51 and (almost)ready to go to New Mexico!

[Mango1956]

Hello all,
I've been dreaming about retiring early ever since I started lurking on the Retire Early discussion board (Motley Fool) about 8 years ago. A lot of water under the bridge since then-got remarried, have stayed healthy, and the savings have continued. I have found this board, and played around with the marvelous FIRECalc, and have been encouraged by the results, albeit with Social Security playing a role Here are our vital statistics:

Savings/investments:
568K- all but 80K in tax deferred 401k's and IRA's 65 stocks, 35 other.
Continuing to save 11K per year in husband's 401K
Social Sec will contribute 10K per year in 2018 and 12K per year in 2022
NO pensions for either one of us.

House is paid off-worth about 400-420K
Land (New Mexico) loan balance is about 120K (no other debt)

Live in a small town in northern Calif. Husband is main income generator, but he is tired of it. I quit 2 1/2 years ago(I was tired of it) and earn less than 20K a year doing what I love-gardening.

We just finished tracking our expenses for this year, which is coming in at just under 31K. We could definitely do better (i.e. 500 bucks spent for wild salmon, for example!)

The plan is to sell the house, pay off the land in NM, and build a modest house on the land with what's left.
We plan on taking the leap at age 55, but of course will revise if necessary.
Main fears are purchasing, and affording health insurance and what if we get an extended bear market right when we decide to pull the plug.
We can work part time, but this will be logistically a challenge since we are out from town. Husband does nice woodworking, so maybe he can turn that into a profit center.
We have never made a lot of money at our jobs (neither one of us ever made more than 50K) but we are proud of our savings nest egg.
We look forward to the change that New Mexico will bring. We have family in Albuquerque (about 3 hours away from where we'll be.)

Thanks in advance for your comments,

Mango1956

[Dawg54]

Welcome! Continue to save like crazy and keep plugging the numbers into firecalc. Thats what we all did as we closed in on retirement. As you mentioned, health insurance can be a retirement buster if you can't find affordable coverage.

Good luck with your plans!

[RetireeRobert]

You "make less than $20K gardening"---means you make almost $20k gardening? If so, WOW! Consider yourself lucky, and for sure one talented greenthumb.

I agree, keep saving, build up that retirement stash for another 4 years. If you earn 7% a year for those four years, and add in the $44k additional 401k contributions (any employer match?), you will be very close to $800k when you are 55. That pot at SWR of 4% gives $32k annual income inflation adjusted each year. Then 6 years after that SS will kick in another $10k.

And, if I didn't misunderstand, can you keep doing the gardening and bring in another $15k+ from that?

Anyway, if $32k and a paid up house fit your budget. You can do it. If you and DH can bring in additional income doing woodworking, gardening, or other "pleasant" pursuit, you will be looking good.

[Mango1956]

Thanks for the encouragement. My gardening income is a combination of working at the local community college Ag dep't, doing plant propagation, garden maintenance, and helping put on the twice yearly public plant sales. The balance is working for folks in the community who need landscaping help. It's so much fun, but hard work for my 51 year old body.
Gardening in New Mexico will be different from here, but I look forward to the challenge. Also means more driving, more gas, etc.

I have a hard time thinking we can push up the nest egg to 800K, since we could see some down markets in the next few years. But, I am optimistically pessimistic, if that makes sense.

Also, our initial withdrawls would be more than 4% of the portfolio, but then would be reduced once SS kicks in to maintain a constant withdrawl amount. That is how I am getting the 100% success in FIRECalc, right?
Mango

[Coach]

Mango, welcome! It sounds like you've got a sensible plan laid out to take you to retirement. You're right to be concerned about health insurance -- that one keeps many of us awake nights. I did a little research on NM a while ago, though, and it seems to me they have very reasonably priced insurance available from a state high risk pool. That might speak well for health insurance rates in NM in general.

Originally Posted by Mango1956

Also, our initial withdrawls would be more than 4% of the portfolio, but then would be reduced once SS kicks in to maintain a constant withdrawl amount. That is how I am getting the 100% success in FIRECalc, right?
Mango

Yes, that's right. In my own plan I start with withdrawals at about 5.5%, falling when SS kicks in.

You got the plan, Mango. Congratulations. Celebrate with a little salmon

Coach

[RetireeRobert]

Originally Posted by Mango1956

I have a hard time thinking we can push up the nest egg to 800K, since we could see some down markets in the next few years. But, I am optimistically pessimistic, if that makes sense.

Also, our initial withdrawls would be more than 4% of the portfolio, but then would be reduced once SS kicks in to maintain a constant withdrawl amount.

Well, let's say you only get the pot up to $725k. With say $14k gardening/landscaping income, and SWR of 3.5% from nest egg yielding $25k, and then if DH can bring in even $9k from woodworking and/or part-time job, that gives you $48k annual and a paidup house. And a mere six years down the road SS kicks in another $10k.

Your actual annual budget is $31k.

Don't you think even "conservatively" you look like winners?

Is the $14k gardening/landscaping doable? (You now make close to $20K)
Is the pot of $725K in four years reasonable? (You have $568K plus add
$44k, then grow it at a mere 4.5%--think CD's anyone?--a year for 4 years, and voila! $725k)
Is the SWR rate of 3.5% "safer" than 4%---yawohl, es ist, mein Frau.
Is $9k from DH doable? (Woodworking and/or a part-time gig seems easy).

Congratulations. I think your biggest challenge is to simply stick with it for the four years. If you live on $31k and can conservatively make $48k in four years, with paidup house, and kicker SS of $10k a mere 6 years later, it looks good to me.

[Mango1956]

Coach, thanks for the encouraging words. I did compare NM Blue Cross online with Calif BC, and NM was cheaper for the "instant quote". But as they say, the devil is in the details. Gotta make sure we get the right type of coverage for our situation (am thinking high deductible, lower premium)
Neither one of us takes any prescription drugs, and we are healthy.

R.Robert, to answer your questions point by point:

We will be 40 minutes from the nearest town, and an hour to Las Cruces, the second largest city in NM. Getting landscaping gigs will be doable, but will involve alot more driving and I probably can't get the rate I get per hour here in Nor Cal. So realistically, I could make money, but it will be less.

DH got a lathe recently, and is turning out some nice vases and frog holders(for fresh flower arranging) in exotic woods-I think he could become one of those New Mexico artists you hear about. Can't swing a cat there without hitting one, you know.

I think 700K is reasonable, but one never knows what the market will do.
I could probably slam everything into a CD or Vanguard Prime MM acct or like vehicle to, as you say, insure a minimal return. Has anyone on this board done this 3 years before pulling the plug? Then what do I do, put it all back in the market once we reach the magic number?

I have to admit, I am a lazy investor, and don't do a lot of switching funds-we basically save through the 401K with a balanced portfolio and check in on the progress 4 times a year. I rolled my 401k into Vanguard. His is with Fidelity at work.

I know we've done a good job at saving-especially given our earnings history. But I am a cautious person and cutting the cord form Calif wages and launching ourselves into the wilds of New Mexico both exhilarates me and scares me!

Thanks again,
Mango

[RetireeRobert]

Originally Posted by Mango1956

I have to admit, I am a lazy investor, and don't do a lot of switching funds-we basically save through the 401K with a balanced portfolio and check in on the progress 4 times a year. I rolled my 401k into Vanguard. His is with Fidelity at work.

I know we've done a good job at saving-especially given our earnings history. But I am a cautious person and cutting the cord form Calif wages and launching ourselves into the wilds of New Mexico both exhilarates me and scares me!

Balanced portfolio with low turnover is good, especially for long timeframe retirement, and battling inflation while providing stability of capital at the same time. If you feel good with it, stick with it. It is the method I myself prefer. I just threw out the CD alternative as an ultra-conservative option. For longterm retirement, though, it leaves open the inflation threat in my opinion (see other threads on forum advocating "cash-equivalent only" investing, however. Some swear by it).

Exhilaration and fear----the twins of really living life to the max!! Go for it!!

[Niko]

Originally Posted by RetireeRobert

You "make less than $20K gardening". . .

I also make less than $20K gardening.