It appears that there are several investors here that have been able to retire at a young age. I'm considering selling some of my TSLA and retiring this year, at 50, from my surgical practice. I can probably continue to work a few days a month as an assistant surgeon to keep my feet wet, without having to worry about answering patient calls anymore. I have plenty of hobbies to keep me busy (I think). I'm curious to hear what experiences different people have had with early retirement. My thought is life is short, and you can't get time back. You also can't rely on your, and your spouse's, good health to continue. So if you can retire and do something different you enjoy more, why not?
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When to retire?
- Thread starter BornToFly
- Start date
Phil Seastrand
Member
I retired from HP at 50 when they made an early retirement offer to me and my wife (also working at HP) that we couldn't pass up. The biggest issue we faced was cash flow. I had plenty of retirement funds, but most were not available at 50 years old. You need to figure out how you will support your cash needs between your retirement age and when you can safely start taking benefits (e.g., IRA distributions, Social Security, etc).
I also thought about keeping active with my job (I was a software developer), but after a couple of months without having to get up early or do anything on a schedule, I quickly decided that complete retirement was for me. It's been 14+ years since we retired and I can't imagine how I had time to work along with all the other things we're doing.
I also thought about keeping active with my job (I was a software developer), but after a couple of months without having to get up early or do anything on a schedule, I quickly decided that complete retirement was for me. It's been 14+ years since we retired and I can't imagine how I had time to work along with all the other things we're doing.
Why not indeed. There are many other things to do with your time besides work. I retired from medical practice at 52 and it was the best decision I have made, as medicine was increasingly making me crazy. I found that my time was quickly filled with things I would rather do. If you have the income to support it, definitely go for it.
adiggs
Well-Known Member
Since I'm also thinking about this, and I expect others are as well, this might help.
Rule 72(t)
The idea is that using a variety of rules, you can establish an annual amount to take out of retirement accounts without paying penalties, at any age. So if you're pre 60's and want to retire early, this might be helpful if the money you need is in retirement accounts.
medicine here. Also increasingly making me crazy. Need 3x from tsla from this point in time to retire.hopefully that’s in 10 years..,or sooner.,then freedom 55 it is.
The Roth conversion ladder is also available to pull your money out of retirement accounts without penalties and possibly at a better taxable rate. You just need to have about 5 years of expenses easily available to live before you get cash from the rollovers.
adiggs
Well-Known Member
An update on this, specific to my own research and situation. It looks like I will be using the RMD (required minimum distribution) method for determining how much I can take out each year. There are 2 other options that use annuity type tables, and yield a fixed amount per year, while the RMD method adjust each year (it's a fixed % of account balance, and since the account balance is constantly changing, then the annual withdrawal changes as well).
When I've looked at this previously, you could get a noticeably higher amount of money in fixed form using one of the other 2 options.
But in this low interest rate environment, I can get a fixed amount that is 5-8% higher than the amount I can get via the RMD method. And the RMD method changes each year (it's a % of the account balance each year). This is important to me as I expect my retirement accounts to expand rather rapidly due to the TSLA shares I have in them. So first year will be lower, but there's a reasonable chance that year 2 and beyond will be higher, and either way they're close enough that I see no advantage in the fixed withdrawals.
Note that I'm also more trying to figure out how to get money out of my retirement accounts for the next 8 years before I reach age 60, than I am about total maximum earnings / portfolio. (So my situation and context is likely different from yours, and these details matter).
Still not advice, and I'm not a financial planner or other sort of financial expert. Just a random internet stranger trying to figure this out for myself due to an active need to understand it well enough that I can use this myself.
Words of HABIT
Active Member
Asking not an advice for a friend who is looking to retire, only given family annual income X, early 50s, no debt, no private pensions, with conservative Assets: TSLA - 20X, House - 10X, Other - 1X
Option 1 - Sell 1/12X TSLA per month starting 2021.
Option 2 - Take out Secured LOC for 4X. Draw up 1/12X per month from LOC for first four years. Sell 1/12X of TSLA per month starting 2025. (Line Of Credit is currently Prime + 0.2% or 2.65% per annum in Canada.)
Please rate this post Helpful for Option 1, or Informative for Option 2.
Option 1 - Sell 1/12X TSLA per month starting 2021.
Option 2 - Take out Secured LOC for 4X. Draw up 1/12X per month from LOC for first four years. Sell 1/12X of TSLA per month starting 2025. (Line Of Credit is currently Prime + 0.2% or 2.65% per annum in Canada.)
Please rate this post Helpful for Option 1, or Informative for Option 2.
Sell call against his holding
I would also say sell covered calls to generate cash flow off of the Tesla positions. If the shares get called away you don’t mind since you are looking to draw down on the position anyways.
Or speak to an actual CFP and I’m sure they can come up with some reasonable ways of leveraging home equity (since it seems like you’re willing to do that) or structure retirement payouts if you don’t want to think about self managing it.
The topic on when to retire is way too wide to cover here. Read up on some FIRE blogs, youtube, books etc. And also understand that no investment is safe, bonds are not 100% to be more secure than TSLA or bitcoins so even if you retire always keep learning and growing to be antifragile to rapid changes in the world. What number is a very complex and subjective question and I think the best way to understand it is to try it, fail a bit, adjust and get a better understanding of your values and needs rather than trying to draw up a perfect solution from scratch.
Also try to ponder the different between work and play. Sometimes work can be play and sometimes play can be work. Often you can shift your value network to actually like working and if you are gonna spend many percent of your life on work you might as well spend some effort to make yourself like it. Often you will end up making more money if you like your work.
Imo try living a few months in a cheap tourist paradise such as SEA, try living dolce vita a few weeks in Southern Europe or Hawaii and compare it to living where you live today. Listen to other people who have been in similar position and see what they say. Then you will better understand if you are okay with living on $500/month in Asia or need $5k/month in US or want at least $50k/month in Como. And how many years you are willing to sacrifice in order to upgrade to the next level...
Also try to ponder the different between work and play. Sometimes work can be play and sometimes play can be work. Often you can shift your value network to actually like working and if you are gonna spend many percent of your life on work you might as well spend some effort to make yourself like it. Often you will end up making more money if you like your work.
Imo try living a few months in a cheap tourist paradise such as SEA, try living dolce vita a few weeks in Southern Europe or Hawaii and compare it to living where you live today. Listen to other people who have been in similar position and see what they say. Then you will better understand if you are okay with living on $500/month in Asia or need $5k/month in US or want at least $50k/month in Como. And how many years you are willing to sacrifice in order to upgrade to the next level...
So if I were to sell such a covered call today (SP $439) what exactly would that call look like? I'm a complete options noob. When would I get money from that sale? And how much?
Johann Koeber
Happy Owner
Not advice:
On Thursday and Friday last week I sold calls against my TSLA shares. The strike is 500, expiration is next Friday and I got $13.3 per share. Each call represents 100 shares, so for 1,000 shares I can sell 10 calls and pocket $13,300.
Now if TSLA is higher than 500 by next Friday I will be called and get an additional $500 per share. Thus I have given up the upside e.g. if the stock goes to 600. I will have made only $513.3
OTOH auf the stock closes under 500, I get to keep the premium and sell calls for next week‘s expiry date.
Notice that premiums are extraordinarily high this week because we are expecting the quarterly report Wednesday after close.
But with TSLA I can usually pocket about $1 to $2 per week and per share without great risk.
Bailed out at 47 myself. Before I retired I talked to my brother who retired the first time at 35. His advice was that unless you are an A+ personality, retire as soon as you can. A+ types should never retire. He has several hobbies, including building rockets. As for money, it’s more what you need than how much you have. For some people, there is never enough. For me, I’ve never spent all the income I have, which is not large.
And if you want more premium you can sell calls that expire further than a week away. I recommend reading up on options strategies and this forum’s threads are also helpful:
Applying options strategy 'the wheel' to TSLA
Advanced TSLA Options Trading
Type A+ personalities are aggressive, dominate, controlling,primarily,but not exclusively, male.
Words of HABIT
Active Member
adiggs
Well-Known Member
I also commend the first page of the "Applying option strategy 'the wheel'.." thread. Besides some background on the assumptions of the thread, you'll find a link to some basic options education, and it's even free! I remember that as about 30 hours of videos that covers the basics and a bit more on options.
I personally consider that a minimum education on options, and is at least a start at understanding what you might be getting into.
When to retire? Sources that I accept suggest to have 25-30X at a minimum where X is the amount of money needed each year beyond fixed sources such as social security. This requires knowing what X is. I would suggest folks track their budget, can serve as a feedback loop. This morning I am adding up receipts for the month to get an idea of where the money went.
Next one needs to make a plan on how to withdraw funds, by this I mean what method to use to pull money out. Fixed percentages get thrown around a lot, something like 3 or 4%. I spent some time reading on each of these and decided on a variable percentage withdrawal method, VPW. Basically there are charts that suggest how much to pull out each year based upon ages and equity percentages. In good times they amount will be large, in bad times it will be less. In order to not panic or suffer during bad times we aimed to have 2 yrs expenses saved in an emergency fund. Now, in good years that fund will grow, in bad years we can eat from it if need be.
Retirement withdrawal methods: Withdrawal methods - Bogleheads
Planning for taxes is important. We have converted some to Roths this year, what great luck to have done so.
While we are well read and understand such things, we do check in with a fiduciary professional once a year.
So my plan, suggested for you:
1. Know your expenses. Save 25X at least.
2. Research and plan on a withdrawal method.
3. Consider how to minimize taxes.
Next one needs to make a plan on how to withdraw funds, by this I mean what method to use to pull money out. Fixed percentages get thrown around a lot, something like 3 or 4%. I spent some time reading on each of these and decided on a variable percentage withdrawal method, VPW. Basically there are charts that suggest how much to pull out each year based upon ages and equity percentages. In good times they amount will be large, in bad times it will be less. In order to not panic or suffer during bad times we aimed to have 2 yrs expenses saved in an emergency fund. Now, in good years that fund will grow, in bad years we can eat from it if need be.
Retirement withdrawal methods: Withdrawal methods - Bogleheads
Planning for taxes is important. We have converted some to Roths this year, what great luck to have done so.
While we are well read and understand such things, we do check in with a fiduciary professional once a year.
So my plan, suggested for you:
1. Know your expenses. Save 25X at least.
2. Research and plan on a withdrawal method.
3. Consider how to minimize taxes.
FYI the guy that created the 4% rule recently updated the rule to 5% or 20X
Time to rethink your retirement — the '4% rule' just changed
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