Category Archives: Case Studies

Why Your Two Cents Matter….Literally!

Mrs. Root of Good decided to pick up the keyboard and pen a few thoughts on work and the decision to finally pull the plug and join me in early retirement.  Here’s what she has to say:

What will it take for me to leave the corporate world and pass the day with Mr. RoG on the back deck laying on the hammock sipping margaritas?  Overall, my job is pretty easy and the pay is good. I have very good benefits, flexible hours and my managers pretty much let me do what I want as long as the job gets done.  And I’m due to take my three month sabbatical any time now.  So what will it take for me to leave my job?  I do want to spend more time with our kids and travel more.  I get jealous when I come home exhausted and Mr. RoG has spent hours outdoor reading.   It’s a tough decision.   If I work for just another year, my salary is enough to pay for our yearly travel expenses for many years!  But there are times when I wonder if it is worth the headaches to stay at work.  There are times when I feel what I’m doing is just silly and a waste of my time!

In the corporate world, we value our customers (they are the reason why we exist) and our number one job is to keep the clients happy!  And when the customer brings us millions of dollars in business we bend over backward to keep our client happy.  Recently, I almost quit over two pennies.  My contact at the BigBucks Investment Group (not their real name, but for confidentiality’s sake, lets call my client “BIG”) may have quit over the two pennies!  I will never know but my guess is my contact felt the same way as I do.

 

So what’s up with the two cents?

Each month, I reconcile account balances for our clients.  Many months, we are off by a penny due to rounding.  I have to manually correct and reissue a new statement to the client.  I spend an extra fifteen minutes to fix the balance. I’m not sure what my client does over this penny.  All I know is between the client and I, we spend much more than a penny to fix the one penny issue!  But OMG, we haven’t had a difference in two pennies until five months ago.  The two penny difference cropped up in May but we didn’t discover the difference until June when we reconciled the May balance.

In June I fixed the two penny difference and resent the statement. My contact at BIG confirmed all is good and left the firm a few days later.  All was good with me and my accounts and at the end of June, I went on my five week vacation.  Upon my return from vacation I was greeted with slew of emails going back and forth between client BIG and my coworkers over the two penny difference.  My coworker was kind enough to leave me alone and let me catch up on my emails.  After reading all the emails regarding the two cents difference, I was boiling inside and said to my co-worker…WTF!  Great thing about working at an investment bank, we can use the profane language out loud like our NY coworkers and it’s completely acceptable!

Apparently, my BIG contact left the firm but his coworker did not realize we resolved the two penny difference and must still have the old statement.  By the time my coworker resent the statement in July, it was too late and my client said they could not accept the revised statement.  To make the client happy, my adjustment on the two cents was reversed and adjusted with the July numbers.  To make a long story short and without going through all my emails (I can’t keep all the facts straight of when the two cents adjustments were made and reversed), the client was still not happy.

We ended up having a conference call for the second time to resolve the two cent difference.  A third call was made to finalize the numbers.  After many additional emails, a final email was sent to confirm the balances and a final statement was reissued at the beginning of October.  So far so good.  Between myself, my coworker and my manager, we spent many hours resolving this two penny difference!  We all feel this is crazy and a waste of everyone’s time.

Damn, if I could, I would send them a check and give them my two cents!  But no, we must make the client happy and do as they say to keep them happy.  After all, they give us millions of dollars in business each year.  For me, I shake my head and wonder if this is why my contact at BIG left the firm.  So many times I just want to tell my manager, “you take care of this so I can move on and focus on my other clients and do something else that is productive!”  These two cents really stressed me out and make me wonder if what I’m doing is meaningful enough to stay in the corporate world.

 

Mr. RoG’s thoughts:

If you think this story sounds bad, just think how challenging it was for me to be a dutiful husband and listen to the entire saga!  Luckily I was able to lay in my hammock while being supportive.  

But seriously, this seems totally asinine and serves as a great example of why so many get frustrated and upset with the corporate world.  I wish I could tell Mrs. RoG (and others) that early retirement is completely free of stressful annoyances like the “two cent issue”.  Unfortunately, we still have to deal with routine irritations from things like health insurance explanation of benefit letters that make no sense, crazy bills from the cable (internet) company, and navigating complex phone menus to fix things that other people messed up.  

Mrs. RoG (perhaps due to my ambivalence) is also experiencing a touch of the “one more year syndrome”.  It’s a phenomenon where soon-to-be early retirees tell themselves year after year that “just one more year, and I’ll have even MORE money!”.  An extra year of Mrs. RoG’s labor (which after her vacation time, paid holidays, and her sabbatical would be more like seven months of actual work) would yield enough money to fund an extra two or three years of our early retirement budget or greatly expand our travel budget for many more years.  However that’s one more year where she is gone most of each week day and not enjoying the early retiree lifestyle.  

 

 

Please input your two cents.

 

 

(cover photo courtesy of flickr user Heartlover1717)

Case Study: High Earning Attorneys Shun High Spending Lifestyle

From time to time, strangers stop by Root of Good to say “Hey, what’s up!  I like your site!” or “Your journey to financial independence is awesome.  I’m almost there, too!”.  The latter type of comment arrived in my inbox a few weeks ago.  Except it wasn’t from a stranger.  It was Jane, an old law school classmate.

After graduating from law school ten years ago, Jane practiced as an attorney and ended up in Washington, DC married to another attorney.  Most 30-something attorneys working at big law firms in big cities are making a ton of money and spending most of it living the high life.

Jane and her husband made the conscious decision to split from the herd of their high-spending colleagues and do the bizarre.  They paid down huge law school debts, saved boatloads of money, tactically bought a home at fire sale prices, and carefully managed their expenses and investments to bring about a certain level of financial independence in their mid-30’s.

Though they won’t be retiring early immediately, their money savvy behavior will allow them to execute a “coup de career” very soon so they can get back to living life on their own terms. Immediately sensing a great story from an old friend, I asked Jane if she would be kind enough to let me share her journey with the readers here.  What follows is her mostly unedited answers to all of my questions:

1. How old are you and your husband?

I (Jane) am 34 and Sam is 35.

RoG note: names fictionalized for anonymity.

2. How long have you worked full time (post-college/law school)?

10 years although we both worked during college part-time during the school year and full-time in the summers.

 

3. You both went to out of state law schools, correct? How much debt did you incur and how did you manage to repay it so quickly.

We had each rung up a solid $100,000 each in debt from law school student and private loans plus about $10,000 in a car loan, too. We saved money by renting in older buildings and units (rather than fancier, newer loft-style ones) and not rushing to buy a house when the real estate market was at its peak in the Washington, DC area. We set a plan for taking each paycheck and putting 2/3 of what was leftover after paying household bills to student loans and 1/3 to savings for a down payment on a house.

Everyone told us we were crazy and that student loan debt is “good debt”.  Since we weren’t from trust funds or family money, we had a lot of fear about debt and how it would limit our financial freedom and freedom to choose the direction of our careers and free time. In the legal profession, you quickly meet people who live at or well above their significant means such that they are tied to maintaining the high level of income that law firm jobs can offer but where job security becomes increasingly precarious year after year with no realistic career options outside the high paying firms. We shared one car, lived in Virginia where state income taxes were less than in the District of Columbia, and rode the metro whenever possible. After 4 years, we had paid down substantially all of our student loan debt and saved a huge chunk of money for a down payment on a house as well as a $25,000 emergency fund that we kept in an E*TRADE (now CapitalOne360) account.

 

4. Where are you working these days?

One of us works at a big law firm and the other works for a small law firm in Washington, DC.

 

5. Do you want to share your salary history?

Our first year after law school, our combined income was around $140,000. That rose over the years to around $300,000 today. Since the legal market crashed not long after we graduated, we really got lucky to have jobs that held up through that rough period otherwise our school debt could have been a disastrous investment in our future careers. Looking back, we both now say that going to those out of state law schools where we incurred all of that debt was the biggest gamble of our lives (and probably a poorly informed decision on both of our parts)! Above all else, we were truly blessed to land the jobs we have held over the last 10 years as they gave us the vehicle to start paying off debt and amassing savings and have made our budding financial freedom and independence possible.

 

6. You probably face a high tax burden each year. What strategies, if any, have you used to save on taxes?

We haven’t done enough here. We are almost as debt-averse as we are 401k-averse. We always envisioned retiring way sooner than we would be able to access our 401k funds without incurring a penalty and, generally, have taken the risk that paying taxes now even at our higher tax bracket may not end up being much different to paying tax on those same funds 30 years from now when the tax rate structure may be very different. We do have one 401k employer account and also have a health savings account we put money in each year, plus we have a child, but generally we make too much money combined to take advantage of a lot of other tax benefits and we did not consult soon enough with you and your blog about how to think differently about that!

 

7. I understand you both plan on quitting your law firm jobs soon. Will you call it “early retirement”, “taking a break”, or “becoming a stay at home mom?”. Do you plan on telling work colleagues one thing and telling close family and friends the full story?

My husband is leaving his firm to work as in house counsel for a company where we can have health benefits going forward.  I plan to quit my full-time law firm job to have more time at home with my son and possibly open a solo law practice on the side on a very part-time basis. We hope to have more time for family and things we enjoy now that we have paid down debt, paid off our house, and saved a substantial amount such that we don’t both need to be at full-time jobs. I may tell colleagues I’m pursuing a solo practice rather than becoming a mostly stay-at-home mom only because I feel like it is none of their business what I’m doing with my career or life! All of our friends know how careful we have been paying off debt and saving and have been joking for years now about how we will retire years before them, so they will not be surprised when I leave the firm at my own choosing just because I can. 9. What are his thoughts on your financial independence and slowing down on the career? Who’s idea was it to pursue financial independence? He is excited to change jobs and do something more predictable schedule-wise than being at a small firm and is excited for me to walk-away from my job and do something different if I want or do nothing at all. Since we were both equally debt-averse and freaked out by the amount of debt we brought to the marriage from law school, we decided years ago that we had this joint vision of paying off debt and quickly amassing savings so that we could work at Starbucks if we wanted and still be very financially secure without having to dip into any savings for years to come so that those investments just continue to grow.

I think “on our way to early retirement” or “career renaissance” are good terms to describe us right now. We are maybe a few years still from really cutting the cord. I’m sure people will be like “of course you are able to downsize your careers with your big salaries you’ve had for years!” But what is amazing is the number of people we work with who make more money than us that have no savings, have overextended themselves financially and could never think about shifting to a single income home or less.

RoG note: That last sentence is the crux of why I thought Jane and Sam’s story is so noteworthy.  Sure, they made a very good income, but they managed to save a large part of it even though most of their peers were doing the opposite.  It all comes down to choices.

8. You live in an area of the east coast where the cost of housing can be very high. You combated the high housing prices by buying a foreclosure. Give me details (how much did you save versus buying at retail prices?, did you do most of the repairs yourself? Large house, small house? How does it compare to what your friends and high-earning colleagues own?)

We saved for 4 years and when the market sank, we started looking for condos, but the condo fees (averaging $500/month if you are lucky) made us reluctant to select a condo and the space limitations made us feel like we would quickly outgrow the space. Our realtor showed us a townhouse outside the beltway that was still metro accessible by only a few blocks. We got a 4 bedroom, 3.5 bath, 1800 sq ft townhouse for $200,000 less than the former owner paid and the current market value today, only 6 years later, is over $100,000 more than what we paid in 2008 and hopefully growing. The house was in good condition and only needed carpet cleaning, painting, and elbow-grease. Some people probably consider it a starter home, but we plan on it being our long-term home or eventually renting it out (around $2800/month) as extra income if we relocate geographically someplace much cheaper.

 RoG note: we ended up in a similar sized house (same square footage with one less bathroom) but in Raleigh the price is much lower.  

9. You bought a second foreclosure recently? Do you plan on using it as a vacation home or as a rental?

We did. It was probably crazy but we had this idea of scooping up another foreclosure and fixing it up to be a weekend/vacation home and maybe future permanent home. This one has needed significantly more work and elbow-grease than our first house, but we are having fun watching YouTube videos to learn how handy we never knew we were! We got it for about $100,000 less than the former owners paid. Right now we have a $1000/month mortgage payment but we are hoping to quickly pay it off.

RoG note: I’m a big fan of DIY when possible, and youtube is also my friend.  

 

The Shenandoah National Park, just a couple of miles from their new house.  Photo credit: Jane

The Shenandoah National Park, just a couple of miles from their new house. Photo credit: Jane

 

10. Do you plan on moving to a lower cost of living area once you quit working?

Probably not. Our property taxes are around $4,500 and our house and car are paid for. Other than paying gas ($30/month), electric ($75/month), cable/internet ($160/month), and our cell phone bills ($160/month), we don’t have many other expenses besides food and clothing and we aren’t big spenders when it comes to either. We love shopping at Kmart, Big Lots, and IKEA and don’t care about name brands.

 RoG note: The biggest costs of living in a high cost of living area in the US tend to be housing costs.  Not having a mortgage makes living in the city a lot more affordable.

11. What will you do with all your free time once you quit working full time? Any big plans? Travel plans?

I doubt it. We like traveling to see family and friends in the US too much and roadtripping wherever we can. I think we view foreign and big travel plans as something we’ll do when we are in our 50s. In the interim, we have Hilton Honors credit cards that earn free hotel stays without an annual fee, so whenever we roadtrip we don’t pay for our hotel costs. Plus, with advance ticket purchases, you can get really cheap Amtrak train tickets from DC, including to NYC for $98 roundtrip. We mostly want to start enjoying family time with our son. Kids grow up so fast that we want to take advantage of this time that we won’t get back while he’s young and not feel like we are at jobs that “own” us or come before our family. We also have various hobbies like playing music, learning photography, and other things we’d love to find time for. I saw how you are learning a foreign language in your free time and that’s exactly the kind of thing we want to do with our free time.

 RoG note: In other words, I don’t think Jane and Sam will get bored easily.

 

Cape May Lighthouse

Cape May Lighthouse

 

12. What do your coworkers and friends think about your financially savvy and frugal behavior? Any funny/awkward moments?

Everyone gives me a hard time about how I won’t or VERY infrequently will pay for a cab ride home even if working late. I’ll always take the metro if I can – you can’t beat a $2.75 ride home! Some coworkers are jealous of the financial freedom we have gained with our strategy to pay off debt and save and invest as much as we can. It has taken willpower to not get caught up in our salaries and a fancy lifestyle here in DC. A dinner out for us is going to Baja Fresh or Chipotle or ordering Dominos pizza.

 

13. You have a young child. How do you plan on raising him to be financially responsible and frugal?

We have a 529 where we are putting $1,000/month to save for his future education. We hope we are already teaching him by osmosis that you roadtrip when you can, you ride the metro to get around, that an evening in the local park beats having our own gigantic yard, etc. He’s still only a toddler so we haven’t talked about whether we’ll give him an allowance someday or anything like that. We received a lot of hand-me-down toys and clothes when we started a family and talk with him about how his things used to be Jake’s or Braeden’s. We are trying to teach him that it’s good to reuse things and hope to have him be part of the process of handing down his (handed down) toys and things he’s outgrown to others who can use them next.

 RoG note: This approach makes a lot of sense.  Teaching by example is the best way to instill knowledge, skills, and values in impressionable little minds.  At age 8 and 9, our kids are very aware of costs, value, and making smart choices already, so I have no doubt Jane’s approach will pay off.

14. How do you plan on withdrawing from your investments and living off your savings? Do you have most of your money in a taxable brokerage account? Are you planning on spending a fixed amount of money each year?

We’ve invested our savings in Vanguard almost 50/50 between dividend earning bond and stock index funds. We hope to not start living off our savings just yet and first start living on a significantly reduced income while still saving a little, too. We hope to just keep growing our savings for another 5 years before we are at a place where we could consider just withdrawing the dividend income each month rather than reinvesting it but hope to not touch the principal or base of our savings until much later in life.

 

15. What kind of cars do you drive and why?

We have always bought used cars until our hybrid Prius which we bought new in December when dealers were trying to move the prior year’s inventory. We traded in our used car at that time toward the purchase and set a budget that we didn’t want to spend more than $12K out of pocket toward whatever vehicle we purchased and it needed to be one with a high miles per gallon capability. Sharing one car has been a huge savings over the years, too!

RoG note: We keep our auto costs low, too, and are thinking about dropping down to one car for the whole family once Mrs. RoG joins me in early retirement.

16. Anything else you want to mention that helped you get into the great financial spot you’re in today?

Being on the same page as a couple about the financial goals we had for ourselves and strategy for getting there – that’s the secret sauce!

RoG note: No way I can disagree with that!  That’s probably the biggest background contributor to growing wealthy at an early age.

Overall Thoughts

Right before Jane reached out to me, I saw another one of those articles that explain how big six figure earners are going broke.  Not long ago I saw another article proclaiming how difficult it is to live on $400,000 in the big city.  Or how $500,000 a year ain’t what it used to be given today’s prices for yachts, maids, nannies, and private ivy league preschool tuition. Then I hear about Jane, who fits squarely within the big earning circle.  But they are different.  They are nowhere near going broke; they are financially thriving!  Which is what every single high income household should be doing, but don’t for some reason. Jane was one of the smarter high earners and figured out that you can actually save a lot of money if your expenses remain lower than your income.  Yes, you read that correctly.  When your expenses are lower than your income, you too can save money!  Such a simple concept, yet so many high income earners don’t understand it (or at least ignore the concept to their own financial detriment). Thank you, Jane, for providing an excellent counterpoint to the too-common sensationalist “barely surviving on $500k” per year articles!

 

Do you know any Janes and Sams?  Or are you a Jane/Sam?  

 

 

High Adventure Early Retirement – Part 1

Team Dixie Chickens!

(Guest post from my friend Sarah, co-founder of Team Dixie Chickens)

Hesitating in the doorway of my mother’s hospital room, I’m distracted by the usual thoughts in such situations, like hoping she’s getting over the pneumonia (she is, and is discharged the following day) and wishing that hospitals didn’t smell so weird, so I was unprepared for the white-coated person standing idly in the room chatting with Mom. Ever proud of our travels, Mom immediately announces to the Physician’s Assistant that this is her daughter who is traveling around the world in a school bus.

I smile and wait for the inevitable question, which I’ve judged accurately from her expression during the introduction to be “I’ve always wondered how you people can afford to travel so much: you are so lucky”. Ah, that.  How indeed do we travel, at 43 and 50 years old, so much?  My flip answer to the cynical hospital worker was “we live small”, but that’s not the whole answer, of course. But she wasn’t interested in the whole answer, better to just imagine me as a lottery winner, and go back to her regular programming.

 

The Adventure Bug Bites Hard And Never Lets Go

Travel and early retirement go hand-in-hand, or at least they have for me and my husband of 20 years and fellow adventurer, Don.  Mostly frugal in our twenties, we bought an old beach house shortly after our wedding and put sweat equity into improvements and upgrades during our ten years there.  We were enjoying the beach lifestyle, but didn’t have any specific long-term goals until one fateful day in 2000 when Don suggested we should try living aboard a boat sometime. That was the catalyst to sell the beach house, build a modest home in the country, and quit our jobs for a long summer aboard our small but sturdy sailboat, the Misty Morning.  We set sail in summer 2003 for the Abacos Islands, leaving behind our steady jobs and relying on a small savings stash to help our reentry in the fall.

When we returned, our energy for this alternative lifestyle was cemented. What if we could have a life with intermittent adventures followed by retirement early enough to still have the boldness required to keep up with our ever-growing bucket list? This became our central goal.

First up back in 2003 was to tackle some creeping consumer debt, about $30,000, while finding and settling into new jobs. We used good old intensity and focus to get the debt paid, holding off on adding to our modest retirement savings while we put our frugal muscles to the test.  Next was to add the mortgage to our debt free plan, paying off the remaining balance of $60,000 owed. Our home was built for $234,000, most of which was paid by the income from the sale of our little beach place.

The mindset and sacrifices we made to get to that point, of being completely debt free, was what leaped into my mind when I heard that cynical “you people are lucky” from the PA in my mom’s room.  How very hard it was to skip vacations, drive junky old cars, never go out for more than a few dinners a month, and see so many of our friends spending on things we could not afford.

The mortgage was paid off (with an appropriate mortgage burning party) in August 2007, and we escalated our retirement savings at the same time, eager to make up lost ground and growth.  Since then, we have used the frugal habits we learned by debt repayment to put our retirement assets over the half million mark, gone on some amazing trips, and reached our latest goal, for Don to take a sabbatical from work to mark his 50th birthday.

As our adventuring and retirement dreams have evolved, we have discovered that trips organized with like-minded folks have proven to be the most fun for us.  To that end, we signed up in 2011 for something called the Mototaxi Junket, which is a 1,200 mile charity rally held in Peru each year.  Organized by The Adventurists, a British-based company, the Junket combines adventure and charity fundraising in a truly insane way.  The Junket began on New Years’ Day 2012 and we were in Peru for a total of four weeks.

The mention of four weeks brings us to our jobs and vacation time.  We have always worked for small companies that offer more flexible arrangements for time off, which works well when you want more than the typical two week vacation each year.  Encouraging my bosses to share in the excitement of our trips has also helped; when I worked for a sailboat hardware company, my boss helped us outfit the sailboat with invaluable advice and discounted purchases. My current employer, a small financial services firm, has been especially patient with our dream trips, granting me time for planning and executing these logistically challenging trips.

 

Back to Peru

We named our Junket team “Dixie Chickens”, after a favorite Little Feat song played at our wedding.  We procured t-shirts and coozies to help us raise money for our chosen charity, Practical Action, a group that aids farmers and rural villages in Peru with technology-based solutions to water, electricity, and animal husbandry challenges.  In the end, we raised over $1,000 for this worthy charity, fulfilling our requirement with The Adventurists and giving us a decent excuse for the inevitable questions of “why do this crazy rally in these silly little motorcycle-sofas?”.  For charity, of course!

Our first view of the mighty mototaxi confirmed our fears: these were more like a minibike with a back seat, incapable of cornering, accelerating, or climbing hills without a push from the back seat rider. Great, what a perfect choice to drive across the Andes Mountains!  But we, along with 35 other intrepid teams, set off on New Year’s Day 2012 to drive from Cusco to Piura, Peru in the tiny little taxis.

 

mototaxi5

 

Our first day ended with a blown engine.  We didn’t even make it out of Cusco before the little 125cc beastie gave up the ghost. Comforting us was the fact that 8 other mototaxis met the same fate. We spent another day and night at a garage replacing the engines with slightly more robust 150cc engines before again starting out for the tallest of the Andean mountains, two days behind the other mototaxis.

 

mototaxi4

 

Fortunately, we discovered that some of our friends we met in the days of practice driving had been waylaid by engine troubles just a day’s drive away, and were waiting on us before striking off again.  Being able to travel in convoys felt a lot safer, as the little vehicles are hard to see on the winding mountain roads by the huge transport trucks and innumerable buses that ply the same stretches of gravel, dirt, and sometime paved roads.

The next days passed in a blur of driving, talking our way out of tickets by policemen at nearly every little town, and finding ways to have fun while still making progress. Our group of nine Americans proved to be great company while traversing some of the toughest roads we’d ever seen.  From the 14,000 foot Occe Occe pass, to the searing desert heat of Nazca, we ran the gamut of temperatures, all the while being totally exposed to the elements—only a plastic top kept us shaded but did little to prevent blowing rain and at times, snow from coming in, and blasts of hot sand in the desert blown into the air by passing trucks.

 

We’re Number One!

Amazingly, we somehow were the first team to arrive at the finish line! We’d managed the 1,200 miles from Cuzco to the dusty seaside town of Piura in just nine days, even with some time off in legendary spots like surfer heaven Huanchaco Beach and the oasis town of Huacachina, home to death-defying dune-buggy rides.

Dune buggies

After riding the high of our first place finish in the Mototaxi Junket, we spent a few relaxing days at the nearby beaches of Mancora, savoring our friendships with fellow adventurers.  Before long, our itchy feet got the better of us, though, and we decided on impulse to take a trip into the Amazon jungle region of Peru.  After all, that was the only area we hadn’t visited by mototaxi!  We were able to get a last minute booking at a jungle lodge near Iquitos that offered canopy walks and low-key exploring of the Amazon River area.

A quick couple of flights brought us to our jungle home, and a whole different world.  Unwittingly, we’d stumbled into the kind of vacation that Mom’s clinician had envisioned when she asked how we could afford to travel.  Yes, the dreaded all-inclusive.  After many wild and unpredictable days on the road, here would be our luxury downfall.  Instead of dirty rooms in sketchy towns, we had air-con and our own bath. Instead of scavenged food from roadside stalls, we had set dinner times and assigned seating. And finally, instead of rowdy and adventurous fellow travelers we got stodgy couples with binoculars and walking sticks.  After realizing the folly of our booking, we opted to do our best to enjoy this brief visit to an alternate vacation universe.  The canopy walk was incredible, our walks along the jungle with our guide were enlightening, and the boat rides through the Amazon in search of pink river dolphin and piranhas were great fun. The Loreto province of Peru is the largest “state” in Peru, but the least populated and most distant from the rest of the country in attitudes and perspectives. In fact, many Peruvians who live along the coast or in the mountains have never even traveled to this remote area, due to there being only air transport and no roads to reach its largest city, Iquitos.

Some quick back-of-the-envelope figuring helped us understand why we could spend a month in Peru and our fellow travelers at the lodge were only staying a week at best.  The cost.  Our few days at the lodge, plus the airfare there and back to Lima, were almost as much as we’d spent the entire rest of our trip.  By choosing an adventure, and seeing the country up close and personal on our tiny mototaxi, we’d avoided the predictable and boring “vacation” option of the all-inclusive folks.

 

mototaxi2

 

The Short Bus

Flying home after 30 days in Peru, we started thinking of our next adventure.  Which of course leads us to the craziest idea we have had so far: circumnavigating the world by short bus! We started with a desire to take an American school bus on the Mongol Rally, a 10,000 mile charity rally that starts in England and ends in Mongolia.  Upon further research, we discovered that the bus could not be donated in Mongolia as most of the rally cars are, because of arcane laws to do with heavy equipment imports. Rather than give up on the idea, we decided we’d just keep going, all the way around the world, and bring the bus back to our own back yard.

First step: find a bus.  Our search led us to a 1991 Thomas “short” bus, originally used to carry school kids around the hills high above Asheville, North Carolina, and finally used as transport for a defunct tour company. A deal was struck for her “as-is”, after our test drive resulted in a small fire starting from the frozen front brakes.  We didn’t even own the bus yet, and she was providing adventure!

To be continued…

 

Root of Good notes: I’ve enjoyed living vicariously through Sarah and Don’s journeys over the years.  I hope you get a kick out of their adventures too!  Even though they are a few years older than me and Mrs. RoG, they make us look like old fogies.  The neat thing about Sarah and Don’s journey to financial independence is that you would never know that’s their goal when you see them having all these crazy adventures.  They just focus on what brings them true value and joy in their lives.  

If you want to keep in touch with their adventures, check them out at Team Dixie Chickens.  

A Simple Way to Retire 15 Years Earlier

I wanted to further explain how low expenses lead to early retirement by taking a look at a case study.

Be a Super Saver

Let’s explore the lives of two fraternal twins, tragically torn apart at birth (not in the separating conjoined twins sense, but rather in the figurative sense).  To protect their true identities, I have carefully crafted cover identities.  Each sibling led similar lives.  They went to college, studied engineering and obtained good jobs right out of college at age 21 earning $60,000 per year.

The young man, Saver Sam, is a financially responsible individual.  He tithes each paycheck, piously placing 10% of each pay period’s payment into his 401k’s collection plate.  That amounts to $6,000 per year contributed to his 401k.  Not a bad way to go about saving for retirement.

Saver Sam’s fraternal twin Super Saver Samantha, sharing only 50% of her genetic makeup with Saver Sam, is a slightly more frugal individual.  She is a really good saver.  Some say she’s a super saver (hence her name).  To appease the retirement gods, Super Saver Sam sacrifices 30% of her hard earned paycheck on the alter of savings.  To be more exact, she puts $18,000 per year into her 401k and IRA.

Super Saver Overview

After taking out investment contributions, Saver Sam is left with $54,000 per year which he spends diligently.  Super Saver Samantha only has $42,000 left each year, which she gladly spends in a more frugal manner.

Sam and Samantha both envision retiring early, and both keep saving toward their goals.  Since Sam spends $54,000 per year, he must save around $1,543,000 to be able to withdraw $54,000 per year to cover his lifestyle (at a 3.5% withdrawal rate).  Samantha on the other hand, only needs $1,200,000 to fund her $42,000 per year spending habit.

Let’s take a look at when Sam and Samantha can reach their retirement goals.  Remember Samantha is saving more than Sam each year, so you expect her to save more money and reach her retirement goal sooner.

super saver lifetime investments

Sam does alright.  He is on track to meet his savings goal at age 59 with $1,548,339 in his investment portfolio.  Then Sam can retire and live happily ever after to a ripe old age.

Samantha does even better!  At the young age of 44, Super Saver Samantha passes the $1.2 million mark and grows her investment portfolio to almost $1.3 million!  She reached her retirement goal a full 15 years before Saver Sam will reach his goal.

Tropical Beach

Around age 46 or 47, Sam is cruising the internet, looking for his long lost twin sister.  Eventually he finds her online profile and the travel blog she started when she retired at 44.  What?  She spends a month or two each winter snorkeling and surfing in a low key (but warm) Latin American beachfront community, and lives a generally awesome life.  Without working ever again.  But that’s unpossible for someone her age!

Sam gets a little jealous at this point, but figures Samantha might be able to give him some tips to get to early retirement.  Sam and Samantha start comparing notes of their lifestyles over the last couple decades.  They found out they both lived comfortable middle class lifestyles in different parts of the US.  Sam and Samantha both have decent houses and good cars, but Samantha is just a little more savvy and manages to spend a little less.

Her mortgage and housing costs were around $400 less per month because she bought a slightly smaller house in a slightly less swanky neighborhood.  Compared to Saver Sam, Super Saver Samantha saves on average $300 per month (more some months, less other months) by buying reasonably priced sedans instead of the latest luxury models.  Samantha also keeps her cars for seven to ten years before replacing them with a new or new-ish car.  Sam lives it up and leases beautiful luxury cars and manages to score a new one every three years when the lease expires.

Samantha also managed to save an additional $300 per month in taxes by contributing $18,000 per year to her 401k and IRA instead of the $6,000 that Sam saved.  Add up Samantha’s savings each month: $400 on housing, $300 on cars, and $300 on taxes.  That’s $1,000 per month or $12,000 per year that Samantha managed to save without making burdensome sacrifices.  The payoff was retiring 15 years earlier than Sam.

This is Samantha’s tip to Sam.  To be a Super Saver, all Samantha had to give up was a little bit of house, and drive a slightly less new, less flashy car.  She didn’t have to reuse dryer sheets, rinse and re-use her ziplock bags, or make her own laundry detergent to retire at 44.  Super Saver Samantha simply selected a few areas to be a little frugal where she could have spent a bunch of money and made some smart choices early on to set her on the path to a very early retirement.

I hope you all enjoyed Saver Sam and Super Saver Samantha’s journeys to retirement!  Just remember, spending less means saving more, and needing a smaller investment portfolio to retire or be financially independent.

Are you on the path to beat Super Saver Samantha by retiring at age 44 or earlier?  Can you come close?

Early Retirement at 33: An Overview

One of the most popular page at Root of Good is the “I Retired at 33!” page where I introduce myself and talk a little about Root of Good.

I assume that means people are interested in the story of how I retired at 33.  In this post, I’ll give a quick summary of how I managed to pull off retirement at a very early age.

 

Early Years

I started finding ways to make money at an early age. Buying candy in bulk and selling individual pieces for a quarter each at school.  A newspaper route.  Mowing the neighbor’s yard.  Tutoring kids after school.

During high school, I had a few different after school jobs, and found full time positions over the summers.

Of the money I earned, I saved a large proportion of it.  I was a self-made thousandaire before I even left high school!

College

College

I decided to go to the nearby state university.  It was a very good school for engineering, and very inexpensive ($3000 per year back in 1998).  My SAT scores could have gotten me into a more prestigious school somewhere else, but in hindsight the local state university was the best choice.

I took more than the normal 15 credit hours each semester and graduated in three years.  Not only did I save a year of tuition, I also made working and earning a (hopefully) good salary one year closer.

During my three years in undergraduate, I had a series of jobs that were interesting, paid well, and/or provided useful experience for my career – civil engineering.  I also managed to win 11 academic scholarships and a few research grants.

By the time I finished undergrad, I had a nice bit of savings accumulated.

I’m planning on using many of these same tactics to help my own three kids get through college without spending several hundred thousand dollars.

Instead of heading into the difficult job market of 2001, I went to law school.

Lucky for me, the law school was also in-state, which made tuition relatively affordable.  Around this time my wife and I bought a condo together where we lived during my law school days.

I worked a few summers at law firms and various governmental legal employers.  Eventually I figured out I didn’t really want to practice law for a living.  The hours sucked big time if you wanted to make the big six figure salaries!  I was all about making some money, but not at the expense of a life outside work.

At one of these summer jobs, there was very little actual work to do, so I decided to start my own business.  I ended up making over $30,000 in the next couple years with relatively little effort.

Figuring a Juris Doctor might come in handy one day (or at least look cool on my office wall), I finished up law school and immediately started a great job at an engineering consulting firm in Raleigh.

We tried (but failed) to sell our condo when we moved back to Raleigh, so we rented it out to some PhD students at the university.  A year or two later the California property boom sloshed some excess money our way when a nice couple from Santa Clara bought our condo sight unseen for a third more than we paid for it.  More money for our portfolio!

 

Optimal Spouse Selection

Mrs. RootofGood and I married right before I finished law school.  She is obviously perfect in every regard.  She also obviously reads this blog, so I have to say that.  Our similar outlooks on personal finances have been a huge wealth generator.

It may come as no surprise that we are both very frugal about virtually everything.  We agree on saving a large part of our incomes.  We take vacations off season because crowds are thinner and our wallets get fatter (er, less thin).  Our furniture might be uncharitably described as dorm room chic.  Our kids wear hand me downs alongside inexpensively purchased new clothes.  We live in a modest neighborhood and drive modest cars.

We made these frugal choices so that one day we can retire early and not have the stress and time demands from a regular job burdening our daily lives.  There is more to life. 

 

Work

Good Job With Benefits

I found a good job straight out of college that paid well and had a really good set of benefits like a low cost 401k plan with a nice 6% matching contribution and an Employee Stock Ownership Plan.

Mrs. RootofGood found a job at a great company with even better benefits, although the pay wasn’t the highest at first.  Her 401k plan was better than mine and had an even larger matching contribution!  The health insurance plans offered at her firm were excellent and almost free, even for family coverage.

During our careers, we both focused on expanding our skill sets and increasing our responsibilities in the hopes that our salaries would rise over time.  My salary jumped big time once I earned my Professional Engineer’s license.  Mrs. RootofGood earned a number of promotions and raises.

This is almost certainly un-American, but we dumped raises into investments instead of buying more crap.

 

Maxing Your Savings

As soon as we started working right after college, we immediately started contributing the maximum to our 401k’s and IRA’s.  It made our paychecks artificially tiny.  Puny.  But maxing out savings options is like putting your net worth on steroids.  There’s muscles popping out all over the place!

Eventually we had to seek out more places to stash money.  Enter the Health Savings Account, the 457, and after the kids were born, 529 college savings plans.  After filling up those accounts, brokerage accounts held the rest of our investment contributions each year.

 

Don’t Pay Taxes

That’s a typo.  Pay as little as possible!  Contributing to 401k’s, traditional IRA’s, health savings account, 457, and a 529 college savings account kept our taxable income low.  We also paid for child care through the Childcare Flexible Spending Account offered by Mrs. RootofGood’s employer.

Our tax strategies have been so successful that we ended up with a federal tax bill in 2012 of $600 in spite of gross earnings over $140,000.  I consider an average tax rate under 0.5% to be pretty good!  2013 is even better.  Our tax rate is 0.1% ($150 tax on $150,000 income).

We didn’t do anything sneaky or illegal.  In fact, I do our tax returns on paper and one of my rules of investing is to keep it simple enough so it doesn’t make our tax returns insanely difficult.

 

Home Sweet Home

A Permanent Starter Home

Right as I was finishing law school, we took our cash from student loans, summer jobs, and profits from business ventures and dumped them into a house (along with a small loan from my parents that helped us both out).

We investigated buying land and building a house, and eventually rejected that option as it would be very expensive to custom build a house compared to buying a “used” house.  Plots of land close to town were more expensive than whole houses (and the land underneath them!).

We bought the house thinking it would be a starter home.  Ten years later, and after ample fix ups, we are still here.  Now it is a permanent home, since it meets our needs well.  It still needs work, but what house doesn’t?

Houses can be expensive.  Of course, we weren’t silly enough to pay full price for the house!  The City put the house up for auction and we were the winning bidder at a price 20-30% below similar houses.  There was a little more research, due diligence, and risk taking on our part, but it has worked out well with no surprises.  Except the lake the City rebuilt for $2 million right behind our house soon after we moved in.  Somehow I concealed this awesome fact from Mrs. RootofGood.

We have been lucky to refinance the house more times than I can remember, pushing the mortgage rate down to 5%, 4%, 3%, 2.5%, and now 1.99% (for 3 more years until it is paid in full).  Each time we refinanced, we tended to make the loan term shorter to help pay off the house quicker.

 

Smart Investments

I started out investing with Edward Jones, a full service brokerage firm.  They “fully serviced” me by providing expensive investment products.  I’m lazy, so I stuck with them for a couple years and paid high fees.  Eventually Mrs. RootofGood’s compliance department gave me the kick in the butt I needed, and made me switch to an approved brokerage firm, so I had to leave Edward Jones.

Switching brokerage firms to Fidelity and Vanguard cut our investment costs and hidden fees (expense ratios) to almost nothing.  In addition, the online access was far superior at both firms.  Now I could manage and automate my investments from the comfort of my own couch.  In the middle of the night.

We have saved close to $40,000 on investment expenses by switching to a low cost provider like Vanguard and Fidelity.  That’s a year or two of living expenses!

The kids

 

Kids

Yeah, we had them.  Lots of them.  Three to be exact.

Recent really scary news reports indicate it costs like $300,000 to raise each kid.  I can’t figure out how they spend so much money on little creatures whose favorite things to play with are cardboard boxes and shiny pieces of plastic up until age 7 or so.  And that $300,000 figure didn’t even include college (which probably won’t cost more than $20,000-30,000 per child)!

The truth is, you don’t have to spend a ton of money on your kids, and they will still love you at least 94% as much as if you had spent $300,000 on them.

Moral of the story: don’t spend excessive money on them.  Spend time with them.

 

Know What You Spend, Budget If Necessary

Until four years ago I never closely tracked what we spent.  We have never had a budget.  “Save money on everything” is a reflex, and keeping expenses low comes automatically for us.  Apparently this is not true for everyone, so budgets could be a good thing if you have a spending problem.

I started out with a simple spreadsheet where I copy/paste all credit card and checking account transactions for each month.  The spreadsheet automatically summarizes the expenses for each quarter and each year.

Income Summary

Personal Capital looks beautiful!

 

I use Personal Capital to track all spending as well as all investments.  It provides a summary of all income, expenses, and investments in one screen.  Incredibly easy to set up and even easier to use.

This is a great tool for figuring out exactly where your money is going.  Knowing how you spend lets you determine whether you get value for your dollars, and where you might be able to focus efforts to reduce expenses further.

After I started tracking expenses in very fine detail, I realized we weren’t spending as much as I had assumed.  Core expenses were around $24,000 per year.  This meant we were even closer to early retirement (lower annual expenses = smaller investment portfolio required to fund those expenses).

Bahamas

Almost Free Vacations

We like to travel, but we don’t like to spend a lot of money.  This is one category of spending where we have paid very little over the years, yet enjoyed some pretty amazing vacations.  I have never sat down and figured out how many countries we have visited exactly.

Ok, a quick mental count says about ten, but all the Caribbean islands quickly blend together with their white sandy beaches and crystal clear blue water.

How did we save money?

We really enjoy going on cruises, too.  They aren’t always the absolute cheapest form of vacation but you can get a good taste of luxury for rock bottom prices if you can swing a cruise during the low season between September and February.

Fun times in the Bahamas on our January 2016 cruise.

Fun times in the Bahamas on our January 2016 cruise.

 

Weathering the Great Recession

Boy howdy, some people lost a freaking ton of money during that little economic blip called “The Great Recession”.  We lost a boat load too.  And then made it all back.  In fact, I switched up the investments to a more aggressive allocation in the middle of the 2008-2009 crash and it has paid off well (I’m retired after all).

It truly hurts to hear stories of people who lost half their investments in the Great Recession, then sold everything and stayed out of the market during the recovery in 2010-2013.  We basically did the exact opposite and piled money into risky investments during the 2008-2009 market crash.

Sure, it was a little scary seeing the market crash 7% in a day.  But I call those “buying opportunities”.  The money we were “losing” was long term investments, so why did I care if one day it went down 7%?  I care what these mutual funds will be worth in 10 or 20 years.

 

The PlanMake a Plan

We made an early retirement plan right after I started my post-college job.  We had all this money coming in the door.  Way more money than we had before.  I knew back then that this was a powerful force that, if harnessed, could lead to something big one day.

Over the years the plan changed and our ideal amount of investments changed numerous times.  These changes are unavoidable, since knowledge of finances and investments increases over time, and your interests and desires also change.  We kept fine tuning the plan as our investments and our family grew.

 

Embracing the Unknown

I would be lying if I said we have a 100% certain plan to be retired early forever and there is no chance we will ever have to work again.  There is always uncertainty.  The best you can do is plan for it, and understand that flexibility will get you a lot further in uncertain times than rigidly holding to a plan.  However, I don’t think we’ll ever run out of money in early retirement.

 

Securing Affordable Health Insurance In Early Retirement

Everyone (in the US at least) worries about finding and keeping affordable health insurance in retirement.  With the Affordable Care Act, those concerns are largely moot.

Our family obtained insurance coverage with $0 deductibles through the Healthcare.gov exchange for $125 per month.  Though heavily politicized, the Affordable Care Act is hugely beneficial for early retirees because it provides guaranteed issue health insurance for everyone.  Those with incomes under 400% of the poverty level will most likely qualify for tax subsidies to help pay for monthly insurance premiums.  In our case, because our income is much lower while retired, we qualify for subsidies over $900 per month.

 

Reaching Our Goals

Over the last six years the stock market produced a lot of wealth.  We went from having “lots of money” to having “enough”.  Having enough money to live comfortably for the indefinite future is a big deal.

After my job ended, I pulled out The Plan and quickly figured out we have “enough”.  Now my days are free and I can do (or not do) whatever I want.  Mrs. Root of Good tried (but failed) to retire in 2015.  She switched to part time work (for full time pay) and eventually joined me in early retirement in early 2016.  The last two years she worked, she had two paid summers off so we could travel to Canada for two and a half weeks and to Mexico for over seven weeks.

From the cruise ship

Accessing our 401k’s and IRA’s without penalty

We have approximately 70% of our investment portfolio in traditional 401k’s and IRA’s.  Withdrawals from these types of accounts usually incur a 10% early withdrawal penalty.  However, there are two methods that allow early retirees to withdraw significant sums from these tax deferred accounts without paying the 10% early withdrawal penalty.

The first is the “72t rule” that requires “substantially equal periodic payments” from the commencement of early withdrawals until age 59.5.  Not wanting to lock myself into a fixed series of withdrawals for the next 25 years, I chose to go a different route.

The second method of accessing tax deferred accounts without paying a 10% early withdrawal penalty is the Roth IRA Conversion Ladder.  Through this method, I am converting small parts of my traditional 401k and IRA accounts to Roth IRA each year.  After a five year waiting period, I’m able to withdraw those amounts converted penalty free.

 

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In a nutshell, this is the story of how I went from a thousandaire to a millionaire in about ten years.  The rest of our early retirement story continues to be written every day.

 

To keep informed of the latest posts at Root of Good, make sure to subscribe on Facebook, Twitter, or by email or RSS reader (in the column to the right).

 

If you want to find out more about any particular area of our lives or finances, please share with me below!  

Obamacare Makes Early Retirement Easier and More Secure

Today, I am answering an email from a reader about health insurance as an early retiree:

Dear Root of Good,

 

What about health insurance as we get older and won’t have company subsidized health insurance and we won’t be old enough for Medicare benefits?

 

Good question, as access to health insurance is something that all potential early retirees should be concerned with.  Over the last decade or two, health insurance and health care costs have spiraled out of control.  Insurance premiums would increase 10% or more per year, and access to health insurance could be limited if you suffered from a pre-existing condition.

Light at end of tunnel

 

Asthma, cancer, or heart disease, even years in the past, meant that your insurance premiums could be hundreds of dollars or even a thousand dollars per month.  Insurance plans could deny coverage altogether, forcing you to rely on a much more expensive State High Risk Pool for coverage.

Since most people of working age are employed or have family that are employed, they are eligible for group insurance provided by their or their spouse’s employer.  Pre-existing conditions don’t affect your rates as an individual in this case.

 

Obamacare

You have probably heard about Obamacare, or the Affordable Care Act (“ACA”).  The health insurance landscape is changing big time under the ACA. 

Health insurance exchanges are about to open up for enrollment on October 1, 2013 to provide coverage starting January 1, 2014.  New plans issued under Obamacare cannot exclude you for pre-existing conditions.  The premiums are uniform for everyone who applies and only vary based on age, geographic location within a state, and smoker status.  How ugly your health history has been is irrelevant.

For example, a 60 year old world class triathlete in Charlotte, North Carolina will pay the same premiums as his neighbor, a 60 year old triple bypass recipient currently undergoing chemo for advanced stage cancer.  Assuming they both don’t smoke!

 

Health Insurance Premiums and Subsidies

In addition to the prohibition against denying coverage for pre-existing conditions, Obamacare will be a huge benefit to middle class America.  A key part of Obamacare is the subsidy to help you buy health insurance.

The formula to calculate how much you will pay for health insurance is a little complicated.  The amount you will pay for health insurance is based on your income.  The more you make, the more you pay.  The Kaiser Family Foundation has a nifty calculator that lets you plug in your income, household size, and a few other details and it spits out what you will pay in premiums and what your subsidy will be.

Let’s look at a 60 year old couple’s situation first.

Scenario 1:

Assumptions: A couple of 60 year old non-smokers with a relatively generous income of $60,000.

Results:$5,700 annual premiums or $475 per month.  This is for the “silver” plan.  A slightly worse plan (the “bronze” plan) that covers a little less will run $2,896 per year.  These are the premiums the insured will pay under Obamacare with the subsidy already factored in.  For reference, the government subsidy would be $10,682, and without the subsidy this couple would pay $16,382!  Good thing for that subsidy.

 

Pro tip:  Be careful to keep your incomes below 400% of Federal Poverty Level! Subsidies go away for anyone making more than 400% FPL.  For a family size of 2, if you make more than $60,520, your subsidy goes to zero and you will pay the full unsubsidized amount of $16,382.  

 

Scenario 2:

Assumptions: A family of 2 adults age 35 and 3 children.  Non-smokers.  Annual income of $37,000.  These details are based on the Root of Good family in a few years.

Results:$1,136 annual premiums or $95 per month.  This is for the “silver” plan.  A slightly worse plan that covers a little less will be free of charge to the Root of Good family.  These are the premiums the insured will pay under Obamacare with the subsidy already factored in.  For reference, the government subsidy would be $11,989, and without the subsidy this family would pay $13,126!  Once again, the Obamacare subsidy makes the insurance premium very affordable.

Early Retirement

Obamacare’s Impact on Early Retirement

For the 60 year old couple and the young family of five, health insurance premiums will be very affordable with the subsidies available for most people under Obamacare.  Add the affordability of the premiums to the guaranteed issuance without looking at pre-existing conditions, and as an early retiree you can expect to have much more certainty in 2014 over your health insurance costs.

For example, our family can reliably budget somewhere around $1200 per year for health insurance premiums.  There is also another cost control provision in Obamacare that limits your annual out of pocket expense for health care spending.  In Scenario 2 above, the annual out of pocket maximum for health care expenses would be $4,500.  Although we would be unlikely to spend this amount every year, it would be prudent to budget some portion of that expense annually, such as $2,000.

 

Why it Pays to Keep Your Income Low

You may have noticed in Scenario 2, which is based on the Root of Good family’s retirement income and ages, that I listed an income of only $37,000.  When possible, we intend to manage our income (actually the fancy IRS term is Modified Adjusted Gross Income or MAGI) to come close to $37,000 each year in order to keep our health insurance premiums relatively small.

We may actually spend more than $37,000 in a given year, but our “income” for Obamacare and tax purposes could still come in around $37,000.  This is where the clever finances come into play.  Some of our living expenses will be from the sale of mutual funds and investments that have appreciated over the years.  When sold, only the gains on an investment are “income”

I might sell $40,000 of an investment that has doubled in value since I bought it.  $20,000 of that sale would be included in income, the other $20,000 is not income, but return of my original investment.  In this manner, we could spend $50,000 or more and still have a taxable income of only $37,000 by carefully managing which accounts we pull money out of.

Check out all the options available under Obamacare and see how it will impact your finances and access to health insurance.  For many people with low to moderately high incomes, it could save you a lot of money and provide more certainty in budgeting.

For a more detailed analysis of the impact of a rising Adjusted Gross Income (AGI) on health insurance subsidies under the Affordable Care Act, check out this more recent article.

 

 

Readers, go check out the Kaiser Family Foundation calculator and input your ages and expected retirement income and report back what your premiums and subsidies will be.  Surprised?  Shocked?  Ecstatic?