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Old 11-05-2017, 11:15 AM   #21
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Question about SS estimates from SSA.gov..... when they say your estimated benefit at FRA is $XXXX, is that in today's dollars or in future dollars at the time of reaching FRA?
Today's dollars. They don't know what future inflation will be any more than we do.
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Old 11-05-2017, 05:15 PM   #22
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I think you're probably OK to ER, but if it were me, I'd be looking for some margin, so I'd try to find something maybe contract or part-time to cover the next few years. Cost flexibility is one advantage we have over new grads half our age in the eyes of local employers (some of them anyway). I'd also try to shave expenses by ~10% or so.

I went to school and worked in the Bay Area for over three decades, and while I liked living there, I never put down roots (also single and no kids) so I moved to a cheaper area in Socal a few miles from the beach. I believe the lower payscales here make housing run about 2/3 what it costs in SJ. Family is what brought me here, but the financial advantages along with the comparable quality of life made my move well worth the effort.
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Old 11-06-2017, 06:43 AM   #23
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I think the OP is in good financial shape to retire. With $797K in before-tax accounts, and $758K in after-tax, she will do fine.

The $70K in annual expenses seems high, but perhaps the cost of living is high there, even with living in a mobile home. Still, this is sustainable with the assets she has.

Healthcare cost is the big unknown that we all face. However, the after-tax money allows her to reduce the IRA/401k withdrawal so that the lower income will qualify her for some ACA premium subsidy. She will have to work out the details, but still has 3 years of COBRA and has time to figure this out. Who knows what will replace Obamacare 3 years from now?

About the $32K of SS at FRA, yes, that assumes that she continued to work till 65. But depending on her work history, the retirement at 57 does not mean the reduction will be much. SS benefit is based on the highest 35 years of income, and then the last 25% of income gets you a lot less than the first 25%.

I retired at 55, but with most of my working years maxing out on the SS tax limits. Working longer means replacing some of my lower years with higher years, and that brings diminishing returns. Still, to be sure I downloaded SS calculator, and computed my benefits to be reasonably close to the max.
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Old 11-06-2017, 07:07 AM   #24
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Originally Posted by pb4uski View Post
At $75k in expenses your WR is about 3.8%.... carving out 10 years of the gap between $75k and $32k of SS is $430k....leaving $1,125k... and your gap of $43k in relation to $1,125k is 3.8%.

At $70k the WR is 3.2%.... so I think you are fine.
I thought she said her total ER assets were $1.55M?
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Old 11-06-2017, 07:07 AM   #25
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Sorry about your layoff, were you secretly hoping that would happen or were you happy working? You are single, no kids and control your destiny. I sometimes think if I lost DH and I would be crushed emotionally, I would get a roommate to share expenses. Of course, someone I knew well and trusted, even consider a family member like my niece who is at university here. This idea might be a stretch but you may be able to rent a nice house.

Your numbers look fine and HI is a concern for everyone. Are you allowed to get ACA if you're offered COBRA? Have you really considered your expenses? There are 2 of us and we comfortably live on @ $70K including nice vacations twice/year. We watch spending but enjoy the fruits of FIRE for sure.
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Old 11-06-2017, 09:52 AM   #26
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Originally Posted by pb4uski View Post
At $75k in expenses your WR is about 3.8%.... carving out 10 years of the gap between $75k and $32k of SS is $430k....leaving $1,125k... and your gap of $43k in relation to $1,125k is 3.8%.

At $70k the WR is 3.2%.... so I think you are fine.

You can make your situation better by spending some of your new found time scrbbing your expenses and seeing if you can dial them down without sacrificing too much... $70-75k seems a bit high for one.... but perhaps you are in a HCOL area.
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I thought she said her total ER assets were $1.55M?
She did say they were $1.55 million, but the amounts above are after carving out from the total an amount for 10 years for SS that she won't receive from 57 to 67. And actually, as I write this I realize I made a mistake and her situation is even better than I thought.

She has $1,550k and carves out $320k as a replacement for $32k a year of SS that she will not have from 57 to 67, leaving her with $1,230k. If her expenses are $75k a year then her gap that needs to be funded is $43k a year ($75k - $32k). The $43k a year in relation to the $1,230k is a 3.5% WR, which is very reasonable for a 57 yo IMO.

So from 57 to 67, she'll withdraw $43k a year plus inflation from the $1,230k and $32k a year from the $320k for a total of $75k a year. Once she turns 68, the $320k will be gone but will be replaced by $32k a year of COLA adjusted SS.

My mistake was carving out the gap * 10 years rather than the SS amount * 10 years.
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Old 11-06-2017, 10:12 AM   #27
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Originally Posted by pb4uski View Post
She did say they were $1.55 million, but the amounts above are after carving out from the total an amount for 10 years for SS that she won't receive from 57 to 67. And actually, as I write this I realize I made a mistake and her situation is even better than I thought.

She has $1,550k and carves out $320k as a replacement for $32k a year of SS that she will not have from 57 to 67, leaving her with $1,230k. If her expenses are $75k a year then her gap that needs to be funded is $43k a year ($75k - $32k). The $43k a year in relation to the $1,230k is a 3.5% WR, which is very reasonable for a 57 yo IMO.

So from 57 to 67, she'll withdraw $43k a year plus inflation from the $1,230k and $32k a year from the $320k for a total of $75k a year. Once she turns 68, the $320k will be gone but will be replaced by $32k a year of COLA adjusted SS.

My mistake was carving out the gap * 10 years rather than the SS amount * 10 years.
pb-

This math seems strange to me; not sure I understand the utility of dividing the first 10yrs withdrawals into two buckets. The OP needs $75k/yr for 10 yrs, then $43k/yr + SS until EOL.

Age 57-67: $75k/$1,550k => 4.8% w/d rate
Age 67-EOL: $43k/($1,550k-$750k) => 5.4% w/d rate

Am I missing something?
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Old 11-06-2017, 10:26 AM   #28
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Yes, the math is a bit strange.... but you are missing something.... let me see if I can explain it better.

OP can't get SS for 10 years and will get $32k a year after that. Her gap between $75k spending and income is $75k for the first 10 years and $43k after SS starts.

The carveout is to effectively replace that missing SS for ER at 57 to SS at 67.

Think of it as 3 sources of income:

  1234567891011+
Carve-out fund323232323232323232320
Retirement fund4343434343434343434343
SS000000000032
            
Total7575757575757575757575

After the carve-out, the retirement fund is $1,230k and she is withdrawing $43k a year, hence the 3.5% WR starting at age 57. The $320k carve-out fund just declines to $0 over the first 10 years, after which SS fills in for the $32k/year. Get it?

True, her overall 4.8% WR is higher in those first 10 years but it is the ultimate 3.5% WR that is the important measure in assessing portfolio survivability.
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Old 11-07-2017, 10:16 AM   #29
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I also live in the San Jose area and I do not understand why you would buy an old mobile home, presumably in a park. Most of the parks are land looking for a new use, as soon as buying out the residents and paying off the local governments for removing affordable housing makes financial sense. Staying there for 10 or 20 years may not be possible.

Is there a good reason to stay here without a high paying job, given the traffic, crowding, air pollution and growing general unpleasantness of the area? Do you have family or friends here? If not, in your shoes, I would at least consider lower cost of living locations that would meet my needs and wants.

I would also consider how realistic it is to expect to be employed at Costco or Starbucks with health issues. I can't recall many 60 year old folks with health issues working at either company. And there are no guarantees these companies will continue to offer health insurance.

In short, in your shoes, I would start the job hunt right away. Bulk up your savings and reconsider the mobile home as a long term solution.
Also, live in San Jose area. Totally agree! Rethink Mobile home parks.
In Silicon Valley, past few years, many closed or are in process of closing.

Also, Costco. I see very few if any older workers.
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Old 11-11-2017, 04:47 PM   #30
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Thanks for all the responses! It's great to get all this input.

I do live in a high COLA area, for sure. The reason I bought the mobile home is because it is the only way I could think of to ensure I could stay in San Jose during retirement. I have been here for 27 years and am well-entrenched socially. I do a LOT of hiking, and you can do it year-round here.

There have been some parks that have been sold recently to make room for high-density shops and housing. The park I am in is not in an area that is highly desirable; in fact there is an empty strip mall right across the main street near my place. But it could happen. I will just have to deal with it if it does. My park is a senior park and is subject to rent control; 2 other reasons I chose this particular park.

My SS estimate was based on entering my work earnings history into the SS calculator, year by year into all those fields. It was tedious, but I did it, and I am using the number that it reported. I guess that working a few more years won't make much difference in my SS award as I have been maxed out with earnings for so long.

I found my job to be very stressful, and am having a hard time getting my enthusiasm up for interviewing again. I am taking advantage of 90 days of professional outplacement services to help address this.

Another thing I am seriously looking at is getting a 1-year medical-assisting certificate, so I can get a lower stress, full-time low-paying medical assistant job (sort of a cross between a nurse assistant and an office worker) that has decent HC benefits. I would be escorting patients into the doctors office, taking blood pressure, etc. and also doing some front office stuff.

I've already paid the CG taxes on the sale of my home. Also I asked for a deferment of my 6 months of severence until Jan. 2018, and my previous employer granted it, YAY

I will have more questions as I go forward, but for now I will be going down the list of stuff on the famous post: "Some Important Questions to Answer Before Asking - Can I Retire?"

thanks again!

Caprica

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Old 11-12-2017, 01:56 AM   #31
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I have a quarter here that says you will look back after 5 years of FIRE and wonder why you were so concerned....
Let me know if I win...

Congrats and happy "new" life.
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Old 11-12-2017, 02:32 AM   #32
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I have a quarter here that says you will look back after 5 years of FIRE and wonder why you were so concerned....
Let me know if I win...

Congrats and happy "new" life.
Absolutely. I think so too.

I live in the Bay Area and I can get my budget down to approx 50k non-discretionary. I own my home but that includes property tax, projected maintenance, eating out, new car every 4-5 years, and a swag at a reasonable ACA payment. With a subsidy I can get it quite low by manipulating Roth conversions.

I'm wondering why yours is so high? Maybe there's room there for cutting?
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Old 11-12-2017, 04:36 AM   #33
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+1 on the SS estimate. It seems too high unless you had some way above average circumstances during your working career.
I can't speak to the actual dollars, but the OP is 57 y.o.
I'd guess that the estimate wouldn't change dramatically whether she worked to FRA.

Yes, there is a difference but I took SS at 62 after having not worked for 9 years. The difference between my 'work to 62' benefit estimate and my actual 62 benefit was negligible (don't remember the actual amount but something less than $50/mo IIRC)
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Old 11-12-2017, 08:10 AM   #34
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I would think hard about the medical assistant thing. I am a retired MD. I would not describe the job as remotely low stress. The medical assistants in my practice worked very hard physically and mentally, were pulled in multiple directions and took a fair amount of abuse from patients ( and unfortunately at times from my partners). Around here at least medical assistants are a dime a dozen and a new grad has problems getting a first job.
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Old 11-12-2017, 06:20 PM   #35
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You have a nice nest egg. My concern is the HCOL area, no-control over whether the park is sold down the line, and unexpected expenses coming into play during a down market. I do not think working at Costco or as a medical assistant for a fraction of what you are used making while in pain from arthritis is something that you are going to tolerate.
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Old 11-12-2017, 09:23 PM   #36
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Originally Posted by caprica View Post
Thanks for all the responses! It's great to get all this input.

I do live in a high COLA area, for sure. The reason I bought the mobile home is because it is the only way I could think of to ensure I could stay in San Jose during retirement. I have been here for 27 years and am well-entrenched socially. I do a LOT of hiking, and you can do it year-round here.

There have been some parks that have been sold recently to make room for high-density shops and housing. The park I am in is not in an area that is highly desirable; in fact there is an empty strip mall right across the main street near my place. But it could happen. I will just have to deal with it if it does. My park is a senior park and is subject to rent control; 2 other reasons I chose this particular park.

My SS estimate was based on entering my work earnings history into the SS calculator, year by year into all those fields. It was tedious, but I did it, and I am using the number that it reported. I guess that working a few more years won't make much difference in my SS award as I have been maxed out with earnings for so long.

I found my job to be very stressful, and am having a hard time getting my enthusiasm up for interviewing again. I am taking advantage of 90 days of professional outplacement services to help address this.
I was recently in a similar situation, though I'm five years younger than you. With my financial situation, I had a similar amount of money to spend per year. I knew for months that I would be losing my job and couldn't figure out if I could retire. I don't own my own home and it was difficult to estimate my future housing costs. It was even harder to estimate my future health insurance costs given the uncertainty with the ACA. Very stressful.

I ended up getting one interview. I didn't want the job and didn't feel ready to dive in because I was so burnt out and stressed out. They wanted me to start immediately, so I didn't get to take even one day off between jobs. But I felt like I had to take it. Now I'm starting to wish I had waited, taken a break, and insisted on a job I liked more. Is there any way that you would be able to take a little time off, de-stress and plan, and then maybe later take a consulting job?

Good luck. I hope you can find a way to stay in San Jose. I've kind of given up on the idea of retiring in the Bay Area, but I definitely get the desire to do so.

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