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Ok - DH and I are seriously interested in "retiring" in our mid-40's. I expect we will always do something that will give us a bit of money - but not do something FOR money - if that makes sense.

Anyway - currently we have 401K, Roth and 403B - but none of these are available (without heavy penalty) until we reach 59 1/2 (with the exception of the principal in the Roth).

With that said - how/what would we invest in to create income prior to 59 1/2? We've done the rental real estate thing - hate it - want something else.

We've been just LTBH stocks. What do you think?

C.
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I like dividend paying stocks like MO,DD,GD,MMM,IP,CAT.Some people like reits (owning real estate without some of the hassles.

2828
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You can roll your 401k and 403b into IRAs and then get at them without penalty using the SEPP (Separate and Equal Periodic Payments) method.

Here is the latest in intercst's homepage on SEPPs.

http://rehphome.tripod.com/sepp2003.html

Can also search on SEPP and find plenty of posts. TheBadger (besides intercst) is the local expert.

arrete
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DH and I are seriously interested in "retiring" in our mid-40's.

How old are you now? I.e., how many years do you have left in the "acquisition phase"? It makes a difference, both to how best to approach it and to your odds of success.

Regards,
holzgrafe
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32 - we'd like to retire in 13-18 years tops.

We are currently investing slightly over 50% of our income. We live on my income and invest DH's. I currently earn just slightly less than him, but within the next few months, his income is increasing to 2/3 of our household income - at which time we will continue to live on mine and invest his.

C.
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I don't know what you mean by LTBH stocks. You can hold any stock forever if you want, but that has not been a winning strategy for the vast majority of stocks recently.

If you want to make money by buying and selling stocks, you need to develop a decent method of trading stocks. CANSLIM is one. Buy O'Neil's book and read it carefully.

If that is too much trouble, then you might look at various methods of trading mutual funds. The people on the FT-Talk Forum know how to do that, and it is not much trouble at all to develop a system. See

http://www.ft-talk.com/forums/

That board costs money, but it has made me a lot of money. That is something I cannot say for the Fool boards. Their chief value is entertainment.

Buy a good book on technical analysis, and learn how to read charts. It is not difficult.

Look at the links I published at

http://boards.fool.com/Message.asp?mid=18345995

If people spent as much time learning to trade as they spend debating SWRs, they might not have to worry about SWRs. But that takes a bit of work.
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Hey C,

I haven't notice anyone as of yet reply to this question, so I'll give it a shot.

32 - we'd like to retire in 13-18 years tops.

We are currently investing slightly over 50% of our income. We live on my income and invest DH's. I currently earn just slightly less than him, but within the next few months, his income is increasing to 2/3 of our household income - at which time we will continue to live on mine and invest his


According to a paper of intercst's that I have (thanks again, intercst for sending it to me a few years ago) he says that if you save 40% of your salary and that you limit your spending increases to inflation that you can retire in 12 years if you average a 10% return.

Now, you are saving over 50% of your income and within a few months you will be saving more than that. I have no idea of how much you currently have saved, but I think that you will be able to retire in much less than 13 years if you maintain this rate of saving and get an average return.

Have you checked out intercst's website at www.retireearlyhomepage.com? If not, do so and scrounge around there for awhile. He has a lot of great information on his site.

Now, I'm not sure how long you've been reading this board, but if you are fairly new here you've probably seen some of the recent attack on intercst. This attack is not to be believed, in my humble blue collar opinion. I don't normally take up for people who are more than capable of taking up for themselves, but in the few minutes that I've met Intercst in person and from the hundreds if not thousands of posts that I've read of his, he is a great person who would not intentionally mislead anyone with false information.

Could his or anyone information here be wrong and/or contain errors in it? Sure. The market may tank tomorrow and all the dollars that you and I have invested in it may mysteriously dissolve in a black hole.

However, I'm sorry to rant on in this post, I'm getting tired of one poster in particular always ranting against intercst. It's been suggested that this poster get evaluated by a mental health worker and I wish he would look into doing this.

I have learned a lot from this board and I have also read a lot of trash here. Some of it may have come from me, but I've always meant to spread good will and not trash.

Hey C, stick around and keep us posted on your trek towards FIREHOOD. If not here, I'll see you on the other boards that I frequent.
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Anyway - currently we have 401K, Roth and 403B - but none of these are available (without heavy penalty) until we reach 59 1/2 (with the exception of the principal in the Roth).


Under certain circumstances, the 401K and the 403B can be rolled over into a conventional IRA. This usually becomes a possibility beginning when your employer either terminates the plan or becomes your FORMER employer.

Money in a conventional IRA can be converted to a Roth IRA - pay the income taxes from some other source - and then, after a five-year wait, can be withdrawn as principle.

Money in either a conventional IRA or a Roth IRA, whether principle or earnings, can be withdrawn under 72(t) "Substantially Equal Periodic Payments" rules. This may (I don't know) also be an option for 401K-like accounts.
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Thank you - I've been reading the board for a little over 2 years - we've just never been in a position to save more than 15-20% of our income, simply because our income was so low.

We have been investing in Roth's and the max match on our 401Ks. We also were investing outside of retirement funds (because we knew we wanted to retire early but didn't know how we'd get at it). We took everything out of outside retirement accounts out just before everything crashed (bless us!) and paid off all debt. And instead of investing in the past 18 months, we've finished paying off debt and building up an efund.

So, we consider ourselves at ground zero (with the exception of some in Roths and 401K). But, no debt having to be paid.

So, now, we are able to put away lots.

Just to clarify - if we invest (at minimum) 40% of our gross income for 12 years and average a 10% return, we will be able to retire at the end of this time on our current income level???

Also, what vehicles are averaging 10% returns right now. I realize stocks will average over the long run around 8% - but thats only 8% - where do we find the other 2%?

Thanks!
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Just to clarify - if we invest (at minimum) 40% of our gross income for 12 years and average a 10% return, we will be able to retire at the end of this time on our current income level???

I posted a link below which takes you to the calculations that intercst has done that I referred to. In his assumption, a person saved 40% of their income, received 10% annual salary increases and limited the increase in their spending to inflation. I'm not sure what type of work you do, but in my line of work I will be lucky to get a 10% raise in one year out of 20, much less every year. Go to this link and take a look at the various charts.

http://rehphome.tripod.com/software.html

Also, what vehicles are averaging 10% returns right now. I realize stocks will average over the long run around 8% - but thats only 8% - where do we find the other 2%?

Ah, if I knew this answer I would be further ahead in my trek to be FIRE'd. However, on that same chart I referred to, if a person only received a 5% rate of return, they could retire in 14 years instead of 12 with all of the other same parameters. Yes, a higher rate of return is great, but the main thing is to save as much as possible of your income in order to retire early. So, the magical formula is to save as high of a percentage of your income that you can and also limit your spending increases to the rate of inflation and not to your increases in salary.
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