49 and missing my goal of 50

[Live And Learn]

Hi Everyone !!!

I've been spending lots of time reading and learning since joining a few days ago. I love the support and guidance that I see from the forum members - seems like a safe place to open up and discuss my goals.

When I was 30 I set an early retirement goal for myself of 50. Plan was for DH to work a bit longer. As it turns out DH went into SER about 10 years ago (at age 44) and I'm still w*rking FT for MegaCorp. The past 2 years have been more stressful at work than usual and I struggle to get out of bed every day. I've been readling with interest the threads that discuss that sometimes its just the j*b that makes us want to ER. That's probably true in my case but I'm still not ready to give up that goal of 50 !

To achieve my goal to ER at 50 I've LBYM and maxed out on my 401K almost all my w*rking life. We don't go on vacation often (maybe once every 3 years - a cruise or a week at Disneyworld), we don't have smartphones, we still have our 15 year old big cube of a TV (purchased because our original TV died and couldn't be repaired). I do have a very nice house, but it cost less than 1/2 of what we were approved for when we bought it 10 years ago. Only debt is mortgage which I could easily pay off tomorrow without blinking an eye.

To retire at 50 I'm using a portfolio life of 40 years. Firecalc says that based upon my input my portfolio would fail 3 times (1 instance at 35 years, 2 at 38 years). Fidelity says my portfolio has a 90% chance of lasting 32 years and a 75% chance of lasting 42 years. Vanguard says I have a 80% chance of my portfolio lasting 35 years but only a 73% chance of it lasting 40 years.

I'm willing to work part time and SER for another 5 years but I really want to get on with my real goals of volunteering and making a true meaningful impact. However, the PT work I'm willing to do is $10 / hr type work. After 27 years at MegaCorp I'm about done with with BS and based upon my data that only adds a year or two to the portfolio live I calculated without the PT work.

I'd be interested to know what confidence level of portfolio longevity that those who ER'd felt comfortable with before they made the decision to do it.

My gut tells me that unless I have 90% confidence of a 40 year portfolio across all three planners that I may have alot of sleepless nights wondering if I jumped ship too early.

Thoughts and feedback appreciated.

 

[pb4uski]

As you have no doubt read elsewhere on these boards, an important thing is sequence of returns and the flexibility to contract or expand spending/withdrawals in response to investment performance.

If you could dial back spending in response to a bad year (or years) then your confidence interval is probably higher than what you are seeing on the analyses that your are running because those analytic tools can't factor in responsiveness.

 

[rescueme]

I'd be interested to know what confidence level of portfolio longevity that those who ER'd felt comfortable with before they made the decision to do it.

I also looked at commonality of results when using FIRECalc, VG's FE, and Fidelity's RIP to give multiple views of my retirement income plan, before doing so.

BTW, you can change the CI on Fidelity's RIP to take you down to 95% if you want a view at a more conservative result (assuming you are using the full planner and not just the Retirement Quick Check or My Plan products).

Retiring a decade older than you, the RIP result met the 95% CI when forecasting till age 100 for both DW/me (since you asked).

 

[frequenttraveler]

GO FOR IT!!

Look, I am just at thoughtful about this stuff as the next guy. I don't just do stuff willy-nilly. I got a very late start toward retirement, as my blog discusses.

So, with that said, I sense a large amount of discontent with your worklife. Thus, I ask myself this: If I ER'd today, what is the worst that can happen?

Seems like the worst that can happen is that you might have to work longer part-time than you wanted to, OR...worst case...have to rejoin the work force. Yes, that would be a tragedy, I agree...

I am guessing that you would find a way to make it work, either through cutting expenses more than you now think, or possibly keeping a part time job a bit longer than you wanted.

In sum, you will be free from Megacorp...what's that worth to ya?


I hope this finds you well,

Gray Fox

 

[Live And Learn]

If you could dial back spending in response to a bad year (or years) then your confidence interval is probably higher than what you are seeing on the analyses that your are running because those analytic tools can't factor in responsiveness.

My budget doesn't have alot of discretionary spend in it - $3k for Travel, $2k for "stuff", plus $3k for future one time expenses. Not sure the last one is even discretionary !

ETA: I have about 3k/yr each in "spending cash" (greens fees, pottery classes, hobby costs). Those could be scaled back but my gut says that giving that up is not retirement - its living in "poverty"

 

[clifp]

My budget doesn't have alot of discretionary spend in it - $3k for Travel, $2k for "stuff", plus $3k for future one time expenses. Not sure the last one is even discretionary !

ETA: I have about 3k/yr each in "spending cash" (greens fees, pottery classes, hobby costs). Those could be scaled back but my gut says that giving that up is not retirement - its living in "poverty"

It is some what difficult to give good feed back since you haven't posted specific numbers. (If you aren't comfortable doing so we certainly all understand. )

If you are feeling that you are closer to living in poverty than enjoying retirement than I'd say you should wait.

There have been a fair amount of unexpected expenses (along with some foolish/risky investments) that would have blown most of my budget if I didn't have a lot of padding. Example include $11,000 for dental implants, flying back to the mainland pretty much every 3 or 4 months to take of care mom.

The world has changed a lot in the last few years. In 2008, 8 years into my very early retirement when my net worth dipped below my comfort level, I realized that Plan B, "I'll go back and get a job" wasn't such a slam dunk. Number one I hadn't been working for 8 years and number two there weren't a lot of jobs.

 

[jclarksnakes]

...Welcome to the forum. All that Firecalc and the Fido tool are giving you is a percentage estimate of whether your portfolio will be depleted or not over the specified timeframe. You do not say whether all of your retirement is based upon your portfolio or whether part is covered by SS and/or pensions. If SS and/or pensions will cover a sizeable percentage of your retirement expenses then a 70% to 75% probability of your portfolio not being depleted may be good enough. If you and your husband have no SS and no pensions coming the 70 to 75 percent probability seems tome to be not high enough. You do not have to share specifics if you do not want to but without knowing about SS and/or pensions (also whether pensions are cola'd) I do not think we can provide an acceptable answer to your question. The good news is that you know about LBYM and have saved and will surely be able to retire early. The big question seems to be how early that will be.

 

[Live And Learn]

I have no issues with sharing specifics so here we go:

Budget = 91k annually:
22 medical expenses (insurance premuim, deductables, medications)
12 income tax
7 LTC (assuming I can get it !)
6 Home Taxes / Insurance
6 Utilities / Cable / Cell Phones
5 Home Maintenance / HOA
6 Food cooked at home
2 Outside dining
7 "fun" money (hobbies, pocket money, etc)
4 Cars (insurance and maintenace, gas = "fun money")
1 LTD
2 Life Insurance
3 Vacation
2 "stuff" (mostly things that need to be replaced)
3 future one time expenses
2 Pets
1 Donations


I've used 79k in firecalc assuming 12k in either earnings or SS. 12k is DH's current salary. SS even if we stopped working today would be 30k, so I've left myself an 18k buffer there.

Current portfolio = 1.9mm (excluding real estate and 200k set aside for one time expenses for new roofs, new A/C, a couple of fantasy vacations, and the like)


I feel like such a dork worrying when I have more than I could have EVER imagined.

Thanks again

 

[Live And Learn]

The world has changed a lot in the last few years. In 2008, 8 years into my very early retirement when my net worth dipped below my comfort level, I realized that Plan B, "I'll go back and get a job" wasn't such a slam dunk. Number one I hadn't been working for 8 years and number two there weren't a lot of jobs.

Thats exactly it - a reliable Plan B is hard to find !!

 

[jclarksnakes]

So you should have pretty good SS and no pensions coming? Couple of things I see.

1. 7K for LTC and then 1K for LTC? Maybe someone with a portfolio of 1.9 million does not need LTC insurance. My parents spent quite a bit on LTC insurance. Dad died at home two years ago with hospice care. Medicare covered it all. Mom is now in an assisted living place. Not one penny paid by their LTC insurance so far. I have heard that LTC insurance is a super cash cow for the insurance companies because so few people actually qualify to receive benefits. Also, many people who actually get into nursing homes do not live very long in them. If you do not seriously deplete that 1.9 million portfolio spending 8K for LTC insurance every year it could pay for nursing home care for quite a few years. You and I do not have smartphones but I would buy one or two dozen of them before I would ever buy LTC insurance.
2. 2 thousand a year for life insurance? Maybe someone with a portfolio of 1.9 million does not need life insurance. DW and I have some life insurance but we both have pensions and if one of us was to die in the next few years the insurance would help cover the lost pension income. If our portfolio was 1.9 million we would not need or have life insurance.
3. Instead of just running the Firecalc excluding the one SS and giving yourself a buffer try running it with both your and spouse's SS figured in and see how much different your probability percentages will be.

Maybe you are right and I am wrong on all of these things but it seems to me that 1.9 million is a very nice portfolio and 91K is a very reasonable annual budget but I would spend more of the 91K having fun and less of it on insurance that might not be needed. If the economy went south for a couple years you could cut back to your current level of fun spending instead of mine and probably get by.

 

[clifp]

I think you are fine. When I asked the question I was trying to figure out was this a couple with $800K portfolio and modest SS, carefully budgeting every dollar, or somebody with a lot more money and conservative budgeting. You clearly fall into the later category.

Getting rid of 10K for life insurance and probably LTC insurance as JClark suggests puts you down to spending $80K with 2.1 Million portfolio right at the 4% SWR. Now you can argue that at age 50 4% is too aggressive but you do have SS to fall back and I feel the 4% SWR not including Social Security is just fine.

In addition looking at your budget I think you being conservative on things such as medical insurance, taxes, and possibly utilities.

I feel like such a dork worrying when I have more than I could have EVER imagined.

Oh you'll fit into the forum just fine there are a whole pile of us. I think there are around 3 million Millionaires in the US so some huge percentage have way less than many people on the forum and most of them retire and do just fine.

 

[Live And Learn]

Oops - that second LTC should have read LTD (I've corrected it now).

Interesting - adding in an additional 8k/yr for DH's SS gets me to 97% success rate with the only failure at year 38

LTC is one of those "nice to haves" until you need it. Since we have no children I do worry about those "what ifs". I'm not even sure we could get LTC given pre-existing conditions, so at worst I consider it a "self insurance surrogate".

Hearing about your parents has made me sad and my heart goes out to you JClark

 

[jclarksnakes]

Oops - that second LTC should have read LTD (I've corrected it now).

Interesting - adding in an additional 8k/yr for DH's SS gets me to 97% success rate with the only failure at year 38

LTC is one of those "nice to haves" until you need it. Since we have no children I do worry about those "what ifs". I'm not even sure we could get LTC given pre-existing conditions, so at worst I consider it a "self insurance surrogate".

Hearing about your parents has made me sad and my heart goes out to you JClark

What if? Worst "what if" I can think of would be both you and your spouse end up in a nursing home for a long time. Chances of that actually happening are very slim. With 1.9 million in your portfolio and you and your spouse both collecting SS you could even pay for both of you in a nursing home for many years. You hear people talking about nursing homes being expensive but most of the people talking about it do not have 1.9 million saved. I think you are a rich person thinking like a poor person. I actually think if you had children that would make it a slightly (emphasis on slightly) better idea to have LTC insurance. The insurance would help to make sure there was more for the kids to inherit.
...Thanks, My dad had a great life till he was around 75 and started showing signs of dementia and Parkinsons. We could have put him into a nursing home but home care with Hospice was a much better choice. He was 82 when he died. Mom has had some issues and needs the supervision of assisted living but thinks she is still able to live alone. She is unhappy about it but it is what it is. My most fervent wish for my DW and I is that we stay healthy for as long as possible and then die suddenly. Perhaps our societal views will change over the next couple decades and we will have a system for picking the right time to die.

 

[Live And Learn]

I think you are a rich person who wants to keep thinking like a poor person.

Not rich, but definitely comfortable.

My fear is being a bag lady someday. Some part of me says I'm crazy, the other part says "better safe than sorry". If Fidelity is right then the bag lady thing is a possibility at 82 ... thats a long time away but heck ... who wants to be a bag lady ?

 

[lhamo]

Looks pretty good to me, especially if you drop the life insurance/LTD (why do you need LTD if you and spouse are both working jobs with limited income, if/when you are working?) and are willing to make a few modest changes in your expenses to build up your nest egg. Food costs seem very high to me for two people -- perhaps the greater time/energy you will have for shopping for bargains and cooking yourself will help you drop this figure significantly after you are retired. 4k for cars and 2k for pets also seems a bit on the high side to me, at least as an average annual expense.

If you are really concerned about it, what difference would working 6mo or 12mo more make in your projections? You could still retire at 50 and 11.99 months and consider yourself "retired at 50" if that goal is really important to you. Or maybe there are ways you could stay on part-time at your employer or work as a consultant in your field for another 6-12 months, at least until you see how it affects the bottom line.

Also consider that your current projections show possible failure at 38 years out -- that's age 88. If the market continues to do well, that might get cancelled out within a year or two just by nature of you continuing to add to the pot and it continuing to grow.

good luck making your decision -- we look forward to hearing more about how things turn out!

 

[jclarksnakes]

Not rich, but definitely comfortable.

My fear is being a bag lady someday. Some part of me says I'm crazy, the other part says "better safe than sorry". If Fidelity is right then the bag lady thing is a possibility at 82 ... thats a long time away but heck ... who wants to be a bag lady ?

The reason I asked about SS and pensions in the first place was that Firecalc and the Fido tool are only telling you about probabilities that your portfolio will be deleted. Total depletion of your portfolio would be terrible but you would still have your SS and could live better than most bag ladies. BTW, it seems to me that it would be better to be a bag lady than a total care nursing home patient.

 

[Rambler]

based on the above, you will probably be OK. If you don't feel like you can sleep at night at the SWR required to cover your expenses, work another year and see where you are, re-evaluate, and decide then to ER or work another year beyond that.

Personally, I am 50, and don't feel comfortable at 4% at this age. I feel better at 3%...for starters. But, everyone is different, and everyone is invested differently.

Good luck with your decision making process.

R

 

[INTJ10]

Live and learn, we are in very similar position as you. So the advice you are getting from the people with experience is very helpful to us as well.

One of the thoughts I have to reduce the risk is for one of us (wife or I) to get a part time job that we truly enjoy to cover health care. I don't know if this is possible or not. The alternative seems to be keep grinding away so we can stash as much money as possible if we don't want to deal with the risk.

 

[ronocnikral]

what about DH's SER income? kick him in the pants and tell him it's time to bring home the bacon for a few years.

while I believe this is implied above, you really should have two budgets. What happens if you have to tighten your belt. Can you drop the spend for categories such as "stuff" and hobbies, eat out less and lower the grocery bill? I'm confident that you could easily slice your budget in half if you had to, as I know our bare bones budget, with mortgage and child, is around $40k per year. We also have about a year's supply of food, nothing anyone would want to eat fulltime all the time, but enough to get us by if we had to.

I would say figure out the bare bones budget and take the plunge. But, I am just a spectator....

 

[Mulligan]

Hello Live and Learn. I noticed that you plan 22k, almost 25% of your retirement income devoted to health care.... Ouch! I am retired and a year younger, my budget in this area is about 6%. 25% would put me back to work immediately! I am no expert on medicare, but have you factored into your future planning that you wont need to spend that much money in this area once you turn 65? Seems your figures could drop quite a bit in that area once you hit that age.

 

[Live And Learn]

Spending alot of time being VERY serious about this .... instead of "can I' my mentality is now "how can I make sure this happens !".

I probably do have 10 - 12k too much budgeted between Medical, LTC and LTD insurance since DH's job does include an employer subsidized plan. So right there is another "cushion" I've built into the budget.

Today I will be gathering all my receipts and statements for a checkpoint into my spending and will see if some of the other expenses are overstated as well. I think I need to run a set of numbers "for fun" that has all the "contingencies / cushions" taken out of it just to see where I land. All of these planners are supposed to be nearly "worst case" so I'm coming to realize that my budget is "the worst of the worst" ....

wouldn't it be funny if I found I could actually spend a little more in "fun money" then my budget has ? Then again, I can't imagine how 4% SWR could possibly work over 40 years .....

I think I need to change my avatar to a picture of a scardy cat !

 

[Live And Learn]

Food costs seem very high to me for two people -- perhaps the greater time/energy you will have for shopping for bargains and cooking yourself will help you drop this figure significantly after you are retired. 4k for cars and 2k for pets also seems a bit on the high side to me, at least as an average annual expense.

Food is budgeted at $120/week based upon current spending. I currently base my menus off of sale items and stock up on sale items. I eat steak maybe 1x every 2 weeks. Would love to eat more fish - but its so expensive in the stores ! Retirement time will definitely include more fiishing time !!! Coupons could help a bit but I dont see all that much room.

Cars covers 2 cars (both fully paid for - one 11 years old, the other only 2, both purchased used) and includes $2k for insurance and $2k for maintenance.

Agree that the pets expense is high but my current dog is "special needs" and should live another 10 years. After that the costs will go down ... unless I get the "luck" of the straw again with my next rescue. For me life w/out a dog is just not the same, so its almost a non discretionary expense LOL

If you are really concerned about it, what difference would working 6mo or 12mo more make in your projections? You could still retire at 50 and 11.99 months and consider yourself "retired at 50" if that goal is really important to you.

I love it - thats true - I have 18 months until I turn 51. I have time to make this work or make a conscious decision that I'm putting this off because I WANT to , rather than HAVE to.

Pehaps knowing that I actually do have enough F-U money will make my current j*b tolerable until I can get Fido to tell me I have a 90% chance of my portfolio lasting to 90. FireCalc is already on my side !

I'd like to thank everyone that responded. I love this place !!!

 

[Koolau]

Live and Learn,

A couple of thoughts to consider:

In your retirement stash, have you considered the effect of taxes on your tax-deferred money? If most of your stash is deferred, the taxes could be a huge bite - especially since you will be living from your portfolio. Each time you cash out some deferred money, you might have Fed and State (perhaps city/county) tax to pay. I say this because I find this to be an issue with our finances. I have begun considering my deferred money as equal to 0.7X the nominal amount. In my case, that's a big difference as much of our stash is deferred. This is a bummer, I know, but needs to be considered.

On (perhaps) a brighter note, I picked up on your use of the term "Medical". If that means you live in California, I have the perfect solution for you (well, I'll let you decide if it's perfect). Simply check out 3 or 4 "low tax", low COL states (I think TX, FL, MS, etc.) would qualify. As a back-up, you could always move to a low (total) cost region and live like a queen on your stash. I'd wait until I saw a portfolio failure on the distant horizon, but at least you have that as a backup.

I had to laugh when clifp talked about the fallacy of his "plan B" - going back to w*rk. I have NO plan to go back to w*rk, but I do have a back up (which might also work for clifp). We could move from Hawaii to TX (etc.) and also live like kings. My 1100 SF place here would buy me three 2000 SF ranch-style homes in certain areas of the mainland. I would have to be in real portfolio distress to use this backup, but it IS available to me. Perhaps you are in a similar situation, back-up wise.

Good luck and YMMV.

 

[Live And Learn]

Thanks Koolau . Appreciate the feedback. We moved to FL (no state or local income tax) about 10 years ago. Homeowners insurance is ridiculous high, but not higher than the State Income tax we paid before. My 12K of income tax assumptions in my budget assumes I have 80k in taxable income .... another area where I'm probably over conservative

I'm still not understanding how a 4% SWR makes sense ... but ... I sure hope it does !!!

 

[REattempt]

You can take out the 1K for LTD.

Disability policies are an income replacement policy. If you RE and have no (or very little) earned income, the LTD policy will not pay out.

You can maintain a policy while you are on sabbatical or looking for work. After about 6 months or so, they expect you to cancel the policy and likely will not honor it if you have not had employment income (W2 or 1099) in the last year.

Ask me how I know Just my 2Cents. Call your insurance company for details.

As for the "by 50 thing," my goal was Fired by 45. I didn't make it. Took me to 46 1/2. Didn't make a bit of difference, amazing that it happened anyway. Now it's just a funny story that I missed it by a year and 1/2. Don't sweat it.