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Hello, Looking to boost my FIRE confidence
Old 01-15-2015, 12:51 PM   #1
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Hello, Looking to boost my FIRE confidence

Hello, I have been reading the forum for a short time. However, I have learned a lot in that short time and appreciate all of the wisdom and experience you all are kind enough to offer!

I am 53 and my wife is 55. I would like to retire mid-year 2015 and she plans on working through 2016. We are in mostly low risk investments now, with a large position in cash/CDs. It’s been hard to push back into the market over the last few years. I fear another crash and what it might do to my overall confidence to retire early. I have included as much information as possible below. I ran the numbers through FireCalc. I used Bernicke's Reality Retirement Plan, total market portfolio mixed 50/50, 50 years duration. FireCalc gave me a 100% success rate. I think I am at FIRE if I gain the confidence to move everything back to the market. I would like the forums opinion on our position and thoughts on steps to move forward with confidence. THANKS

Core Expenses
Average Spending over last two years has been $60 k, excluding taxes (fed only; live in FL) and the purchase of auto ($27 k). Have great benefits through wife’s company, medical insurance is $130/mo. For planning purposes I built up a separate budget, including $10 k for Medical insurance and included estimated taxes and expense to offset the periodic costs for big ticket items like auto and appliances. My retirement budget is $80 k per/year. Children are grown; expect no financial need from them. Parents have good pension, LT care, etc. We own a condo without a mortgage. Maintenance fees are included in monthly expense, so not many surprise expenses to consider.

Tax-Deferred Investments
$800 k (Mostly Mutual Funds – Target Retirement 2020)

Taxable Investments
$300 k Stocks
$900 k Cash/CDs

$500 k Condo (Paid)

Pensions (Both are non-Cola and 100% Joint & Survivor)
Mine - $28 k per year starting at age 65 (2027)
Wife’s - $6 k per year starting at age 65 (2025)

SS
Mine - $34 k per year starting at age 65 (2032)
Wife’s - $23.5 k per year starting at age 65 (2030)

Income (Net)
2015 $130 k
2016 $70 k
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Old 01-16-2015, 10:26 PM   #2
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Welcome aboard, Dollar!

Looks like you're good to go according to FIREcalc.

You mention wanting a boost of confidence to get back into the market. I'd say stick with the Target 2020 mutual funds. No need to take on unnecessary risk at this point.

Hopefully some others on the forum will weigh in here soon, also.

omni
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Old 01-16-2015, 11:05 PM   #3
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Omni,

Thanks for your feedback. I really appreciate your insight. I am reading about permanent-portfolios now trying to understand how I might find a long-term low-risk strategy for my retirement years. Thanks Again!
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Old 01-17-2015, 12:26 AM   #4
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Good that you saved, and great that you understand your expenses.

But you are being so conservative that you will end up with much less.
$900 k Cash/CDs is a huge number.
You don't say but lets pretend 1/2 of it is cash, so you earned about 1.25% last yr, vs 12% in the stock market, and the year before 30%.
Had you just stuck that $450K into some broad based etf 4 years ago, it would be about $200K higher than it is now.
One of you will live to about 90, so that means your investment view has to be 35-40 years long and having 13 yrs of spending in cash is far too much.

I know its hard, as back in 2011, I too thought the market was overpriced. So I suggest you stick just $10K of cash into something like Vanguard wellington fund each month for the next 45 months (or 4 years).
This dollar cost averaging will get you over your frozen action.
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Old 01-17-2015, 06:42 AM   #5
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$900 k Cash/CDs
2016 $70 k
900k in cash/CD? spread among how many banks and in how many registrations. I had a bank in 2007 get taken over by the FDIC... too much in one bank, or under one registration could put money at risk. The question here is have you exceeded FDIC coverage with any of this money?

Second, adding $10 for med insurance sounds about right for a HDHP, have you also set some $ for those higher deductibles? I'm 53, DW 54.. she ER at the end of last year, I'm ER at the end of Feb. We added 10K for HI and 10k for deductibles (even though we don't expect to use much in the way of deductibles most years. Check healthcare.gov for estimated rates for other plans. Also, there are several threads on these boards on qualifying for the ACA. So look at your "income during ER".. you may get a subsidy... or you could get put on Medicaid... really check your "income"

Welcome to ER.... hope to beat you there
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Old 01-17-2015, 08:32 AM   #6
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This bull still has years to run. Start with a blue chip fund, increment over time, and keep a 10% cash position for your pillow.
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Old 01-17-2015, 01:11 PM   #7
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So for your first 10 years of retirement, you will be living on your portfolio alone. Is your plan to use the $900k cash/CD's during that time period? That makes some sense then. After that, SS and pensions will sustain you until the pensions lose value due to inflation and lack of cola. But you will still have a good amount in mutual funds/stocks, so your plan looks good.
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Old 01-18-2015, 07:36 AM   #8
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Sunset,

Thanks for your comments. Your approach of easing back in is a great idea! I am reading about AA, so I just need to decide on one of the funds and go ahead and start to populate the one. THANK YOU!
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Old 01-18-2015, 07:40 AM   #9
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bingybear,
Yes, the cash is spread across 4 on-line banks for protection. I think we can qualify for ACA. I am hoping that holds out. My wife will work 2 more years where we will leverage her policy. So about 10 years for me and 8 for her on private or ACA. I didnt estimate 20k per year for total healthcare costs. I will research further. I sure hope it isn't that high for us... Thanks for your insight!
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Old 01-18-2015, 07:42 AM   #10
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heeyy_joe,

Thanks for your comment. I am determined to get started moving back in next week.
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Old 01-18-2015, 08:29 AM   #11
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bingybear,
I think we can qualify for ACA. I am hoping that holds out. My wife will work 2 more years where we will leverage her policy. So about 10 years for me and 8 for her on private or ACA. I didnt estimate 20k per year for total healthcare costs.
My comment on "qualifying" was more to medicaid verse ACA. If you assume a 2% dividend rate on your 1.2Mil will be 24k. this will be marginal at best for getting out of medicaid, so you may need to add some capital gains. Sitting in bank accounts, likely much lower at this time. Medicaid limits likely vary by state... so I can't be precise. It also depends if your state expanded medicaid as part of the ACA.

The comment was really that you may need to make some investment decisions to increase your MAGI for ACA.

Note my numbers are for my state, bronze plan (there are some less expensives -- but did not have my doc). However, I did not include possible subsidy. And most would not include max out of pocket every year. This is my over conservatism in planning. I see this as giving me more spending money in good years. I expect low outlays most years, but will likely blow my individual max out of pocket when I have my pacemaker replaced... about once a decade.

I told DW to save up for 5 more pacemakers
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