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Burnt out and is it time?
Old 10-27-2017, 05:15 PM   #1
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Burnt out and is it time?

Considering pulling the plug in 2018, DINK, mid-40s, very high cost of living area

Goals:
Stop working for 'the man' as early as possible with a balanced view of risk
For various reasons assume will never work at a high salary again and part time work would be pocket money at best

June 2018 forecast:
2.6M - invested 70/30
120K - cash
850K - primary residence
700K - secondary residence - elderly relative lives here probably 10-15 years more and then would likely sell and add to investments it has a cost basis of $800K

Liabilities:
5 years and $140K left on 15 year mortgage on primary 3K month

Spouse earnings until age 60:
75-100K with health insurance but often long periods of unemployment figure this income mostly just exists for insurance or savings for COBRA

3 year ave yearly expenses wo fed/state/payroll taxes:
140K - no budget or attempt to restrain spending so far but paying off the primary home and some modest cut backs could drop to 100K

Logic:
2.6M is only 18.5x @ 140K, or 26x at 100K but in future secondary residence sells and adds 700K+ to the pile
Firecalc for 40 years @ 120K spend, SS @ 67, 700K lump sump add in 10 years says 99% success

Talk me into it or out of it thanks in advance
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Old 10-27-2017, 06:14 PM   #2
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Welcome to the board!

Expected Social Security in addition to all this? This significantly effected my readiness analysis when I stopped assuming $0 SS and instead began assuming 66% of my accrued benefit taken at age 70.

Start tracking your expenses with categories so that you have a better understanding on how they will change in retirement.

I suspect you will be good to go once you have a good handle on your spending.

I left about ~5 years ago in my mid-upper 40's and have not regretted it at all. DW will hopefully join me next year too. DINKs also.

Start giving some thought about things you want to retire too (ie volunteer opportuntities etc.) You don't want all your time to be unstructured.

-gauss
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Old 10-27-2017, 06:21 PM   #3
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I was in a similar situation as you and decided to TMY (ten more years) it. But we're now way too conservative. It could have been just 5 years easily. We probably should have bailed at 50.

For your plan, the things I'd like you to consider are:
- Could you really drop back to 100k spend no problem? And, uh, taxes count. You aren't saying what HCOL area you are in, but I know of one area that an 800k house will cost you 15k in RE taxes alone.
- Medical insurance. Just read some of the ACA threads here. My company provides "full pay in" insurance for retirees, and they just jacked it 15% this enrollment period. You were not clear as to how solid the spouse's insurance is.
- Could you rejoin your work easily if it doesn't work out? I know in tech, I'm done when I'm done. However other people can have careers they can come back to. Can you? (Alternate safety net.)

So, I'm not going to blindly say you "are good to go" as many do here when they see Firecalc at 99%. I just want you to think a bit more. Start by trying to live on, say, 80K burn rate for a while and see if you can do it.
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Old 10-27-2017, 06:45 PM   #4
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Welcome, you appear to be close, but have some work to do wrt expenses, taxes, HI, etc.

Couple of questions: You are assuming spousal income of 75-100 with gaps, but with HI, until 60. So this is while you work for.. pocket money/pt? that's a long time to have one spouse basically retired and the other doing FT assignments on contract (which is what is sounds like, off then on?). If you are in tech in mid 40's then you can't count on coming back if you take even just a year off...the vultures are already circling you if you live where I think. But if you're specialty tech you might be able to do the PT gig stuff for a few years.

Besides paying off the mortgage don't assume any other cut backs on expenses. Sure, if you have a high commuting cost, take that out, but you'll find other things to spend money on once RE'd, and most of us don't RE to tighten our belts, but, rather, to continue a comfortable LBYM lifestyle that's well established, with some flexibility.

Is that 2.6 all in non-taxable? If so, spend whatever time between now and RE beefing up your taxables, enough to carry that $120k per year with ample breathing room until 59.5.

Yes, were that 2nd residence cashed out (assuming no mortgage on that?), then you'd be in better shape. I am guessing your inlaws are staying there for no cost so no income, which is fine. But also what if they live 20/25 more years? instead of the 10/15 projected. Can't exactly kick them out if they reach 98... so this is kind of like inheritance money in that you can't really count on the when.. so really can't add it into the equation at all. But damn that's a pricey house for family... could you find them something for say half that and move them and sell it sooner? Not like they need to be living a block from the google bus.

You don't mention your current income/save rate. So if you stayed and OMY'd or 2'd, what would that look like? get the initial nut over 3 and pay off the mortgage and you'd be in a far more breathable place.

You'll also want to read all the intro threads (someone will be along to post them), as well as plan for things like the best time of year to split with your company (bonus, vesting, etc.)

You're close, just have a bit of homework to fill in the blanks.
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Old 10-27-2017, 09:08 PM   #5
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Any possibility of downshifting to part-time work with your current employer or a competitor?
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Old 10-28-2017, 05:58 AM   #6
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Definitely include taxes and medical on the spending side. I believe that we should not expect historical rates of return going forward so I recommend 30-40X expenses for long term RE.
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