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940 days and counting....
Old 07-03-2018, 02:19 PM   #1
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Posts: 145
940 days and counting....

I suppose it’s going to be one of the longest 940 days for me and it’s not that I am wishing away the next 2+ years of my life .. but the finish line... or should I say the next starting line seems so much more exciting.

Little nudges that made me google retiring early:

- the passing of my parents and realizing that they didn’t enjoy life later on for various reasons - health mainly
- a personal career that seems less and less meaningful and rewarding
- vacations that used to be “nice mental breaks” from the work routine have become “oooo this is nice and I wished I had more time to travel”

The plan since starting my career was ER at 60, 60 became 58, now it’s been pushed forward a few years to early 50s as I started seriously working through the math.

DW’s SS benefits + my SS benefits + 2 pensions should cover our projected expenses @62. But I’m expecting inflation to out grow COLA - so the pre tax retirement account (currently at $1.3M) will be used to bridge the difference at some point.

My current monthly expenses is about $8K with 2 kids. College savings has been taken care of so I’m not adding this to my expected expenses. I’m expecting ER expenses to drop $2K (72K annually)

Expected Increased monthly costs at retirement:
health insurance (ACA) (TBD difference between work and ACA)
Grocery bills (+200)
Life insurance (+300)
Travel (+1000)

Expected Decreased monthly costs:
Savings for kids college and expenses on sports. (-3500)
Going from 2 to 1 car (-200)
The cost of working... clothes, gas, eating out, dry cleaning (-300)

Am I missing any obvious retirement vs working costs changes?

Outside my 401K I have been transitioning from 90/10 stocks/cash to 50/50 stocks/cash with the cash currently in 2.75-3% 2-3 year CDs. My goal was $900K at the end of the 940 days to bridge the 9 years to 62. I find myself more and more risk adverse with this pot of savings and feel the urge go 0/100 stock/Cash as that should get me to the $900K goal. Besides CDs, should I consider other safe investments that are low risk and have lower tax implications.

Love this place BTW.
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Old 07-03-2018, 03:41 PM   #2
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Join Date: Oct 2017
Location: Brighton
Posts: 1,072
Quote:
Originally Posted by Lukeee View Post
I suppose it’s going to be one of the longest 940 days for me and it’s not that I am wishing away the next 2+ years of my life .. but the finish line... or should I say the next starting line seems so much more exciting.

Little nudges that made me google retiring early:

- the passing of my parents and realizing that they didn’t enjoy life later on for various reasons - health mainly
- a personal career that seems less and less meaningful and rewarding
- vacations that used to be “nice mental breaks” from the work routine have become “oooo this is nice and I wished I had more time to travel”

The plan since starting my career was ER at 60, 60 became 58, now it’s been pushed forward a few years to early 50s as I started seriously working through the math.

DW’s SS benefits + my SS benefits + 2 pensions should cover our projected expenses @62. But I’m expecting inflation to out grow COLA - so the pre tax retirement account (currently at $1.3M) will be used to bridge the difference at some point.

My current monthly expenses is about $8K with 2 kids. College savings has been taken care of so I’m not adding this to my expected expenses. I’m expecting ER expenses to drop $2K (72K annually)

Expected Increased monthly costs at retirement:
health insurance (ACA) (TBD difference between work and ACA)
Grocery bills (+200)
Life insurance (+300)
Travel (+1000)

Expected Decreased monthly costs:
Savings for kids college and expenses on sports. (-3500)
Going from 2 to 1 car (-200)
The cost of working... clothes, gas, eating out, dry cleaning (-300)

Am I missing any obvious retirement vs working costs changes?

Outside my 401K I have been transitioning from 90/10 stocks/cash to 50/50 stocks/cash with the cash currently in 2.75-3% 2-3 year CDs. My goal was $900K at the end of the 940 days to bridge the 9 years to 62. I find myself more and more risk adverse with this pot of savings and feel the urge go 0/100 stock/Cash as that should get me to the $900K goal. Besides CDs, should I consider other safe investments that are low risk and have lower tax implications.

Love this place BTW.
Hello Lukeee,

You don't mention if your spouse will continue to work or will retire at the same time. You have done a nice job of saving, but you have a long bridge to span with that portfolio. Your 50/50 is likely conservative enough for a 10 year span with half in fixed income.

I think your plan becomes more feasible with a shorter span to medicare and full retirement benefits. Taking SS and pensions at 62 will be leaving quite a bit of income on the table. It becomes more troubling if you have depleted most of your tax-deferred portfolio to get there.

I would run https://firecalc.com/ to test the plan.

I am not being a pessimist, I just think the plan works so much better with a shorter bridge to Medicare and Full retirement age.

Test it out and I am pulling for you to retire at your preferred time.

VW
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Old 07-03-2018, 06:14 PM   #3
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Why more life insurance when you are retired? IMO the only reason for it is income replacement. If you have no income, as in being retired, I see no reason for it. That’s $3600/year by your calculation that may not be needed.

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Old 07-03-2018, 07:22 PM   #4
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Quote:
Originally Posted by VanWinkle View Post
Hello Lukeee,


I would run https://firecalc.com/ to test the plan.

VW
I’m at 100% for both pre 62/ post 62 (till 92) based looking at each scenario individually. The wife will be retiring at the same time, probably doing a part time job to stay socially connected... any additional money will probably go into a grand child college account. With regards to drawing at 62 vs 67, I did some spreadsheet calculations and my breakeven was sometime around the mid 80s. Based on family history, I’m just hoping for a healthy 80-85 years.

Quote:
Originally Posted by CH47 View Post
Why more life insurance when you are retired? IMO the only reason for it is income replacement. If you have no income, as in being retired, I see no reason for it. That’s $3600/year by your calculation that may not be needed.

Welcome!
This was question that I struggled with too. So here is my reasoning (let me know if it’s flawed) I would like to sustain my spouses lifestyle should I pass early (and before her), I would like to make up the lost SS dollars for her. I figured that if she passes before me, I am okay as I see travel expenses dropping and I see myself downsizing the home.
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Old 07-03-2018, 08:01 PM   #5
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Quote:
Originally Posted by Lukeee View Post
I suppose it’s going to be one of the longest 940 days for me and it’s not that I am wishing away the next 2+ years of my life .. but the finish line... or should I say the next starting line seems so much more exciting.

Little nudges that made me google retiring early:

- the passing of my parents and realizing that they didn’t enjoy life later on for various reasons - health mainly
- a personal career that seems less and less meaningful and rewarding
- vacations that used to be “nice mental breaks” from the work routine have become “oooo this is nice and I wished I had more time to travel”

The plan since starting my career was ER at 60, 60 became 58, now it’s been pushed forward a few years to early 50s as I started seriously working through the math.

DW’s SS benefits + my SS benefits + 2 pensions should cover our projected expenses @62. But I’m expecting inflation to out grow COLA - so the pre tax retirement account (currently at $1.3M) will be used to bridge the difference at some point.

My current monthly expenses is about $8K with 2 kids. College savings has been taken care of so I’m not adding this to my expected expenses. I’m expecting ER expenses to drop $2K (72K annually)

Expected Increased monthly costs at retirement:
health insurance (ACA) (TBD difference between work and ACA)
Grocery bills (+200)
Life insurance (+300)
Travel (+1000)

Expected Decreased monthly costs:
Savings for kids college and expenses on sports. (-3500)
Going from 2 to 1 car (-200)
The cost of working... clothes, gas, eating out, dry cleaning (-300)

Am I missing any obvious retirement vs working costs changes?

Outside my 401K I have been transitioning from 90/10 stocks/cash to 50/50 stocks/cash with the cash currently in 2.75-3% 2-3 year CDs. My goal was $900K at the end of the 940 days to bridge the 9 years to 62. I find myself more and more risk adverse with this pot of savings and feel the urge go 0/100 stock/Cash as that should get me to the $900K goal. Besides CDs, should I consider other safe investments that are low risk and have lower tax implications.

Love this place BTW.

do your stocks pay dividend returns ??

would you torch that income , when you are so close to retirement

i focused on stocks that pay dividends and reduced my interest-bearing securities in the face of plunging quality

but on the flip-side i calculate on investment returns rather than a set $$value for my targets

cheers
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Old 07-04-2018, 07:29 PM   #6
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OZ, unfortunately not, the dividends are relatively low. I typically don’t look at investments by target and could move the 2.5 year goal back / or forward depending on what happens with the investments.
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Old 07-04-2018, 08:49 PM   #7
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Lukeee,

indeed divs on many stocks are rather low ,
i use the logic that low divs . will eventually encourage lower share prices , because i for one resist buying anything paying 4% or less ( regardless of apparent safety )

i remain flexible at the moment , but i also have a vision of where i want to be in 2022 ( health permitting ) so a fuzzy target but a target and hopefully a less dangerous path to arrive in the target area

planning for the longer term has both positives and negatives
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