come very close to funding even the most expensive colleges. And we have decent 401ks and IRAs (heavily TSLA) but likely not enough to fully fund a retirement at age 60 even if they tripled between now and then. My wife has a work from home gig consulting that generates about 100k year.

After lawyering for 20 years, I was fried in 2016. Now my brother and I have 50-50 ownership of an S-corp that generates ample annual income and has been trending upwards steadily the past 3 years. We have just one employee for customer service and paper pushing. I currently run the backend and financials (as well as daily answering phones and order processing) on about 6 hours a day of work (4 out of 5 days from home). My brother is technically in charge of sales. Really we both do just about everything but I don't now how to run the website and he doesn't know how to do the accounting.

I've run numbers on potentially selling the business to fund retirement but I don't think we'd get the price we'd want compared to what it generates. We had someone approach us a couple of years ago and we were nowhere close on a price. So my brother and I both think keeping ownership and living off the annual income generation is the way to go for retirement. My current thought is that in about 5 years we find a really good manager who could do 90% of the running of the business and we incentivize this person with a healthy annual bonus based on a percentage of annual profits. And then my brother and I both semi-retire (yes, we've discussed this plan and are on the same page).

By my calculation, if we implemented this plan for 2021 I'd maintain over 80% of my current income from the company while only putting in maybe 10 hours per week of general oversight work. Eventually that 10 hours becomes close to zero hours as the manager (maybe another employee as well if we keep growing) runs everything. This continued annual income should allow us to not have to draw down any principal from investment or retirement accounts. I view those as a safety net. But we can tap those once we hit the age limit if needed for supplemental income.

I welcome any thoughts on this plan, particularly the pitfalls I'm sure I'm overlooking.

 

[ReddyLeaf]

So you're okay with people having to pay tax on unrealized gains? You're okay with having to sale holdings to pay for the gains in equities? What will you think if you have to do that, then the market drops by 30%?

Been there, done that. I had lots (relatively for my young age) invested in taxable mutual funds in the 1990s. This was back when $2000/yr was the IRA maximum, and ROTH didn’t exist. During the recession (don’t remember which ones, but probably several through 2002), I had to pay taxes on capital gains in those mutual funds EVEN though the funds lost money. This happened several years. It wasn’t a huge deal because I was working and could afford the taxes, but still it seemed unfair because I was holding long term like stocks, but being taxed differently.

 

[Featsbeyond50]

Been there, done that. I had lots (relatively for my young age) invested in taxable mutual funds in the 1990s. This was back when $2000/yr was the IRA maximum, and ROTH didn’t exist. During the recession (don’t remember which ones, but probably several through 2002), I had to pay taxes on capital gains in those mutual funds EVEN though the funds lost money. This happened several years. It wasn’t a huge deal because I was working and could afford the taxes, but still it seemed unfair because I was holding long term like stocks, but being taxed differently.

What you're describing is different (I say that knowing "wealth tax" is just a twinkle is someone's eye at this point and we, or at least I, don't know what the reality will be if it gets pushed through). That type of capital gains is just the fund manager selling gainers, holding onto losers and the overall value of the fund going down. It's just like if you own 5 stocks, four of them go down in value and one goes up. You sell the one that went up incurring capital gains on that asset. The others you hold so there is no event.

The wealth tax on the other hand, is a tax on the non-event. You own 100k worth of TSLA, it goes up to 800k and you do not sell any shares. There is no event, but Uncle Sam gives you a tax bill for your increase in wealth. That's a wealth tax if my understanding is correct.