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Hopeful!
Old 01-12-2013, 07:23 AM   #1
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Hopeful!

What a great resource i've found (i'm sure i'm not telling anyone here anything they don't already know!)

Here's my scenario:
40 years old, married. Current household income is about $220k, with retirement savings of $500k, and are debt free (house paid off). Total net worth approximately $817k.

As with many of you, 80hr work weeks are not sustainable for much longer, and i'm looking to ramp down vs ramp up. If i were to stop working today, i'm pension eligible for $18k/year (beginning draw at age 65). If one believes the SS calculator the gov't provides, a scenario of me stopping work now and my wife continuing, initiating SS draw at 65 would provide an additional $32k/yr (combined for the both of us). I *think* if i were to retire now, and my wife continues to work as a tenured professor with a salary of $70k with retirement contributions of 11% of her salary and the university matches it 100% for a total contribution of 22% of her salary per annum - we'd be just fine - but it's always good go get a second opinion (or 3rd, or 4th..). Assuming 6% growth on our current base, this puts our estimated 401k value between $3-3.5mm USD in 25 years.

Of course i understand the fact that i'll need to be very intentional about what i do with my time element, i'm just looking at the fiscal element here...

Hoping folks who are more versed at this than i can 'kick the tires' on the above and sense check it, point out flaws in thinking, etc!
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Old 01-12-2013, 07:40 AM   #2
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Welcome aboard. There are scads of variables but the essential three are nest egg value, duration (years) and projected spending/expenses. No one can give you a meaningful answer without at least those three. You've projected a nest egg value, left us to assume duration (to age 95 is commonly used) and said nothing that I noticed about spending.

Have you tried FIRECalc: A different kind of retirement calculator?

The big three go on the first page/tab and you can get a broad result on that alone. I'd consider retirement income source(s) the fourth essential element though it's not on the first page/tab. You can input your assumptions for other variables such as pensions, Soc Sec, other income/expenses, etc. on the other pages/tabs and solve for a more complete picture & success rate.

Give it a whirl...from there the members can probably offer more useful replies.
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Old 01-12-2013, 09:00 AM   #3
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Somewhere along the way there will be steep losses in the stock market over such a long time horizon. Be careful! Think about what you really want to do, maybe there is another career to pursue? Also, social security needs to be reexamined to make sure your have enough work "credits" so you do not have years with zeros that will affect your check. www.ssa.gov
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Old 01-12-2013, 09:22 AM   #4
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I think ER sounds really great and I would especially prefer it to 80 hour work weeks. But if you were to stop working and actually see for yourself how wonderful ER is, what makes you think your wife would want to work another 25 years to make that possible. There must be another accommodation that can help with your work burnout.
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Old 01-12-2013, 09:24 AM   #5
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At your age and income level, some thought must be given to "means testing" which almost certainly will be a fact of life in the years to come and impact your healthcare along with SS.
At this point, the only way I think you can plan for it is to save even more and keep an eye out for ways to shield those assets.
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Old 01-12-2013, 10:42 AM   #6
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Quote:
Originally Posted by sebvad View Post
if i were to retire now, and my wife continues to work
I keep trying to convince my wife that this is a good idea, especially since men have shorter life expectancies but I'm not making much progress
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Old 01-12-2013, 11:19 AM   #7
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Thanks guys. I have run multiple scenarios through firecalc, and assuming a target annual spend of 110,000 in the future, an ER retirement scenario for myself with my wife continuing to work until 65 (don't worry, she's been part of this conversation all along and in fact plans to work until she's 85!), firecalc reports 100% success in all models, assuming a 30 year duration. Could be that i've got some settings wrong in it however, but both firecalc and other monte carlo sims are yielding similar results (i used a portfolio value of both 3 and 3.5MM for the evals).

Now, realistically, the 'softer' side of the calculation is that i recognize that i'm unlikely to go from 20 years of 80 hr, high performance work weeks to a full stop - so an alternate career, or part timing or consulting is likely to ensue should i go for an ER - however part of my mindset is to eval worst case scenarios, which would include the possibility of me not working at all after ER - so if my situation is such that the math does work in a scenario where i don't - all other scenarios become immensely more attractive!
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Old 01-12-2013, 04:13 PM   #8
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Welcome.
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Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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