Excellent Post at the Retirement Manifesto on your beginning of the year financial moves

Pretty much parallels what I do each year in the first day or two. Excellent checklist!

Retirement Manifesto: A step-by-step guide-to-your-annual-financial-update

Steps:

  • Update Net Worth Statement
  • Update investments/capture current asset allocation
  • Determine portfolio rebalancing actions
  • If retired, update your bucket strategy (how much in cash bucket, how much in 5-8 year bucket, how much in long-term bucket)
  • Update your spending from the previous year
  • Determine your spending goals/limits for the new year
https://www.theretirementmanifesto.com/a-step-by-step-guide-to-your-annual-financial-update/

WOW! Just WOW! Investment update for Jan 2020

I think I speak for everyone when I say – Wow.

The year 2019 will go down as one of the best years for most people in terms of their investments. The S&P 500 (everyone’s standard for judging US stock performance) went from $2,607.39 to $3,235.14 (Jan 1 to Jan 1) – a 24.0% increase. Tack on the 1.77% dividend yield and you were seriously kicking butt, as long as you just left it in the market in an Index Fund! Hopefully the readers here didn’t panic in Dec 2018 and sell their stocks.

I’ve been an index investor for most of my investing life. Whenever I have dabbled in individual stock pickings, I mostly got my head handed to me. So here I stay. My allocations tend to be broader than just your typical “dump it all into the S&P 500”

Retirement Accounts: Remember, my allocation for these is:

  • 30% Bond Index Fund
  • 17.5% S&P500 Index Fund
  • 17.5% International Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% REIT Index Fund

My company 401K/Deferred account doesn’t have a REIT option, so I’m 25% for the other 4 categories.

I set up my father’s inherited IRA to see how it would perform if it was concentrated on creating income (i.e. dividends). My allocation for that was:

Dividend Income Account: Allocation:

  • 25% Dividend Stocks
  • 25% REITs
  • 50% Bond Index Funds

Finally, my “fun money” post-tax account is primarily setup for value investing, with a mix of USAA and Vanguard index accounts.

Value Account: Allocation

  • 12% PAWZ ETF (it invests in pet related companies, a vanity play on my part)
  • 44% USAA Market Index (my brokerage is USAA)
  • 44% in Vanguard Value Index fund

So how did they perform for the year?  Here are all my portfolio items (not weighted)

Name Symbol Capital Gain % Dividend % Total Return
TRowe Price S&P 500 PREIX 28.5% 1.8% 30.2%
Extended Equity Market Index PEXMX 22.0% 1.0% 23.0%
International Equity Index PIEQX 17.7% 2.6% 20.3%
Real Estate TRREX 3.7% 2.5% 6.2%
US Bond Enhanced Index PBDIX 5.2% 2.9% 8.1%
Vanguard Bond Index Fund VBTLX 5.7% 5.24% 11.0%
Vanguard 500 Index Fund VFIAX 28.8% 1.85% 30.7%
Vanguard REIT Index Fund VGSLX 24.5% 3.31% 27.8%
Vanguard Small-Cap Index Fund VSMAX 25.5% 1.38% 26.9%
Vanguard Int’l Index Fund VGTSX 17.7% 2.98% 20.7%
Vanguad Welesley Income Fund VWINX 11.8% 0.95% 12.8%
Eagle Small Cap growth   18.7% 0.00% 18.7%
Vanguard 500 Index Fund   28.8% 1.74% 30.6%
Vanguard Total International Index   17.7% 2.08% 19.8%
Vanguard total bond Mkt   5.7% 2.52% 8.3%
Eagle Small Cap growth   18.7% 0.00% 18.7%
Vanguard 500 Index Fund   28.8% 1.74% 30.6%
Vanguard Total International Index   17.7% 2.08% 19.8%
Lord Abbot Total Return   6.2% 2.71% 8.9%
Chevron Corp CVX 10.8% 3.9% 14.7%
Cisco CSCO 10.7% 2.9% 13.6%
Healthcare Realty Trust HR 17.3% 3.6% 20.9%
Ishares Preferred PFF 9.8% 4.9% 14.7%
Realty Income Corp O 16.8% 3.7% 20.5%
Service Properties TR SVC 1.9% 8.8% 10.7%
UMH Properties Inc UMH 32.9% 4.6% 37.4%
Verizon VZ 9.2% 3.9% 13.2%
Vanguard Total Bond Index VBTLX 5.7% 2.5% 8.3%
Vanguard Int-term Bond index VBILX 7.2% 2.5% 9.7%
USAA Extended Market Index USMIX 24.0% 1.3% 25.2%
Vanguard Value Index VVIAX 22.5% 2.6% 25.1%

As you can see, no real negative items in the bunch. While the bonds and REITs didn’t light the world on fire, the other stocks really jumped off. The bonds and REITs  will help balance the portfolio out when the stocks have a correction (and we all know a correction is long overdue here).

Overall, I was up 20.1% for the year, which definitely exceeded my expectations. Even with all the bonds and REITs, the overall performance was excellent.

Mr. 39 Months

Roth Conversion for 2019

For some who have been following, you will remember that I did a Roth conversion of $100K at the end of 2018, and it screwed me up a bit. It basically pushed me into a tax bracket where I could not do our annual contribution of $7K each to our Roth IRA. So I managed to switch $100K to Roth, but lost out on the ability to put the normal $14K into it. Sad face, and a kick on me for not knowing what I was doing, here.

Fast forward to the end of 2019,, and I’m studiously looking at the income levels of Mrs. 39 Months and myself, and it looks like we’ll be about $45K under the limit for contributing to our Roth 401K for 2019. So today, I took the opportunity to shift $40K in my Vanguard IRA to my Vanguard Roth IRA. Note that this is a taxable event. Going from an IRA that I contributed in pre-tax and moving it to Roth, where it is supposedly post-tax and non-taxable in the future means having to pay the government their taxes.

Luckily I have other money set aside to pay the taxes on this item. If I didn’t, then I’d have to take out more from the IRA to pay the taxes, and potentially pay a penalty on that money being withdrawn before I hit 59-1/2. It’s a real accounting nightmare, so better to pay the taxes from another account (like a savings account) rather than going through the hassle.

So now we currently have more in our Roth IRAs than in our normal IRAs. The 401Ks we have continue to grow, but both of these are Roth 401Ks, so in essence we should continue to enhance our future tax-free investments.

Its kinda sad that retirement is such a complicated numbers game, but for those of us in the FIRE community, its part of the fun – finding new ways to squirrel away more money and better prepare for the good life.

Mr. 39 Months

Returns

As many of you have been following, Mrs. 39 Months and I have been seeing a financial advisor for the last 2 months, reviewing our finances and getting a second opinion on when we’ll have reached FI. There has been some give & take on expenses, investments, inflation rates, etc. Overall, I’ve been pleased, especially as it has helped get Mrs. 39 Months and myself on the same page.

One of the big “bones of contention” between myself and the advisor has been the subject of investment returns. We’re already being somewhat conservative on inflation (setting it at 3.25%, and 6% for medical inflation). Then the advisor is using very low (in my opinion) estimates on investment returns for the next 40 years. Here is what he is using before inflation is taken out (i.e. the real returns will be lower than this):

Asset Class Total
Large Cap Growth Equity 5.03%
Large Cap Value Equity 6.08%
Mid Cap Equity 6.07%
Small Cap Equity 7.24%
US REITS 6.34%
International Equity 7.60%
Emerging Markets Equity 7.27%
Long Term Bonds 3.40%
Intermediate Term Bonds 3.69%
Short Term Bonds 3.48%
High Yield Bonds 6.07%
International Bonds 2.73%
Cash 2.68%

Thus, after inflation of 3.25%, you can only expect to get around 2.5% – 2.75% after investing in the S&P 500. What the…? Based on my current allocation strategy, this would give me a 5.75% return per year. Minus the 3.25% inflation, I’m looking at a 2.5% return. That is going to make it very difficult to make it to 99, even if I don’t retire early!

Historically, since 1930, here are some of the returns, based on market watch report

  • S&P 500: 9.7% (4.7% more than the advisor is using)
  • Large-Cap value: 11.2% (5.1% more than the advisor using)
  • Small Cap: 12.70% (5.5% more than the advisor is using)
  • Small Cap Value: 14.40% (7.2% more than advisor is using)

If you go from 1925, the returns from the CRSP report shows the following

  • US Stocks: 9.8%
  • International stocks: 7.8%
  • Bonds: 5.1%
  • T-Bills: 3.7%
  • Inflation: 2.9%

I actually found a good site, the portfolio visualizer, which shows the returns each year, for a wide variety of asset classes, all the way back to 1972 (almost 50 years of data). While I would like to go back to the mid-1960s (right before the 1968 market, when it started to tank), this is good stuff. It has the inflation rates as well, so you really can dig into the numbers and do some analysis.

Based on this information, my average return for my allocation would be 15.1% vs. a 3.9% inflation, so 11.2% returns. Much better than 2.5%! Much better chance of lasting to 99!

 Still, we have had a tremendous run over the last 40 years of stocks. In the early 80s, the Reagan revolution and the Volker defeat of inflation launched a tremendous stock market surge that we have been living with for our adult lives. Most folks don’t remember how much “in the doldrums” the market was from 1968 – 1981. Now we have several knowleadgeable people saying those heady days of returns may be in for a pause of several decades.

Even Jack Bogle, the Vanguard mastermind, was predicting lower returns back in 2018 before he died. He estimated returns of around 4% annually for growth and 2% for dividend (total of 6%). He based this on expected economic growth and the historic P/E ratio versus current levels. He also estimated bond returns of 3.1% annually.

Since returns play such a vital role in all our plans to achieve FI, its critical that we look at them with an experienced eye, and make good estimates for our lives going forward.

What returns estimates are you using?

Mr. 39 Months

Net Worth Jan 1, 2019

OK, a lot of folks have done postings on their net worth (and how much it took a hit in 2018). I figure I’d join the crew and open up the windows to the folks outside. I know this is a topic of some controversy within the FI community, as some folk’s post their net worth, and some folks are loathe to do it. I believe that the more information folks have, the better they can judge my writings and decisions versus their own.

Like many others, I’ve posted my net worth on Rockstar Finance. So here goes.

Real Assets Value Jan 1, 2018 Value
House $279,809 $289,171
Mrs. 39 Months Car $3,650 $3,981
Mr.39 Months Car $5,251 $4,353
Sub-Total $294,781 $297,505
Liquid Assets Value Value
Family Checking $8,428 $4,014
Family Savings $11,963 $3,673
Mr. 39 Month’s Roth IRA $135,025 $178,199
Mr. 39 Month’s IRA $298,748 $234,647
Mr. 39 Month’s 401K $55,467 $61,732
Mr. 39 Month’s Deferred Savings $56,566 $105,889
Mr. 39 Month’s Checking/Savings $9,249 $8,925
USAA Brokerage Account $53,481 $22,526
Pop’s stretch IRA $135,205 $127,882
Mrs. 39 Month’s Checking/Savings $119,658 $119,658
Mrs. 39 Month’s IRA $162,001 $104,627
Mrs. 39 Month’s Roth IRA $89,448 $135,481
Sub-Total $1,135,238 $1,107,253
Debits Value Value
Home Loan $0 $0
Credit Card bill -$1,288 -$3,240
Auto Loan $0 $0
Sub-Total -$1,288 -$3,240
Net Worth $1,428,730 $1,401,518

Overall, net worth dipped about 1.9% for 2018, and this after pumping in around $87K of money during the year. Needless to say, it wasn’t a “banner year.” However, it’s the first dip in my Net Worth since the 2008 crash, so a good ten year run. Since my growth plans are based on my long term growth rate of 6% (what I’ve averaged over the last 22 years, including the 2000 and 2008 stock dips), I’m still in the ballpark.

Key lessons learned for Net Worth in 2018?

  • Real estate not really jumping up in my area (Southern NJ). My value hasn’t moved much since 2009.
  • Cars have depreciated a lot – but they continue to run well (regular maintenance) so no need to replace anytime soon. Slowly saving up for new ones at some point of time in the future.
  • Roth IRA conversions altered the makeup of my retirement accounts. Will probably due one more $50K conversion, and then let it ride from there. Used money from investment account to pay taxes, so it dipped a lot there.
  • Put aside 25% of paycheck and 100% of bonus to deferred account, so that jumped up significantly over Jan 1, 2018. No taxes paid until I leave work (when it gets paid out as a lump sum). This will end up being a good portion of my year 1 & 2 of FIRE money
  • Credit card bill was from one of our Pet’s emergency medical costs (ouch!). We have the money to pay it off, so no big thing

Overall, while our Net Worth took a slight dip, we will continue with the plan. I believe we are still on track to retire in 18 Months (if we want), or we could retire now if we felt confident in US Social Security.

How did your Net Worth go in 2018?

Other FI Bloggers and their net worth

Mr. 39 Months

Just Like a YoYo

Wow, you go away for a week and the market goes nuts. Down an unprecedented 600 points the day before Christmas? Up 1,000 points the day after Christmas? What is going on?

In my opinion, the market is still unsure of where the economy is going to go in 2019, and there are a lot of scared people running out of the market right now, trying to find safety. This is forcing mutual funds to sell at a prodigious rate, often times having to sell their winners in order to generate sufficient funds. It’s almost a self-perpetuating drop, as each new drop pulls the next group after it. The overall drop was around 20% from the market high, which brought us into “bear” territory. Time to panic and sell?

The problem is, as was just demonstrated with today’s 1,000 point jump, you not only have to get out before it drops and you have to get back in before it starts going back up again! Or you can do what so many good investors do, and don’t worry about it.

Stick to your plan. Invest regularly. Dollar Cost Average. Diversify. Take advantage when folks panic and sell at bargain basement prices to pick up some deals. The mutual funds that folks have shed will be there, ready to jump back up again shortly.

In a previous posting, I talked about the P/E ratio. The P/E ratio had dropped down on Dec 24th to 18.03 – still higher than its mean of 15.73. This was back below its Jan 2014 number. Still higher than its mean though, so we could have more to go before we get back to an average market.

I still have over 18 months to go before I hit my FIRE date. The typical market downturn is 12-24 months, which is why they tell you to have 1-2 years in savings bucket, to weather that storm. So I intend to stay with the plan, and keep investing.

How about you?

Other Bloggers on the topic:

Mr. 39 Months

Well I screwed up…..

 In working through my “Power of Zero” philosophy and plan, which included doing a Roth IRA conversion from my IRAs to Roth (in the hopes of keeping my taxes low to non-existent in retirement) I failed to take into account hitting the limits on who can pay into a Roth.

In order to put money away into a Roth, you have to have a Modified-Adjusted Gross Income(MAGI) less than $135K for singles, and $199K for married couples. Note that it starts phasing out at $120K and $189K. Modified Adjusted Gross Income is before you put in your deductions ($12K and $24K in the US). If you are over these limits, you cannot put money into a Roth IRA. You can put it into a regular IRA, but you can’t deduct the income for tax purposes (so what good is that?)

In this case, I converted over $100K from regular IRA to Roth, and combined with our regular income for the year, its going to push us over $200K. Thus, I am going to have to “claw back” $13K of my Roth contributions for 2018. Uggh!

I have heard that you can invest that into a regular IRA, and then at a later date (since you have already paid the taxes on it) convert it to a Roth with no tax implications. I’m not sure about that, but I am going to investigate it. I’ll let you know at a later date.

So for 2019, if I do a Roth IRA conversion, its only going to be for about $50K, so I can make sure that I stay under the amount. Don’t mess up like I did!

Mr. 39 Months

Budgeting for the next year – when do to it/how to do it?

Typically it is around the middle of December when I start looking at my budget for the next year. By then, I’ve got 11 months of spending under my belt and I have a pretty good idea of what my spend has been. From that, I hope to be able to predict my spending for the following year.

I start off with a short review of the current years financial goals vs. where its looks like I will end up. In this case, while my investments have not done that well (thank you market), I still was able to save over 50% of my salary – the first time I’ve ever done that much! In addition, we remain debt free, and I am 12 months closer to FI. We did dip into our savings account somewhat this year, due to some medical bills (sucks to get into your mid-50s), so our savings account isn’t where I believe it should be.

From there, I try and set my budgetary goals for 2019

  1. Continue to budget to have excess funds for the year (i.e. don’t depend on debt)
  2. Put away more for medical (got caught short this year)
  3. Continue to try and keep my savings rate in the mid-to-high 40% range
  4. Continue to fully fund Charitable spending at the rate I did last year ($400/month)

With that in mind, here is a comparison of my monthly spend for 2018, and my budget for 2019.

Revenue Base 2018 Month Jan-19
$4,543.10 $4,456.42
$0.04 $0.04
Total Revenues $4,543.14 $4,456.46
Expense
Home
Property Taxes ($515.43) ($515.43)
PSE&G ($208.42) ($208.42)
Verizon ($279.15) ($279.15)
Water Bill ($33.55) ($33.55)
Life Insurance ($43.95) ($43.95)
Home/Auto Insurance ($219.79) ($219.79)
Investments ($333.33) $0.00
Groceries ($454.03) ($454.03)
Medical ($334.70) ($334.70)
Roth IRAs ($1,166.67) ($1,166.67)
Savings ($100.00) ($100.00)
Charity ($400.00) ($400.00)
Dining Out ($160.26) ($100.00)
Home Repair ($277.93) ($150.00)
Other ($57.91) ($50.00)
Total Expense ($4,585.12) ($4,055.69)
Operating Revenue ($41.98) $400.77

You will notice a significant chunk of funds being leftover at the end of the month. This is a little misleading, as I get paid every 2 weeks, so every 6 months, I get an extra paycheck. Thus, on a real monthly basis, I’ll be a little in the black until that 6th month. My intention is to dump that extra paycheck into savings to get it back where is used to be.

You’ll also notice that my take home pay actually went down about $100/month. That is because I didn’t take enough out in taxes and didn’t realize it until over halfway through 2018. I’ve corrected it, but the result is $100 less a month in income.

I also have a personal account which I pay myself $1100/month. I use this for paying for my lunch & travel food, gas, hobbies. Etc. I follow the same method to do that one, and plan on coming in each month “in the black”.

Some of the categories may seem outside the norm for FI people (groceries, dining out,etc.) but we intend to live some of life for now. Also, you can see that property taxes are pretty expensive in NJ – and my $6K a year is actually quite low for the state (its typically 2-3 times that).

With this in line, I can now go to my banks and investment sites and set up automatic transfers. I typically track my budget monthly, and make adjustments every 3-6 months, based on how I am doing.

Other articles on budgeting

What are you doing to plan for 2019?

Mr. 39 Months

How did I build my budget?

One of the first steps to getting yourself on course, financially, is to create a budget. Aaahhhh!

I know, many people hate the idea of budgeting, can’t make one, can’t follow one, etc. There are also a large number of FI folks who have been able to move towards FI without keeping strict budgets. However, I would suggest to you that even these people started out by getting a handle on what they were making in $, what they were spending in $, and what the difference was. This is the same as going through the budgeting process and creating a base budget.

I find budgets to be very helpful, though I don’t stick to one religiously. I have an idea of what I’ve spent in the past, build a budget at the beginning of the year, and then track how I am doing against it monthly. Typically I blow past the budget on some items, and under-spend on others. I also adjust as the year goes on, to try to stay within my revenue goals.

So how I go about creating a budget? Like most folks, I started with my actual spending and my paychecks. Remember, the key thing for a budget is to get to where Revenue – Expenses = surplus (what is left over to save/invest). If you are getting a negative number, then you need to either increase your revenue (side hustle?) or decrease your expenses (ex. Cut out the expensive cable bill).

Revenue

Looked at my paychecks and determined my take home pay. I had already adjusted my W-4 (the tax withholding form) with my employer so that I was getting taken out almost exactly what needed to be taken out to not get any money back at the end of the year (i.e. I might owe a little). Why give the government an interest free loan? I also checked how much I was putting into my employee 401K, for reference in tracking my investments. So I knew what I was getting every 2 weeks in pay. I then multiplied that by 26 (# of paychecks in a year) and divided by 12 (# of months in a year) to get a monthly revenue number. After doing all this, I arrived at 3 months of revenue = $15,603.96

Expenses

For this, I turned to my bank and its electronic statements (or you could use the paper statements they can send you). My bank lets you easily download the last 3 months of your bank statements, showing you how much you spent on each transaction, as well as each deposit. With this information I had a key decision to make: How did I want to classify each expense, so that I could determine how much I was spending on it each month? It doesn’t do much good for a budget to have too many categories (it gets hard to track) but you should have enough so that you can make decisions about spending (what to cut back, what to add to, etc.)

After review, I chose the following categories:

  • Home Mortgage
  • Property Taxes
  • Home Insurance
  • Utilities (Gas, electric, water)
  • Phone/Cell Phone
  • Auto Insurance
  • Life Insurance
  • Groceries
  • Roth IRA investment
  • Charity
  • Vacation Funding
  • Dining Out
  • Home Repair
  • Other (areas that were not easily classified)

With that I created a spreadsheet and determined what I had spent on that for the last 3 months:

Category Expense
  Home Mortgage, taxes, insurance ($5,950.47)
  PSE&G ($839.45)
  Verizon ($686.20)
  Water Bill ($206.50)
  Life Insurance ($131.85)
  Auto Insurance ($366.52)
  Chiropractor $0.00
  Groceries ($1,297.86)
  Disability ($288.90)
  Roth IRAs ($2,750.01)
  Savings ($300.00)
  Charity ($300.00)
  Vacation Funding ($750.00)
  Dining Out ($140.57)
  Home Repair ($203.27)
  Other ($489.01)
Total Variable Expenses ($14,700.61)

So revenue of $15,603.96 and expenses of $14,700.61 gives me a surplus of around $900. OK, a good start. Please note that I gave myself an allowance of $1,000/month for my personal use (gas, lunches & snacks, tolls, etc). This money was already taken out of my revenue above, and I tracked it separately. That is why you don’t  don’t see that in the expenses above.

With that in mind, I created a budget for the remainder of the year that looked like this.

Revenue Budget
Salary from Work $4,733.31
Other $0.00
Total Revenues $4,733.31
Expense
Mortgage ($1,376.29)
Insurance ($83.25)
Property Taxes ($523.95)
Gas & Electric ($313.83)
Phone ($246.14)
Water Bill ($66.50)
Life Insurance ($43.95)
Auto Insurance ($120.78)
Groceries ($378.76)
Roth IRAs ($1,000.00)
Savings ($100.00)
Charity ($100.00)
Vacation Funding ($100.00)
Dining Out ($50.00)
Home Repair ($100.00)
Other ($50.00)
Total Expense (4,653.45)
Operating Revenue 79.86

Note that my revenue went down, because I put more money into my company’s 401K savings plan.

At this point, I had an idea of how much I needed to spend each month. All I had to do was track it monthly, see how I did, and make potential adjustments.

Revenue Budget Actual YTD Variance
Salary from Work $56,619.50 $62,816.57 $6,197.07
Other $0.06 $5.08 $5.02
Total Revenues $56,619.56 $62,821.65 $6,202.09
Expense
Mortgage ($16,515.48) ($16,515.48) $0.00
Insurance ($999.00) ($999.00) $0.00
Property Taxes ($6,287.40) ($7,205.47) ($918.07)
Utilities ($3,765.98) ($1,498.98) $2,267.00
Phone ($2,953.68) ($3,472.88) ($519.20)
Water Bill ($798.00) ($396.93) $401.07
Life Insurance ($527.40) ($527.40) $0.00
Auto Insurance ($1,449.36) ($1,316.59) $132.77
Groceries ($4,545.12) ($3,970.84) $574.28
Disability $0.00 ($96.30) ($96.30)
Roth IRAs ($12,000.00) ($11,995.00) $5.00
Savings ($1,200.00) ($1,200.00) $0.00
Charity ($1,200.00) ($1,824.90) ($624.90)
Vacation Funding ($1,400.00) ($2,350.00) ($950.00)
Dining Out ($600.00) ($1,343.96) ($743.96)
Home Repair ($1,200.00) ($1,318.00) ($118.00)
Other ($600.00) ($2,032.39) ($1,432.39)
Total Expense ($56,041.42) ($58,064.12) ($2,022.70)

So I ended up making about $6K more than expected (didn’t account for pay raise) and spent about $2K more than expected. I could then make additional adjustments for the new year.

Overall, it’s a fairly flexible budget. I make enough money and have a sufficient emergency fund to be able to account for the minor ups & downs, and can make adjustments as things go.

So how do you guys budget?

Other Links to budgets:

 

Good post at retire by 40 on social security benefits for early retirees

The post gives you the math to determine your Soc Security benefits, and how retiring early will curtail them.

Most folks don’t know that the report from SSN assumes you will continue to work at your current salary till you hit your retirement age. Thus the number showing on the website for you is overstated if you retire early.

I found out that we’ll be taking about a 30% cut to our stated benefits if we decide to retire in the next year.