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Old 18-07-2014, 13:14   #1
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Retirement Planning: Help me sort this out

So, this winter being as craptastic as it was, it got me seriously thinking about planning our retirement. My husband and I decided that we want to retire somewhere where we can sail more often (we live in Michigan now) and possibly live aboard. So much research yet to do.

What I'm having trouble with is the financial planning part. I'm a little reluctant to call a planner when I have nothing to invest at the moment...would they even speak to me? How much could that cost?

The details:
Me-42
Husband 46
Both of us work for the same company as seasonal-ish employees for 15 years. (8 mos out of the year) Yearly income around $50k combined. The problem is, when we're working we make roughly $4k a month, but only $2200 during layoff. (unemployment) Monthly bills are about $1900/mo not including gas or food. Basically, whatever extra I have left over when we're working gets saved to offset unemployment. We usually pay for the marina from our tax return and have a summer cruising fund of about $1500.

As for retirement, we have an ESOP through our employer. They don't offer anything else. As of last year, mine is valued at $88 k and my husband's at $123 k. (The year before it was $76 k & $106 k)

I don't know too much about ESOP. Much of what I've been told I honestly don't understand.

I know we need to see a planner, I'm just nervous, knowing we don't have much of anything to invest right now...pennies, really. But I don't know how to predict our ESOP's growth. Is it enough now? We can take 10% in 2020 and roll it into a Roth, but is that too late to be helpful?

The dream (so far) is to buy a bigger boat (under 40 ft) and sail off. When and where to is the bigger question. Crappy credit, so no financing for us. We own our house, but it has wheels under it, so not much help there.

Thoughts anyone?
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Old 18-07-2014, 14:09   #2
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Re: Retirement Planning: Help me sort this out

Neither of you can work the other four months out of the year?
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Old 18-07-2014, 14:10   #3
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Re: Retirement Planning: Help me sort this out

Get off your ass and get a FULL TIME job and start saving. It's not rocket science to figure it out.

Only in the US.
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Old 18-07-2014, 14:47   #4
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Re: Retirement Planning: Help me sort this out

ESOPs are great if the company stock is up in value when you retire. Mine wasn't... In fact the company pretty much wasn't. Seems like a pretty easy to understand write up here. Good luck with your future.

Employee stock ownership plan - Wikipedia, the free encyclopedia
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Old 18-07-2014, 15:58   #5
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Re: Retirement Planning: Help me sort this out

Well, you are better off than three quarters of Americans with about $200K in ES?OP savings.

It isn't that difficult to plan for retirement. Take your savings- the ESOP and subtract the cost of a home or boat. The remainder can provide 4% per year in annual retirement living expenses. Add to that social security and any other pensions that you will get upon retirement. That is what you have to live on.

If it isn't enough, then you need to live cheaper, save more, work longer or buy a cheaper boat/house to live in.

The foregoing analysis is quite simplified. Do not go to a broker/financial planner to refine it. A fee based financial planner is the only kind worth consulting with. This is the kind that charges you a fee and does not sell investments. But they are going to charge you a thousand or more to do it right.

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Old 18-07-2014, 16:20   #6
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Re: Retirement Planning: Help me sort this out

Your finances are not complex enough to see a financial planner but you can check if your company offers one as a benefit. Otherwise, start reading. Don't use the ESOP for anything other than funding retirement and roll it into an IRA as soon as you can or otherwise diversify it. Thats not hard - just buy SPY and QQQQ. You need a bigger income and to save every penny you have. For savings, dont worry about bonds, CDs or annuities. Put it all in equities, except for a small cash reserve. You are gonna be the kind of cruiser who oinches pennies and works whenever yiu need to. If you want to do it, you'll have to get your arms around it.

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Old 18-07-2014, 16:22   #7
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Re: Retirement Planning: Help me sort this out

Quote:
Originally Posted by a64pilot View Post
Neither of you can work the other four months out of the year?
We do, but it's side work and comes and goes, so it's hard to predict. We're photographers and so we shoot the occasional wedding or event. It's tricky trying to find 'real' jobs in the off season because it's not all in one chunk. Half of December and all of January, June and July. Not a ton of jobs want someone that short of time and temp work doesn't cover what unemployment does. We stayed too long at this job before we realized we're kinda stuck. But it's immensely satisfying work, which has value, just not monetary.
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Old 18-07-2014, 16:25   #8
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Re: Retirement Planning: Help me sort this out

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Originally Posted by Kenomac View Post
Get off your ass and get a FULL TIME job and start saving. It's not rocket science to figure it out.

Only in the US.
Wow man, that was unnecessarily snarky and not at all helpful. None of my original post was meant to be taken as me complaining. I can live with the reality of the choices I've made; I'm just trying to figure out what's best with what I have.
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Old 18-07-2014, 16:25   #9
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Re: Retirement Planning: Help me sort this out

Try here on this sister site.

FIRECalc: A different kind of retirement calculator

Its an online retirement calculator. It starts pretty simple, but if you fiddle with it enough it has some pretty sophisticated bits. It's a good place to start anyway.
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Old 18-07-2014, 16:45   #10
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Re: Retirement Planning: Help me sort this out

Thanks, djmarchand and SVNeko! Thant's kind of what I was looking for.

I'm definitely going to re-evaluate my monthly budget and try to work on some savings. I don't see me maxing it out, but I guess something is better than nothing. Six years is a ways off before I can pull 10%, but I was already planning on rolling it over into a Roth.

My employer has had some ups and downs in the last few years, but my ESOP has never actually dropped, just grown by less. (We seem to be trending back up now) There's a good chance that our ESOP will be all we have. In trying to guess if we'll make it I've figured out the percentage of growth from year to year, averaged it out, rounded it down to get some idea of where it will be in 15 or so years. Am I being foolish?
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Old 18-07-2014, 17:50   #11
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Re: Retirement Planning: Help me sort this out

Ok, a little back of the envelope calculations:

Average annual contribution= $11,000 (what gets contributed just because we're employees, based on income. This would go away if we left)

Average growth percentage: 12.85% (after subtracting contribution)

I ran these numbers through a couple of calculators and I'm getting somewhere near 1.4m at age 60. No way that's anywhere correct, right? (Assuming my company doesn't tank, that is)
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Old 18-07-2014, 18:53   #12
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Re: Retirement Planning: Help me sort this out

If your esop invests only in your own company, and thats basically all you have, you are in serious trouble. Think Enron. Every financial planner, in fact anyone who knows anything at all about investing, will tell you the single most important thing about investing is DIVERSIFY. A good rule of thumb is to have no more than 5% of your money in a single investment.

I think you had better go see not one, but several, financial planners.

Would it not be wise to take on a second job to help build up a cruising kitty?



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Old 19-07-2014, 00:25   #13
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Re: Retirement Planning: Help me sort this out

Yeah right, these people who made a decision 15 years ago to intentionally go on government/employer unemployment benefits for four months of each year and collect over $150,000 instead of working... basically scamming the system. And I'm the bad guy for saying what most others are thinking.

I stand by my original post.
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Old 19-07-2014, 00:45   #14
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Re: Retirement Planning: Help me sort this out

Kenomac,

Those employers also made a decision to start a business in a part of the world where it gets damn cold and they have to make their yearly income in just a few months AND have to pay into the unemployment pool to offset some of the costs involved. And THEY did that consciously. This is a fact of life in the northern tourist areas. Employers are willing to do that because they get good employees back every year whereas they would otherwise have to find new people every year. Continuity actually helps with the business - go figure.

It it ideal? No. Is it fair? No. But northern tourist areas have done that for years and it ain't gonna stop. I am quite familiar with this since most of my family lives in a tourist area - most work year round and eschew unemployment - that is typical. The state is quite aware this is happening and they look at the income and taxes raised in that industry and they consider the benefits a cost of doing business. And this in a red state like Wisconsin, where Gov Scott Walker reins. He wouldn't do anything to change that since, other than a few dairy farmers, all he's got is a few factories and a LOT of tourism. And you won't find a lot of those factories sitting next to cutsey touristy photog studios.

My .02.
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Old 19-07-2014, 00:56   #15
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Re: Retirement Planning: Help me sort this out

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Kenomac,

Those employers also made a decision to start a business in a part of the world where it gets damn cold and they have to make their yearly income in just a few months AND have to pay into the unemployment pool to offset some of the costs involved. And THEY did that consciously. This is a fact of life in the northern tourist areas. Employers are willing to do that because they get good employees back every year whereas they would otherwise have to find new people every year. Continuity actually helps with the business - go figure.

It it ideal? No. Is it fair? No. But northern tourist areas have done that for years and it ain't gonna stop. I am quite familiar with this since most of my family lives in a tourist area - most work year round and eschew unemployment - that is typical. The state is quite aware this is happening and they look at the income and taxes raised in that industry and they consider the benefits a cost of doing business. And this in a red state like Wisconsin, where Gov Scott Walker reins. He wouldn't do anything to change that since, other than a few dairy farmers, all he's got is a few factories and a LOT of tourism. And you won't find a lot of those factories sitting next to cutsey touristy photog studios.

My .02.
I'm originally from California where this unemployment scam goes on all the time as well. I also live at present in the cold state of Massachusetts during the winter months, and the folks who support this scam can't tell me that there's absolutely no work available during the winter. There's plenty of work, just not the sort of work they're willing to do... like move snow. I'm actually surprised a government agency hasn't already been set up to advise folks on how to invest their government handouts so that they can buy a larger yacht someday.

It's no wonder why the country is broke with this sort of work ethic in place. I tell my European friends of this sort of behavior and at first ... they simply don't believe me and say, "how can this be, it makes no sense?" Then they always reply.... "I want to move to America, so I won't have to work."
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