Travis Bickle
Dryer sheet aficionado
- Joined
- Aug 10, 2017
- Messages
- 30
Hi All -
Hoping you fine folks can look over my situation and give me your thoughts.
Personal Situation:
Current Savings:
Current Expenses:
The FIRE Plan
The plan I am contemplating is to retire in 2Q18 - after I receive my bonus and options. Wife - currently a SAHM - intends to work part time as a sub teacher once both are in college, but will not make more than $15-20k/year likely and I've told her that I don't want to retire and make that mandatory income in case she doesn't like it.
For myself, I am investigating options for consulting work, but really don't want to just end up grinding at the same role I'm doing now and want something part time as I'd like to get more involved in my community.
So - I have a narrow idea of offering my services on a project-by-project basis to other companies in my industry. I have many contacts and feel comfortable that I could land some jobs, but this may not be fully guaranteed and if I hate being a "supplier" I will not want to do it any more (I have been a customer my whole career).
Plan would be to roll lump sum to an IRA, and then pay living expenses and additional college costs from 401k until age 59 1/2 (my plan does allow for withdrawals w/o penalty if I retire early). After 59 1/2 I can also start to wdwl from the IRA.
My plan would be to get everything into diversified Vanguard index and bond fund accounts with low expenses and self-manage to target stock/bond ratios.
I have run all the calculators - FIREcalc, i-ORP, and Fidelity's retirement readiness tool. All of them put available spending at somewhere between $110k to $140k/year assuming zero post-retirement working income aside from selling the stock options when they come up and social security.
I have built my own spreadsheet, in which I have built in 1.5% increase in spending each year and can adjust interest earned on my balances, and it shows that at a starting spending level of $132k I would need to earn about 5.2%/year to have my money last to age 95. I think that feels OK as I recognize that after 70 my spending will probably start dropping as we get less active.
The things I worry about are the large sums I'll have to withdraw to cover college in the early years of my retirement, and while I built that into all models it does scare me especially if there is a market downswing at the same time.
Also, the couple of financial guys I've talked to always raise the specter of huge healthcare costs in my later years and how I need to have more than I think.
Lastly, I am worried about what the drop in the lump sum pension for next year will be based on the recent interest rate increase. It may force my hand to decide whether I need to retire at year end this year, which would impact my bonus possibly.
Hoping you fine folks can look over my situation and give me your thoughts.
Personal Situation:
- 55 years old
- Current Income about $160K + 30% target bonus (bonus can vary between 10 and 40% depending on company performance)
- Assoc. Director in a Large Pharma Company
- Two daughters 17 and 18 years old - Oldest starts College this fall
- Getting very tired of the corporate grind and ready to go now. Vacations are never, ever long enough and the last half of every one is dread about having to go back to work. Sometimes I suffer stress, but nothing too serious yet and I control via meditation (but not medication yet). However, I recognize that it's not healthy.
- Have plenty of hobbies and interests outside of work. Not worried at all about not working.
Current Savings:
- $1.1M in Fidelity 401k - maintaining about 30%bonds/70%Stock Index Funds. (NOTE: I keep this more aggressively positioned as I consider the lump sum pension to be my "safe" money)
- ~$50k cash
- $25k in ROTH IRA (over the income limit to add more)
- Have stock options for 3 years worth about $60k total (~$20k/year)
- Will receive Lump Sum Pension upon retirement - current estimate of $1.3M (but this may drop at year end as they adjust each year based on interest rates - not sure what the drop will be)
- If I retire, I am eligible to withdrawal from 401k before 59 1/2 without penalty.
Current Expenses:
- We ran numbers using last year - which seemed pretty typical and came up with about $128k in expenses - $97k deemed as "essential" and $31k as discretionary. I feel pretty confident that we could lower the discretionary, and even some of the essential, by about $10-15k with no trouble
- Expenses include $20k/year in mortgage that will be paid off in 2025
- We have about $120k saved for college in 529's but are projecting total OOP costs after financial and merit aid for both to be about $300 to $400k depending on where second daughter goes. (First daughter projected to cost $160k). So - we need to fund from somewhere the additional $180k to $280k that we don't have saved in the 529's or available as cash.
- In retirement, I will be eligible for retiree HC benefits, which will make my health insurance about $3-$4k more than what I pay now - total of around $8-$9k/year for a family of 4. It's a good plan with low deductibles and preventive care covered 100%.
The FIRE Plan
The plan I am contemplating is to retire in 2Q18 - after I receive my bonus and options. Wife - currently a SAHM - intends to work part time as a sub teacher once both are in college, but will not make more than $15-20k/year likely and I've told her that I don't want to retire and make that mandatory income in case she doesn't like it.
For myself, I am investigating options for consulting work, but really don't want to just end up grinding at the same role I'm doing now and want something part time as I'd like to get more involved in my community.
So - I have a narrow idea of offering my services on a project-by-project basis to other companies in my industry. I have many contacts and feel comfortable that I could land some jobs, but this may not be fully guaranteed and if I hate being a "supplier" I will not want to do it any more (I have been a customer my whole career).
Plan would be to roll lump sum to an IRA, and then pay living expenses and additional college costs from 401k until age 59 1/2 (my plan does allow for withdrawals w/o penalty if I retire early). After 59 1/2 I can also start to wdwl from the IRA.
My plan would be to get everything into diversified Vanguard index and bond fund accounts with low expenses and self-manage to target stock/bond ratios.
I have run all the calculators - FIREcalc, i-ORP, and Fidelity's retirement readiness tool. All of them put available spending at somewhere between $110k to $140k/year assuming zero post-retirement working income aside from selling the stock options when they come up and social security.
I have built my own spreadsheet, in which I have built in 1.5% increase in spending each year and can adjust interest earned on my balances, and it shows that at a starting spending level of $132k I would need to earn about 5.2%/year to have my money last to age 95. I think that feels OK as I recognize that after 70 my spending will probably start dropping as we get less active.
The things I worry about are the large sums I'll have to withdraw to cover college in the early years of my retirement, and while I built that into all models it does scare me especially if there is a market downswing at the same time.
Also, the couple of financial guys I've talked to always raise the specter of huge healthcare costs in my later years and how I need to have more than I think.
Lastly, I am worried about what the drop in the lump sum pension for next year will be based on the recent interest rate increase. It may force my hand to decide whether I need to retire at year end this year, which would impact my bonus possibly.