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56 yr old looking for opinions
Old 05-29-2013, 09:03 AM   #1
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56 yr old looking for opinions

Hi – I am new to the board. I am 56 years old with a 55 year old DW and am trying to set a date. Less than a year ago I left megacorp after 33 years and began drawing a pension that is $49,000/yr after taxes in retirement (some COLA is possible but not anticipated). I took another job and have been living off of my pension and saving money from my new job (at a rate of ~$84,000/yr). Our expenses are ~$34,000/yr which includes health insurance costs in retirement from megacorp and projected out of pocket health care costs as the largest single category in my budget ($10,200). House, cars, etc are paid for (no debt). I do have a $150,000 HELOC at 2.5% interest that I maintain at ~$15,000 - $20,000 for flexibility. If it drops below $15,000, I have to pay some insignificant but irritating account charges. To avoid those charges when it drops to ~$15,000, I transfer $5000 to my brokerage account and hope that I can invest with a return of more than 2.5%. It’s currently close to the $15,000 lower limit. I have the following investment assets:

$550,000 401K
$130,000 IRAs
$ 40,000 Roth IRAs
$140,000 After tax brokerage account
-----------
$860,000 Total investments

My current plan is to use a withdraw rate of a maximum of 4% of total current asset value / 12 per month. I would not worry about taxable vs non-taxable in determining this value, but would make the withdraws in the most tax efficient way possible. I would plan to withdraw only for travel, special occasion or needs, etc. Unused withdraws would be available for a period of 6 months if they were not taken. The firecalc website gives safe spending rates of ~$75,000 - $82,000 with the major variable being how the funds are invested. Note that this amounts to a withdraw rate of $26,000/yr to $33,000/yr from investments (or a 3% to 3.8% withdraw rate respectively – not 4%). My DW will have a pension and SS that will be much less than the above (~$15,000 /yr at age 62). I am choosing to treat this as a safety factor and not include it in the calcs. My pension is leveled to provide constant income once SS is taken, so I have excluded my SS from the calcs. In this situation does it matter if I have $860,000, $900,000, or a $1,000,000 in total investments?
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Old 05-29-2013, 04:25 PM   #2
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Hi Dan, and welcome to the forum!

It sounds to me like you have reasonable access to funds well in excess of your spending requirements, so I would say it doesn't matter where in the $860K-$1M range your investments end up.

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Old 05-29-2013, 04:35 PM   #3
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I agree, Dan. Good job with the FIRE planning!
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Old 05-29-2013, 05:35 PM   #4
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So if I understand your post correctly, your pension is $49k a year and your current spending is $34k a year plus you have DW's SS and $860k of investments.

You're golden. What you waiting for?
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Old 05-29-2013, 06:24 PM   #5
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Quote:
56 yr old looking for opinions
Well Dan, you should certainly find all the opinions you want here.

Ha
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Old 05-29-2013, 06:46 PM   #6
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Originally Posted by pb4uski View Post
So if I understand your post correctly, your pension is $49k a year and your current spending is $34k a year plus you have DW's SS and $860k of investments.

You're golden. What you waiting for?
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Old 05-30-2013, 06:42 AM   #7
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Thanks for your thoughts. I think the problem is knowing that you have enough for minimum requirements but also knowing if you work longer and save more then you would have potential to spend more, do more, worry less - thus the procrastination around pulling the plug. After the feedback, and reading other threads I'm now thinking September instead of sometime next year. Thanks!
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Old 05-30-2013, 06:49 AM   #8
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Originally Posted by Dan32 View Post
Thanks for your thoughts. I think the problem is knowing that you have enough for minimum requirements but also knowing if you work longer and save more then you would have potential to spend more, do more, worry less - thus the procrastination around pulling the plug. After the feedback, and reading other threads I'm now thinking September instead of sometime next year. Thanks!
If you enjoy your work, then keep doing it for another year so that you can build a safety margin. However, if you have a plan for all of the free time, I would say start when you feel it is time.

You didn't mention what your DW thinks of this. Is DW working?
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Old 05-30-2013, 09:40 AM   #9
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The decision to retire includes the financial and the emotional. It appears you're well prepared to pull the plug (COLA?), congrats.

But you didn't say whether you enjoy your work or what you want to do with yourself in retirement. It's not enough to retire from something, you're more like to enjoy retirement if you're retiring to something else. If you still enjoy your work, you're lucky and you might consider staying with it to improve your financial odds even more (as you noted in #7). And you may have more than enough activities in mind to occupy your time/mind in retirement already. Some people have no problem with what to do all day, but some aren't prepared and fall into boredom even depression once the novelty of 'permanent vacation' wears off - that's sad, and avoidable in many cases. I'm not sure how common the latter is, but it's not unheard of so...

...not saying (early) retirement is a bad idea by any means, just suggesting we all owe it to ourselves to think about what we are retiring to, to enjoy it!
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Old 06-03-2013, 07:39 PM   #10
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I would agree with this.
Quote:
Originally Posted by pb4uski View Post
So if I understand your post correctly, your pension is $49k a year and your current spending is $34k a year plus you have DW's SS and $860k of investments.

You're golden. What you waiting for?
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Old 06-03-2013, 08:48 PM   #11
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Well Dan, you should certainly find all the opinions you want here.

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And probably some that you don't want.
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There Is So Much Life Beyond Work
Old 06-03-2013, 09:37 PM   #12
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There Is So Much Life Beyond Work

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Originally Posted by Midpack View Post
The decision to retire includes the financial and the emotional. It appears you're well prepared to pull the plug (COLA?), congrats.

But you didn't say whether you enjoy your work or what you want to do with yourself in retirement. It's not enough to retire from something, you're more like to enjoy retirement if you're retiring to something else. If you still enjoy your work, you're lucky and you might consider staying with it to improve your financial odds even more (as you noted in #7). And you may have more than enough activities in mind to occupy your time/mind in retirement already. Some people have no problem with what to do all day, but some aren't prepared and fall into boredom even depression once the novelty of 'permanent vacation' wears off - that's sad, and avoidable in many cases. I'm not sure how common the latter is, but it's not unheard of so...

...not saying (early) retirement is a bad idea by any means, just suggesting we all owe it to ourselves to think about what we are retiring to, to enjoy it!
+1. For me, the question became, "What is more important now? Time or money?" I ER'd last year at 59, with fewer assets than those you have at 56. But, there came a point when there were so many other things to do in life, beyond the career I'd enjoyed for 33 years.

Work was interfering too much with life. Knowing that I could live decently, with occasional luxuries, made free TIME even more appealing.

The old cliche has turned out to be true: "I don't know, now, how I ever found time to go to work." There is boundless time to hang out with DH, to help DS and his bride plan their upcoming wedding, to prep trips with DH, or clear out 40 years of clutter (and sell it at a garage sale), then spend that $ this fall in Paris (with best friend from college).

Meetings? Conferences? Dept. politics? Student "drama"? Counting the days until Spring Break, or Christmas vacation? Reams of grading? Nope. No more time for that.

They interfere with water aerobics, walking, reading, coffee with friends, filling the bird feeders.

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Old 06-04-2013, 05:42 AM   #13
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"Everything becomes more itself." --C.S. Lewis

I love this quote. Thanks LitGal.

Now back to the OP. I can't speak with any authority on the emotional side of ER as I don't begin the journey for 4 more weeks. But from the financial side, I think given the information you provided you are more than all set. My assets are much in line with yours and I have 3 children still at home for another 10 years or so.

Right now it seems you're working because you want to. Not because you have to. In my situation there's always a chance that I'll have to return to work. In the big scheme of life, that's small potatoes.
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Old 06-04-2013, 12:45 PM   #14
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Thanks for your thoughts. I think the problem is knowing that you have enough for minimum requirements but also knowing if you work longer and save more then you would have potential to spend more, do more, worry less - thus the procrastination around pulling the plug. After the feedback, and reading other threads I'm now thinking September instead of sometime next year. Thanks!
You're experiencing symptoms of OMY syndrome. You're definitely FI, but alas I cannot advise on emotional "issues"... I think I'll feel the same when it's my turn to make such decision.
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