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Subject:  Re: non-MasterMind will RE Date:  8/10/2002  12:41 PM
Author:  FoolMeOnce Number:  73391 of 881679

Patnbj writes:
I think that any personality type can achieve ER. . . . .Although I am very glad that I found the REHP and learned about the SWR, no offense to Intercst, but I think that it will play a small role in the plan that will allow me to be a successful ER. . . . .So the SWR is just a hypothesis but then when you think about there are so few sure things in life. . . .What I think is more important is to have a diversified approach to investing, constantly think ahead, and be willing to be flexible--have a plan “B” in your hip pocket. . . . .This isn't just the ravings of an mad optimist--I have been able to weather this bear market just fine, thank you very much and am still on track for ER.

I like the way you think. Like you, I think very highly of Gillette Edmund's “How to Retire Early and Live Well”. I am a fan of diversification. All that is really necessary to retire early is a willingness to plan, live below your means and exercise a little common sense.

I would appear to be the anti-REHP poster boy. I appreciate the REHP Safe Withdrawal Study for what it is; an interesting intellectual exercise. Beyond that, I have little use for it since I feel it is basically unworkable for most people and doesn't apply to me personally. I invest in real estate. (Egad!) My primary source of retirement income will be an old-style defined benefit plan. (Gak!) I plan on retiring in a few years at age 55. Some people would consider this early retirement. Others would not. It makes no difference, since it the age at which I have always planned to leave paid employment. It certainly doesn't qualify me for the “Royal We” club or any other of the recently defined “clubs” which this board has a penchant for establishing or popularizing, such as the “I Hate Real Estate” club or the “Mastermind” club, etc.

Plan A: I decided early that I would devote my working years to public service. The federal government defined benefit plan is quite good as these things go. Retirement with an immediate annuity is possible at age 55 with 30 years service. Since I participated an a work study program with the Government while in college, I got an extra 4 years tacked on to my service time, even though I was not employed full time during that period. The result is that when I retire I will receive about 70% of my high three salary and maintain full health plan benefits. The pension is inflation-adjusted using the full CPI. I can enjoy my current standard of living on about 2/3 of this amount.

Plan B: I never owned a stock until about 8 years ago, preferring instead to invest in residential real estate. With the advent of 401K plans I ventured into the equities markets, since owning real estate in my 401k was not allowed. I also fully funded an IRA. At retirement, these assets will conservatively throw off a sum equivalent to what my pension will pay me. Since I can live on 2/3 of the proceeds from either Plan A or B, I have no fears of outliving my assets. I have learned to appreciate equities but they have, and forever will, constitute only a small portion of my investment assets.

This approach isn't for everyone. Working for the federal government has never been viewed as a means to get rich quick. The amount of ignorance and fear surrounding the field of real estate investment, limits widespread participation. However, it has worked for me. Observing the hysterical gyrations of the equities markets, for me, is just an entertaining diversion. It will have no impact on my ability to retire or my subsequent standard of living. I won't waste one minute fretting over safe withdrawal rates and sympathize with those who consider the current market environment a test to see how much pain can be absorbed before their retirement plan goes completely off the rails. It must be terribly difficult to have your future well-being tied to an investment class which moves violently about and with no more sense of direction than a drunk who has forgotten where he has parked his car.

I have enjoyed posting here about real estate, and while my efforts may not be appreciated by the members of the aforementioned clubs, I think that some of the “outies” have either enjoyed the posts or learned something from them. However, I welcome those who challenge my assertions. It forces me to re-examine my beliefs and sharpen my philosophy. Perhaps at least it is not too late for me to be a charter member of the “thick skin” club.


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