hoping I can join the ER club

[sab6499]

Hi, I am 57 years old, married for 4.5 years (2nd for me). I have 2 daughters (ages 30 & 26), both married & self-supporting and both expecting 1st babies in January. I have been learning alot by reading this forum and also reading books some of you have recommended. (Investors Manifesto and The Four Pillars of Investing). Next on my list is the Millionaire Teacher! I am convinced I can do this myself! I am looking for second pair of eyes - for some confirmation I can do it (considering retiring Feb or March 2014) or if I am just wishing!

I work for megacorp, making approximately $101k, my share of expenses (we half all household expenses) is $48,000 but I am building my plans around going it alone (planning for worst case scenario). All extra $ go into 401(k) and taxable savings account. I have always been a LBYM type and plan to continue.

Following is how my $'s are invested: my AA goal is 60/20/20 - stock/bond/cash

401(k) - $467K - all are low cost vanguard funds
27% large cap
21% small/med cap
12% international
40% bonds

Taxable acct -
$255K - most are low cost vanguard funds
27% large cap (VFINX & VIVAX)
22% small/med cap (PRNHX, VISVX, VIMSX)
5% international (VEIEX & VGTSX)
41% bonds (ACITX, VBIIX, VBMFX, VFSTX)
5% Reit

$115k in employee stock options (just sold $75K and need recommendations on what I should do with that)

$ 95k in employer stock

$20k in individual stocks (Aflac, Prudential primarily)

$335K in cash - I am thinking about taking $180k and building a 3 year cd ladder to cover for bear market years. I know I probably have too much cash!

I am planning on spending $72k (assuming I am alone) for 1st 5 years, then take social security at 62, $18k/yr. I will start with small pension, $18K/yr. I am planning on spending interest/dividends as well to reduce draw on portfolio to $44K initially, $34k at 60, then $16k after 62. Firecalc says i am at 100%, but not sure if I put in asset allocation correctly (garbage in, garbage out?) HI is taken care of through megacorp for 1st 3 years.

Sorry for the long post, but I wanted to give as much info as possible. I am so thankful to have found this forum and greatly appreciate all the folks willing to provided such helpful input.

 

[MBAustin]

Welcome! I'll leave commentary on your specifics to some others who do that sort of thing regularly, however I know they will ask if your spending expectations are based on at least a year's worth of detailed expense tracking and projections to cover actual expenses (such as HI after first 3 years, replacing cars/roofs/other major items, etc.).

You'll find lots of good information and friendly folks so post away!

 

[sab6499]

Thanks. I developed the $72k based on our actual expenses for the last 4 yrs. That number includes some cost, about $4k that could be cut, if necessary. It also includes $6k / yr for HI which should more than cover 1st 3yr costs. After 3 yr i would look to the exchange. It also includes an estimate of $4k for car replacement / major repairs. This was a guess as we have very little expense here, just routine maint, less than $1k / year.

 

[Trooper]

Welcome sab6499, from one noob to another. I've just finished the Manifesto and planning to read Pillars. Looks like you have a pretty solid plan, but I'm still learning as well. Only thing I would question is the number of mutual funds in your taxable portfolio....i'm leaning toward 4 or 5, but could be personal preference -- less statements to look at

 

[wingfooted]

$1.3MM retirement assets equates to roughly $50K per year annual withdrawals. $1.3MM is somewhat optimistic as the IRS will get a portion of the company stock and options. Your expenses are $70K per year and IMO you are light on HI.

So it looks to me like you are short in retirement assets by about $500K. I would suggest 1. Move your cash to equities. 2. Keep working (and saving ) 3. Re-evaluate your position annually.

 

[panacea]

Before you can join the ER club, you first need to know the secret hand shake...

If Firecalc says you're good at 100% then you should be good but it's not jumping off the page obvious. It does look a little light on the surface with your portfolio withdrawals alone but once your pension and Soc Security benefits kick in things look much better. Is your pension COLA'd? I would just make sure you have your investment return assumptions entered correctly in FIRECALC.

Another thing I'd look at carefully is the ideal time to take Soc Security. It might make sense for you to wait, to increase your inflation-protected lifetime benefit and depending on your spouse's benefit, to ensure a larger lifetime benefit for the surviving spouse... unless her own benefit is larger.

Also, don't forget to carefully consider a pension option that includes a survivor benefit for spouse. It may not be necessary in your particular situation but I've seen too many people just automatically take the largest payout, even if their spouse has much better longevity.

 

[sab6499]

Appreciate all the comments. On the portfolio page of firecalc, on the 1st option, i entered 50% for equities vs fixed. Not sure if that is correct.