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Old 11-03-2013, 09:00 PM   #1
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Hello

Been following the board and finally decided to post. My hubby is 41 and I'm 40. Our goal is to retire by 52. I know it sounds crazy but that's the goal. I think the biggest advantage we have right now is my husband manages our portfolio so we do not have to pay any mgmt fees. We've averaged at least 8% for the last 7 years and this is a very conservative off the top of my head estimate. My hubby says it's more like 15% compounded rate for the last 7 years. Anyways I use the 8% number for future projections.

Our current goal is to try and build our non retirement account so that we have income until we can tap into our retirement accounts. We are putting about 25%of our income into our non-retirement account to try and reach our goals.

I also have a very small pension that I will have access to at age 55.

We have one daughter who is ten.

Anyone else who retired a few years short of the 59 1/2 magic number that can offer some advice?
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Old 11-03-2013, 10:03 PM   #2
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I wouldn't be so concerned about the 59.5 age because there are options. You likely will have some taxable savings. If you have 401k and "retire" your plan may allow withdrawals at age 55. If you have Roth contributions 5 years old or older, you can withdraw contributions and leave earnings in the account. You can do 72t withdrawals from IRA and 401k at any age.
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Old 11-04-2013, 10:06 AM   #3
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Im doindlg 56-59.5 with taxed income, will do some 401k withdrawls as the plan allows fot 55 and terminated without penalty. If I had to could always do 72t. So yes it's very possible.

Best wishes,

MRG
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Old 11-04-2013, 10:11 AM   #4
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Welcome to the forum. If you haven't already found it, go to FireCalc and run your numbers. Most of us here feel it's more appropriate to use than just picking an average return.

If you really want specific comments on your situation, we'd need a lot of numbers that many people are hesitant to post even anonomously.
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Old 11-04-2013, 10:29 AM   #5
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Welcome to the forum.

In addition to the excellent suggestions above, you should start keeping detailed records of your expenses so that you will have a high confidence in your annual budget.

Many here subscribe to the use of index funds for investments. Even if you're not so inclined, read the literature so you're making an informed decision. Bogle, William Bernstein etc are good authors.

We retired pre-59 1/2 and are using assets from our taxable accounts to fund retirement till that point.

All the best.
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Old 11-04-2013, 10:43 AM   #6
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Quote:
Originally Posted by Dwofnlo View Post
Been following the board and finally decided to post. My hubby is 41 and I'm 40. Our goal is to retire by 52. I know it sounds crazy but that's the goal. I think the biggest advantage we have right now is my husband manages our portfolio so we do not have to pay any mgmt fees. We've averaged at least 8% for the last 7 years and this is a very conservative off the top of my head estimate. My hubby says it's more like 15% compounded rate for the last 7 years. Anyways I use the 8% number for future projections.
Are you including all of your savings when coming up with this 8% number or just your equities? This seems overly optimistic and could get you into trouble if you use this number in planners. I suggest you look at the actual records and include all savings in calculating your rate of return.

Personally, we are using a rate of return of 5 or 6% in our planning, with an inflation value of 3%, so only 2 or 3% real return. Most people here are using index funds so have extremely low fees as well. The rate of return assumption has a tremendous affect on plan success so it is best to be conservative.

With respect to running retirement calculators, make sure you have accurate expense estimates. Don't forget to add in income tax as an expense and remember that for at least a portion of retirement the filing status will be single as one of you will pass away before the other. (Painful to think about but important to consider.) Expenses do not half when one of you passes away.

Good luck in your planning! I am hoping on escaping at 55 so 52 is not crazy.
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Old 11-04-2013, 05:46 PM   #7
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Thank you for responses. It's nice to get some feedback. I have run the numbers through firecalc as well as other retirement calculators and also a spreadsheet I created myself. It looks good but I'm always skeptical.

I know it's hard without specific numbers and I guess I'm nervous posting too much detailed info.

I have been tracking our expenses and I did make sure to calculate taxes in our expenses but I did not consider the idea of at some point having to do it for a single person. Thanks. And yes sad

The 8% does not include our savings. It's only the return on equities. We do not have any annuities, bonds or indexes. We invest in dividend paying stocks and reinvest all the dividends.

My husband shows me the actual records all the time and the problem is the last 7 years we've done really, really well. I mean it's not a problem but it may be an anomaly. So 8% is our conservative number. But I've run the numbers at 5% and 6% too. Just to see what plan b would be. It would mean retiring at 56 maybe instead. Which is still fine by me

I'm just a big nerd and love doing the calculating. Thanks for the greetings!
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Old 11-04-2013, 06:38 PM   #8
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Quote:
Originally Posted by Dwofnlo View Post
...

My husband shows me the actual records all the time and the problem is the last 7 years we've done really, really well. I mean it's not a problem but it may be an anomaly. So 8% is our conservative number. But I've run the numbers at 5% and 6% too. ....
The sequence of returns is a HUGE factor in the longevity of your portfolio when you're living off it. Using constant returns may yield good looking spreadsheets, but have little relation to reality. That's why firecalc is such a worthy tool. Obviously, you can't blindly follow it, but at least you know if your withdrawal amount would have worked historically for the duration you assume.
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Old 11-05-2013, 05:38 AM   #9
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Quote:
Originally Posted by Dwofnlo View Post
...The 8% does not include our savings. It's only the return on equities. We do not have any annuities, bonds or indexes. We invest in dividend paying stocks and reinvest all the dividends.

My husband shows me the actual records all the time and the problem is the last 7 years we've done really, really well. I mean it's not a problem but it may be an anomaly. So 8% is our conservative number. But I've run the numbers at 5% and 6% too. Just to see what plan b would be. It would mean retiring at 56 maybe instead. Which is still fine by me

I'm just a big nerd and love doing the calculating. Thanks for the greetings!
Hi Dwofnlo, Since you are a self-described nerd you might like wading through this Vanguard Research paper on "Forecasting Stock Returns: What Signals Matter and What They Say Now". https://personal.vanguard.com/pdf/s338.pdf

You seem to be somewhat conservative, but yet have everything in stocks. Here's a quote from the article:

"Readers will also note that the projected distribution of annualized 10-year U.S. stock returns in Figure 6 displays wide and fat tails. A key reason is that, as we have discussed, nearly 60% of the variation in long-run stock returns is unexplained by valuations. As a result, our VCMM simulations in Figure 6 reveal that, although there is roughly a 35% probability of U.S. stocks achieving an average annual real return
between 3% and 9% over the next 10 years, even greater odds favor average returns outside of this central tendency. The odds of another “lost decade” of negative average real U.S. stock returns are approximately 20% by our calculations; this alone
provides a strong case for maintaining fixed income exposure despite a more muted outlook for nominal bond returns."
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Old 11-05-2013, 08:31 AM   #10
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Quote:
Originally Posted by Dwofnlo View Post
Our goal is to retire by 52. I know it sounds crazy but that's the goal.
Not crazy at all. There have been various polls of the members on this site, and most of them show 54 as the average retirement age, iirc. I'm shooting for 53 myself. So you're "crazy" compared to the average population, but normal compared to this one.
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