Hi! ...I am stressed to pull the trigger

[Morris4096]

I am coming out sort of speak. I have followed so many of you on this forum and have read many informative threads. Seeking input to give us confidence to make the move. We have been lucky as hell but feel the time is up. Turning 58 and DW is 54 who retired last year. DW and I have been working since our teens and have been fortunate to always be employed by megacorps and avoided layoffs multiple times over 35 years. Sheer luck. Lived well but no big house compared to neighborhood outside of DC and thus saved a considerable portion of income over the years and invested like clock work from the age of 20. Never worried about money until I started to think about pulling the plug and DW and I are stressed out with decision to cut off income stream. We have no sources of income to come other than SS so what we have in investments has to feed us. Job is killing me , lost confidence in megacorp mgmt and want to leave by spring 2020. DW has good genes and will live to 100 and is worried about having enough to carry her for 45 year retirement horizon. I might be good till mid eighties based on family history.


Projected Expenses In Retirement

House
Insurance $1600
Taxes $7000
Electricity and Gas $3800
Sewer $900
Trash $1000
Water $900
Cable/internet $2400
Cell $2400
House cleaning $3600
House maintenance $4200

Food /Restaurants
Groceries /Liquor $9600
Dining Out $10800

Car Expenses
Gas for 2 cars $7,560
Insurance for 2 cars $4,728
Car maintenance $4,200
Car fund to replace one car every five years $9,600


Health Expenses
Health and dental insurance for family $6600
Out of pocket( copays and contacts and rxs) $4000
Liability insurance (umbrella) $1600

Entertainment /Travel /Pet
Entertainment (movies, Netflix, concerts ,lessons ) $4800
Fitness memberships $4800
Vacation $30000
Pet costs ( vet, food boarding) $3000

Other discretionary expenses
Dry cleaning $1000
Hair/nails/grooming $ 2000
Clothing $6000
Gifts /charity $ 17000


Total Year Budget= $160,000 ( after tax expenses)



Healthcare insurance costs between now and 65 are being subsidized ( 6600 cost to us ) from retirement package. At 65 and then receive subsidy of 3K per year for medicare coverage. Not sure what that will cost for 2 and keeping my daughter insured until she finishes 4 year college in 2028.


Nest Egg
DH IRA $1.1M
DH Lump Sum Pension rollover $1.2M
DW IRA $1.2M
Taxable accounts 2.2M

Portfolio 60 /30 /10 stock/bond /cash….total retirement assets =$5.7M

House value = 600K
529 Plan =300K for daughter college expenses to start in 2023

Social Security Estimates

DH =2400/month at 70
DW = 2000/month at 70

Tax assumptions

I am assuming the my effective tax rate until 70 would be about 20% until social security and RMD kick in and then effective rate might up. Not sure how to model this.

Assuming 160K of expenses annually, I would need to generate 200K before taxes for the first 12 years or so.

Firecalc

Ran model with $5.7M portfolio, 200K before tax income from portfolio and taking social security at 70 . This is about a 3.5% withdrawal rate until SS kicks in. Firecalc outcome is 100%.


Why are we stressed?

We are at the peak of the market and believe sequence or return risk is acute. I do not want to go back to work even part time once I am gone . We could cut back budget in many areas if needed . Do not replace cars every 5 years and do it at 10 years . Cut back on entertainment / travel and restaurants. We have not accounted for long term care insurance but think we can fund long term care with assets . We would appreciate comments and advise on plan for a 45 year retirement …at least for DW. What have we missed? Are we silly to be stressed at this point?

 

[gwraigty]

Welcome. It's good you're willing to cut expenses. Some of them seem high to me. I'll just mention a few. I'm assuming your figures are annual. Correct me if I'm wrong.

$3600 for house cleaning. Why? Clean your own house. You'll have time when you're retired. $4200 for house maintenance every year? Probably not. This year we spent $7700 for a new roof, $4000 for a driveway extension, and about $1200 to have a large tree removed. It was an extraordinary year for house maintenance, yet those things aren't repeated regularly, obviously. $2400 for cable/internet can be cut considerably by using a Roku/Netflix/Hulu/OTA antenna. $4728 for car insurance for 2 cars. Are they gold-plated? Seriously, we pay about 10% of that for 2 cars with considerably more than state minimum coverage. $4200 in car maintenance. We don't spend that in a year, much less every year. No, you don't need to replace a car every 5 years or buy one that costs $50K either. I've never had a fitness membership, but I've seen those commercials for Planet Fitness for $10 a month. That's a lot less than $4800. $1000 dry cleaning. Don't buy clothes that need to be dry cleaned. Speaking of clothes, I haven't bought new clothes for a couple of years. I'm confident I could buy myself a whole new wardrobe every year and not spent $6000. And that's all I'll pick apart at the moment.

HOWEVER....

With $5.7M, you could easily generate what you need without cutting one single penny from your proposed budget, and without drawing down your nest egg.

I've been an income/cash flow investor for a long time now, mainly because I used to be a lousy growth investor, but I digress. Obviously, you have done extremely well in that area. Most of my investments generate around 3.75% to 6.5% in dividends and interest. On $5.7M, that would be around $213,750 to $325K easy. You can get those yields with ETFs. I've posted specific tickers that I use elsewhere in these forums before. Nothing exotic. Long term corporate bonds, preferred stocks, high dividend stocks.

 

[LarryMelman]

Why does everyone put "D" in front of everything? I mean, I assume H means husband and W means wife. But why the D? Sorry for the off-topic question.

I'm surprised that Firecalc says you're 100%. Yes, 4% of 5.7M is 228K but there ought to be scenarios where that fails on a $160K spend, if you dial in enough pessimism.

I can't relate to your spending expectations. There is much more that I had written but I will just leave it at that. It's your life and your lifestyle and you're entitled to it.

I do wonder why, if you're replacing your cars every 5 years, why you have any maintenance costs at all. Oil changes and maybe some tires every few years, that's all you should have. You've budgeted $350 a month, every month, and I just don't get that.

 

[gwraigty]

Why does everyone put "D" in front of everything? I mean, I assume H means husband and W means wife. But why the D? Sorry for the off-topic question.

I assume the "D" means "Dear". I confess that I got tired of writing "my husband" and just started using "DH" because everyone else does it. I could get even lazier and start using "H" and see if it takes off.

 

[SnowballCamper]

Yes, you’re silly to be stressed about money at this point. However, retiring is a serious change of pace that you’ll need to adjust to. I concur that you budget is on the high side. Is it from actual spending records?

What’s your withdrawal strategy? You’ve got enough to put a few years spend in cash and let the rest ride the stock market downturn and back up afterward.

 

[Dtail]

I assume the "D" means "Dear". I confess that I got tired of writing "my husband" and just started using "DH" because everyone else does it. I could get even lazier and start using "H" and see if it takes off.

I believe it means dear or darling IIRC. I like the term as for me it is DGF.

 

[Dtail]

Why does everyone put "D" in front of everything? I mean, I assume H means husband and W means wife. But why the D? Sorry for the off-topic question.

I'm surprised that Firecalc says you're 100%. Yes, 4% of 5.7M is 228K but there ought to be scenarios where that fails on a $160K spend, if you dial in enough pessimism.

I can't relate to your spending expectations. There is much more that I had written but I will just leave it at that. It's your life and your lifestyle and you're entitled to it.

I do wonder why, if you're replacing your cars every 5 years, why you have any maintenance costs at all. Oil changes and maybe some tires every few years, that's all you should have. You've budgeted $350 a month, every month, and I just don't get that.

Bolded by me - When using the default settings with Firecalc at 100% success rate, the maximum WR is 3.59%.
Since they would be spending 3.5% for the 11-15 years before SS kicks in, the success rate is 100%, as the first years of failure in these types of scenarios usually don't take place until 20+ years of retirement.

 

[DrRoy]

Gwraighty spoke well above about reducing expenses. If you cut $28K/yr you are at 3% WR. That might give more comfort. We went down to 1 car. That saves a lot too.

 

[Golden sunsets]

I think you are fine. And I don't think you need to start cleaning your own house. That would be about the last expense I'd cut. However I'd be willing to bet you will naturally reduce some of the other expenditures once you are retired. A bit here and there. We keep the travel and entertainment categories at high levels because..... Why else would you have accumulated nearly 6 million in assets?


Sent from my iPad using Early Retirement Forum

 

[HadEnuff]

Morris, the most important 3 words from your original post, "Job is killing me" tells us all we need to know.

It wouldn't matter what the numbers might have been, no amount of money is worth "Job is killing me"....as it turns out you have more than enough to save your life, and not find other work.

Just do it, and if they give you too much BS at work, do it sooner, rather than later. You'll be glad you did.

 

[joeea]

Why are we stressed?

We are at the peak of the market and believe sequence or return risk is acute.

So change your asset allocation to be very conservative and reduce this fear.

 

[pb4uski]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

 

[Omalley]

Seems like your daughter may have just started high school, and that could bring increased spending depending on your "keeping up with the neighbors" inclinations. Possibly additional vehicle/insurance costs, as well as potential international educational trips/camps.

$300k in the 529 account should grow over the next 4-8 years, and would cover the full brochure price at most US public/private universities.

While your expected expenses are high, you have a nest egg to cover the spending. However, we have a similar nest egg with only half of your planned expenses. That probably means we just worked way too long.

 

[Golden sunsets]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

Some of his numbers seem high, but he did join almost 3 years ago.

 

[MichaelB]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

Why don’t we give the benefit of the doubt to a new member and help sort through the detail.

 

[gwraigty]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

I almost picked on those 2 things as well, but figured, what do I know? We pay less than $30/mo. for trash removal. I don't know if that's considered average or low. We also don't put a lot of miles on the cars, but people can travel more when retired. Still...sounds super high.

 

[ckelly78z]

Some of his numbers seem high, but he did join almost 3 years ago.

I was just doing a bit of computing myself, and couldn't get past the car expenses...$150 a week for gas while retired ?

 

[wmc1000]

I'll give the OP the benefit of the doubt and say he has modeled a worst case budget scenario with lots of cushion. If you have say 25% of the $2.2 taxable in liquid funds that gives you a 3 year cushion against SORR which is plenty of time to adjust your spending habits if needed.



PULL THE PLUG in spring of 2020 is my vote!

 

[pb4uski]

Why don’t we give the benefit of the doubt to a new member and help sort through the detail.

I fine with that... it is just the numbers are hard to believe... if they had just posted that they needed $160k/year for spending then I probably would not have batted an eye. In any event, with $5.7m and $160k/yr in spending they are in great shape to retire anytime they want to.

 

[Ready2Go]

$400 per month for fitness membership! WOW! I thought I was extravagant at $80 per month. I guess $400 would be a health club with pool, tennis, etc.

 

[Dtail]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

In our high flying days, we paid over 200 monthly for cable and close to 200 for cellphones.
We currently pay $5,900 yearly for car insurance for 3 cars in FLA and this is a reduction from up North. This includes a 20 yr old driver though.

 

[T-Minus]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

I disagree. In WA state, my last Allied Waste trash bill was $118.01 for one (1) month!!! - so his numbers seem correct. CATV and VZ family plan numbers (including taxes and fees) seem correct also. Insurance is fairly high, but with covered family members, a few tickets/accidents, and more expensive SUV’s, I can see it. Same with fuel - if you’re getting 15 MPG and running all over the place (malls, work, shopping, exploring) in heavy traffic, you’d see that many miles. How can I be so sure? Because those numbers are what I retired from in 2017 (Bellevue area). We’ve since downsized and relocated to a LCOL area, and now retirement is a relatively safe reality.

 

[LarryMelman]

I smell a troll.

$1,000/year for trash? $200/month for cable AND $200/month for cellphone? $4,728/year for car insurance for 2 cars? $7,560 a year for gas? At $3/gal and 20 mpg that is 50k miles a year.

Actually the cable/internet number was one of the few that I did not have issue with. I pay almost $200 a month for internet, land-line phone, and cable (no movie channels, just digital cable service including a package of sports channels). And I have to dance with Cox on an annual basis when they raise rates... this year, I slowed down my internet and dropped some features from the phone package, just to keep the bill the same as in 2018. Yes I could slash that cost if I really needed to, but it is the one luxury that I allow myself.

That said, my cell phone is under $100/year. Health club, $250 a year. Dry cleaning? They still have that? And so forth. But like I said, it's the OP's life and if he did the work to estimate those numbers, I'm not going to dispute them.

 

[Vacation4us]

Anyone who has had the means to save 5 million lives in a HCOL area also probably has a lifestyle they enjoy and would like to continue to enjoy. It’s what’s important to them.

Our budget will be in the 120k range and there is NO way the housekeepers going at $240/ month for us. As we age that becomes especially important. His budget is fat because he can afford it. Good for you. Retire enjoy life. They say as we age the travel budget and fluff decrease I say you can and should retire ASAP.

 

[ncbill]

+1

OP lives in a HCOL to VHCOL urban area

If you think OP's spending is high go read boglehead forums for a few weeks & see what those highly-compensated professionals (tech, medicine, law, etc.) report spending!