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Old 07-03-2018, 11:52 AM   #1
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Another 2, maybe 3 ?

Hi, I am almost 58 and want badly to retire at 60 or 61.

I'm sitting on 459,000.00 in a 401k, 98,000 in IRAs.
My monthly expenses are roughly 4500.00 monthly. My wife is 58 as well.
I'm putting away about $2800 per month. I have an emergency fund of about $30k. I have a home with no mortgage or other debt.

I will have a small pension of $1200 beginning at 62 and SocSec estimate combined of about $2500 at 62. My thinking is to hopefully have $100k to fund the early months prior to 62, leaving somewhere between $550-600k to fund the shortfall. I hope to leave at least some $$ to my 2 kids when i'm done. Am i kidding myself, or can this be a reality?
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Old 07-03-2018, 11:56 AM   #2
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Where do you live, how much is your home worth, what kind of property taxes are you paying today, and have you taken health insurance costs into account?

The numbers seem to be a little on the light side to me. However, if you're open to selling your home to tap that equity and possibly moving/downsizing, it could be just fine.
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Old 07-03-2018, 11:57 AM   #3
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YIR, take a look at this for assistance in answering your questions: Some Important Questions to Answer Before Asking - Can I Retire?
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Old 07-03-2018, 12:00 PM   #4
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I plugged the numbers into FireCalc for you and the results were not good.

Quote:
Because you indicated a future retirement date (2021), the withdrawals won't start until that year. Your contributions will continue until then. The tested period is 3 years of preretirement plus 34 years of retirement, or 37 years.

FIRECalc looked at the 110 possible 37 year periods in the available data, starting with a portfolio of $557,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 110 cycles. The lowest and highest portfolio balance at the end of your retirement was $-1,659,205 to $5,071,393, with an average at the end of $732,153. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 37 years. FIRECalc found that 41 cycles failed, for a success rate of 62.7%.
The good news, however, is that you could make it work if you can cut your expenses.

Quote:
Originally Posted by assuming pension is inflation adjusted
A spending level of $44,098 provided a success rate of 95.5% (110 total cycles, of which 5 failed). This spending level is 7.92% of your starting portfolio. (Your spending is assumed to come from any Social Security and pensions you entered, as well as from the portfolio.)
Quote:
Originally Posted by non-inflation adjusted pension
A spending level of $36,542 provided a success rate of 95.5% (110 total cycles, of which 5 failed). This spending level is 6.56% of your starting portfolio. (Your spending is assumed to come from any Social Security and pensions you entered, as well as from the portfolio.)
The good news is that most people see their overall spending drop in retirement. If you do that like the Bernicke model, your numbers look good to go at 60.
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Old 07-03-2018, 12:07 PM   #5
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Your gap is $4,500 spending less $1,200 pension less $2,500 SS.... or $800/month. At a relatively conservative 3% WR, you'll need $320k to fund the gap. If you assume that SS benefits will get reduced 25% in 2034 then you'll need more... ~$465k.

Then you'll need $4,500/month to carry you from ER at 60 to pension and SS at 62... so that is another $108,000.

So.... IF you really can live on $4,500/month then you should be in good shape.... but, does the $4,500/month include health insurance and health care? periodic car replacements? occasional new roof or HVAC equipment? Etc.
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Old 07-03-2018, 12:19 PM   #6
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Originally Posted by njhowie View Post
Where do you live, how much is your home worth, what kind of property taxes are you paying today, and have you taken health insurance costs into account?
in rural midwest. My home is worth approx $225,000.00 Property taxes are about $1300 annually. Health insurance is of course the big unknown. I'm guessing $1000 monthly. I did not mention that my wife and I would work doing something part time to cover health insurance for that 2 years.
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Old 07-03-2018, 12:33 PM   #7
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Quote:
Originally Posted by exnavynuke View Post
I plugged the numbers into FireCalc for you and the results were not good. ....
Did you include an additional 2 years of savings at $2,800/month?
His $30k emergency fund?

If I include those and his pension and SS I get 94.5%.
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Old 07-03-2018, 12:58 PM   #8
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OP, I did something very similar with numbers not too different. Our big break was excellent health care from 60-65 and a little more pension/SS. I built a two year CD ladder to get from 60 to 62. We're ten months in to the two year gap and it's working fine. I've actually rolled some of the CD payout into a few smaller, short duration CD's, as we didn't need the money at the time.

We have about 12 months cash (emergency fund). We replaced the HVAC system before retiring, and have funds planned to replace the water heater (next month) and for a new roof in 2019.

As others have stated, proceed with significant due diligence.... And welcome to the free zone!!!
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Old 07-03-2018, 01:40 PM   #9
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Originally Posted by pb4uski View Post
...periodic car replacements? occasional new roof or HVAC equipment? Etc.
I am sitting on a classic car that will be sold to fund a new car just before retirement..my home is 5 years old with a metal roof, so im hoping we are good for a while. I plan to keep a years expense cash on hand for such emergencies.
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Old 07-03-2018, 01:52 PM   #10
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You still have 2 to 3 years so save all you can in that time. That a good look at your expenses and there maybe some place you can cut back. One option is to retire in two years find a temp/part time low stress job for a few years.

I believe you can retire on what you have with some exceptions. Good Luck
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Old 07-03-2018, 03:28 PM   #11
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Quote:
Originally Posted by YesIamReady View Post
Hi, I am almost 58 and want badly to retire at 60 or 61.

I'm sitting on 459,000.00 in a 401k, 98,000 in IRAs.
My monthly expenses are roughly 4500.00 monthly. My wife is 58 as well.
I'm putting away about $2800 per month. I have an emergency fund of about $30k. I have a home with no mortgage or other debt.

I will have a small pension of $1200 beginning at 62 and SocSec estimate combined of about $2500 at 62. My thinking is to hopefully have $100k to fund the early months prior to 62, leaving somewhere between $550-600k to fund the shortfall. I hope to leave at least some $$ to my 2 kids when i'm done. Am i kidding myself, or can this be a reality?
I am in the same boat as you are. I played with the numbers and in my case I plan on a monthly budget of $4300.00 with a nest egg of $700.000. My plan is to retire at 61( currently 56) with the majority of my investments in reits, closed end funds, MLP and dividend stocks, hoping to generate a 5.5% return. I think you will be ok. Just control your spending
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Old 07-10-2018, 03:08 PM   #12
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Seems a little tight, and leaves you little wiggle room for new hobbies, or unexpected expenses/emergencies. Have you accounted for any long term care costs? Have you looked up the cost of health insurance in your area?
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Old 07-10-2018, 03:25 PM   #13
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Can’t you trim your expenses? $4500 with no mortgage is kinda high in my book
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Old 07-10-2018, 03:56 PM   #14
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Quote:
Originally Posted by YesIamReady View Post
Hi, I am almost 58 and want badly to retire at 60 or 61.

I'm sitting on 459,000.00 in a 401k, 98,000 in IRAs.
My monthly expenses are roughly 4500.00 monthly. My wife is 58 as well.
I'm putting away about $2800 per month. I have an emergency fund of about $30k. I have a home with no mortgage or other debt.

I will have a small pension of $1200 beginning at 62 and SocSec estimate combined of about $2500 at 62. My thinking is to hopefully have $100k to fund the early months prior to 62, leaving somewhere between $550-600k to fund the shortfall. I hope to leave at least some $$ to my 2 kids when i'm done. Am i kidding myself, or can this be a reality?
You could probably swing it.

At 62, if your numbers are accurate, you only have to fund $800/month of expenses. Seems like that is doable, assuming healthcare and all other expenses are included in your numbers.

You really should take a look at other Social Security claiming strategies, rather than both starting at 62. A higher percentage of your retirement income in a guaranteed, inflation-protected, source could come in rather handy down the road.

What about your wife? What part of the pension does she get if you expire first?

Have you written a detailed budget for retirement?
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