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Finally Introducing Myself
Old 08-09-2015, 07:16 PM   #1
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Finally Introducing Myself

Long time lurker ready to start posting. First a little about myself:

Married, mid-fifties, two children. I'm ready to start posting and participating on the forums. Here's some additional details:

Children: One in college and one will start next year. DW and I have been fortune enough to be able to save most of the cost for their undergraduate education. They should be able to cover any shortfall.

Debt: None

Total savings: About 30x our annual spending, with 47% of this total in our taxable account and 53% in tax sheltered accounts.

Goal: Retire in 2017 with 35x saved. Live off taxable accounts until DW and I are 70, and then start drawing from SS, and retirement accounts. Reaching the 35X threshold will take decent market returns, and continued saving rates. Hitting 35x might be a stretch.

If we don't hit the 35X threshold by 2017 might consider some part-time work for a few years so we can earn enough to cover some basic expenses like groceries and insurance.

Concerns: Future market returns, uncertainty with ACA as don't have access to health insurance after leaving the workforce. Health is good, but I foresee continued health cost inflation. Also concerned about SS, that's why we want a low withdrawal rate.

Looking forward to participation,

Sycamore
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Old 08-09-2015, 07:57 PM   #2
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Welcome aboard Sycamore!

Looks like you have a very conservative financial plan. I noticed that you didn't complain about your job, a common pastime here. So presumably it's at least tolerable, no?

So, my big question is why do you want to retire? Another way of asking this is "what will you do all day"? Also, will DW be retired with you? Don't get me wrong, I'm all for ER, having existed with a far less robust SWR. However, given the apparent strength of your finances, the biggest "concern" may be the emotional aspects ER.

I've found the Ernie Zelinski's book "How to Retire Happy, Wild, and Free" very helpful for all the non-financial aspects of retirement. It's often recommended on this board.

FB
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Old 08-09-2015, 08:25 PM   #3
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FreeBear,

Thanks for your reply.

The job is getting tough. My company was acquired by a Megacorp five years ago. Lots of changes, stress level rising fast. The changes along with a long commute have me ready for a change.

You posed an important question: what will I do all day? I have to figure that out. DW works part-time and will likely continue.

I just ordered Ernie Zelinski's book and will read it this month. The what will I do all day question is important and I know I have to figure that out. I'm don't think I can find enough projects to keep me engaged, and occupied.

I'm interested in hearing if others think the financial aspect my plan is too conservative, or not. My wife's family members live a long time so I think I need to plan on a minimum of a 40 year time horizen.

Sycamore
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Finally Introducing Myself
Old 08-09-2015, 08:46 PM   #4
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Finally Introducing Myself

Welcome sycamore, I look forward to you reaching your goals. I too think your 35x is excessive so if you are a little short you may be able if you're comfortable to go closer to the traditional 25x, maybe 30x or a 3.3% SWR. Also one of you should take spousal benefits at FRA 67 as they don't continue to grow. You are close to to my age and but I'm paying grad school on first and 2 more years of undergrad on 2nd, and have some pension and SS. Again good luck on finishing strong, I'll be rooting for the same market next 2 years!


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Old 08-09-2015, 08:55 PM   #5
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35X?
That is more than I would ever have imagined anyone having!
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Old 08-09-2015, 09:30 PM   #6
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So DW will likely continue to work for a bit and it sounds like you might need a part time job just to stay busy. Your children are leaving the nest, and you have considerable means. It sounds like you have nothing but good problems on all fronts. Congratulations! I do believe you've won the game of life.

I advise spending some quality time enjoying yourself and figuring out what really fulfills you and makes you happy. This may require some trial and error and a bit of courage to really explore.
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Old 08-09-2015, 09:33 PM   #7
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Quote:
Originally Posted by Eileen View Post
35X?
That is more than I would ever have imagined anyone having!
That is 35X spending, not income I believe. Can make a big difference if you save a significant portion of your income.
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Old 08-09-2015, 10:30 PM   #8
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Gauss,

Yes I referenced 35x total spending. I include paying health insurance from an ACA exchange for four people in this 35x total. Additionally this includes other expenses for the kids like car insurance cell phones, etc.

Those expenses will decrease over time, but right now they are significant.
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Old 08-09-2015, 10:32 PM   #9
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Yes just a conversion of multiples of spending to SWR
1/SWR = X times spending, so

35x = 2.86% SWR
30x = 3.3% SWR
25x = 4.0% SWR

Using Firecalc, 75% equities, you can see how SWR must be decreased as retirement duration increases, For a 95% success rate we find that:

30 yrs SWR = 4.0%
40 yrs SWR = 3.65%
45 yrs SWR = 3.55%

Let's say we want 100%, we find we need about another 3-4 times spending (.35-.4% lower SWR)

30 yrs SWR = 3.59%
40 yrs SWR = 3.3%
45 yrs SWR = 3.2%

So a lot of us on the site like SWR below 4% but some seem to be striving for levels that may be causing them to work more years than needed. These bad outcomes are the worst bad sequence of return outcomes, the expected value leaves significant money to heirs.





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Old 08-09-2015, 10:37 PM   #10
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Rothman,

You touched an important point for me. Right now I think we have to plan on a 45 year time frame given longevity in my wife's family. I know some level of Social Security will be there when I turn 70. But I want to leave a little safety factor.

A struggle I have is looking at Trinity Study/Bengen and seeing all the years where 4% works well.

How much margin of safety do we need?
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Old 08-09-2015, 10:46 PM   #11
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For a 40 year time horizon, 35x spending sound OK to me (if you have somehow factored in the reduction in spending, once you start getting Social Security).

I'd suggest trying your numbers out using our free FIRECalc calculator. Link is at the bottom of the page.
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Old 08-10-2015, 08:53 AM   #12
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Welcome to the forum!

I won't say anything about your SWR as others have given you things to consider with respect to that already.

You state that you have 53% in tax sheltered accounts, is that all tax deferred? You might want to consider starting Roth IRA conversions when retiring. The 53% will probably increase substantially over the next 15 years leading to a higher tax bracket when RMDs hit. Check out I-orp to play around with scenarios a bit.
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Old 08-10-2015, 10:46 AM   #13
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Welcome! How much tracking of your spending have you done? If you don't quite reach your savings goal by the time you want to ER, it can help to know the details of your spending. That way you know if you have room to cut back and what the impact to your lifestyle might be if you do cut back just in case you hit a sequence of returns issue.

For example, if there isn't much fluff in your budget, a bad couple of the years might mean difficulty affording insurance. In that case you may want to work a bit longer or at a PT j*b to give you more cushion. But if your budget shows that you can cut back expenses by modifying some categories that wouldn't matter that much to you, then you can feel more comfortable retiring even if you aren't at your ideal target number.

I look forward to reading more of your posts and hearing how you progress on the journey.
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Old 08-10-2015, 11:15 AM   #14
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Welcome to the forum, Sycamore. It sound like you have your finances pretty well under control. I usually recommend that folks have flexibility built into any plan as the unexpected can always be expected. In our case, for instance, DW and I figure we can cut our expenses by 1/3 fairly easily and by 1/2 if we absolutely have to. 1/2 would require completely changing our life style (location for instance.) But having the back-up plan(s) in place is very comforting. YMMV

Good luck with your FIRE plans. We look forward to your inputs.
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Old 08-10-2015, 09:14 PM   #15
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molof,

Good suggestion on i-orp. I need to spend some time doing some Roth IRA conversion analysis. I've done a lot of sensitivity analysis (varying stock/bond allocations, withdrawal rates, time frames) using FireCalc, and cfiresim. I haven't spent much time with i-orp. Thanks for that suggestion.

Katiek,

I've done a lot of expense tracking going back ten years, and have some good ideas about where I would cut if I lose my job or we experience an unforeseen expense.

One area where I'm interested in feedback from others is forecasting (if that's possible!) reduced expenses as the kids move through college and on to their own. As many can attest, the college years are expensive.

Thanks for everyone's feedback.
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Old 08-10-2015, 09:24 PM   #16
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Welcome, Sycamore.

I ER'd when our kids were in college (with all of those expenses in 529/custodial/savings accounts). Both chose private colleges half a continent away (in opposite directions) so we had airfare as well.

After that, we realized that we were putting significantly fewer miles on our cars (plus didn't have them on our insurance), and weren't paying for massive quantities of food consumed by teens and their friends.

We do still have one on our cellphone plan, but only because we don't want her enriching AT&T any more than we already do.
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Old 08-11-2015, 04:11 AM   #17
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Welcome to the forum!

I won't say anything about your SWR as others have given you things to consider with respect to that already.

You state that you have 53% in tax sheltered accounts, is that all tax deferred? You might want to consider starting Roth IRA conversions when retiring. The 53% will probably increase substantially over the next 15 years leading to a higher tax bracket when RMDs hit. Check out I-orp to play around with scenarios a bit.

That was going to be my comment. You can delay SS to 67 or 70 but I would start tapping the retirement accounts at 59.5.

Just because you tap them doesn't mean you have to spend all that you withdraw.

Avoid huge RMDs
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