Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Hello! Soliciting input on retirement plan
Old 05-14-2019, 11:58 AM   #1
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
Hello! Soliciting input on retirement plan

Hello! Greetings from Michigan

I have been lurking, reading posts and replies, thirsty for knowledge, as our own retirement date is starting to come into focus. Our planned retirement date is May 1st, 2023.
I will be age 64 and my wife will be age 57 at time of retirement.

My wife and I make good incomes for the area that we live in. My income is approx. 110 K, My wife’s income is approx. 116 K. My job is not secure. As a matter of fact, there is a large cut coming next week and I do not know if I will survive the cut. My wife’s job is much more secure.

We have already downsized, selling our large house and bought our retirement condo. The condo was a cash sale with no mortgage. The condo is worth approx. 325 K.
We have zero debt. We have always paid cash for our cars and have never ran a credit card balance.

I have calculated our expenses to be 90K per year, after taxes. I will need to withdraw 111K per year

Our essential expenses are 62K per year. The essential expenses include a budgeted 22K expense for health care. This may or may not be a high estimate, but I believe that it should be a safe estimate. We are both currently healthy and take no medications.

The remaining 28K is spending on the fun stuff. Boating, vacation, 2 months rental in Florida, etc. (We hope to escape winter for a few months each year) These are expenses that could be cut back if necessary.

We have been contributing the max to our 401Ks for many years. We have also been contributing to our Roth IRAs, however only in recent years. The Roth portion of our portfolio is definitely lacking and I fear that it will have a negative effect on our withdrawal strategy.

I have ran FireCalc a few different ways.
If I leave the cash in our bank accounts out of it and just run the 1M in retirement accounts, I get a success rate of 56% for 40 yrs and 83.2% for 30 yrs
If I add the cash in, it lowers my equity position to 40% and I get a success rate of 78% for 40 yrs, and 99.2% for 30 yrs.

Here are our vitals:
Tax Filing Status- Married- filing jointly
Current Tax Rate – 22% (19% Calculated)
Age – 60
Spouse – 53

Pension- None
Savings and checking accounts - 235 K (2.5 yrs. expenses)
Investment Portfolio - 1M
401K and Roth contributions - 60K per year until retirement date
Asset allocation- Stock- 49% Bonds-36% Cash- 9% Other – 6%

Annual Spending plan – 90K Essential Spending 62K

Calculated Overall Expense Ratio 0.11%
Vanguard Advisor fee – 0.3% on approx. 550K - $1650 annually
(Thinking about dropping this and proceeding on my own.)

My IRA
Vanguard Total Stock Market Index – 106K
Vanguard Total International Stock Index – 53K
Vanguard Total International Bond Index - 75K
Vanguard Total Bond Market Index -174K
Industrial Property Trust- Non-traded REIT- 29K

My Roth IRA
Vanguard Total International Stock Index – 27K
Vanguard Total Stock Market Index – 3K

Wife’s IRA
Vanguard Total International Stock Index – 21K
River Source Variable Annuity – 28K

Wife’s Roth IRA
Vanguard Total International Stock Index – 16K

Joint Taxable Account
Vanguard 500 Index Fund – 3K
Vanguard Growth Index Fund – 3K
Vanguard Total Stock Market Index Fund – 65K
Vanguard Prime Money Market Fund – 5K

My 401K
MFS Growth Fund – 53K
American Funds Euro-Pacific Growth Fund – 18K
American Funds 2025 Target Date Ret. Fund – 49K
Stable Value- Guaranteed Interest Account - 65K 3% interest

Wife’s 401K
Vanguard Total Bond Market Index Fund – 94K
Vanguard Total International Stock Index Fund – 48K
Vanguard Total Stock Market Index Fund – 72K

Please comment on the feasibility of our plan. Let me know if you see anything that I am missing in my calculations. Asset allocation, recommendations, etc.
I would really appreciate the input.
__________________

downrod is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-14-2019, 12:42 PM   #2
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,452
Welcome and thanks for such a detailed breakdown.

A couple things are jumping out at me. First of all the amount you have allocated for HI. It seems way too high. You will have one year to Medicare which will costs much less.

Since you have after tax cash/savings to live ACA healthcare should cost you little or nothing. You go on Medicare at 65 and your DW continues on ACA till she is 65. You will want to take a combo of cash and either IRA withdrawals to extend your ACA timeframe. Go to ACA threads and start reading. Second when will you pull the trigger on SS? It's very possible that with cheaper HC and 2 SS checks your core expenses will be almost completely covered.
__________________

ivinsfan is offline   Reply With Quote
Old 05-14-2019, 01:02 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,741
No social security?

Taxes of $21k ($111k withdrawals less $90k of spending after taxes) looks a bit high... have you done a proforma return in TT or similar to verify that $111k of withdrawals would result in $21k of federal and state income taxes?

For health care, go to healthsherpa.com or your state exchange website and pretend that you just lost coverage to get an idea of the monthly cost of health insurance both before and after subsidies. +1 with ivinsfan that in a year after retiringyour costs should be a lot less once you are on Medicare.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 05-14-2019, 01:02 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 4,162
+1 on the ACA managed income concept.
Are you including SS in your Firecalc calculations?
If you get laid off, what is your plan to carry you until 2023?
__________________
TGIM
Dtail is offline   Reply With Quote
Old 05-14-2019, 02:45 PM   #5
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
Quote:
Originally Posted by ivinsfan View Post
Welcome and thanks for such a detailed breakdown.

A couple things are jumping out at me. First of all the amount you have allocated for HI. It seems way too high. You will have one year to Medicare which will costs much less.

Since you have after tax cash/savings to live ACA healthcare should cost you little or nothing. You go on Medicare at 65 and your DW continues on ACA till she is 65. You will want to take a combo of cash and either IRA withdrawals to extend your ACA timeframe. Go to ACA threads and start reading. Second when will you pull the trigger on SS? It's very possible that with cheaper HC and 2 SS checks your core expenses will be almost completely covered.
I am confused by your answer. I will go to ACA threads and start reading. I dont understand why my healthcare would cost little to nothing. Is that if I spend all of my cash savings to live on at first, thus show no income?

Right now it is my plan to take SS at my full retirement age of 66 yrs 7 months, and my wife at her full retirement age of 67
My SS estimate is 35K and my wife's is 31K. SS was calculated into my FireCalc projection
downrod is offline   Reply With Quote
Old 05-14-2019, 02:48 PM   #6
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,477
Welcome! Did your FIRECALC runs include future savings? If not, your success rates might be slightly higher.

I'd suggest taking the Savings and checking accounts - $235 K, and moving them to a money market account such as Vanguard's VMFXX. While it's not FDIC insured, you'll get dividends, and make about 2% right now. You're likely giving up ~$4,500 annually in earnings, and losing purchasing power vs. inflation.

His 401(k). Since you're over 59, rollover into the IRA once retired.
Her 401(k). Since she might retire between ages 55 and 59.5, she may be able to take distributions prior to age 59.5 without penalty. Suggest leaving in 401(k) in case of need.

Are you happy with those success rates? Most here go for 100%, but you're definitely giving up time for security that you may not need. I love the "Rich, Broke, or Dead" calculator, which helps put this in perspective. https://engaging-data.com/will-money-last-retire-early/

Good luck!
__________________
Balance in everything.
HNL Bill is offline   Reply With Quote
Old 05-14-2019, 02:49 PM   #7
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
Quote:
Originally Posted by pb4uski View Post
No social security?

Taxes of $21k ($111k withdrawals less $90k of spending after taxes) looks a bit high... have you done a proforma return in TT or similar to verify that $111k of withdrawals would result in $21k of federal and state income taxes?

For health care, go to healthsherpa.com or your state exchange website and pretend that you just lost coverage to get an idea of the monthly cost of health insurance both before and after subsidies. +1 with ivinsfan that in a year after retiringyour costs should be a lot less once you are on Medicare.
Yes. SS at full retirement age. 66 and 7 months for me (35K) and 67 for my wife (31K)

I calculated my taxes based upon 111K income. That putys me in the 22% bracket. Actually calculated, my tax burden works out to be 19%. Am I missing something here? If so, please advise
downrod is offline   Reply With Quote
Old 05-14-2019, 02:51 PM   #8
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
Quote:
Originally Posted by Dtail View Post
+1 on the ACA managed income concept.
Are you including SS in your Firecalc calculations?
If you get laid off, what is your plan to carry you until 2023?
I will look into the ACA managed income concept. I am completely ignorant about ACA. Thanks!
downrod is offline   Reply With Quote
Old 05-14-2019, 02:55 PM   #9
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
Quote:
Originally Posted by HNL Bill View Post
Welcome! Did your FIRECALC runs include future savings? If not, your success rates might be slightly higher.

I'd suggest taking the Savings and checking accounts - $235 K, and moving them to a money market account such as Vanguard's VMFXX. While it's not FDIC insured, you'll get dividends, and make about 2% right now. You're likely giving up ~$4,500 annually in earnings, and losing purchasing power vs. inflation.

His 401(k). Since you're over 59, rollover into the IRA once retired.
Her 401(k). Since she might retire between ages 55 and 59.5, she may be able to take distributions prior to age 59.5 without penalty. Suggest leaving in 401(k) in case of need.

Are you happy with those success rates? Most here go for 100%, but you're definitely giving up time for security that you may not need. I love the "Rich, Broke, or Dead" calculator, which helps put this in perspective. https://engaging-data.com/will-money-last-retire-early/

Good luck!
Yes. my FireCalc projection included us saving 60K total to our 401Ks and Roths until our retirement date.
I really am not happy with our projections. Although I do have a financial plan created by my Vanguard Advisor that shows us at 100%. That is part of my frustration. There does not seem to be a high correlation between these calculators
downrod is offline   Reply With Quote
Old 05-14-2019, 02:57 PM   #10
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,452
Quote:
Originally Posted by downrod View Post
I am confused by your answer. I will go to ACA threads and start reading. I dont understand why my healthcare would cost little to nothing. Is that if I spend all of my cash savings to live on at first, thus show no income?

Right now it is my plan to take SS at my full retirement age of 66 yrs 7 months, and my wife at her full retirement age of 67
My SS estimate is 35K and my wife's is 31K. SS was calculated into my FireCalc projection
Is it clearer to you now? Just read a few threads and put a question on them or come back here and ask. You have time to read and ask questions. I truly believe you don't need anything near 22K a year for HC.

That's what our comments about managed income refer to.
ivinsfan is offline   Reply With Quote
Old 05-14-2019, 03:02 PM   #11
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,477
Quote:
Originally Posted by downrod View Post
I calculated my taxes based upon 111K income. That putys me in the 22% bracket. Actually calculated, my tax burden works out to be 19%. Am I missing something here? If so, please advise
$111,000 income (assuming all comes from tax-deferred accounts), less MFJ standard deductions $24.4K = $86,600. Taxes are calculated as follows (2018 rates):
  • First $19,400 at 10% bracket: $1,940
  • $19,400-$78,950 at 12% bracket: $7,146
  • $78,950-$86,600 at 22% bracket: $1,683

TOTAL: $10,769
Effective tax bracket = $10,769/$111,000=9.7%
IF you take some of your income from your taxable accounts, then the principal won't be taxed, and this will lower your income taxes further.
__________________
Balance in everything.
HNL Bill is offline   Reply With Quote
Old 05-14-2019, 03:04 PM   #12
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,452
Quote:
Originally Posted by downrod View Post
Yes. SS at full retirement age. 66 and 7 months for me (35K) and 67 for my wife (31K)

I calculated my taxes based upon 111K income. That putys me in the 22% bracket. Actually calculated, my tax burden works out to be 19%. Am I missing something here? If so, please advise
My point from my earlier comment 35+31..66K close to your barebones that already includes 22K for HC.
ivinsfan is offline   Reply With Quote
Old 05-14-2019, 03:10 PM   #13
Thinks s/he gets paid by the post
HNL Bill's Avatar
 
Join Date: Dec 2017
Posts: 1,477
Quote:
Originally Posted by downrod View Post
Although I do have a financial plan created by my Vanguard Advisor that shows us at 100%. That is part of my frustration. There does not seem to be a high correlation between these calculators
There might be some incorrect or vastly differenct assumptions in one or the other of the calculations.

The first time I asked VG to create a retirement plan, we created 4 versions before it was mostly right.

Changing the inflation rate in FIRECALC or the spending model or the AA, can create wildly differing results.
__________________
Balance in everything.
HNL Bill is offline   Reply With Quote
Old 05-14-2019, 03:10 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 22,741
Quote:
Originally Posted by HNL Bill View Post
$111,000 income (assuming all comes from tax-deferred accounts), less MFJ standard deductions $24.4K = $86,600. Taxes are calculated as follows (2018 rates):
  • First $19,400 at 10% bracket: $1,940
  • $19,400-$78,950 at 12% bracket: $7,146
  • $78,950-$86,600 at 22% bracket: $1,683

TOTAL: $10,769
Effective tax bracket = $10,769/$111,000=9.7%
IF you take some of your income from your taxable accounts, then the principal won't be taxed, and this will lower your income taxes further.
What he said! Even with state income tax OP will still be well under 19%... unclear if OP's 19% was state and federal or just federal.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 05-14-2019, 03:14 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 4,162
Quote:
Originally Posted by downrod View Post
I will look into the ACA managed income concept. I am completely ignorant about ACA. Thanks!
Healthsherpa.com and Healthgov.org will be your guideline links as to how much the ACA will cost you and your family.

See the below link for the details on what is included for "MAGI", which is the official version of taxable income that is used for ACA premium/OOP amounts.

http://laborcenter.berkeley.edu/pdf/..._summary13.pdf

Ask us questions. Many of us manage our MAGI income to low levels in order to minimize medical costs.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 05-14-2019, 05:04 PM   #16
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
Quote:
Originally Posted by HNL Bill View Post
$111,000 income (assuming all comes from tax-deferred accounts), less MFJ standard deductions $24.4K = $86,600. Taxes are calculated as follows (2018 rates):
  • First $19,400 at 10% bracket: $1,940
  • $19,400-$78,950 at 12% bracket: $7,146
  • $78,950-$86,600 at 22% bracket: $1,683

TOTAL: $10,769
Effective tax bracket = $10,769/$111,000=9.7%
IF you take some of your income from your taxable accounts, then the principal won't be taxed, and this will lower your income taxes further.
Duh!! I didnt take out my standard deductions. I like that result much better!
In that case, i will not need a 111K withdrawal. Time to do some calculations. I need to get 90K after taxes. Thanks! Good catch!
downrod is offline   Reply With Quote
Old 05-14-2019, 05:10 PM   #17
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
This community is awesome! So much great information!
downrod is offline   Reply With Quote
Old 05-14-2019, 05:29 PM   #18
Dryer sheet aficionado
 
Join Date: May 2019
Location: Harrison Township
Posts: 31
By calculating my taxes correctly, (thanks to HNL Bill) I am able to lower my annual withdraws from 111K to 99K. I ran the new values through FireCalc and my new success rate is 100% for 40 yrs. I feel much better about things now. I will also deep dive the ACA information to try to get a better handle on what my actual health care costs might be.
Great stuff!
downrod is offline   Reply With Quote
Old 05-15-2019, 09:24 AM   #19
Full time employment: Posting here.
Carpediem's Avatar
 
Join Date: Aug 2016
Posts: 677
Quote:
Originally Posted by downrod View Post
By calculating my taxes correctly, (thanks to HNL Bill) I am able to lower my annual withdraws from 111K to 99K.
This is the tax calculator I use for fed tax:

https://www.calcxml.com/calculators/...tax-calculator
Carpediem is offline   Reply With Quote
Old 05-15-2019, 09:53 AM   #20
Full time employment: Posting here.
 
Join Date: Oct 2014
Posts: 678
Quote:
Originally Posted by downrod View Post
IOur essential expenses are 62K per year. The essential expenses include a budgeted 22K expense for health care. This may or may not be a high estimate, but I believe that it should be a safe estimate. We are both currently healthy and take no medications.
Just curious I guess but 40K/year on what? Essentials? Food, heat (you do live in Michigan), cable package?, Gas and car maintenance? You say you have no debt (house, car, etc...) Can't imagine 40K of essentials.
__________________

__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. New target 2020.-

-"Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Hello... And any input is appreciated! Malo e lelei Hi, I am... 4 11-09-2012 05:02 PM
Soliciting comments on ER strategy David1961 FIRE and Money 20 07-13-2012 12:51 AM
Hello All, and I need input David G Hi, I am... 3 04-06-2007 09:56 AM
Long Term Care Insurance: Soliciting Opinions ZMAN FIRE and Money 1 12-20-2006 05:36 PM

» Quick Links

 
All times are GMT -6. The time now is 01:58 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.