Almost 53 Hoping to Retire in 3 years on my 56th Birthday

[OrcasIslandBound]

Hello,

My DW is 53 and I'll be 53 in January. I'm hoping to be able to retire on my 56th birthday in January of 2014. We have about $1.3 million invested, approximately 40% stocks and 60% bonds, about 2/3 in pre-tax (IRA, etc) and 1/3 in post tax accounts. We anticipate SS (2.7K/month @62 years old), but nothing else. No pension. We live in a $375K house and owe $140K on it. We also have a piece of raw land (5 acres, $150K) that we have been trying to sell for years. If we sell it, we'll pay off the mortgage (hopefully). We own this land free and clear.

I'm hoping to live off of 50K but will try to hit $1.5 million + 100k before the planned retirement date. We wish to be able to use the 4% rule to allow us a max withdrawal rate of 60K if we have to. The $100K is for our son's (14) future college education.

I've run "Firecalc" and Fidelity's planning websites, and it appears that we're on track to pull this off, provided we can sell that piece of raw land. I'm employed and earn about 120K/year and contribute 15% to the company's 401K. They are generous and contribute (in both their pension and 401K) another 10%, so $30K gets added to the total every year.

I'll follow "DRiP Guy"s lead and post here periodically to let you all know, as it happens, if this math works. I believe the single biggest wild card is the medical insurance. For this we plan an expense of $1,200 per month as we'll have to simply buy it on the open market when we retire. We hope this will still be possible to do in 2014. Our health is reasonable, but not perfect, so I don't know how much they'll charge us for the health insurance.

I like this forum and appreciate all the help everyone gives each other. In a different thread, I'll post a mathematical model that I used to create our investment strategy (following a sort of modified Bogle method). I'll also post a listing of our investments in both stocks, funds, and bonds, if that helps anyone.

Thanks all in advance for any advice...

 

[golfnut]

Welcome to the forum. I'm sure you will receive some very useful info from other posters.

My wife and I are in the same age range (55 and 52) and our net worth is in same range as yours. We have one child (17 yrs. old) and a 529 plan with a balance of $90,000. I recently lost my job but I did qualify for a small pension (about $8,500/year) and subsidized retiree medical which costs about $10,600 per year. My wife works part time. I need to start looking for a job in 2011 (at least a part time one).

Our home is worth about $450,000 and we owe approx. $77,000 on it. Still debating about paying it off.

We have gotten real serious about budgeting now. We roughly need about $75,000 per year but we do plan on downsizing with the next 12 months which would put more money in the piggy bank and also reduce our Real Estate taxes (presently $9.600 per year) by 50% or so.

You might want to try the following calculator as well.
Flexible Retirement Planner

Good Luck!

 

[OrcasIslandBound]

Thanks golfnut! I suppose that the "$10,600" per year for the medical is your cost and will continue until age 65? If so, even though this is a significant amount, it is at least predictable in that you know you have medical coverage for this amount of money going forward. I think this is very good.

On the other notes, $9,600 for property taxes does seem excessive. We're in California and have owned the same house since 1982. Our property taxes are a little under $2,000/year. We hope to move to Oregon, although the DW has practically given up on that dream due to the downturn.

Do you think you can make it in the long run with a similar income, $50k to $60k/year?

 

[golfnut]

Unfortunately, our medical costs will not be static. For example, there was a 10% increase from 2010 to 2011.

With the mortgage out of the way (via downsizing) and lower real estate taxes, we should be fine at $65,000 per year in spending. We live in Chicago Suburbs (good schools, high RE taxes).

 

[OrcasIslandBound]

I have a coworker living in another state who works half time just to get medical coverage. He told me that he had some minor asthma issues and his wife had some other minor issue. Neither he nor his wife can get medical coverage by purchasing it on the outside. This is the kind of fear that we have, and why I call it a "wild card". There are ways around this, but those tend to be a bit pricey.

I tried the website called "Flexible Retirement Planner" but it didn't work in Firefox. I'll try again with windows explorer later, thanks

 

[Moemg]

Welcome ! I would recommend tracking your spending for at least six months to make sure that $60,000 budget is realistic .

 

[Birdie Num Nums]

I applaud you and yours for doing what relatively few of our Baby Boomer Generation have done: save $ for retirement. Well done!

 

[OrcasIslandBound]

Thank you Moemg and Birdie Num Nums, and I would like to encourage all those trying to save that it can work in the long run. Not trying to show off too much, but, our investments have grown by $94500 from Dec 1, 2009 to Nov 30, 2010. Add to this our additional savings through my 401K.

Long term investing does its biggest growth right near the endpoint. While we are still down slightly overall from the peak in 2007, we're up from 2005 and earlier years. Hence, in the long run, we're making money towards our retirement by continuing the investment strategy of primarily "buy and hold" with the new method of gradually increasing our % in bonds as a function of total investment instead of years left before retirement. I'll try to go into the details of this latter strategy later...

 

[chinaco]

Welcome!