Howdy and Feedback on Plan A

[Bolkow105]

My humble greetings…and a promise that all critique/input/advice will be greatly appreciated.

While I am a little premature on the “FI” part of the FIRE equation…I have decided to embrace the “RE” side of the equation as I have come to realize the fear of NOT doing this has finally exceeded the fear of doing it.

My decision is based on the two items that concern me the most about retirement--will my health and money be there when I retire. Since my crystal ball can at least fundamentally project what money I will have, it is completely blank when it comes to my health status later in life. And so enters Plan A.

The premise of Plan A is to give me an additional 10 years on the front side by using a portion of my investments to fund my daily living expenses up to my original retire date of 62. The main risk being that my remaining investments will need to grow to a sufficient level within that 10 year period to fund my full retirement at 62, if I so choose.

While the pitfalls could be numerous, I believe that if I allow this opportunity to slide by only to realize later in life that it would have worked, well…that’s something I don’t want to do. Besides, if Plan A starts to crumble I can always come back here with Plan B.

All figures are based on projected amounts on R-Day: June 6, 2014

I am single, 51, never married, with no kids, but have a longtime significant other that has her own financial means. I will be finishing up a 32 year career with one company, and I am also owner of two small LLC’s which I pursue various small ventures. My only debt is a home mortgage at $800/month and located in the south central US. My investments are as follows:
401k: $500,000
SEP: $75,000
IRA: $85,000
Cash or equivalent: $340,000
Trust: $100,000

I am currently working additional overtime to top off my 1 year reserve fund of $30,000 and an additional $10,000 medical deductible/social security disability lawyer fund.

I have been living on expenses of $27,000 to $28,000 per year for the last 5 years, which includes items like extra gas money for extended trips and dining out a couple times a month. I also have been including $400/month for medical premiums but currently put it in savings as I have insurance through my job.

One item that my plan does not cover is vacation money. While I am basically low maintenance when it comes to getting away, as I have several “free” destinations in Texas, Alaska, and Ohio to visit and enjoy, I still would like the option to travel to different locations. And this is where I would break the sacred “retired” rule and basically “work to play”. My professional skill set is somewhat specialized and portable, so if I wanted to take a nice vacation to Hawaii, I could either work out a contract assignment there or just contract work somewhere to pay for a very nice trip.

So Plan A basically has me withdrawing $29,000-$30,000 per year (after applicable taxes) from my cash accounts for a 10 year period, with small adjustments for COL increases or decreases. I will reconfigure my remaining investments, except the trust account, to maximize their returns to double the value by age 62. In theory, if I have $1,000,000+ at 62 then I should be good to go.

Anyways, if you, the collective wisdom of FIRE can offer any feedback to this plan I would be greatly indebted.

Thank you,
Scott

[pb4uski]

Have you run your situation through Firecalc?

[InTheSticks]

Why do you have a social security disability lawyer fund?

[Bestwifeever]

Does your current budget include shared expenses with your longtime significant other? If so, would those need to be adjusted if things changed on her side?

Looks like you have put a lot of thought into this. Agree with the firecalc suggestion.

[Bolkow105]

pb:
I think I have run every possible situation that I can think of through firecalc and the lowest result I encountered was in the high 80% range with the average result 98-100%

sticks:
The cost of any private long term disability policy was absurdly expensive. After several discussions about this possible requirement it was pointed out to me that since I am over 50 another option could be to file with SSD if it were necessary. I also discussed this with an attorney who specializes in SSD and since this was a "fringe" type policy for my personal situation, I elected to roll this item togather with my medical fund and scratched this item off my list. On average it would take between to $8000 to $12000 to file claim with SSD through an attorney.

Best:
No, there are no shared expenses. My budget is set up to maintain the entire household in which everything is under my name. She maintains her own house (leased out) and other items completely separate for various reasons. As she is 7 years older she plans to retire in 5 years so we had discussed and worked out this in my plan.

Appreciate the input...

[pb4uski]

Quote:

Originally Posted by Bolkow105 pb: I think I have run every possible situation that I can think of through firecalc and the lowest result I encountered was in the high 80% range with the average result 98-100%...

Then what are you waiting for? Christmas?

[Bolkow105]

Quote:

Originally Posted by pb4uski Then what are you waiting for? Christmas?

Last I heard I thought they moved Christmas to June 6 2014...ha.

No, just cleaning out the closets...finishing up my game room and addition to my shop. Plus just ordered a new truck last week. By next March I should have the flexibility to pull the plug on my time schedule.

Appreciate the interest.