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CFP says I'm on Track to Retire Next Year! (Virginia)
Old 09-20-2015, 06:25 PM   #1
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CFP says I'm on Track to Retire Next Year! (Virginia)

I retired from the Air Force in 1995 and worked at an agency with the Commonwealth of Virginia until 2004. I joined the federal government at age 50. Under the Federal Employee Retirement System, the earliest I can retire with an immediate annuity will be age 62 (12 years civil service). So that's when I want to retire!

I recently met with a Certified Financial Planner at Fidelity Investments in Washington DC. He confirmed that my retirement plan is sound. The CFP helped me build an estimated monthly budget and interviewed me about goals such as inheritance to my children and charitable giving. He added my holdings at TIAA-CREF, Vanguard and Fidelity and ran simulations using different market assumptions and decision-points such as drawing Social Security at age 66 or age 70. (Assuming I live to age 83, drawing Social Security at age 70 always "won," even drawing down my IRA's, 403B and savings accounts.) It was good to receive this confirmation that with prudent management, I can be financially secure in retirement.

I am happy to have found this informative forum as I plan for the next (hopefully long) chapter in life!
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Old 09-20-2015, 06:43 PM   #2
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Welcome. I assume you gave the CFP an accurate budget. Did they come up with a withdrawal plan and how does it mesh with your pension and SS sources.
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Old 09-20-2015, 07:10 PM   #3
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Welcome GoWest, it's great to hear from the CFP that you're good to go, but it sounded like maybe it was a surprise to you? Congrats on the achievement but I'd like to understand the numbers for myself to be confident, and it all rests on a good understanding of spending. Thanks for you service to the country.


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Old 09-20-2015, 09:28 PM   #4
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Monthly Budget: The CFP helped me estimate my budget by reviewing the last 12 months of outflow through my Fidelity checking account. With limited exceptions (e.g., income tax), virtually all my living expenses go through that account: HOA fee, insurance bills, property taxes, utilities, ATM withdrawals, credit card payments, etc. Based on that review, which included a few big-ticket items like a new refrigerator and a Caribbean vacation, I targeted a retirement budget of $7,000 a month. This amount includes my estimated federal-state income tax liability rate of about 30%. Inflation-indexed pensions will cover $4,100 at age 62, which means that for eight years I need to withdraw approximately $3,000 a month from IRA's, Thrift Savings Plan or savings. (This withdrawal rate equates to less than 4% annually.) At age 70, I will start Social Security (estimated $3,300 monthly), which essentially means I could stop withdrawing from savings at that point. (Of course I will have to withdraw required minimum distributions from IRA's.) I was not surprised by the fact that I could retire -- but that I could fully retire at 62, which is 3 years earlier than I was contemplating a few years ago. And, that I could retire and be financially secure.
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Old 09-21-2015, 08:03 AM   #5
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Welcome and congrats! Your pensions make a nice foundation for your retirement and it sounds like you've done a good job saving additional amounts as well.
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Old 09-21-2015, 02:01 PM   #6
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Welcome GoWest!

It sounds like you've got a good start to your retirement planning. Based on what you wrote I'd consider the following:
- Does your budget adjust for things that typically change in retirement: no more medicare withholding; employer provided healthcare costs might change significantly; no more TSP contributions or IRAs when you no longer have earned income.

Look at the FAQ about what to consider when you retire.
http://www.early-retirement.org/foru...ire-69999.html

- Consider running firecalc (linked at the bottom of the page) to "what if" various scenarios. It back tests against historical markets - so it's a worst (historical) case test of your plan. That said - the future might be worse than the past.... no guarantees.
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Old 09-21-2015, 02:44 PM   #7
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You have made a good start. Was there any discussion about asset allocation to support your IRA withdrawals prior to starting SS?
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Old 09-21-2015, 05:56 PM   #8
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Come on in the waters fine.
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Old 09-23-2015, 09:45 AM   #9
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Hello and welcome to the forum from a fellow Virginian! Thank you for service in the Air Force! It sounds like you're good to go!
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Old 09-23-2015, 08:07 PM   #10
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Thank you for all the warm welcomes. Regarding Nun's question about asset allocation: During my first meeting with the CFP, we did not go into this aspect in detail. The CFP asked me about my tolerance for risk. (I'm risk averse.) Based on Fidelity's portfolio analysis, he thought my holdings looked appropriate for my goals and risk tolerance. I'm currently at 50% equity, 35% bonds and 15% cash. The "cash" allocation is nearly all in the Thrift Savings Plan G fund which has paid 2.31% over the past year.
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