Adjusted Net Annualized Return 9.80%

My Notes at-a-Glance 273
Not Yet Issued ?0
Issued & Current ?251
In Grace Period ?5
Fully Paid ?14
Late 16 - 30 Days ?2
Late 31 - 120 Days ?1
Default ?0
Charged Off ?0

8/26/2014 11:15:57 PM

I've been playing with life tables. How long are you planning to live after retiring?

8/31/2014 6:34:32 PM

35 years

8/31/2014 8:40:44 PM

^^^ hmm, interesting.

If that's typical, that's a very solid ROI that probably isn't in sync with equities markets. Yes, it's slightly below historical average for the S&P, but wouldn't you expect it might be somewhat less volatile?

9/1/2014 1:12:51 AM

^^ How did you arrive at 35 years?

Given that I live to retirement age, I figure that I have ~95% chance of dying withing the following 36 years; i.e., I have only a 5% chance of living more than 36 years in retirement. It's 42 years for the wife. Figuring out how long retirement will be seems like an easy rabbit hole to sucked into, but I'm curious if I'm in the same general range as other people.

^ Assuming you retire from the military, I would imagine you're significantly less concerned about how long you live in retirement.

----

I just realized my question about living after retirement was poorly worded. It was directed at the thread and not David0603 specifically.

[Edited on September 1, 2014 at 11:31 AM. Reason : ]

9/1/2014 11:28:57 AM

Are you concerned with your age at death because you are trying to zero out prior? Why not just play it fairly safe and use 100 or 110 and if there is more than enough then blow it or leave it to your family.

I'm still new to the lending club game but I'm hooked - we'll see once my first missed payment hits.

9/1/2014 3:05:19 PM

My target retirement age is 55. Statistically a couple that age will have at least 1 person live to be 90 so 35 seemed like a good amount. Keep in mind, I'm not talking about zeroing out after 35 years. Even with a lower # like 30 or 25, that's still a very long time. The last thing I want is to be stuck working part time at walmart when I'm 90 b/c of good health combined with a decade of subpar returns.

9/1/2014 4:07:11 PM

yeah I'm not too worried about zeroing out. I mean I don't want to WAY over-save but at the same time I'm not worried about leaving money behind. We're planning on no later than 55 as of now and around 35 years as well.

Additionally, I am not counting on any SS and I am also not counting on any extra income when I do my calculations - both of which are probably unrealistic. Between both my wife and I, I find it hard to believe that both of us would make $0 income after retirement from our regular career jobs but I'm just not counting it in our numbers.

9/2/2014 9:13:25 AM

I'm not trying to zero out, but I do want to plan using a number that's plausible (though conservative). We're currently planning to retire when I'm 60 and my wife is 57. At retirement, life expectancy is 83.3 (23.3 years) for me and 85.7 (28.7 years) for the wife.

I think 35 years may be too short for planning--the wife has a nearly 30% of surviving that long (10% for me). She has a ~10% chance of surviving 41 years and a ~5% chance of reaching 44 years of retirement. So, I'm thinking 40 years for planning purposes.

I switched to the SSA 1980 cohort tables instead of the period life table I was using earlier.

If I were to retire at 55, I'd have a 25% chance of making it past 35 years of retirement and a 10% chance of making 40 years.

9/2/2014 12:21:02 PM

I understand what you're saying but your calculation methods are going to vary from person to person so the age is only one input. One person may choose to use 35 years as their number but include a safety factor into their living expenses (for example, someone calculates their living expenses at retirement then adds a 25% safety factor). Someone else may base their net real gains during retirement at 3%, or someone wants their draw-down ratio to only be 2% etc.

Knowing how many years someone is using is only one piece of the puzzle if you don't know the other inputs they are using. Someone could say "my retirement is going to last me 50 years" until you find out they are assuming 8% returns every year.

Then you also have the fact that spending is not continuous. Most data I have seen shows spending spiking at the beginning of retirement (young and healthy enough and now freed up to travel) with spending slowly declining (but overall declining significantly) toward the middle and then ramping back up toward the end with medical expenses. In most peoples' models, they only account for one annual income/spending number and in many cases the number people use is some arbitrary % of current income instead of actually coming up with a more realistic number.

Lots of factors to consider. In the end, everything you use is a guess and will vary from person to person, but as long as you are using inputs that make sense to you and you are planning, you are way ahead of most.

[Edited on September 2, 2014 at 1:20 PM. Reason : ]

9/2/2014 1:13:34 PM

i'm surprised that you are putting that much work in to it other than to do all of the 'right things'

i started to try to figure out how early i could retire a few months ago and the number of variables is too large to even fathom a guess at this point - great to work towards a goal but guessing what's going to happen with even one variable such as life expectancy in the next 20-30 years is not worth spending a lot of time on unless you are viewing it the same way as when you buy a lottery ticket and dream about the things you'll buy

9/2/2014 2:01:35 PM

Honestly, the reason I put extra thought into it is because the 'right things' aren't always accurate for people - especially those who want to retire early. Additionally, what is the right thing? Putting in just to your employer match? Employer match plus Roth IRA? maxing 401k + maxing Roth IRA? Doing all that + investing extra in an after-tax account (but how much? $100 a month or $1000 a month?).

It may sound like over-analyzing but to me I don't think most people do enough analyzing to determine their actual goal and the actual requirements to meet those goals. The rules of thumb in terms of % of pre-retirement salary to base your post-retirement living on, and how much you should have in your account at X age are shallow and inadequate depending on your goals imo. You'd be surprised at how many people misunderstand these rules and think "if I save 10% of my gross salary b/w 401k and Roth IRA that I can retire at 55 and travel!".

For example, there are many rules of thumb out there that say a good target in your retirement accounts is 1x your salary by age 30 - some even say 1x by 35. However, that number is woefully shallow of what I 'need' based on my actual goals and not just using a rule of thumb. I turn 30 in a month and between my 401k, my Roth, and half of my wife and my's after-tax retirement account, I have a few times my salary saved up and I am dead on my calculated curve based on my numbers.

Am I overdoing it? Maybe, but I'd rather be safe than sorry in this application.

9/2/2014 2:29:46 PM

I don't like to go too specific because I think it will drive me nuts and cause me to penny pinch in my early 30s when I should be spending more on having a little bit of fun.

Personally I'd like to have (at the very least) several hundred thousand in savings, a couple of income generating properties, and my current house paid off. The plan is that I won't spend too much of my savings if I have a few small streams of income (Social Security would just be icing on the cake). And if my savings ever get too low, then I can just sell off one of my properties (hopefully by that time I'll have had one or two for a while and most of it will be paid off). We're about to buy a bigger house and turn our current home into a long term rental and then hopefully into a VRBO after a few years. Long term rental would only net me about $500/month while VRBO could get me several thousand.

Basically I'd like to retire and be a part-time landlord.

9/2/2014 3:25:49 PM

^ Part of the reason I budget the way I do is so that I know the spending/travel/entertainment pot we have is already accounted for and thus it actually helps/forces me to spend money in some of those categories. Maybe it's just the way I think (and maybe it's backwards to some), but because I already budget a healthy amount of money for things like eating out, buying nice clothes, traveling, buying furniture/decor we like and other random discretionary spending I don't ever feel the least but guilty buying nice things because I know it isn't affecting our long-term goals at all.

9/2/2014 3:47:04 PM

http://www.ebay.com/sch/i.html?_from=R40&_trksid=p2050601.m570.l1313.TR11.TRC1.A0.H0.Xbeanie+baby.TRS0&_nkw=beanie+baby&_sacat=0

9/18/2014 1:08:04 AM

if you've got an employer-matching 401k, you should go with that over a roth.

9/24/2014 10:59:51 PM

i have had some money invested in a traditional firm but i'm about to pull a majority of it out to toss in to personal capital and wealthfront - anyone use either of them?

10/8/2014 3:54:40 PM

Never used either, but been an opponent of traditional firms for a while now. Finally got my family to realize this a few years ago and move most of their money to vanguard.

10/8/2014 4:50:43 PM

closer to pulling the trigger on ^^ although it's since changed to wealthfront and betterment - starting small in both and then will see which one i like better and move a chunk over in the near year

11/11/2014 9:49:23 PM

I still use Vanguard for both my wife's Roth IRA as well as mine. And then in addition to that our major taxable account is also with vanguard. I do have an etrade account for a little play money but I've often debated moving most of that to vanguard as well.

11/11/2014 11:07:07 PM

Wife and I are butting heads about what to do with our current housing situation.

We own a 2br/2ba in an upcoming neighborhood. I bought it right before real estate was going back up and I have some really good equity in the house right now.

We're now looking to start a family and are shopping for at least a 3br/2ba house in the same neighborhood. While our house value has gone up, so have all of the others...so everything is pricey. If we sold our house, we'd have more than enough to put down on exactly what we need and maybe even more...and then even have some money to put away.

But I want to keep our current house because our rental market is also really high. I could easily rent our current house out for $300 or $400 more than the mortgage. I see this as a huge retirement bonus. But it would also make purchasing our next home pretty tough. So we might be sacrificing a bit on our next home (less sq/footage, small backyard, etc)...as well as having to tighten the budget a lot just to get by for the first year or two.

Happy wife happy life....but I know I will be kicking myself in years to come if I sell this house now.

11/12/2014 1:54:12 AM

I would want to keep the house purchased at the bottom of the market.

If you rent it out make sure you do not have Farm Bureau insurance, they only have the worst policies for rental properties you can buy.

11/12/2014 3:33:08 AM

^^

yeah I think you're spot on. Unfortunately, (and yeah i'm going to drop a generalization), too many women tend to focus on having the big house and material things now regardless of future financial consequences.

I battle this all the time with my wife. when she finished medical residency and got a $texas job, I suggested we live solely on my salary (i don't do too bad myself), rent for a couple of years and pay off her $200k in loans in 2 years. We wouldn't even really have had to sacrifice our standard of living at all.

but nah. she wanted to buy things. and stuff. and then she wanted a big fucking house. Don't get me wrong. I love this big fucking house. we have a 4 car garage, and two of them are mine.

but I would have rather been free and clear of debt. there are other houses we would have been just as happy in. It's hard to put my foot down on stuff like this when she's making 60% of our combined income. She did agree to hire a financial planner, so i'm hoping that hearing solid financial advice from someone other than me might get her thinking differently.

[Edited on November 12, 2014 at 9:23 AM. Reason : .]

[Edited on November 12, 2014 at 9:24 AM. Reason : .]

11/12/2014 9:23:33 AM

^ What makes mine just as frustrating is that I make about 70% of our income. I also bought the house prior to us even dating and still pretty much pay the entire mortgage every month. Every single person we've brought this up to has said, "You can't sell that house." In an unrelated conversation she had with her dad recently (who is about to retire and move down here), he even mentioned, "I wish I gotten into real estate when I was younger so I wouldn't still be working right now."

She knows I'm right, but I think she wants to get into a bigger house as soon as she can so we can try to have a kid. Personally, I think we could tough it out in a 2br with a kid for a little while. The final compromise might be us just putting down 10% on something now and carrying PMI for a couple years. Paying a couple extra thousand dollars over a couple years so that I can keep a $300k-$400k real estate nest egg is worth it to me.

11/12/2014 9:47:30 AM

Quote :

"putting down 10% on something now and carrying PMI for a couple years."

Probably your best bet. You could also liquidate some of your non retirement investments.

11/12/2014 10:27:33 AM

[Edited on November 12, 2014 at 10:49 AM. Reason : double dribble]

11/12/2014 10:47:16 AM

Quote :

"If you rent it out make sure you do not have Farm Bureau insurance, they only have the worst policies for rental properties you can buy."

FB doesn't cover rental houses any more. They farm you out to some state administered policy, and it is crap.

11/12/2014 10:48:44 AM

A friend of mine has 7 rental houses and two of them were purchased after the down turn. He only makes about $80K a year in salary. They will still finance almost anything, so keep the house and rent it out.

As long as you are in a semi desirable area and the mortgage is almost covered you should be good. Even after the down turn and huge loss in equity I'm back about even after renting my two places out.

11/12/2014 12:39:45 PM

Quote :

" You could also liquidate some of your non retirement investments."

Don't have any of those. We pretty much have a nice sized Roth, this house, and cash in the bank.

^ I ultimately want to do what your friend is doing, but know it will take a few years to build up the cash to be able to do that (and maybe add a partner).

The rental market is just so far ahead of the mortgages down here that it doesn't make sense not to do it.

Ultimate goal is to keep my current 2br/2ba house, rent it out, and move into a 3br/2ba house. After about five years and one or two kids, upgrade to the final house and also keep the 3br/2ba and rent that one out.

Retire in 20 years with two houses paid for that should total close to a million (hopefully more). With a Roth and maybe a few other investments in there...hopefully I'll be sitting pretty.

Might be wishful thinking, but I don't think that's unmanageable at all.

11/12/2014 12:51:06 PM

highly recommend keeping it as a rental as well - we kept our townhouse after we moved out rent covers the mortgage + hoa and then a few hundred on top - any of the headaches of having a rental are far outweigh the benefit in my case at least

11/12/2014 3:03:38 PM

We're doing the same with the town home that was my wife's before we got married. Despite having been purchased at the market's peak, we're in the process of refinancing so that our rent will be covering mortgage, insurance, HOA, with a little extra to spare.

11/13/2014 1:09:08 PM

Quote :

"FB doesn't cover rental houses any more. They farm you out to some state administered policy, and it is crap."

They would have done me a favor by cancelling my policy instead of selling their shittiest policy. If they stopped selling that one, there is a good chance it was due to my complaint to the state insurance commissioner.

11/13/2014 2:51:44 PM

Quote :

"We own a 2br/2ba in an upcoming neighborhood. I bought it right before real estate was going back up and I have some really good equity in the house right now. "

Here is the deal.

You still live in this house, that means you can get the best financing terms, loans not available to investors buying homes to rent. If you have had some solid appreciation your LTV% may be better now as well. Get the best deal on a fixed rate loan you can while you live there, keep that forever.

The neighborhood might be on the way up now, but odds are its still climbing, sell the house and you lose your position. Rents are ridiculously high right now. I think eventually they will flatten or drop if luxury apartments keep being built all over Raleigh. Even if that happens it means the rent vs. own ratio around here will then be swinging back toward own, which also drives up demand for resale homes. Sell it then if you choose too, or keep it for retirement, either way you it will be worth more later than now. In the mean time keep that ridiculously low interest rate and save the cash flow off it for a bigger house.

I still have my college townhouse and use the $300 or so a month in profit to pay my personal house payment. If I actually had some equity on that one it would be bringing in over $500 a month, but when I lived there I kept cash out refinancing it like a dumbass.

I feel like if you want to raise your net worth your plan is better than your wife's. Try to figure a way to get the house she wants without letting go of this asset that you obtained at probably the best time in our adult lifetimes to buy it.

11/13/2014 3:06:43 PM

Quote :

"They would have done me a favor by cancelling my policy instead of selling their shittiest policy."

I don't disagree, but you probably had a shitty agent. When I was talking to my agent about moving a house to a rental policy, he outright told me to go to state farm for that instead of getting the one FB now sends you to, which is underwritten by the state.

11/13/2014 3:21:18 PM

jbrick83: not planning to build any sort of after-tax retirement account? For me I feel like that is a key to retiring early unless you have several rental properties that you will pull your income from. We have the 401ks and the Roth, and we know we can pull the principle out of the Roth penalty free, but I feel like we will need/want 'bridge' funding to delay withdrawing from our tax-advantaged accounts when we retire early.

I agree with the others about keeping it as rental if possible though.

[Edited on November 14, 2014 at 12:46 AM. Reason : ]

11/14/2014 12:37:56 AM

I plan on it at some point, but just don't have the funds to do it right now. This next house is going to max us out for a bit, but my practice keeps getting busier and I'm close to having my full investment back from the restaurant and ready for distributions. So hopefully in about a year or two from now I'll have some money to mess around with.

11/14/2014 8:01:54 AM

sorry yeah I didn't mean to question why you weren't now - was just wondering what was in your plan.

11/14/2014 12:19:40 PM

No worries.

I actually wouldn't mind the rental property route (in addition to renting my "old house[s]" out), but there's no telling what the housing market is going to be like in the future. If I had the funds, I'd purchase a couple right now. Rent is so damn high here that its killing me that I can't get into it.

Ideally I'd still be in the restaurant game as an investor and getting distributions until I croak...but that's about as unpredictable as real estate. It would also be nice to sell my practice and maybe stay on in a "mentor" type role and just take a case or two every now and then to keep some cash flow coming in.

Or I could just hit the lottery. I buy a ticket every time we go on a road trip.

11/14/2014 1:57:10 PM

I still don't understand after Tax Roth's. I had a tiny amount in my Roth and cashed it out early, because it was insignificant.

Has anyone setup a 401K if they are self employed?

11/14/2014 2:08:56 PM

^ I'm guessing you are referring to a Roth IRA? As in, the dollars invested are after-tax? But if so, I don't see how you don't view them as advantageous.

11/14/2014 2:20:59 PM

Quote :

"I don't see how you don't view them as advantageous."

11/14/2014 3:41:54 PM

In my case I had like $2K in it, I get why they are advantageous, but didn't think the $2K was worth keeping in it since I can't contribute to it any longer.

I am currently self employed on a long term contract with 1099, so am more curious about setting up a 401K. I've been mostly freelance with a couple of "real jobs" over the last 10 years. I don't understand much about what differentiates a 401K vs a Roth/Traditional IRA. I know a Roth you don't pay taxes on the money at exit and Traditional you don't pay taxes on it now IIRC. If the 401K was either of those it'd be great.


[Edited on November 14, 2014 at 4:19 PM. Reason : a]

11/14/2014 4:14:49 PM

Also, Lending Club Check after a year of use:

9.06% ROI currently.

My Notes at-a-Glance 559
Not Yet Issued ? 18
Issued & Current 501
In Grace Period 0
Fully Paid 29
Late 16 - 30 Days 2
Late 31 - 120 Days 6
Default ? 0
Charged Off ? 3

[Edited on November 14, 2014 at 4:22 PM. Reason : a]

11/14/2014 4:22:13 PM

Quote :

"I can't contribute to it any longer."

If it's a roth ira you can contribute if you have earned income. If it was a roth 401k you could have rolled it over into a roth ira.

Quote :

"I don't understand much about what differentiates a 401K vs a Roth/Traditional IRA"

401k is through your employer and the money comes out prior to you getting your paycheck.
The IRA is only available if you have earned income, however you can set that up with any firm.
The 401K has about 3X the contribution limit of an IRA however you are usually restricted to certain funds where as the IRA provides you with more flexibility. Most people contribute to both.

11/14/2014 4:41:58 PM

I'm at 12.26 until I adjust for past due notes and then that becomes 2.55

My Notes at-a-Glance 303
Not Yet Issued ?0
Issued & Current ?257
In Grace Period ?1
Fully Paid ?28
Late 16 - 30 Days ?2
Late 31 - 120 Days ?12
Default ?1

11/14/2014 4:45:59 PM

Quote :

"401k is through your employer and the money comes out prior to you getting your paycheck. "

I remember seeing this:

https://www.fidelity.com/retirement-ira/small-business/self-employed-401k/overview

I missed the boat on the Roth. Should have actually saved something earlier in my career. I cashed it out when I bought my condo in like 2008 and never recovered it to anything substantial after.


[Edited on November 14, 2014 at 5:07 PM. Reason : a]

11/14/2014 5:00:09 PM

It's never too late to save for retirement and even minimal contributions add up over time. Compound interest is a wonderful thing.

11/14/2014 8:28:19 PM

^^ Srsly, are you 70 or something?

11/14/2014 9:16:13 PM

There is an income limit right? For IRA it starts at $91K and you can still contribute up to some amount, which from memory is like $150K or something. The 401K has one too but you can contribute as long as you haven't hit that amount YTD.

11/15/2014 12:56:06 AM

In 2014, the following income limit rules apply to Roth IRAs:
Single filers with modified adjusted gross income up to $114,000 can make a full contribution. ...
Joint filers with modified adjusted gross income up to $181,000 can make a full contribution.

11/15/2014 1:31:53 AM