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43, targeting retirement end of this year
Old 06-29-2017, 02:09 PM   #1
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43, targeting retirement end of this year

Hi -

My story isn't short; you've been warned! :-)

Brief summary of our current finances
--2 homes (one is a "cabin" in northern MN). Both have mortgages, but the cabin will be sold next summer and has ~$100k in equity, after real estate fees. We intend to keep our main home for a while longer. Main home has about $170k in equity.
--we have $470k in savings right now - the vast majority is mutual funds & ETFs.
--we have $998,500 in 401k's and $18k in Roth IRAs - with again, the vast majority being in mutual funds & ETFs. We don't have a lot in Bonds.

Expenses
--when you remove cabin-related expenses, it's about $56k/year (including mortgage, property taxes, etc). We do not have an expensive day to day lifestyle (ie - one of our cars is 9.5 years old and the other is 6), though we do travel a lot for people with FT jobs. We do not have kids, but we do have a dog-child that eats whatever fits in his mouth (3/4 bar of Lever 2000, beeswax pellets, chocolate, etc).

Work Exit Strategy
--I intend to engineer a lay-off for myself; our company has them frequently, and we usually have one during 4th quarter. That's the one I'm eyeing up. If I'm successful, I'd get a severance worth $85k (pre-taxes). If I'm extra lucky, I'll also get a portion of my annual bonus (it's something they've done the past few years)...could equal another $20-25k (pre-taxes). This additional money isn't included in the previous savings number.
--My husband will continue to work until about this time next summer, and his income is able to meet our expense needs on two homes until we sell the cabin (we're not positive how long it will take to sell - it could be a while).

Retirement Lifestyle
--For the next 3 - 5 years (until we get sick of it or the dog dies), we plan to split time between an RV and our primary residence, traveling the US and Canada. We will purchase the RV and truck to pull it using the equity from the cabin. I've done a lot of research and believe our expenses will increase during the split RV/home time to $66k average for both. EDIT TO ADD: After RV-time, our expenses are budgeted to drop slightly to low $60's, plus what we get back from selling the RV would be added back into the taxable portfolio...right now, assuming we'll spend $100k and get $60-70k back after 3 - 4 years.
--We originally planned to rent out our main home and go full time in the RV for a few years, but my dad was very recently diagnosed with Stage 4 Colon Cancer. Plans were adjusted.
--We are not opposed to side hustles during retirement, or coming back to work in a number of years, but they won't be the all-encompassing jobs we have now (he's an engineering project manager, I'm a program lead focused on strategy, communications, and business operations). After traveling for a while, I'd love to work with small businesses or non-profits in some capacity. I've toyed with the idea of giving seminars through community programs as well. We have lots of ideas, but all I know is they won't be for The Man anymore!

And that's it! We haven't told anyone of our plans, and probably won't until October. We can't tell my family because of my dad's cancer; it's really thrown my parents for a loop. They spend a lot of time at the cabin (it's 2,500 sq ft with 210 ft of lakeshore - fully equipped), and they even have one room that they furnished (plus they have a boat they keep up there, they help keep things maintained - so they have a small sense of ownership even if they don't actually own it). We want to wait until we see how dad responds to chemo and surgery in the fall so we don't add extra stress and uncertainty during this time. We also don't want them to think we're selling it because he has cancer - we had decided to go down this path and were going to tell them within days of his emergency surgery and cancer diagnosis. Terrible disease, and with bad timing here too.

It also means we can't tell my husband's family because we can't risk my parents finding out our plans from anyone besides us.

So I'm telling all of you - I think we're financially ready (and flexible and skilled enough that if we need/want to work again in the future, we can). I've been with my company 20 years as of next month, but this corporate stuff feels so very meaningless right now. We were already ready, and now I'm extra ready.

If all goes well, in about 6 months, it will be my last day!
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Old 06-29-2017, 02:22 PM   #2
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Congrats and welcome to the forum! I am sorry to hear of the health news, that is no good and yes, can certainly affect current and future plans. There is a plethora of information on this forum and you can (if you haven't already!) spend hours/days/months perusing the many, many useful threads.

And if you have any questions as to how it is to retire *really* early, there are a few of us youngsters that will tell you that no time is better than NOW!!! So, embrace the VERY early retirement mantra...it is a wonderful, WONDERFUL THING!
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Old 06-29-2017, 02:23 PM   #3
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Did not seem to see you mentioned health insurance in your retirement.
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Old 06-29-2017, 02:25 PM   #4
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Hi CarGal, welcome. A few first impressions. Have you considered healthcare in your assumptions? Depending on where you live, and what's available on the exchanges this could get quite expensive.


With ~ 1.5mln, a 4.4% withdrawal rate seems quite high. Have you run your scenarios through FireCalc? If not, definitely do. Also, I assume your husband is the same age as you. This means you have to make it roughly 15 years before you are able to dip into that 401k money so, again the withdrawal rate against the 470k seems a bit high. I think your scenario can certainly be done, may have to recheck the expenses.


Good luck and hope you are able to pull it off!
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Old 06-29-2017, 02:28 PM   #5
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Welcome to the forum!

If you haven't already seen it here is a list of questions that you should have good answers to:

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 06-29-2017, 02:33 PM   #6
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43 and you have arrived nice. Rent out your main home? To like total strangers? We have threads about this, Im not a fan of someone living in my castle. But i see that this renting part is off the table. Sorry to hear about your dad, I wish you well with that situation. As far as helping a non profit, you cant start with me, every business venture i tried was definitely a non profit hahaha, enjoy your new retired life, keep us posted on the RVing.
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Old 06-29-2017, 02:37 PM   #7
Confused about dryer sheets
 
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Thanks!

First - healthcare. I have $500/month budgeted in the retirement budget, but I actually think that will be high. I definitely know things could change between now and 2019 (when we'd start on something not provided by either of our companies). We intend to stay with as low as income as possible (not hard, I think, since we won't be working and it will just be cap gains that will provide our income level), so we *should* (again, subject to change) receive credits to help offset healthcare costs. Minnesota has very good public coverage - we always have, even before ObamaCare came along (we are one of the Medicaid expansion states though). Estimates from the MN website are that we'd pay under $200 for both of us per month for a silver plan through Blue Cross (which also gives us access to a national provider network while we travel). But, again, $500/month is my budget. We are both in very good health.

Brokren - we are going to start a Roth Conversion ladder right away. I project we'll tap into it at age 55 or 56, and will use it to bridge the gap until we have full access to 401k's and the Roth gains at 59.5. I built a (very complicated) spreadsheet to check everything, am tracking via MadFientist, and I did use the FireCalc tool back when we first started investigating this (back in March - I need to check it again, because I think that was when we were going to full time RV). We also met several times with an independent financial planner, who gave us two thumbs up.

ExFlyBoy5 - thank you!! I know it's super early and we'll have to sacrifice some things to do this, but we are mentally prepared to do so...and expect the payoff to be worth it.
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Old 06-29-2017, 03:13 PM   #8
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Very sorry to hear about your DF. Best of luck to him and your family on dealing with his health issues.

Having said this I frankly think your plans seem very tenuous financially. Even if your health premiums are initially only $500/month, a number that may increase significantly in the near term depending on changes to the ACA, they will surely increase as you age. Added to this is the high withdrawal rate that you plan. Have you run firecalc? I would think that the success rate would be relatively low. Sequence of returns risk would also be a big concern where your withdrawal rate could be even higher. Perhaps you should look at this as more of a sabatical for a limited period where you acknowledge that you will likely return to the workforce for a number of years to replenish your nestegg.
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Old 06-29-2017, 03:26 PM   #9
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UPDATE:

Just ran FireCalc, assuming no social security (which I don't believe will be the case - I believe it will look different in 20 years, but I don't believe I'll receive $0, either). Predicted 45 more years of living (I should be so blessed!) and it returned a 97.1% success rate. 1 cycle failed.
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Old 06-29-2017, 03:41 PM   #10
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Also, we don't intend to preserve our taxable savings account. We intend to live from it and more or less deplete it (thoughtfully, carefully) until a bit before regular retirement age, at which time we'll switch to our 401k's, which should be about $2M (yes, after taking some out for Roth conversions - and there should be around $400k left in Roths at that time, too). That's with 6% average growth on the 401k's and 4% on the Roth's. I'm assuming 3% growth on the taxable account, though in reality, we'll keep what we need for the immediate 5 years in something lower risk equal to about 3%, and the rest of the taxable portfolio will remain in stocks...so 3% might be a little conservative (but I'd prefer to forecast a little conservatively).

Totally understood re healthcare comments - it's a huge unknown, but if it's the largest unknown I have, I'll work it out as it's figured out. Worst case we work in an Amazon warehouse for 3 months and go on their COBRA (a number of RV'ers do this - do we "want" to - no, but if we have to, of course, we'll do it). I think the key here for us is flexibility...
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Old 06-29-2017, 03:43 PM   #11
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Quote:
Originally Posted by CarGal View Post
UPDATE:

Just ran FireCalc, assuming no social security (which I don't believe will be the case - I believe it will look different in 20 years, but I don't believe I'll receive $0, either). Predicted 45 more years of living (I should be so blessed!) and it returned a 97.1% success rate. 1 cycle failed.
Your golden, as an eternal pessimist I dont think soc sec will be zero either.
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Old 06-29-2017, 03:44 PM   #12
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Agree with Golden Sunsets, the $500 per month for healthcare seems very low, especially as you age. I have $2k per month (OK, maybe too pessimistic) in my retirement budget for healthcare related costs (premiums, deductibles, co-pays, prescriptions, etc).
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Old 06-29-2017, 04:04 PM   #13
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Quote:
Originally Posted by brokrken View Post
With ~ 1.5mln, a 4.4% withdrawal rate seems quite high. Have you run your scenarios through FireCalc? If not, definitely do. Also, I assume your husband is the same age as you. This means you have to make it roughly 15 years before you are able to dip into that 401k money so, again the withdrawal rate against the 470k seems a bit high. I think your scenario can certainly be done, may have to recheck the expenses.
OP: At first glance, I had similar concerns, but in just a few posts, you have convinced me that your are a very careful and deliberate planner who is well aware of potential pitfalls and has fallback options in place. I think you will be able to make this work. Your biggest risk, as others have mentioned, is healthcare. Hard to predict the future of the healthcare system, but even harder to predict your health - things can change in a hurry. That said, you seem well aware of the risks, so "go for it"!

PS: Sorry about your dad's health problems
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Old 06-29-2017, 06:03 PM   #14
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Agree with Golden Sunset and brokrken that $500 is not enough for health and dental coverage. It is extremely hard to predict if someone is going to need a surgery or other major decease treatment while your amount is only for very basic insurance what may or may not lead to financial ruin if medical care is actually needed. Perhaps a part time job may be needed to add to med coverage after COBRA expires.
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Old 06-29-2017, 08:19 PM   #15
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I engineered my severance, worked very well.

Re HC... DH and I are within a few years of you, and our COBRA is 1200 per month. the exchanges? For high deductibles we'd be looking at a minimum of $800 per month, for very basic BC HMO's. And that plan already pulled out of our state for 2018.

Anything we think we "know" about HC costs, afaic, is a complete wild card until the current ... stuff... is resolved one way or the other. I'd urge you to shop on the exchanges now to at least get a feel for the available plans as a baseline. But a year from now those plans may very well be gone. I think any placeholder budget should expect a bare minimum of $1k per month at this point, just to cover insurance and check ups and what not.
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Old 06-29-2017, 09:37 PM   #16
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Sorry for my somewhat unrelated question: where can I find the tool to run FireCalc that you guys mention all the time? Thanks in advance.
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Old 06-30-2017, 06:15 AM   #17
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Here you go
FIRECalc: A different kind of retirement calculator
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Old 06-30-2017, 01:28 PM   #18
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Thanks everyone.

Re Healthcare, I priced it out but after your feedback, I went back and priced it again. We'll qualify for MinnesotaCare, which estimates we'll pay $80 per person, per month. Copays are $15 - $25 unless it's ER, which is $50. No deductible. Only covers care in MN, so we'd probably buy a supplemental travel coverage of some kind for the times that we're not in MN (5 - 6 months a year - I have not checked on costs for this yet).

If we don't qualify for MinnesotaCare, we'll still qualify for APTCs, and estimates for a silver plan are that we'd pay $300/month, or $160/month for a bronze plan. There are a few other silver options that cost less, but the one I've priced I know has nationwide provider access and coverage. Another one I like (but haven't confirmed nationwide access, other than seeing that it's a PPO and not an HMO) is $300/month with copays for office visits instead of paying a % of cost (no deductible for in-network office visits - just copays for normal office visits).

Both of the above options have income limits, but for paperwork purposes, our "income" will be long term cap gains only (along with Roth ladder conversions), and I believe we can work within those confines.

Lastly, yes, I know healthcare is this massive unknown and has SO much certainty around it. I'll continue watching Capitol discussions on this topic, and local ones as well. With flexibility on our part, I'm confident we can work through whatever comes up (even if it means working for health insurance at some point in the future, as long as it's not a return to corporate life! we're willing to risk this.).
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Old 07-02-2017, 03:41 PM   #19
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Thanks a lot!
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