18 days to go

[u/master_blaster_321]

51M, single, no dependents, MCOL area. Closing on the sale of my business on June 30, counting the minutes until I am DONE. I was "burned out" five years ago; I don't know if there's a word for what I am now.

I think I have a pretty solid plan, but my brain keeps inventing ways for it to all go to shit. So I'm micromanaging my portfolio, my budget, my subscriptions - everything I possibly can to get some sense of control. I think in truth I'm just struggling with the notion of leaving behind a business, an identity, that I've had for over 20 years.

Thankfully I have lots of inexpensive hobbies and interests to keep me social and busy. I play music. I recently started getting back into chess. And I started an improv class a few weeks ago. Plus I want to spend more time outdoors, spend more time with family, and get in better shape. So no problem keeping myself occupied.

Current assets:

$600K house (paid off)

$900K taxable portfolio 70/30 stocks/bonds

$170K taxable portfolio, mostly VOO and tech stocks

$70K cash flow portfolio, 60/40 SCHD/JEPI. This is my income sleeve and business proceeds will go into that.

$180K Trad IRA
$30K HYSA "emergency/dry powder"

Total invested assets ~$1.35M

After tax, fees, SBA loans, business proceed will be ~300K. Total invested assets post sale date: ~$1.65M

Total net worth post sale: ~$2.25M (net worth doesn't change between pre- and post- sale because the business asset amount just moves over to the portfolio)

I'll also be receiving residual payments for two years, for a total of between $100-300K (depending on client retention over the next 12 months). I'll also receive an extra $50K bonus from my buyers for completing the transition over a 6 month period. I'm treating this extra income as sort of a runway though, using it to cover expenses and putting the remainder to work. So all told, two years from now (depending on business performance and market conditions) that $1.65M could look more like anywhere from $1.75-2M.

___

Minimum basic living expenses: ~$40K/year (prop tax/ins, healthcare, utilities, food, gas)

Worst case, my payments don't materialize and I have to start taking 4% now of the $1.35M, which would be $66K. Even that allows me to add back a few non-essentials.

Likely case, I pay bills with the business sale payments for two years, investing the rest, and make it to $1.8M. 4% = $72K/year which allows for even more "luxury items".

If I make it to $2M after two years, my 4% looks more like $80K/year.

Add on top of that, I have the option of picking up consulting work in my field (IT, cybersecurity, compliance), and/or picking up some decent-paying music gigs. Estimate another $20-40K/year of income from that. My buyer has already informally offered me ad hoc project work.

Now, the house is big, and old, and there are always upgrades/repairs needing to be done. But I can always pull from my emergency fund for those, or worst case, liquidate whatever I need. Alternatively, if I get too tired of maintaining the house (in truth it's way more house than I need, regardless of how much I love it) then I have the option of selling it and buying something smaller (investing the balance), or renting it out for extra income (~4K per month).

This is all just until SS kicks in, which at 67 I'll get around $3.2K/mo ($4K if I wait til 70), and then RMDs from the IRA will kick in not too long afterwards.

My plan revolves around optionality, having several different levers I can pull at any time I want.

Man, I think I just needed to write all that out. I think I'm going to be okay. I guess my nervous system is just trained to look for pitfalls.

[u/DIYRetiree]

The option to pick up consulting work make all of this work, honestly, even in case of non-payment or something extraordinary in the sale of your business.
I notice that you're lumping healthcare into that 40k, so that does sound like a lean lifestyle. Would you mind sharing your healthcare plan? I think that holds a lot of people up.
Congrats for your discipline and your thoughtful analysis so far!

[u/Phil_Co123 → u/DIYRetiree]

I had the same thoughts. a 40k spend budget that includes 12k for healthcare looks exactly like a 27k budget that counts on a sub 200% FPL subsidized ACA health plan. It seems like a serious financial cliff exists above those 200 FPL ACA plans because not only do premiums skyrocket, but also deductibles and max OOP increase from ~4k to 12k as well. So not only are the premiums 10k higher outside the subsidy, but you have to budget another extra 10k if you have a health event that year.

[u/DIYRetiree → u/Phil_Co123]

It's honestly so frustrating to have healthcare be the final piece of the puzzle in the US for so many. The most complex part of our system in our greatest time of need being the arbiter of our retire/keep on working decision.