New guy here - is a few more years enough?

[wannabefire]

Newbie here. We aspire to retire sooner than later (or at least stop working for the man). We are both near 50 years young.

Here's our stats. Let me know what I am missing or need to clarify.

Assets:
Tax Deferred $1.3m (32% US Stocks, 29% Int'l Stocks, 25% Bonds 10% Alternatives 3% Cash)
Taxable $1.1M (39% US Stocks, 25% Int'l Stocks, 25% Bonds, Alternatives 10%)
Cash $240k

Other Variables:
Home Value $750k
No Mortgage
No Debt
No Pensions
Pre-funded college
Currently saving $100k/yr now that mortgage is paid and college pre-funded
I'm not sure about counting SS, as I have concerns about its viability-long term (it would be about $2,600/mo each if we wait till 70)

Assumptions for Expenses:
Monthly Fixed Expenses (includes $2,000/mo placeholder for Health Ins) $3,800/mo
Monthly Discretionary Expenses $2,200/mo

I'd love to be done with the rat race ASAP. DW is concerned about stepping away from peak earning years. Also, DW wants to keep our current spending ability.

If we stick it out 3-4 more years, we add to savings aprox 100k/yr in principal AND keep employer group Health Insurance, which would also get the kids to 26 where they'd need their own Health Insurance anyway.

Any thoughts on how we are looking?

EDIT - I checked FIRECalc with $2.5m, 75k expenses, 45 years in retirement and 2 years of additional savings (100k) and it came back with 100%. I do question that a bit...

 

[Red Badger]

Have you run these scenarios through FIRECalc?
You're probably fine, but FC is a good tool.
Don't fret about SS, we may get a haircut (doubtful) at the worst.
Congrats!

 

[wannabefire]

Have you run these scenarios through FIRECalc?
You're probably fine, but FC is a good tool.
Don't fret about SS, we may get a haircut (doubtful) at the worst.
Congrats!

OP here.

Thanks!!

Checked FIRECalc and it looks good! I am a little bit skeptical though...

Also edited my original post.

 

[Ready]

I think you would be fine if you want to retire now since your withdrawal rate would only be 3%, but if work isn't too awful I'd probably still hang around for another year or two since you're putting so much away into savings right now. You'll have to think about how you would feel if we had a major correction at the beginning of your retirement, which would bring your WR above 3% at the beginning of retirement.

History says you'll be fine, so it just depends on how cautious you care to be.

 

[gauss]

Do you expenses include income taxes plus any additional taxes when you withdrawal or Roth convert your tax-deferred acct?

 

[HI Bill]

If I were you (and didn't hate my job), I'd give it another year or two, depending on your desires for new toys or travel. If you plan to stay at home, spending only $2200/mo on discretionary items, then it looks like you're good to go, with a 3% withdrawal rate. BUT...adding 2 years of work, saving $100K/year, and gaining earnings of (likely) around $140K per year, would give you a little bigger cushion. Any ideas for what you want to do in retirement? If you don't have hobbies now, would you take up something new in retirement that's expensive (horse racing, yatching, etc.)? Anyhow, Congrats! Looks like you're in good shape!

 

[street]

Unless I miss read your post you have about 2.5M and expenses are 46000 a year your WR would be about 1.9%. You would be in great shape but like the rest said do the FIRECalc.

 

[wannabefire]

Do you expenses include income taxes plus any additional taxes when you withdrawal or Roth convert your tax-deferred acct?

Good point! No, the expenses do not include income taxes.

I have not really spent much time modeling that out. Are there any good tools available to plan for taxes? It will be very different than our current tax situation. The new Standard deduction certainly helps in the short term.

Are there any good planning models for tax on distributions from tax deferred accounts?

We will almost certainly work for another 3 years.

We have plenty of hobbies and enjoy the outdoors, so I don't think we'll be bored. We just need to keep within the spending constraints, likely on the low side.

 

[LARS]

Perhaps knowing that you CAN quit at anytime will make it easier to stay in the Rat Race for a few more years. My point being knowing you have options can allow you to take more of the nonsense in stride.

Just a thought if you find yourself thinking you want a little more cushion (and more cushion up to a point is never a bad thing assuming physical/mental cost isn’t too high).

 

[wannabefire]

Perhaps knowing that you CAN quit at anytime will make it easier to stay in the Rat Race for a few more years. My point being knowing you have options can allow you to take more of the nonsense in stride.

Just a thought if you find yourself thinking you want a little more cushion (and more cushion up to a point is never a bad thing assuming physical/mental cost isn’t too high).

As you mention (and I highlighted above), getting a comfort level of knowing that we CAN quit with some small adjustments the discretionary spending - that is the key takeaway. I don't hate my job, but I certainly do not love it either.

Knowing that you have the "F-you" card in your hand, gives you a different outlook on your job. Also, seeing the light at the end of the tunnel is satisfying.

Just a few more years!!!

 

[JustCurious]

I'd love to be done with the rat race ASAP. DW is concerned about stepping away from peak earning years. Also, DW wants to keep our current spending ability.

I lean towards agreeing with your wife, but only you know how you feel about working and how important it is for you to stop working. Do you hate your job? Does it make your life miserable? What will you do with your time if you retire? Will you be bored after a while and want to go back to work and then regret that you are unable to earn what you earned before? Are you comfortable cutting back on expenses for the rest of your life? Will you regret not working a few more years to pad the nest egg? Only you can answer these questions for yourself.

 

[exnavynuke]

At a conservative 3.5% withdrawal rate, never getting social security, you could quit today and take home ~$92k/year, leaving you up to ~19% of that for taxes and still have enough to cover your budgeted $75k/year.

IF you like working stick with it, but I don't think you have any need to.

 

[wannabefire]

At a conservative 3.5% withdrawal rate, never getting social security, you could quit today and take home ~$92k/year, leaving you up to ~19% of that for taxes and still have enough to cover your budgeted $75k/year.

IF you like working stick with it, but I don't think you have any need to.

Thanks for another perspective. As much as I’d like to call it quits now, I will likely stick with it and match my DW’s planned exit timing of another 3-4 years.

The upside is that we’ll add to the “cushion” and maybe splurge on a few things going into our planned exit from work as we know it.

Thanks for all of the thoughtful responses! It really is great to have a community such as this to bounce ideas off and learn from.