Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
52 and getting close to pulling trigger
Old 05-05-2017, 01:13 PM   #1
Dryer sheet aficionado
 
Join Date: May 2017
Posts: 36
52 and getting close to pulling trigger

Hi, I am new to this forum. Have 2 questions below. But first a few data points on our scenario

My wife worked for 20 years at a mega corp (she stoped working 5 yrs ago) and I am in my 30th year at a mega crop.

Very thankful that Income over the last 10 years has been well above what we need for living expenses. We have saved from day 1 out of college. Thanks dad for instilling in me the discipline to save first.

Next year we will have 1.4 mil in qualified retirement accts and 1.4 mil in brokerage. For the last 30 years we have been 90% equities 10% cash. But shifted recently to 50% cash 50% equity. We are preparing to go 60% equities and 40% fixed income once interest rates run up a bit. Also, 150k in emergency fund. First 2 years of retirement income is covered through a deferred comp program. No debt. No pension.

Questions
1. We are targeting 7,500-8,000 per month as expenses in retirement (does not include income taxes). We have drafted several mock retirement budgets and the numbers seem reasonable. Included 1,500/ month for health insurance, need to include son in coverage for 2 more years. Does this seem reasonable?

2. I have an aversion to paying an advisor 1% to manage our money. I am planning to use a fairly simple ETF or fund allocation model (like Morningstar models developed by Christine Benz). Thoughts?

Appreciate any guidance from those who have taken the plunge.
__________________

beachfire is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-05-2017, 01:23 PM   #2
Thinks s/he gets paid by the post
euro's Avatar
 
Join Date: Oct 2015
Posts: 1,100
Welcome, beachfire! Looks to me like you may be in very good shape (have you plugged your numbers into FIRECALC yet?), although the biggest unknown is healthcare; especially right now where everything is up in the air. Any shot at retiree health insurance after this many years with Megacorp? Often this is based on some "age+service" formula and you'd be over 80 in that regard. I know this benefit is slowly getting wiped out be more and more companies, but certainly worth checking, if you haven't already.
__________________

euro is offline   Reply With Quote
Old 05-05-2017, 03:38 PM   #3
Recycles dryer sheets
 
Join Date: Dec 2015
Posts: 244
Seems tight. If you are at 50% equities on 1.4 Mil, pulling 4% (a bit high but using historical averages), that's 56K per year - assuming the market cooperates and you don't hit a bad sequence of returns period. You could burn down your cash to fund the other 40K/year needed and that'll get you 35 years without inflation..but what about inflation and unpredictable HC costs?

PS: do you include inflation in your spreadsheets? I did, and our 80K estimated annual expenses this year increases at a rather frightening and sobering pace, even at 2% Annual.
RetireSoon is offline   Reply With Quote
Old 05-05-2017, 05:24 PM   #4
Dryer sheet aficionado
 
Join Date: May 2017
Posts: 36
Thanks for replies. No luck on mega corp sponsored health care. On the point about burning down the 1.4 in brokerage acct. My thinking is that the other 1.4 that is in IRA won't be touched until I am 59.5 and that along with SS at 67 will create the bridge we need into old age. I have not tried firecalc yet, will do that this weekend. Thanks for the thoughts.
beachfire is offline   Reply With Quote
Old 05-05-2017, 05:46 PM   #5
Full time employment: Posting here.
 
Join Date: Sep 2013
Posts: 588
A really coarse calculation says your $90-96K projected annual spending is 3.1-3.3% of your $2.95M (1.4+1.4+.15). This is generally thought to be a reasonably safe withdrawal rate for a 40 year retirement. Your asset allocation also seems OK (though I'd probably stick some of that cash in short term bonds if nothing else).

That said, you'll find quite some diversity of opinion here on what constitutes a reasonable asset allocation and safe withdrawal rate. For a long (40+ year) retirement I, for instance, think the traditional 4% safe rate is too aggressive and wouldn't go higher than 3 (and in my own case actually am closer to 2). My (admittedly arbitrary) 3% is pretty close to your projected spending. Is there some flexibility in your spending level? Could you comfortably live on a 3% withdrawal rate or even less if investments don't perform up to expectations over time?

I don't mean to be a downer. Your numbers look OK to me. Just evaluate your spending needs carefully and run some detailed retirement calculators before pulling the trigger.
stepford is offline   Reply With Quote
Old 05-05-2017, 05:49 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Mar 2017
Location: New York City
Posts: 2,838
50 % cash? when did this shift occur? so your a market timer. i wish you well. some people make fortunes doing that. others get beat up. let us know when you jump into the bonds, id like to follow if this timing was a good move.
__________________
Withdrawal Rate currently zero, Pension 137 % of our spending, Wasted 5 years of my prime working extra for a safe withdrawal rate. I can live like a King for a year, or a Prince for the rest of my life. I will stay on topic, I will stay on topic, I will stay on topic
Blue Collar Guy is offline   Reply With Quote
Old 05-05-2017, 05:59 PM   #7
Dryer sheet aficionado
 
Join Date: May 2017
Posts: 36
Thanks. We can dial back spending. I will look at budget and see what discretionary stuff would have to give when times are tighter. Definitely not a market timer. Spent 30 years fully invested with 90% equities. Have been selling down equities to move to 60/40 allocation. Took it down a bit beyond what I needed. But plan to move to target 60/40 allocation over the next year or so.
beachfire is offline   Reply With Quote
Old 05-05-2017, 06:30 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Posts: 1,592
Quote:
Originally Posted by RetireSoon View Post
Seems tight. If you are at 50% equities on 1.4 Mil, pulling 4% (a bit high but using historical averages), that's 56K per year - assuming the market cooperates and you don't hit a bad sequence of returns period. You could burn down your cash to fund the other 40K/year needed and that'll get you 35 years without inflation..but what about inflation and unpredictable HC costs?

PS: do you include inflation in your spreadsheets? I did, and our 80K estimated annual expenses this year increases at a rather frightening and sobering pace, even at 2% Annual.


I think the above reply missed the $1.4 mil in tax-deferred, and your $150K in cash. Your assets are double what Retire Soon noticed. It really isn't that tight when you take that into account. It is worthwhile looking at your taxes for the next couple of years--beyond that politics come into play and becomes unpredictable. If your AGI puts you in the 15% tax bracket, your federal taxes will be tiny, as long term cap gains and dividends will be taxed at 0%.

Mostly I think you should be good as well as the first post after yours. My taxable and tax-deferred are different but my total is identical to yours. Firecalc and other retirement calculators put me at 100% at a spending level until I hit $125K/yr. Other calculators indicate the same.

Health insurance is a huge problem-it is a giant question mark because of politics and ridiculous costs, over which we as individuals have little control. Think about waiting a few months and seeing which way the political winds blow, and have a backup plan for health insurance-moving to a state or country where your ability to get health insurance is not hindered by price or pre-existing conditions., working to pay the premiums, whatever you can live with. Also, don't trust your Social Security projections, as your SS will be less because of less years contributing.

Whatever happens politically, the next couple of years are not likely to change much in terms of health insurance. Figure out if you can keep your MAGI under the magic number for getting subsidies, as it is a five figure difference in what you have to pay. For you, a I think it might be doable.

My advice-sleep on this a couple of months and come up with a plan B for health care. I'm having second thoughts myself due to health care and I retired last July.

BTW except for health insurance uncertainty, ER is wonderful. And isn't it crazy that those of us in the top 10% of assets in this country, are worried about going broke if we retire in our 50s as opposed to age 65 due to the cost of health care? Good luck with your decision.
EastWest Gal is offline   Reply With Quote
Old 05-05-2017, 07:28 PM   #9
Recycles dryer sheets
 
Join Date: Jan 2017
Location: Charlotte
Posts: 196
Curious to see the numbers breaking this into a 'two phase" retirement.

The first being a 13 year retirement using only the 1.4M in brokerage starting at age 54. (Years aged 52 and 53 covered by deferred comp, right?)

What does FIRECALC say about safe income level in this phase 1?

THEN

The second period begins at age 67 needing to last 25 more years with whatever the other 1.4M in tax deferred has grown to in the past 15 years.

Can any of you FIRECALC wizards run this scenario?
bw5972 is offline   Reply With Quote
Old 05-05-2017, 07:30 PM   #10
Dryer sheet aficionado
 
Join Date: May 2017
Posts: 36
Thanks so much for all the well thought out feedback. This is really a great forum. Appreciate being able to get all these points of view.
__________________

beachfire is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Trouble pulling the trigger brianinsf Hi, I am... 16 05-21-2015 05:31 PM
Pulling the trigger - This should be easy Lagniappe FIRE and Money 13 10-20-2006 09:24 AM
Pulling the trigger MRGALT2U FIRE and Money 9 12-18-2005 07:08 AM
Pulling the trigger on Monday nearly50 Young Dreamers 20 12-21-2004 07:35 AM
Thinking of of Pulling the ER Trigger...... Bill Gates FIRE and Money 10 09-02-2004 08:00 AM

» Quick Links

 
All times are GMT -6. The time now is 12:24 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.