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Old 06-22-2016, 09:45 PM   #1
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Loving Retirement

Hi all, been lurking for a few months so figure its time to introduce myself.
Iím Steve and retired from NY state government service 12/02/15. Age 55.
Been reading tonís of threads on ER, lots of good info, but kind of glad I didnít find this site prior to pulling the plug or I might have been scared off from doing so.
A little background: Didnít start being serious about life and work until I was 30 years old and didnít start contributing to deferred comp plan until I was 40.
So this is where I am, I was earning very low six figures gross and netting about 60% after all deductions. I now get payments from a defined benefit plan no cola until Iím 62 and a small draw on my 457 plan. All monthly bills paid for i.e.: Mortgage, taxes, electric, etc, ect. and I am able to start building an emergency fund, also still have some fun money. Mortgage is the only outstanding debt, no CCís and such.
Income replacement is at 89.5% net. So only took a haircut of 11% between working and not working. By not commuting and lunch money I save more than 11%. No out of pocket for medical except $20 co pay until Medicare eligible then must sign up for part A and B, part B cost will be reimbursed by state and state will pick up what Medicare does not pay like a supplement plan I guess. If I kick the bucket the DW will keep the same medical and she gets 75% of my DB plan for life.
457 will last until Iím 60 then I have a small 401K to last until Iím 62, I plan to take SS at 62 because I had cancer at 52 and who knows if it will ever come back.

I guess the big question is using the income replacement method valid?
So far 6 months in it seems to work.
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Old 06-23-2016, 06:39 AM   #2
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Originally Posted by Just_Steve View Post
I guess the big question is using the income replacement method valid?
So far 6 months in it seems to work.
I will find out very soon. From my calculations, deducting Medicare/SS, 401K, my house payment that is no more and extra federal income taxes, I only need ~30% of what I was making to have the equivalent after tax money.

An 85% replacement ratio assume you do not save very much to begin with.


DescriptionAmount
Salary$113,001
-FICA($8,645)
-Health Care Sav($4,350)
Less 401K($24,000)
Tax Savings($26,300)
Sub Total$49,706
Mortgage Pmt($16,836)
Annual Total$32,870
Monthly Total$2,739
Salary Equiv %29.09%
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Old 06-23-2016, 09:29 AM   #3
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That sounds good for now, but your salary was likely keeping up with inflation or better and your RE income will not do as well there.
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Old 06-23-2016, 09:41 AM   #4
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"An 85% replacement ratio assume you do not save very much to begin with."

I don't agree. It means you intend to spend as much in retirement as you did working, less the costs of working, including your "typical" retirement contribution. If you are smart about this, you have paid off most or all of your debt and your retirement contributions that were a large percentage of you salary go away. After you adjust for the difference between your employer paid health insurance and ACA or whatever you substitute, which in Senator's case is free through the VA, and reduced taxes if that applies, then you see what you need to replace in terms of percentage of your income while working.
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Old 06-23-2016, 10:00 AM   #5
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That sounds good for now, but your salary was likely keeping up with inflation or better and your RE income will not do as well there.
Wish that was the case, managerial salary freeze 6 of my last 7 years of employment although I did get promotion bump 5 yrs ago but voluntary demoted 2 yrs ago, didn't want to deal with the stress after returning from extended sick leave.
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Old 06-23-2016, 10:23 AM   #6
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Sounds like a plan. You say your pension gets COLA adjustments after age 62 right? You've got a defined benefit pension and retiree medical - both big pluses. And a serious medical issue really makes you think about what is important to you in life. Continued good health and welcome!
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Old 06-23-2016, 06:13 PM   #7
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Originally Posted by Senator View Post
I will find out very soon. From my calculations, deducting Medicare/SS, 401K, my house payment that is no more and extra federal income taxes, I only need ~30% of what I was making to have the equivalent after tax money.

An 85% replacement ratio assume you do not save very much to begin with.


DescriptionAmount
Salary$113,001
-FICA($8,645)
-Health Care Sav($4,350)
Less 401K($24,000)
Tax Savings($26,300)
Sub Total$49,706
Mortgage Pmt($16,836)
Annual Total$32,870
Monthly Total$2,739
Salary Equiv %29.09%
Besides my ongoing mortgage thats real close.
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