42 seems too early but the calcs say I can

[karen1972]

Quote:

Originally Posted by gauss +1 If your spouse has been working a SS covered job all along then he will also likely have at least 1.5k/month in accrued benefits (under current law). In our case I worked 22 years in an engineering position and have accrued $2,500/month if I defer until age 70. Spouse, who is still working, has accrued even more. Of course these benefits can be changed by lawmakers at any time for any reason. I personally discount them by 1/3 to come up with about $40,000 /year in SS benefits starting at age 70 for the two of us in ~ 20 years. -gauss

Notice how I completely ignored the SS. My spouse will get a conservative SS check and I know they are suppose to average out your earnings so mine should still be somewhat reasonable having maxed it out for 18 years.. so I figure we will get some money, just not nearly what was projected.

However my big concern is really how to get from now to 65. My 401K won't be touched and should easily have $2M in it which by then won't be the same as now.. but still a heck of a lot more than most will have. I just figure if I pull the trigger too soon, I will be 60 and looking for a job not to touch my 401k...and that I don't want to do.

[papadad111]

Well... You can begin to tap the tax deferred retirement accounts at 59.5 penalty - Even earlier for Roth accounts. So both are ate earlier than 65 as you know. And early SS is an option too.

Maybe sit down and work out a few scenarios for draw down -

Aggressive
Modest
Conservative

Modulate the timing that you and spouse take SS. You may be surprised.

[MBSC]

Quote:

Originally Posted by photoguy - $500/month in insurance is probably going to just cover premiums for health insurance under ACA (without subsidy) at your age and they will go higher as you get older. However, the maximum out of pocket expense could be an additional 12k+/year not including the premium. These additional costs need to be included in the budget.

+1

These were exactly my thoughts as I read the original post. Getting an unexpected cancer diagnosis can mean hitting the OOP max each year. I retired early this year at age 46 and include the premium and OOP costs in my budget "just in case".

[karen1972]

For my own benefit thought I'd update this 3 years into it.

Did pull the plug in Feb 2015, sold my home in Illinois (good bye astronomic taxes).. and ended up in North Carolina (well because Denver was booming and didn't like the housing prices or the snow it was having at that time).

Now: 45
Spousish: 46
No Kids
Annual Expenses: $52K which didn't change after all due to added health care costs.

Net Worth: $1.3M ($1.2M is invested assets)
- $80K ROTH IRA
- $600K Traditional IRA
- $520K Stock Investments
- Pension of $2,050/yr no inflation adjustment
- Spousish income currently at $12K at part-time gig which I consider a solid floor.

So $52K-12K-2K=$38K out of $1.2M or about 3.2% WR and still not accounting for SS.

I think I made the right decision, I wouldn't mind an extra $100k to be able to slightly upsize our home but not important enough to make me go back to work.

When the market tanked in 2015 and my honey lost his job right after moving here I was a little freaked out... I did something completely opposite to what I would normally do and we went on an extended trip to Europe. When we came back refreshed, we simply changed our plans and he went to work full-time for a year.. which allowed us to offset cost of a new car, trip to Europe, cost of two moves, closing costs on the home, and cost of 4 trips to the ER at $3500/trip and tons of physical therapy/chiropractor.

Now we are much closer to where we need to be and he is back to working part time. Just like in savings mode, I figure early retiring is about having a plan, sticking to the plan, adjusting to the bumps along the way to get you back on plan.

[MBAustin]

Thanks for the update, karen1972! Glad to hear things are working out for you. It will be encouraging to those who are considering extra-early ER as you did.

[medved]

Glad to hear it is working well. There is not the slightest chance that I would have felt comfortable pulling the plug with your NW and at your age -- or even with three times your NW and at your age. That is not (at all) a criticism. It just shows how each of us is different, in terms of risk tolerance, desired spending, etc. But I am happy for each person who I see do what they want to do, and have it work out well. Congratulations.

[aida2003]

Great update and it's inspirational for others. What's your AA?
It's funny (well, it's not) how life gives unexpected surprises like you said you both were both healthy before pulling the plug and now the update mentions ER visits. This part scares me the most when thinking about the ER.

[Diver]

Thanks for the update and Congrats on it all w*rking out. It is always interesting to get honest updates on these threads. I need to do one myself!

[karen1972]

Quote:

Originally Posted by aida2003 Great update and it's inspirational for others. What's your AA? It's funny (well, it's not) how life gives unexpected surprises like you said you both were both healthy before pulling the plug and now the update mentions ER visits. This part scares me the most when thinking about the ER.

I'm 85% Equity/ 10% Bond/ 5% cash equivalent.

Yeh I know the medical thing is scary to think about but then I just realized there is zero way to plan for it.. whatever you put in your plan is just a wild guess anyway... who knows what the laws will be, what treatments will exist in 10 years, what meds will cost, etc. Everyone has to figure out what their comfort level is.

[ExFlyBoy5]

Congrats Karen...sounds like your retirement has been fabulous!

I have to admit I was a little confused as I didn't realize that this thread originated back in 2014. I was wondering, "Why is she using 1972 if she's 42 in 2017?" The math just wasn't working...but then I realized you recently updated the thread and cleared my confusion!

[Rianne]

I'm glad this thread was bumped to the top. I also was surprised when I realized I was reading posts from 2014. Thank you for updating Karen.

[RunningBum]

Quote:

Originally Posted by karen1972 I'm 85% Equity/ 10% Bond/ 5% cash equivalent. Yeh I know the medical thing is scary to think about but then I just realized there is zero way to plan for it.. whatever you put in your plan is just a wild guess anyway... who knows what the laws will be, what treatments will exist in 10 years, what meds will cost, etc. Everyone has to figure out what their comfort level is.

I did a 10 year average estimate based on how many times I thought I might hit my max out of pocket, went through the deductible, and various smaller amounts down to virtually nothing. I thought I was being conservative and overestimated them since I rarely needed to see doctors, but some bad luck with injuries, illnesses, and age related stuff made my estimates a bit low. Plus max OOP limits went up more than I expected. So did premiums, though the ACA subsidy helps. I don't feel like I made a wild guess, but it was a guess for sure.

[haha]

Quote:

Originally Posted by karen1972 For my own benefit thought I'd update this 3 years into it. Did pull the plug in Feb 2015, sold my home in Illinois (good bye astronomic taxes).. and ended up in North Carolina (well because Denver was booming and didn't like the housing prices or the snow it was having at that time). Now: 45 Spousish: 46 No Kids Annual Expenses: $52K which didn't change after all due to added health care costs. Net Worth: $1.3M ($1.2M is invested assets) - $80K ROTH IRA - $600K Traditional IRA - $520K Stock Investments - Pension of $2,050/yr no inflation adjustment - Spousish income currently at $12K at part-time gig which I consider a solid floor. So $52K-12K-2K=$38K out of $1.2M or about 3.2% WR and still not accounting for SS. I think I made the right decision, I wouldn't mind an extra $100k to be able to slightly upsize our home but not important enough to make me go back to work. When the market tanked in 2015 and my honey lost his job right after moving here I was a little freaked out... I did something completely opposite to what I would normally do and we went on an extended trip to Europe. When we came back refreshed, we simply changed our plans and he went to work full-time for a year.. which allowed us to offset cost of a new car, trip to Europe, cost of two moves, closing costs on the home, and cost of 4 trips to the ER at $3500/trip and tons of physical therapy/chiropractor. Now we are much closer to where we need to be and he is back to working part time. Just like in savings mode, I figure early retiring is about having a plan, sticking to the plan, adjusting to the bumps along the way to get you back on plan.

I looked up spousish but was unable to find much. Could you clarify what is a spousish? Does the net worth figure include spousish's assets?

Ha

[Yarnstormer]

Well shoot editing to say congrats and glad it's working out!

[NgineER]

Quote:

Originally Posted by aida2003 Great update and it's inspirational for others. What's your AA? It's funny (well, it's not) how life gives unexpected surprises like you said you both were both healthy before pulling the plug and now the update mentions ER visits. This part scares me the most when thinking about the ER.

I thought you were full time ER, not just visiting the ER. [emoji6]

[karen1972]

Quote:

Originally Posted by haha I looked up spousish but was unable to find much. Could you clarify what is a spousish? Does the net worth figure include spousish's assets? Ha

LOL yes spousish ..when you have been living with someone over 7 years but stay happily unmarried.. it makes one well versed on differences in tax/marriage/gifting laws.

it does include spousish assets which in 2014 his NW was zero ( or slightly negative) and has improved to $27K to the plus side, so a huge improvement on his side, but really negligible when talking our NW.

[karen1972]

Quote:

Originally Posted by RunningBum I did a 10 year average estimate based on how many times I thought I might hit my max out of pocket, went through the deductible, and various smaller amounts down to virtually nothing. I thought I was being conservative and overestimated them since I rarely needed to see doctors, but some bad luck with injuries, illnesses, and age related stuff made my estimates a bit low. Plus max OOP limits went up more than I expected. So did premiums, though the ACA subsidy helps. I don't feel like I made a wild guess, but it was a guess for sure.

I tried a 17% premium increase YoY plus $5K oop per person factor and still think that is a wild guess as max out of pocket isn't actually max, since lots of times there are caveats on medicines, therapy co-pays, things not covered like only X amount of therapy/chiropractor visits per year allowed.. etc etc etc.

My cousin had been diagnosed with a terminal, non treatable illness. Her family decided to give up everything to save her.. she found a doctor in Colorado doing experimental treatments and after 10 treatments she is doing great, no evidence of the disease after 5 years... but it was all out of pocket at massive expense..losing over $3M in real estate, plus their personal home, business, etc. ie dead broke but alive and starting over at 45.

[ugeauxgirl]

Thanks for the update- I am your age and glad to hear about your situation. Like your spouseish- I would be happy to be re-employed at some point if its necessary. My resume looks good and unemployment is (currently) low- I'm pretty sure I could get a job if I really needed to. I just need to get out of THIS job. Looking forward to joining you in the ranks of 40ish retirees soon.

[bloom2708]

OP, how are you estimating your healthcare costs? Seems low.

You are in the discovery phase. Now you need to dig in and see if you are comfortable with the numbers.

How will you handle lumpy type purchases? Cars, new furnace, roof repair, etc. Do you have a good idea of your spending over 2,3,4 years?

Are taxes included in your spending?

The pension is nice, but just eyeballing, I don't think you are quite there yet unless you want to really tighten the spending.

We are currently power saving for another 5 years or so. That might be a strategy. Look into career shifts where you can find the motivation for another few years.

Good luck!

[panhead]

Very cool OP, thanks for the update! I am in a very similar circumstance to yours, although a couple years older. I'm hoping to work till about 50 (about 3 more years) and then pull the plug. Our assets and such are similar, so nice to see you killing it! Please keep us up to date!


-Pan-