52 to ER at 59

[BellyFull]

Hi I'm new to the forum and am 52, married with one child. My son is a college sophomore at a private school. Back in 2007 I thought I was on track to retire at 55 but my portfolio took a big hit in the 2008 market crash. In 2007 I had $960k in investable assets which then dropped to $550k and only now have I built it up to $940k.
My assets are as follows:
Taxable Account $ 330k (half in a managed account, half in mutual funds)
Roth IRA's (myself and wife) $160k
401k & Roth 401k $ 300k
ESOP (Employer stock) $150k
In addition we own our home valued at $465k. Our mortgage on the house is $332k.
Our net worth is around $1,072,000.

Our investments are at about a (80-20) split of Equities and Fixed Income. The non-employer funds are with Morgan Stanley. I'm pretty comfortable with the broker I have.

Our current combined incomes amount to $110k per year. With our son in college we have not been able to add to our savings in fact we have been drawing $20k a year from our taxable accounts.
I am not looking to bequeath a large estate but would like to leave the house to him. We currently have our assets in a living trust.
We don't feel that we need a lot of money to live on in retirement. More is always better but we probably need to generate $75k per year from our portfolio. I am thinking probably $1,500,000 is the number to have saved with a 5% withdrawal rate. It doesn't look like ER is going to happen at 55 so I am wondering if 60 is realistic. I am probably of the opinion that starting with a drawdown of 5% or 5.5% and decreasing later in life makes sense because in your 60's are probably the peak for what you want to maintain your living expenses. When we get to 80 we don't think we will need as much.
Some good discussion on this board. People don't seem to be hesitant to say how much money they have so as they say if you put your heads together you can make your money green...
I'd retire tomorrow if I thought I could afford it but am slowly coming to the conclusion that 59 and 1/2 or 60 (2020) is the ticket. Thanks for reading.

 

[Rambler]

Welcome Bellyfull.

R

 

[obgyn65]

Have you entered your numbers in FIREcalc ?

Welcome to the forum.

 

[pb4uski]

Welcome BellyFull. A few thoughts for you to consider.

If you have an 80/20 AA and your investments have not fully recovered from the 2008 market downturn, I would probably questioning my faith in my broker. If you look at a chart of the growth of $10,000 of the Vanguard Total Stock fund as an example, it has fully recovered from the downturn. Ditto for the Vanguard Target Retirement 2030 Fund, which is a roughly 80/20 AA.

A 5% WR would be too high for a 58 year old, but a 5% initial WR rate followed by a 3.5-4% WR after SS (and pensions if any) kick in would be ok, so look at both you initial WR and your WR once SS kicks in.

While FIREcalc is a great tool, I think that the Quicken Lifetime Planner is a bit more intuitive so I would start with that and if it shows that you can retire with some reasonable assumptions, you should then stress test it through FIREcalc using the same assumptions.

 

[BellyFull]

Obgyn65 - I'll to look at the FIREcalc again. It seemed pretty conservative compared to other calculators I have seen. It didn't give me a great result and I wasn't sure how to interpret the results since it seemed to give a range of results...

Pb4uski - Good point about the broker. I tend to be loyal to a fault. Part of the problem was in the taxable account he steered me into the Legg Mason funds including a big stake in the Value Trust. They really took a dive and I stubbornly stayed in them for too long, long after he wanted to sell. The Ivy Asset Strategy was a winner though... I also pulled some money out for a wedding and college costs so I was really looking at the total portfolio then versus now. The managed account also underperformed a bit rising a mere 7% over the last 6 years. That didn't exactly make up for the other losses....
I'll look for the quicken calc. as well.

 

[REWahoo]

I'll to look at the FIREcalc again.... I wasn't sure how to interpret the results since it seemed to give a range of results...

Spend some time understanding how FIRECalc works and it will explain those results. I think you will find it time well spent.

FIRECalc: How it works

 

[Niko]

Our investments are at about a (80-20) split of Equities and Fixed Income. The non-employer funds are with Morgan Stanley. I'm pretty comfortable with the broker I have.

80-20 was probably too aggressive back in 2008 when everything tanked, and it is even more aggressive now, when you're only 7 years from retirement. While risk tolerances can and do vary widely, I would suggest revisiting your AA. This close to retirement I would suggest something closer to 60-40 or 50-50.

 

[pb4uski]

....This close to retirement I would suggest something closer to 60-40 or 50-50.

Good point that crossed my mind but I forgot to mention. I was heavily in stocks until I was abut 50 at which point I just started putting new money and dividends towards fixed income so it was fairly effortless to get to 60/40.

 

[walkinwood]

Welcome to the board. I recommend you take the time to read some of the books recommended here (look in the ER FAQ).

Learning how to invest by yourself is not difficult and even if you choose not go that route, you're better off knowing the basics including benchmarks to measure your broker against.

 

[BellyFull]

I'm bummed now that I got laid off at the start of 2013. Am looking for a job but may be hard to find. Possibly may retire now....
$950k Investments
$50k Severance pay to come
$160k Equity in home
Also I should be getting $450/ week in unemployment while I look for a job. Past the stage where I will take a crummy job...

 

[fh2000]

I'm bummed now that I got laid off at the start of 2013. Am looking for a job but may be hard to find. Possibly may retire now....
$950k Investments
$50k Severance pay to come
$160k Equity in home
Also I should be getting $450/ week in unemployment while I look for a job. Past the stage where I will take a crummy job...

Bellyfull,

So sorry to hear about your job. With a mortgage and a private school tuition, I think you should try your best to look for a job.

I got laid off in 2008 at the age of 53. It took me 4 months to find my current job so it is possible to find a job in our 50s.

 

[rodi]

Bellyfull -
Sorry to hear about your job loss. The severance pay should tide you over till you find a new job, I hope. Does your wife also work? That will also reduce the hit to your nestegg while you're looking for a good job (not a crummy job.)
Best of luck.

 

[BellyFull]

Bellyfull -
Sorry to hear about your job loss. The severance pay should tide you over till you find a new job, I hope. Does your wife also work? That will also reduce the hit to your nestegg while you're looking for a good job (not a crummy job.)
Best of luck.

Thanks, my wife is working now which should help also now at her 1 year anniversary she will get health coverage for her only. Our son and I need to stay on cobra. It sounded like I need the family cobra election so not sure if that is saving anything.

 

[BellyFull]

I'm loving the run up in the market and home values....

Investments now at $995,000
Home Equity now at $165,000
Net worth now at $1,160,000

Here's the downside: I have no job and need to keep a tight budget as I'm 53 and may find a career position or may end up working at Starbucks.

Does anyone know of a good job for someone that is caught in the middle... not quite ready to retire but affluent enough to not accept the unacceptable crummy job or put another way a job with a good work life balance that may not pay 6 figures but is rewarding in other ways....

I've got some options but have had just one job interview in 2 months and the market is pretty tight, not like 1985 when I was last looking...

Thought that maybe a good job to bridge the gap would be to work for the IRS (I'm a Finance guy with an MBA). Bad timing with that because with the sequester there is a govt. hiring freeze. Work for REI... Payday loans... Tax preparation... Not sure but I've also had solicitations for franchise opportunities and selling life insurance. Life is complicated. Thanks for reading...

 

[martyb]

Not all of the government has a hiring freeze. My agency within DOD, Defense Contract Management Agency, seems to have increased hiring going on now. Take a look at www.USAJobs.gov I dont' know about the IRS. I've always worked for DOD.

In fact, take a look here: http://www.dcmacareers.com/

Check out the Cost Price Analyst and also maybe the Contract Management Specialist links. I don't work in those areas, so don't know what's available, what the requirements are, etc. Any chance you were ever in the military or worked for the government previously?

 

[tinlizzy]

You know what you should do, seriously....We have a learning center (run by the city parks dept) that also offers classes (pottery, organization, swimming, etc.) and I saw a sign on the door today to sign up for senior computer classes and I thought - they need to offer finance classes to young people to get them motivated to save and learn how to invest.

You could try and create your own job.

 

[CDN_47]

BellyFull, I'm curious as to how you came up with $75000/yr for your required retirement income? Do you have a good handle on what your expenses are without your mortgage and College costs? I think you'll find that you're currently spending much less currently than what $75000 gross income would provide.

I'm also making $110,000 per year, and while I admit we're living somewhat frugally, we still manage to do some travelling and other fun stuff. Our 2012 living expenses (no mortgage, no kids) was $33,000 (does not include income taxes). For that reason, we're shooting for a $45,000 per year gross income during retirement. If we manage to get more ... then great. But we'd live very comfortably with $45K.

As a comparison, we're almost 47yrs old, with a 650K net worth.

 

[NanoSour]

BellyFull, sorry for your job loss and I can sympathize with how difficult it would be to replace what you had at your age. My thoughts are also about expenses. Particularly that big housing expense. With the child out of the house, I'm wondering if you could consider downsizing in this area or make a move to a lower COL location. Seems like an appropriate time to reinvent your life and a move, either local/new helps to make that transition.

If you are SS eligible, I think your assets will allow you to be quite comfortable in ER. If you provide your estimate for SS, I'll run some numbers through ESPlanner for you for another basis point. Or you can check out the free version here.

Home | ESPlannerBasic

 

[Fishingmn]

Some random thoughts -

- As difficult as it may sound one of the first things I'd be doing is stop paying for college or at a bare minimum reduce what you pay in. Maybe say you'll pay toward what a state college education would cost and leave it up to your son as to whether its worth the student loans to stay private.

- It does sound like something is going to have to give in regards to either trying to find another higher paying job, retiring later or significantly reducing your expected retirement expenses. 5% SWR was already riskier than most on this forum would suggest.

- Does wife work? Is that an option?

- You asked about career options. When I got the corporate ax in 2009 I became a Realtor. Pretty low barrier to entry but it's 100% commission with no benefits so you'd have to be pretty serious about it to make it work. Sell 2 homes/month and you can be close to what you used to make income wise but again no benefits and pay all your own expenses (plus only top 20% of agents sell that many). Good news is job hiring seems to be picking up.

Good luck!