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Old 10-12-2013, 10:56 AM   #1
Dryer sheet wannabe
 
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Hello gang:

I was searching around for retirement planning info a few days ago, and I am happy to have stumbled across this forum. I am 56 years old, and I am being "rightsized" at my place of employment at the end of 2013. I will likely pursue some full or part-time employment in 2014, and I have been running the numbers to see what I might need if I just want (or need) to kick back for a while. I have had a high-stress job for a number of years, and I might want/need to just chill for a while. Our personal situation is as follows:

Mortgage debt: $51,000; 3.25% ($375,000 home value)
Taxable savings accounts: $2,200,000
401(k) and IRAs: $640,000
Lifetime pension/annuity: $30,000 per annum

I estimate our annual expenses at about $100,000 currently (I used the budget worksheet in the Fidelity Retirement Income Planner). We have two kinda-sorta grown children, although some financial support is still required.

We have a good chunk of our retirement savings in "after tax" accounts, so these can be accessed without tax implications. In addition, we still have about a $200k tax capital loss carryforward left from 2008 that can be utilized to offset future capital gains in the taxable investment account.

I have run a variety of retirement calculators, and most say that we are in pretty good shape - even if I want to retire without part-time income. That said, I am pretty active, and I would enjoy some part-time interaction or consulting work. I have mainly used the Fidelity Retirement Income Planner since it allows for quite a bit of detailed input on both the income and expense side.

I am still afraid to pull the trigger and relax, but I might start 2014 by watching the spending, seeing where we can cut back and seeing how things settle in. I would appreciate your thoughts and sanity check on our situation. Again, I'm happy to have found the forum and look forward to participating in the future.
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Old 10-12-2013, 11:01 AM   #2
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Welcome!

I think the most important thing, and what a lot of folks new to the planning process need, is as good a handle on expenses as possible. I tracked mine for over 15 years pre retirement (and continue now) on Quicken. Once you accumulate categories of where it's going, you can adjust for future changes you expect with pretty good precision. Good luck. It does look off hand like you're in pretty good shape...
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Old 10-12-2013, 11:12 AM   #3
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Looks like you are in good shape but I agree it all comes down to how much you want/need to spend.
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Old 10-12-2013, 12:29 PM   #4
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With a 2.8 million portfolio, 4% SWR supports your 100k spending, plus you have a pension/annuity besides. I think you are the captain of this ship and you get to choose whatever you want to do. Since you are FI, you can choose to work or not as you wish. Congrats.
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Old 10-12-2013, 12:45 PM   #5
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I'd take your time at least. Massage the expense budget to exclude work expenses and include health insurance, infrequent costs like home repairs, cars, and appliances, and any extra stuff you want to do in retirement. Include taxes of course. If it still comes out at $100k or less you are in good enough shape. Very good if you have some flexibility and social security, less so if it's bare-bones.

You are set up nicely to start Roth conversions after you retire. Consider the ACA subsidy levels if applicable and the 0% capital gains taxable income level when determining how much to convert, or tax brackets.
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Old 10-12-2013, 01:05 PM   #6
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Quote:
Originally Posted by Singletrack View Post
In addition, we still have about a $200k tax capital loss carryforward left from 2008 that can be utilized to offset future capital gains in the taxable investment account.
Ouch ! Your portfolio hasnt recovered since the 2008 decline ? Did you get out of equities altogether and miss the ramp ? What's your current asset alocation ?
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Old 10-12-2013, 01:30 PM   #7
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Thank you for all the responses thus far....I appreciate it!

Quote:
Originally Posted by wingfooted View Post
Ouch ! Your portfolio hasnt recovered since the 2008 decline ? Did you get out of equities altogether and miss the ramp ? What's your current asset alocation ?
Good question, wingfooted. I took some losses near the bottom, then gradually reinvested on the way back up. I have unrealized gains in my portfolio, and I will use the loss carryforward in the future as I harvest gains and rebalance.

Currently, I'm cash heavy (the balance is equities; no bonds). I just moved from a managed account relationship to Fidelity, so I sold certain accounts so I wouldn't have to deal with basis transfer between firms (plus, the market is pretty strong right now). My next step is to work on a reinvestment program to take advantage of pullbacks.
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Old 10-13-2013, 09:01 AM   #8
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Originally Posted by Singletrack View Post
Thank you for all the responses thus far....I appreciate it! Good question, wingfooted. I took some losses near the bottom, then gradually reinvested on the way back up. Currently, I'm cash heavy (the balance is equities; no bonds). ........... (plus, the market is pretty strong right now). My next step is to work on a reinvestment program to take advantage of pullbacks.


Sounds like market timing. Why not cost average your way back into a target equity allocation. Painful that you've missed a major gain over the last two years, 2012 and 2013 have been strong bull runs. And strong markets can just get stronger.
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Old 10-13-2013, 09:10 AM   #9
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Sounds like market timing. Why not cost average your way back into a target equity allocation.
That's basically what I am doing. I have a group of ETFs that I am beginning to commit to, and I will add more as opportunities present. I realize that market timing doesn't work, unless one is simply lucky (and "lucky" is not a sound investment strategy). Thanks for the follow-up.
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