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Am I Ready?
Old 08-09-2013, 06:16 AM   #1
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Am I Ready?

Hello All. My first post here after studying the site for quite a while.

After 30+ years in the corporate world, I really need a change, so I'm building up my courage to announce my resignation in a few weeks. I've run the Firecalc numbers and all looks good, but it's still nerve-wracking and some feedback would be nice. Once I pull the plug, the's no way I'll go back to this kind of job (or salary) ever again. My DW is on the fence about the idea, despite trying to explain the FIRECALC numbers to her, but I think she's more worried about me hanging around the house all day. Anyway, what I'm really looking for is "semi-retirement" with the assurance that I COULD retire if I wanted to. So for the next 5-10 years, my plan is to start up a small business or find a lower stress job which I expect can generate at least $3K in income per month.

So here's my situation:
DW and I are both 55 years old. DW is retired.
No mortgage and no debt
Total current investments: $2.3 million ($880K in IRAs/401Ks) (50/40/10 equities/bonds/cash)
Home value: $650K (will downsize to retirement area in 10 years)
Est. Annual Spending: $85,000 EXCLUDING health care and income taxes
Annual Social security at age 70: $62,000 combined with DW (per SSA estimator)
Additional Income : $36,000 per year from now until my early-mid 60s. (This should hopefully cover the health care and income taxes)
One son starting college but all expenses are 100%+ covered in a separate 529 account
To me, the big variables are health care and taxes, which are hard to estimate. I can pick up COBRA from my company for 18 months which is costly ($2K/mo), but I may be better off with a new policy under Obamacare.I know taxes on dividends and capital gains will be less, but not sure how much.
What do you think? Firecalc tells me I'm 100% based on 40 years but am I missing anything?
Thanks.
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Old 08-09-2013, 07:10 AM   #2
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you know what you are retiring FROM but you're unclear what you are moving TO. That's the concern your wife has and the uncertainty you mention. Financially, you certainly look OK.....just be careful to remain diversified.

Can you spend some time with your wife talking about what you want to do? Can you investigate a class on transitioning or opening a small business......maybe attend a franchise show or visit with a successful small business person that could help you paint a vision. Then, build a business plan.

Or, better define your future job, make sure it exists and share that knowledge with your wife. Earlier in my life I found myself working for a real jerk but I was with a company and job that I loved. It took me two years, researching a retail business or going to work for a comparable company. I bought a business and had a back up job offer with a similar company that I was leaving; they would hire me for more money that I made in my old job if the business didn't work out.

It did work out, I moved across country, worked 60 hours a week, made a lot of money and built a happy life. You're older, you wouldn't want to do what I did. But, today, I'm doing what you would like to do. I'm working assisting families that need a fresh start after having a financial setback. I name my hours, get out of the house, have time to enjoy family and have a lot of fun. I've planned this for a couple of years.

Years, ago, a very good manager said: "stop running from" He told me I was a smart person and I should "start running to". It's obvious that you are a smart person....I wish you as good a luck with your future plans as I've had with mine.
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Old 08-09-2013, 07:20 AM   #3
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Quote:
Originally Posted by ImReady View Post
Annual Social security at age 70: $62,000 combined with DW (per SSA estimator)
Just a quick check on this one. You and your wife each earned the maximum taxable amount for 35 years (i.e., starting at age 21 or earlier)?
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Old 08-09-2013, 07:23 AM   #4
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It would be very helpful if your DW and you are on the same page with regard to your ER. Being that you still plan to have an income from part time w*rk which sounds like it might be more enjoyable for you, it does seem good to go.I cannot emphasize enough the importance of decreasing stress as we age, not just emotionally but for the toil it truly takes on our bodies.Best of luck
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Old 08-09-2013, 08:33 AM   #5
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Being on the same page with your DW, is always a good thing. But as a female myself, I'm rather dismayed at the large number of late 50, early 60 males who come and post they want to retire, but the DW or SO isn't thrilled or is not "on board" with his goal. The thing that stands out is that the majority of the DW or SO mentioned are either SAHM (with adult children) or already retired themselves.

What is behind this, are the ladies really worried about finance, in which case why are they not working, or do the ladies have a very enjoyable lifestyle with a lot of freedom in it that they are not willing to change to adjust to their hubby being home?

I have a personal interest in this question. My DH, who is 64 and I have had our own business for 40 years. Three years ago we sold the part of the business that I worked full time on, so I am retired at now at 59. We kept part of the business intact (the part my husband ran) and it keeps him busy on and off from mid-March until late Nov. We have our SWR completely funded and I would like nothing more then for him to quit working completely and relax and enjoy life more as a couple. He wants to keep going, as he makes good money and really enjoys what he does.

This might appear to be a thread hijack, but I wonder about the comments some of these gentlemen make about their DW or SO's , I think it's rather strange to tell someone they shouldn't quit working because they might rattle around the house all day and be bored. This is a general comment and in no way directed to the spouse mentioned on this thread, as I'm just curious about other ER's or ER wannable household dynamics.
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Old 08-09-2013, 10:25 AM   #6
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I think you need to drill down on a few things, but are probably in fine shape. Very similar numbers to me other than I'm a few years older, have slightly lower spending, lower SS and I'm fully retired.

Is it possible to convert to part time work or consulting with your current employer? I was able to for ~5 years prior to retiring and it worked out very well for both of us.

How confident are you in your annual spending? To be candid, $85k a year exclusive of taxes and HI is more than many of us need but a lot depends on lifestyle.

You can get a good idea of taxes by creating a hypothetical tax return as if you were retired using TurboTax or TaxCaster or some other tax planning tool.

If you can control your income and stay within the 15% tax bracket (AGI of ~$90k or less assuming standard deductions for a couple) then qualified dividends and long-term capital gains attract zero tax. this was one of the big, pleasant surprises of ER. IOW, you can have up to $90k of qualified dividends and LTCG a year and pay $0 federal income tax - and that doesn't even count principal so if you have substantial unrealized gains in your taxable portfolio you could pay zero in federal income taxes if you manage your income right. But check to see what your state income taxes would be as well. Last year I had ~$90k of income and paid ~$2,300 in income taxes ($0 federal and all state).

Once you do your hypothetical tax return, you'll know about what your O-MAGI is and you can then do a estimate of your ObamaCare health care costs using one of the various calculators out there. There may even be one available for your state. I know our HI will be a lot less than $2k a month even before subsidies. (We pay ~$630/month now for a HDHI HSA plan). If you want to get Obamacare subsidies, you'll need to keep your O-MAGI to ~$62k a year for a couple - but be careful - if you go over even just a little bit then you totally lose the subsidies and the subsidy will probably far exceed that little extra income.

While I also plan to take at SS at 70, taking it earlier is my relief valve should my investment performance be poor.
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Old 08-10-2013, 02:23 AM   #7
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I think this would make an interesting thread on its own.
Maybe you should post it as a new thread?

Amethyst

Quote:
Originally Posted by ivinsfan View Post
Being on the same page with your DW, is always a good thing. But as a female myself, I'm rather dismayed at the large number of late 50, early 60 males who come and post they want to retire, but the DW or SO isn't thrilled or is not "on board" with his goal. The thing that stands out is that the majority of the DW or SO mentioned are either SAHM (with adult children) or already retired themselves.

What is behind this, are the ladies really worried about finance, in which case why are they not working, or do the ladies have a very enjoyable lifestyle with a lot of freedom in it that they are not willing to change to adjust to their hubby being home?

I have a personal interest in this question. My DH, who is 64 and I have had our own business for 40 years. Three years ago we sold the part of the business that I worked full time on, so I am retired at now at 59. We kept part of the business intact (the part my husband ran) and it keeps him busy on and off from mid-March until late Nov. We have our SWR completely funded and I would like nothing more then for him to quit working completely and relax and enjoy life more as a couple. He wants to keep going, as he makes good money and really enjoys what he does.

This might appear to be a thread hijack, but I wonder about the comments some of these gentlemen make about their DW or SO's , I think it's rather strange to tell someone they shouldn't quit working because they might rattle around the house all day and be bored. This is a general comment and in no way directed to the spouse mentioned on this thread, as I'm just curious about other ER's or ER wannable household dynamics.
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Old 08-10-2013, 07:26 AM   #8
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Quote:
Originally Posted by ivinsfan View Post
....What is behind this, are the ladies really worried about finance, in which case why are they not working, or do the ladies have a very enjoyable lifestyle with a lot of freedom in it that they are not willing to change to adjust to their hubby being home?.....
Yes. For them DH working is more security and more freedom.
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Old 08-10-2013, 09:03 AM   #9
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Originally Posted by jerome len View Post
I'm working assisting families that need a fresh start after having a financial setback.
That sounds like a really great job. Can you tell me more about that? Is it a for pay job? I was hoping to find some volunteer work doing something just like this, but I haven't figured out where to find it. And, I'm not a CFP, so I'm not sure if I would be considered qualified.
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Old 08-10-2013, 09:07 AM   #10
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To the OP,

Financially I think you are more than set, with your SS and additional income, no debt, and over $2M in savings. I don't see any problem generating $85K in income for you, or even a bit more to cover HI.

The comments about having something to retire to are all valid. However, I left my job without any firm plan in place of what I was retiring to, and within a few weeks a great part time consulting opportunity came my way that I never would have expected. Now I'm home full time, but still earning some income doing some really fun things on a part time basis, and loving the free time I have.

Only you know if you are emotionally ready to stop working. Financially, you're definitely more than set!
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Put your foot down (gently)
Old 08-13-2013, 08:38 AM   #11
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Put your foot down (gently)

Quote:
Originally Posted by ivinsfan View Post
What is behind this, are the ladies really worried about finance, in which case why are they not working, or do the ladies have a very enjoyable lifestyle with a lot of freedom in it that they are not willing to change to adjust to their hubby being home?

This might appear to be a thread hijack, but I wonder about the comments some of these gentlemen make about their DW or SO's , I think it's rather strange to tell someone they shouldn't quit working because they might rattle around the house all day and be bored. This is a general comment and in no way directed to the spouse mentioned on this thread, as I'm just curious about other ER's or ER wannable household dynamics.
My retired DW would like to see me work until age 60. It makes her feel safer to have my big salary coming in longer. She comes from a family with a big fear about money. Her last salary was a small fraction of what I make now. She says she can't be sure we'll be have enough. I've run the numbers a jillion ways, and we've been set for a year or two now. I've tried to explain the models, but she thinks in terms of 1% CD rates, and not using any principal, rather than reasonable SWRs. I finally put my foot down, and said I'm going to retire next spring, and start enjoying some of that money saved up while I'm still alive to enjoy it. She's OK with that. And says she may go back to work - I'm alright with that.

So my advice is to the OP, just put your foot down, (in a gentle and kind way) or the OMY syndrome will creep in forever.
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Old 08-13-2013, 09:06 AM   #12
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Its always easier to retire, when one of you is still working!
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Old 08-13-2013, 02:37 PM   #13
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That's a pretty impressive financial portfolio. I would love to be there one day. Can you share how did you managed to save $2.3M working for corporate America?
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