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Long Way To The Top
Old 05-21-2014, 08:31 PM   #1
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Long Way To The Top

Hi Everyone, I am 44 ,with approximately $198,000 in invested assets.My gross pay is $45,000 annually.Of the $45,000 I contribute 6% to a 401k worth $64,700.In my taxable accounts I have $133,300.I contribute $550 a month to my taxable accounts.Between the 401k and the taxable accounts I am 95% in stocks.Right now I am living on roughly $24,000-$25,000 a year.When I am 52 I get a pension worth about $1400 a month.I will also have health care until 65.In my taxable accounts 70% is in a Equity Income Fund,20% in a Real Estate Fund,with the remainder in the Sp 500.In my 401k I have almost 40% in a small cap value fund, 45% in the SP500,and the remainder in a Interest Income Fund.The Interest Income Fund I do not contribute to anymore.I should also mention I am single with no children.I also own a condo worth $240k and I owe $78,000k.I would like $650k between my taxable accounts and 401k before I pull the plug at 52.Not sure if I will make it.It is a lot harder than I thought.It is a long,hard road.In October 2011 I had $100k in investment assets.I am looking for support,any advice,encouragement.Thanks,
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Old 05-21-2014, 08:41 PM   #2
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Do you have a government job with a secure pension? Otherwise, I think you will have a tough time, though a good retirement later in life should be feasible.

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Old 05-21-2014, 08:52 PM   #3
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First thing - nice job doubling your money since Oct 2011. It looks like you're saving about 20% of your income - 6% in 401k and 14% in the taxable account. Does your employer match on your 401k?

I don't have any specific advise other than keep saving as much as you can...and you'll likely get there.
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Old 05-21-2014, 09:06 PM   #4
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Ha,thanks for the reply.I do not have a Government job.But it is a Unionized job.Of course anything is possible,but I have to feel my pension is safe,atleast for now.In the distant future,who knows?But it would be difficult for my company to short change me on it.
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Old 05-21-2014, 09:08 PM   #5
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Stay way from relationships. They can impact plans. Welome to the group.
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Old 05-21-2014, 09:13 PM   #6
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Are you contributing to Social Security? If so, it looks to me like you could be comfortable with your current saving rate, but that's assuming you're getting an overall 7% return on your investments. Otherwise, you're barely going to keep up with inflation, given current expenses inflated at 3%, and that's only going to last until your 90 or so. These are pretty simplistic guesses, recommend you put your numbers in FireCalc...
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Old 05-21-2014, 09:38 PM   #7
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ggbutcher,I will have social security.I have been paying into it all along.I have been working for the same company for 25 years.When I reach 62,if I don't need SS I will wait until 67. Rodi,Yes the compounding effects from 100k to 198k is sure nice. Like you say I will just keep plugging away and hope I get where I need to be.
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Old 05-21-2014, 10:33 PM   #8
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Cool; note that by 'comfortable', I mean what we used to refer to in the service as 'three hots and a cot'.

If you can, consider bumping up savings, at least $100/month. It appears you have room for that in your income/outgo, and what I think you want to consider is to be able to draw down the 401k between 59 1/2 and 70 so your social security is taxed as little as possible. That relationship is a bit of a head-hurter; there's a recent thread on it.

Welcome to a very helpful and informative forum...
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Old 05-21-2014, 10:58 PM   #9
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Have you ran FireCalc in multiple scenarios?
Will you have enough income when you FIRE at 52?
What would happen if there were a Black Swan occurrence prior to FIRE or after FIRE?

What Color is Your Parachute? Richard Bolles, after FIRE?
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Old 05-21-2014, 11:04 PM   #10
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You are doing good. Obviously the more you can save the better. But you also should be able to enjoy life at a std of living you want. So there presents the trade-off. The more you can save now, the better. One thing you did not specify, but I assume your pension will continue to rise if you work longer than 52? Not that I am saying to do it, but you might think about making the pension higher, and give yourself another year or two of contributions to make things better financially. You will still be pretty young and a lot of good years to enjoy retirement.

Just continue to save as much as you can and then make the OMY decision when you are closer to the 52 point. I think your allocation is about what i would do, now is time to take more risk and ride the ups and downs since you have a somewhat longer time horizon.
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Old 05-22-2014, 05:13 AM   #11
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Originally Posted by 38Chevy454 View Post
You are doing good. Obviously the more you can save the better. But you also should be able to enjoy life at a std of living you want. So there presents the trade-off. The more you can save now, the better. One thing you did not specify, but I assume your pension will continue to rise if you work longer than 52? Not that I am saying to do it, but you might think about making the pension higher, and give yourself another year or two of contributions to make things better financially. You will still be pretty young and a lot of good years to enjoy retirement.

Just continue to save as much as you can and then make the OMY decision when you are closer to the 52 point. I think your allocation is about what i would do, now is time to take more risk and ride the ups and downs since you have a somewhat longer time horizon.
I will continue to earn pension benefits if I work past 52.Age 52 is the point in which I can retire without any pension benefits reduction. My company doesn't match the 401k at all.My current plan is to have atleast $450k in the taxable accounts.Put it in a bond fund to generate atleast $20,000 If there is any excess income I will reinvest it back in the bond fund.I figure over time this will help raise my income.At some point I will have to move the bulk of my taxable investments to the bond fund.I am not even close to that yet.Another 4 or 5 years I will have a better idea of when to move to bonds.Right now I think stocks make sense for me.With $20,000 from the bond fund and $1400 from the pension I feel I will be in the ballpark to replace my current living expenses.If I am not,then I work longer than 52.The pension is taxable though,and may be closer to $1500 a month.
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Old 05-22-2014, 05:59 AM   #12
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I think your goal is doable as long as the stock market cooperates over the next 8 years. At your savings rate you could have maybe $550,000 in investment assets by age 52. You could then pull nearly $20,000 (~3.5%) from this portfolio for life to supplement your pension and eventually social security benefits. This assumes all the money you are saving goes to retirement and not vehicle replacement, home repairs, a new girlfriend, etc. I think you may want to reconsider your plan to move all your taxable money into fixed income. You will likely need more opportunity for growth given your long time horizon... unless you have a short life expectancy.
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Old 05-22-2014, 09:10 AM   #13
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I assume you are in the 15% tax bracket now, so there is no great need to increase 401(k) contributions...
Do your current expenses include your mortgage payment? If so, how much is it? I assume it'd be somewhere around $7.5-10k a year. If that is taken out of your annual expenses, you're almost at a break even with your pension payment! Is the pension COLA?
Do your current expenses include taxes? The taxes will be significantly reduced from your current levels if you can live mostly on your pension.

Can you have your condo paid off before pulling the plug, though you'd still have property taxes and COA fees?
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Old 05-24-2014, 08:37 AM   #14
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I assume you are in the 15% tax bracket now, so there is no great need to increase 401(k) contributions...
Do your current expenses include your mortgage payment? If so, how much is it? I assume it'd be somewhere around $7.5-10k a year. If that is taken out of your annual expenses, you're almost at a break even with your pension payment! Is the pension COLA?
Do your current expenses include taxes? The taxes will be significantly reduced from your current levels if you can live mostly on your pension.

Can you have your condo paid off before pulling the plug, though you'd still have property taxes and COA fees?
You are very close to the annual mortgage expense.The pension will be a fixed amount for life at the point I decide to take it.So obviously I need as much investment assets as possible to help supplement my income.Yes,my current expenses include taxes.It may come to pass that I get $500k in my taxable accounts and decide to shoot for 700k or higher.Of course I will have to work longer but it is what it is.No way I could pay the mortgage off completely before I am 52 and invest at the same time.I could sell it though when I retire .I do have about $140k -150k in equity in my condo right now,and I could sell it and move to a cheaper place to live when I retire.The equity will be higher in all probability in the future and I could rent a house or apartment instead of buy and put the equity from the condo in investments to help boost my income.
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