I'm 46, and would like to retire in 2013

[TOPDAWG]

Hello,

I visited this forum years back when I sold my business, and received some great advice on here from some very friendly and helpful people.

I am currently 46 years old, and would like to retire in the next 12 months. I am married with two kids 18 & 16.

I continue to be burned out from work. While I am currently making 6 figures, coupled with 4 weeks of vacation, and a wonderful place to work, I feel like I need to re-evaluate myself, and my direction in life. I am simply tired of what I do. My job is so customer service oriented, and stressful that I cannot take 1 day off without getting hammered with phone calls. I need peace. I'm tired of high demanding customers. I currently work 5:30am to 4:30pm 5 days a week. Most days my lunch is 30 minutes or less. I am really worried as I get older that I will stroke out, or have a heart issue and miss out on life. I take things seriously at work, and take things to heart.

Liquid assets - $3.20mm+ (assumes no 2011 investment return), of which $2.20mm in non-retirement accounts and $1mm in retirement accounts.

Other assets/debts - $400,000 House, Cars, etc.. No Debt, Zero

Kids (ages 18 and 16) assets set aside for college - $125k, each (250k total not included in the above 3.20

Budget - We currently spend 150k pre-tax dollars. This will not change in the next 10 years.

Portfolio - Our portfolio is professionally managed. I am pretty confident the portfolio will average 4.5%.

Income - My wife is 42, and will work at least until she is 52. We have a great health plan via her work. Her income is only $15k, but the health insurance is valuable.

Health - We are fortunate to have great health.

I currently have no plan on what I will do. I know I will volunteer and help in the community. I would like to get in better shape (I'm not overweight). I want to be in the best physical condition in my life when I turn 50.

If I give up this job, there is no turning back. I will be done. Finding another job is not easy, and I would have to start from scratch establishing myself.

I am looking for advice on how my situation looks? I am confused on my tax situation post retirement. Any advice is appreciated. Can I make it?

Thanks in advance TD

 

[2B]

Welcome back. I'll give you a few quick comments....

Based on your assets, you are right on the edge for being able to retire on your current spending plan. I suggest you run your numbers through FIRECalc. Be sure to include any SS and pensions you may have coming. You would be in even better shape if you include a downsizing in your expenses. When your last child leaves for college is a fairly convenient time to do this.

Don't expect a lot of sympathy for your high stress job. You'll find a small army of people here with high stress jobs that would retire with a lot less than what you have.

Now about that high stress job. You are making your job high stress. Yes, it is you. It is not the job. (Please consider yourself B-slapped). The next time you are confronted with what you used to consider a stressful situation, take a deep breath, smile and ask how you can help them. You are making a pile of money doing what you are doing. You have enough money to walk out today and live a great life. No one is coming at you with guns or knives. CHILL OUT. The worst that can happen is that you get fired. Now how is that bad?

I really think you need to conquer the "high stress job" syndrome so you can really enjoy retiring. I have a job that some of the people I work with call "high stress" and I can't understand how they see the stress. I can only surmise that I have totally accepted the fact that I'm here because I want to be and don't need the money or any sort of ego gratification from my position.

After you conquer yourself, then you can start forming your plan on retirement activities.

You say your wife will continue working. Good luck with that. She'll become envious of your lifestyle pretty quickly.

Start reading and learning. You need to take over your own investing. You say it's "professionally managed" which tells us you are paying a significant amount of fees that you can easily avoid. You won't find much support for your FA here.

 

[TOPDAWG]

Thanks for the reply. I am not looking for sympathy, just trying to make it clear why I am getting out. That is all.

Welcome back. I'll give you a few quick comments....

Based on your assets, you are right on the edge for being able to retire on your current spending plan. I suggest you run your numbers through FIRECalc. Be sure to include any SS and pensions you may have coming. You would be in even better shape if you include a downsizing in your expenses. When your last child leaves for college is a fairly convenient time to do this.

Don't expect a lot of sympathy for your high stress job. You'll find a small army of people here with high stress jobs that would retire with a lot less than what you have.

Now about that high stress job. You are making your job high stress. Yes, it is you. It is not the job. (Please consider yourself B-slapped). The next time you are confronted with what you used to consider a stressful situation, take a deep breath, smile and ask how you can help them. You are making a pile of money doing what you are doing. You have enough money to walk out today and live a great life. No one is coming at you with guns or knives. CHILL OUT. The worst that can happen is that you get fired. Now how is that bad?

I really think you need to conquer the "high stress job" syndrome so you can really enjoy retiring. I have a job that some of the people I work with call "high stress" and I can't understand how they see the stress. I can only surmise that I have totally accepted the fact that I'm here because I want to be and don't need the money or any sort of ego gratification from my position.

After you conquer yourself, then you can start forming your plan on retirement activities.

You say your wife will continue working. Good luck with that. She'll become envious of your lifestyle pretty quickly.

Start reading and learning. You need to take over your own investing. You say it's "professionally managed" which tells us you are paying a significant amount of fees that you can easily avoid. You won't find much support for your FA here.

 

[bizlady]

Congratulations- you certainly have acquired a very nice nest egg.

You do not say if your spending includes taxes. You also do not say if it will remain the same. At a minimum, assuming it does include taxes, it will decrease once you stop earning! If it does, on the surface it seems you will be fine. Do run numbers on FireCalc and any other financial calculator you can to be sure.

I would also make sure that you have very good life insurance, and probably long term care insurance in place as well. You and your wife are relatively young, and should disaster strike...

Do have a plan for retirement- not for money, but what you will do. Take some time to think about this. Voulunteeering can be one aspect, but what about a hobby, spending some time with an aging parent, taking on some household duties while your wife keeps working.... Retiring is awesome. But know what you will retire too.

Congrats, best of luck, and welcome to the board.

 

[donheff]

I would also make sure that you have very good life insurance, and probably long term care insurance in place as well. You and your wife are relatively young, and should disaster strike...

I don't see any need for life insurance (unless possibly enough to replace his wife's $15K. If OP dies his assets will remain and continue to deliver the same income stream they did when he was alive.

 

[2B]

Thanks for the reply. I am not looking for sympathy, just trying to make it clear why I am getting out. That is all.

I wan't giving you any. I was trying to tell you that if you leave your "high stress job" you may just carry your stress over into whatever else you decide to do. I know people that volunteer and get all stressed out over their unpaid, part-time, volunteer position.

You have plenty of money to get out especially if you make very minor lifestyle adjustments. You may find that just getting out won't really give you the peace you think you'll find.

 

[MichaelB]

Hi topdawg, welcome back

How does your situation look? To me it looks like you have enough money to make some choices but not enough to stop working. Spending of $135k needs a portfolio of at least $3.3M @4% (not including taxes), and many here would suggest that at your young age a withdrawal rate of 3% is more appropriate, leaving you with a portfolio need of $4.5M. This assumes your DW is successful keeping her job, income and health insurance. You could work a few more years until you reach that portfolio level.

Another option is to look for another job that is less stressful and demanding. The likely lower pay can be offset by withdrawing some income from the portfolio. This would let you build a bridge to a stronger financial situation when you can retire.

If you have any pension income or social security, this would make your current financial situation stronger. Likewise, in 10 years your spending needs will be less just due to the fact that two teenage children have left the nest. Have you run Firecalc yet?

 

[donheff]

I wan't giving you any. I was trying to tell you that if you leave your "high stress job" you may just carry your stress over into whatever else you decide to do. I know people that volunteer and get all stressed out over their unpaid, part-time, volunteer position.

You have plenty of money to get out especially if you make very minor lifestyle adjustments. You may find that just getting out won't really give you the peace you think you'll find.

You may be correct 2B but it is a very personal equation. Lots of people carry their stress with them wherever they go but for others it is job specific, or related to the responsibilities inherent in some work situations. Many of us on this board have reported on how our stress evaporated with ER and stayed evaporated. I, for one, liked much about my career but consistently woke up at 4 AM worrying about the job. Since ER (7 years now) I have been sleeping like a baby (well, except for trips to the john).

 

[bizlady]

I don't see any need for life insurance (unless possibly enough to replace his wife's $15K. If OP dies his assets will remain and continue to deliver the same income stream they did when he was alive.

I generally agree with no life insurance. However, with two children still at home, and dependent on you for another 8 years or so, my conservative nature would be to insure- just in case.

 

[Midpack]

Welcome back. My circumstances were very much like yours in many ways except I was 57 when I was "simply tired of what I do." I also left knowing I was FI, but I think I'd be happy to find an second career and start from scratch, but it's nice to know I should never have to.

I ran your basic info to age 95 through FIRECALC and it didn't look promising (64% success rate) but I suspect you have Soc Sec and/or other income sources so you'd have to run your own numbers. In addition to FIRECalc: A different kind of retirement calculator, you might learn something about your tax/withdrawal picture from Optimal Retirement Calculator and Retirement Decision Support System. Both are just helpful tools, not guarantees of course.

I also wouldn't consider a 4% WR, I'd shoot for no more than 3% at your age - but we all have our own unique risk tolerances and retirement "plan B" options, so it's a personal decision only you have to live with.

Like donheff, I don't see the need to buy life insurance. I always viewed life insurance as "buying an estate" when you don't have one to provide for your dependents in the event of an untimely death and/or insufficient assets. You already have a substantial estate, so I don't see the need for life insurance.

 

[PaddyMac]

What popped out at me was that you have a $400K house but spend $150K a year. Have you been keeping a good budget for the past few years? This seems like a high annual outflow. If you were to cut back and make a few adjustments, I bet your wife could stop working much sooner.

 

[pb4uski]

I agree with others that at your age a more appropriate WR would be 3%, there is no need for life insurance given your assets and that if you really need $150k a year to live that it would be premature to RE.

I wonder if you really "need" $150k a year to live and if there is lattitude there. If you could dial that down to $100 I think you would be in good shape to RE. And as Midpack points out including SS in your projections would increase the $100k some, but probably not a whole bunch.

Your choice may come down to a tradeoff of continuing in your high stress job to support your current lifestyle or being able to RE but dialing down the lifestyle a bit.

 

[jclarksnakes]

Welcome back. I'll give you a few quick comments....

Based on your assets, you are right on the edge for being able to retire on your current spending plan. I suggest you run your numbers through FIRECalc. Be sure to include any SS and pensions you may have coming. You would be in even better shape if you include a downsizing in your expenses. When your last child leaves for college is a fairly convenient time to do this.

Don't expect a lot of sympathy for your high stress job. You'll find a small army of people here with high stress jobs that would retire with a lot less than what you have.

Now about that high stress job. You are making your job high stress. Yes, it is you. It is not the job. (Please consider yourself B-slapped). The next time you are confronted with what you used to consider a stressful situation, take a deep breath, smile and ask how you can help them. You are making a pile of money doing what you are doing. You have enough money to walk out today and live a great life. No one is coming at you with guns or knives. CHILL OUT. The worst that can happen is that you get fired. Now how is that bad?

I really think you need to conquer the "high stress job" syndrome so you can really enjoy retiring. I have a job that some of the people I work with call "high stress" and I can't understand how they see the stress. I can only surmise that I have totally accepted the fact that I'm here because I want to be and don't need the money or any sort of ego gratification from my position.

After you conquer yourself, then you can start forming your plan on retirement activities.

You say your wife will continue working. Good luck with that. She'll become envious of your lifestyle pretty quickly.

Start reading and learning. You need to take over your own investing. You say it's "professionally managed" which tells us you are paying a significant amount of fees that you can easily avoid. You won't find much support for your FA here.

I vote for this as the best and smartest post on e-r.org in quite awhile. The OP (and many others of us) should read it VERY carefully and take it to heart.

 

[TOPDAWG]

To clear up a few things:

1. Life Insurance = $4mm total, and $8k in premiums per year.
2. Removing the life insurance, and trimming up, I can get my BEFORE tax needs to $115k.
3. No way I live past 80. 95 is impossible.
4. SS will be 20k per year for me, and 10k for my wife. (46 & 42)
5. Property Taxes are currently 7k per year. We could easily move into a smaller house and cut that in two. There is no need for a big house once the kids go to college.
6. I am assuming my tax rate can be controlled with my investments. I cannot afford to pay 35% tax.

Welcome back. My circumstances were very much like yours in many ways except I was 57 when I was "simply tired of what I do." I also left knowing I was FI, but I think I'd be happy to find an second career and start from scratch, but it's nice to know I should never have to.

I ran your basic info to age 95 through FIRECALC and it didn't look promising (64% success rate) but I suspect you have Soc Sec and/or other income sources so you'd have to run your own numbers. In addition to FIRECalc: A different kind of retirement calculator, you might learn something about your tax/withdrawal picture from Optimal Retirement Calculator and Retirement Decision Support System. Both are just helpful tools, not guarantees of course.

I also wouldn't consider a 4% WR, I'd shoot for no more than 3% at your age - but we all have our own unique risk tolerances and retirement "plan B" options, so it's a personal decision only you have to live with.

Like donheff, I don't see the need to buy life insurance. I always viewed life insurance as "buying an estate" when you don't have one to provide for your dependents in the event of an untimely death and/or insufficient assets. You already have a substantial estate, so I don't see the need for life insurance.

 

[pb4uski]

You'll need to do you own diligence, but my off-the-cuff sense is that you could probably retire with a WR of ~3% or perhaps a bit more.

On your tax situation, if you do your own taxes using software, you could do a what-if of your retirement taxes by adjusting your earnings to zero (leave in DW's earnings) and adjusting for any other things that would go away if you retired (perhaps state income tax deduction would be lower) and see where it ends up. If you have your taxes prepared you could DIY or ask your preparer to run a what-if.

 

[donheff]

To clear up a few things:

3. No way I live past 80. 95 is impossible.

Never say never. My father-in-law assumed he would never hit 70. He had a bypass in his 40s, and two of his three older brothers were dead in their 50s -- all from CHD. He ended up living in good health until 85 and only went then because of complication from Alzheimer's. He was down to his last bucks preparatory to Medicaid when he died.

The other aspect of longevity is that all your dying young does is cut the larger social security benefit. Your wife will likely still be living - and spending.

 

[ziggy29]

Beyond what others have said -- weigh the happiness you'd get from being able to get out of your job with the happiness that comes from being able to enjoy a $150K lifestyle. If you'd be more miserable cutting back than work make you feel today, then keep working. If not, you have options.

There's not a right or wrong answer in the general case here -- just the one that's right or wrong for you and your family.

 

[pb4uski]

donheff's post on longevity reminds me of DW's uncle. Great larger than life guy loved to party, rich food and drink, rarely exercised, enjoyed cigars, you get the picture. When he was in his mid 80s he told me with a wry smile that if he had know that he was going to live so damn long that he would have taken better care of himself.

 

[Midpack]

To clear up a few things:

1. Life Insurance = $4mm total, and $8k in premiums per year.
2. Removing the life insurance, and trimming up, I can get my BEFORE tax needs to $115k.
3. No way I live past 80. 95 is impossible.
4. SS will be 20k per year for me, and 10k for my wife. (46 & 42)
5. Property Taxes are currently 7k per year. We could easily move into a smaller house and cut that in two. There is no need for a big house once the kids go to college.
6. I am assuming my tax rate can be controlled with my investments. I cannot afford to pay 35% tax.

I'd encourage you to run FIRECALC yourself.

I think it's a rule of thumb to use life expectancy plus 10 years for planning purposes, so 95 would be planning on 85, you never know how long you'll live. And only you can decide what safety factor is appropriate for your plan duration.

 

[TOPDAWG]

I think I will struggle with not being able to buy whatever I want, whenever I want. I can live on a budget, but right now I am pretty free wheeling. I enjoy the lifestyle (away from work) that I live now. I do however feel I will enjoy the retirement lifestyle too. What retirement means is less eating out and more eating at home, less changing smartphones every 6 months, less buying a new car every 2 to 3 years, etc..


However, what I am reading indicates that 3.2mm is not enough at age 46 to retire and be free wheeling. I will continue to move forward with my original 52-54 range and see how things progress. I appreciate everyone's advice on this forum.

 

[2B]

However, what I am reading indicates that 3.2mm is not enough at age 46 to retire and be free wheeling. I will continue to move forward with my original 52-54 range and see how things progress. I appreciate everyone's advice on this forum.

I suspect that when you reach 52 - 54 you will still not have enough to retire, the stress will still be a problem but you'll see how things look when you're 58 - 60. Good luck.

 

[ziggy29]

I suspect that when you reach 52 - 54 you will still not have enough to retire, the stress will still be a problem but you'll see how things look when you're 58 - 60. Good luck.

Yep. Do a forum search on "One More Year Syndrome" for plenty of examples of this.

 

[amfox1]

TD -

I just retired at the end of February (at age 45) under very similar circumstances financially and otherwise. See below. Before I retired, I spent a great deal of time running FIRECalc and clearing my retirement budget past my financial advisors (and convincing my DW that this was the right thing for us). Therefore, I would recommend running FIRECalc and doing some heavy budgetary lifting to determine whether you are comfortable financially. You can then figure out whether 46, 50 or 54 is the right age.

I am happy to serve as a resource as you try to figure this out.

I am currently 46 years old, and would like to retire in the next 12 months. I am married with two kids 18 & 16. 45, married, 14 & 12

I continue to be burned out from work. While I am currently making 6 figures, coupled with 4 weeks of vacation, and a wonderful place to work, I feel like I need to re-evaluate myself, and my direction in life. I am simply tired of what I do. My job is so customer service oriented, and stressful that I cannot take 1 day off without getting hammered with phone calls. I need peace. I'm tired of high demanding customers. I currently work 5:30am to 4:30pm 5 days a week. Most days my lunch is 30 minutes or less. I am really worried as I get older that I will stroke out, or have a heart issue and miss out on life. I take things seriously at work, and take things to heart. I had a very similar experience.

Liquid assets - $3.20mm+ (assumes no 2011 investment return), of which $2.20mm in non-retirement accounts and $1mm in retirement accounts. Approximately the same amounts and allocations.

Other assets/debts - $400,000 House, Cars, etc.. No Debt, Zero Approximately the same (although house is net of debt).

Kids (ages 18 and 16) assets set aside for college - $125k, each (250k total not included in the above 3.20 Approximately the same (getting a little scary).

Budget - We currently spend 150k pre-tax dollars. This will not change in the next 10 years. We are slightly higher but less on a net basis (see "Income" below.)

Portfolio - Our portfolio is professionally managed. I am pretty confident the portfolio will average 4.5%. We have been transitioning our portfolio from professional management to self-management over a 2-3 year period. This is an area you will need to consider. Expenses will be an issue in retirement and paying 1.5% in management fees on $3mm is a lot of money.

Income - My wife is 42, and will work at least until she is 52. We have a great health plan via her work. Her income is only $15k, but the health insurance is valuable. My DW also works but makes more than your wife, so our net expense nut is 2.9% over the next 10 years.

Health - We are fortunate to have great health. Same.

I currently have no plan on what I will do. I know I will volunteer and help in the community. I would like to get in better shape (I'm not overweight). I want to be in the best physical condition in my life when I turn 50. I used the 18 months before my retirement to get into great shape (I lost 30 pounds and totally changed my diet) and did not retire until I passed two consecutive quarterly physicals. I am in the third month of my retirement and still figuring out what to do next. Kids, home responsibilities, working out, volunteering, reading and self-investing have filled a good chunk of that time. Still a work in progress.

 

[2B]

Yep. Do a forum search on "One More Year Syndrome" for plenty of examples of this.

I'm somewhat in that mode myself. I'm definitely FI and FireCalc says my 95% SWR are almost double my "comfortable" living expenses. "Comfortable" has my "basic" living expenses covered with enough for a little traveling. I would have to ratchet my lifestyle way up to spend it all which I have no interest in doing. My heirs are probably happy with this.

My FI finally passed away after almost a decade of Alzheimer's which frees DW from her emotional fretting and making me just happy to go somewhere other than to visit him in the nursing home.

Oh well, I have absolutely no work related stress other than having to get out of bed four days a week while getting cheap heath insurance and a good income. I have a SERP plan that I screwed up when I set it up. Right now it has about a 1-1/2 years salary that will pay out immediately when I leave the company. If I retire anytime but January, I'll pay over 1/3 of it to the government. Leaving in January will give me a nominal 15% loss to income tax. So, I'm telling myself I'm hanging in untill then. I'll see what I do come December.

 

[Nords]

I think I will struggle with not being able to buy whatever I want, whenever I want.

You don't have to struggle with that. You just have to be willing to work long enough to do it.

If you're not willing to stop doing it then you're not mentally or emotionally ready to retire, and you might even want to cruise back through a library copy of "Your Money Or Your Life".

But by the time you retire, you'll have made enough progress in your thinking to no longer struggle with consumerism. It's a self-fulfilling prophecy.