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Re: Okay, this is where I'm at, am I ready?
Old 01-25-2007, 11:12 AM   #21
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Re: Okay, this is where I'm at, am I ready?

Quote:
Originally Posted by Sam
The OP said 60 to 70K.  I did not run firecalc, but my ballpark guesstimate is that he should be ok at 60K.
I know what he said but the way he said it ...

Quote:
Originally Posted by testtubes
I think I would need to have an income of at least $60k to $70k annually to fund it.
Leads me to believe it is a guesstimate, and considering his self proclaimed level of financial expertise this could be a number based on the "convential wisdom" of needing 80% of current income which we all know is not the way to arrive at how much you need in retirement.
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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 11:51 AM   #22
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Re: Okay, this is where I'm at, am I ready?

JDW-Fire, I would be very interested in what the majority of people in here consider the real percentage of pre-retirement income is really needed in retirement.

My pre-retirement income is $75,000 and my wifes pension is $1250/month. Of my 75k, I now put 11% in 401k. So I know once I retire, I would have the same amount of money to live on if I could generate $61,125 with my investments. (75k minus 11% in 401k, and 7.5% to SS.)
I have an annuity that will pay me a little over $3k per year so if my 900k investments can generate 58k a year, I will have the same amount of income after retirement, that I have before retirement when you add in my wifes pension.

Now I know you are supposed to need less money after you retire but we want to travel and do a few of the things in life we never had a chance to do. And that will take money.
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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 12:03 PM   #23
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Re: Okay, this is where I'm at, am I ready?

TT, you will almost certainly pay less in taxes in retirement. On the expense side, I would suggest tracking your expenses for 6 moths to get asense of what you spend on what stuff. That way you an mock up a post retirement budget pretty easily. Right now, you are just taking shots in the dark.
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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 12:13 PM   #24
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Re: Okay, this is where I'm at, am I ready?

A few things:
1) You should re-think the whole Edward Jones thing IMHO.
2) calculate a realistic budget so you know your expenses.
3) go to firecalc and run the numbers yourself.

I ran the advanced firecalc and unless you plan on augmenting your income with some part time work, at 60k/year you are coming up more than a wee bit shy. However, if you can live on 50k from your investments - I came up with a 97.4% success rate.
at 60K it drops to 76.9%

what age are you planning on tapping your soc sec benefits? I used 12k per year starting at age 62.

Whatever you decide, you are very close. Congrats!

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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 12:26 PM   #25
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Re: Okay, this is where I'm at, am I ready?

Quote:
Originally Posted by testtubes
JDW-Fire, I would be very interested in what the majority of people in here consider the real percentage of pre-retirement income is really needed in retirement.
The majority of people (judging by the posts I read) don't use a "percentage of pre-retirement income" as a guide to how much they will need in retirement. What they do is what I (and brewer & alex) suggested and that is figure out what your current expenses are, analyze them to determine what is going to change (and by how much) in retirement, then pad it some if you think it is necessary and sum everything up to get your retirement budget. If you really want to know the percentage number for the participants of this board (for entertainment purposes) search for the poll that was taken not too long ago asking exactly that.
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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 02:53 PM   #26
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Re: Okay, this is where I'm at, am I ready?

Your post retirement spending is likely to be only somewhat related to your pre retirement spending. You'll still eat, wear clothes (presumably), drive a car sometimes, etc. If you plan to travel extensively or take up diamond collecting, your spending may rise with those newly introduced costs. All things being equal, many have found that post retirement spending is 20% or more less than their pre retirement spending. Many "guides" suggest that you'll lose some spending needs while gaining others and it will hit parity.

But...it depends...

I'd do a reasonable base budget, then add in some fudge factors for everything you're going to need to replace in the next ten years (cars, furnace, water heater, stove, furniture, televisions)...if you can figure out how much you'll spend on that stuff over the next decade, take a chunk of that and add it to your budget. Then add 10-30% "fill" to cover unexpected stuff, to suit your tolerance for risk and the unknown. There are a brazillion internet sources for budget templates, and if you look hard enough around here you'll find that ESRBob and I compared some budget stuff and I consolidated and posted what I ended up using for a template.

A big change for some ER's is that they start doing for themselves what they used to pay others to do. No more child care, gardeners, maids, oil changers, plumbers...so factor in what you can do or are willing to try out yourself.

Will you still eat out a lot or cook at home more? Get rid of your dry cleanables?

I think you get the idea. Spend a day or so figuring this all out, make a spreadsheet, and refer to it and make adjustments as more real data comes your way. I'd advise erring on the conservative side.

Be advised that the freebie company paid medical could evaporate at any time. If you're healthy that may be less of a problem...you could get yourself a high deductible policy and an HSA and skid along until medicare. If you've got preexisting conditions and some issues...factor that possibility into your plan.

Vanguard offers "lifestrategy" and "target retirement" funds, largely based on market indexes. Lifestrategy funds retain their 'shape' while 'target retirement' funds constantly adjust their holdings to become more conservative over time. Buy one to suit your risk tolerance and forget about it. You'll pay under .25% total expenses to the fund and automatically pocket what EJ is going to charge you plus the higher fund fees and trading costs they'll hand you. Its not a perfect solution, but its probably better than what an investment adviser will do to you put you into. To be fair, some advisers are good guys that will help the financially helpless avoid major screwups. Or you can just invest on autopilot as described above and save 1-2% on annual expenses. When you're making 3-5% after taxes and inflation on your money...a percent or two is a pretty big deal.

Lastly, as noted your portfolio size and guesses at your spending needs puts you a bit on the ragged edge. Calculators are fine for what they are, but sometimes I think we overplay the need for 100% probable success rates while planning. Nothing is guaranteed, so the final question is how good of an improviser are you and will you eagerly accept some potholes or will you regret your decision to get out early. Someone willing to cut their spending in half during a couple of bad investing years can easily turn 60 or 80% success rates into 100%.
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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 08:56 PM   #27
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Re: Okay, this is where I'm at, am I ready?

It seems to me you are close to being able to retire early.

The big unknown is your spending. A couple of questions about your spending habits.
How much saving outside of your 401K do you have?
Any debt other than your motorhome?
You mentioned that you and your wife are going to be doing travel. Will this primarily be within North America using the motorhome? Or are you guys going to spring for the round the world cruise on the Queen Elizabeth 2 the wife always dreamed off. .

The people on this board are hard core savers far from typical so what we spend vs the rest of the population is probably very unusual. I finally broke down and bought a new 37" TV after keeping my old one for a mere 24 years, and the number of millionaires on this board with vehicles with more than 100,000 miles has to be some kind of record.
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Re: Okay, this is where I'm at, am I ready?
Old 01-26-2007, 11:17 PM   #28
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Re: Okay, this is where I'm at, am I ready?

One other comment...regarding your SS benefit, please be aware that your SS statement that you get every so often assumes that you keep working, and that future years have earnings applied to your SS account. If you retire at age 55, your (and possibly your wifes) SS benefit may be less than the SS statement indicates.
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Re: Okay, this is where I'm at, am I ready?
Old 01-27-2007, 12:04 PM   #29
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Re: Okay, this is where I'm at, am I ready?

As discussed in another thread on the SS topic, providing you have enough working years (and the OP appears to be fine there), the SS benefit will only be very slightly reduced. Perhaps as little as $10-15/month, but unlikely to be more than a hundred or so.
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Re: Okay, this is where I'm at, am I ready?
Old 01-27-2007, 01:49 PM   #30
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Re: Okay, this is where I'm at, am I ready?

Quote:
Originally Posted by MooreBonds
One other comment...regarding your SS benefit, please be aware that your SS statement that you get every so often assumes that you keep working, and that future years have earnings applied to your SS account. If you retire at age 55, your (and possibly your wifes) SS benefit may be less than the SS statement indicates.
Quote:
Originally Posted by Cute Fuzzy Bunny
As discussed in another thread on the SS topic, providing you have enough working years (and the OP appears to be fine there), the SS benefit will only be very slightly reduced. Perhaps as little as $10-15/month, but unlikely to be more than a hundred or so.
It probably *is* worth it to run the different SS scenarios using the estimator calculators available from
SS website. Perhaps if you have 35 years of very nearly maximum SS earnings, going early may make very
little difference. On the other hand, I recently ran numbers based on 35+ years of current earnings, though progressively increasing throughut that period. In that case, the difference between stopping earnings at 52 and working at current levels until 66+ (full SS age), with both cases starting benefits at 66+, was in excess of $300 per month, due to newer, higher-earnings years replacing older, lower-earngins years. In any event, $3600 per year may not be worth putting in the extra work time for, or you may be able to do something with an annuity as suggested in the SS thread, but it also may not be insignificant for someone feeling close to the edge. I'd suggest running the numbers and not assuming a rule of thumb of negligible impact.

There also is some psychological comfort to be had from doing such due diligence - learning to run the numbers yourself, knowing your expenses, etc. It's not that difficult to put together piece by piece, and with each piece you put in place you may feel a little more confident and in control of your situation.
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Re: Okay, this is where I'm at, am I ready?
Old 01-27-2007, 04:38 PM   #31
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Re: Okay, this is where I'm at, am I ready?

Huh...never heard of a difference that large for someone with a full 35 years in. I only have about 25 years of work, stopped at 39, and only about half of my working years were max contribution years. I think when I did the numbers there was a few hundred bucks difference but I'd have to work another 10-20 years to get it. :P

Sounds to me like the OP is fiddling with another year or two of work, rather than 10-11 to max out the benefit.

But due diligence is always a good idea.

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Re: Okay, this is where I'm at, am I ready?
Old 01-28-2007, 11:49 AM   #32
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Re: Okay, this is where I'm at, am I ready?

For sure, each case can be different, which is why it's good to run the numbers if it's a concern. The 35 years I mentioned above still include part-time years during high school and college (e.g. $142 in 1972), and many early- and mid-career years were well below the max. To earn that additional $300/month as described would indeed require 14 more years of work at max earnings. DW's SS also will be based on that record, which could mean an additional $150/month for her part while we're both living. So perhaps as much as much as $4800 per year could be at stake for the household. That's still not a show stopper or even much of a plan changer. But now, having run the run numbers, we have a better idea of the impact of that decision, for our particular case, and can choose more confidently. It's not rocket science (or, perhaps more appropriately, life science or organic chemistry). It's just a matter of knowing where to find the formulas, calculators, etc., and doing the arithmetic. Ferreting out those specifics via this board from others who have been there, and then following up using personal information, is a great resource and approach.

For TT, I'd also second (or third, fourth, ...) the recommendation to consider
handling investments on your own through VG or other similar no-load vehicles. A diversified, buy-an-hold strategy, appropriate to your stage in the game, need not be that difficult (can be as simple as a single life strategy or target retirement fund) and you'll likely end up with equivalent returns, lower fees, and more control of your situation for having done so.

Good luck on your planning and subsequent ER decisions.
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Re: Okay, this is where I'm at, am I ready?
Old 01-29-2007, 11:02 AM   #33
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Re: Okay, this is where I'm at, am I ready?

TT, one of the things I would strongly recommend that you do is try to educate yourself a little more. There are two basic concepts that you don't seem to have a grasp on that you should definitely try to learn about as soon as possible:

1. In retirement, you should not plan to have more than about a 4% inflation adjusted rate of withdrawal.

2. The furor over turning over your asset management to an IP is because most folks on this Board do it themselves. With a 4% withdrawal rate, it's hard to justify giving a quarter or perhaps even half of that to someone for doing something that you could do yourself. The key to earning adequate returns is all in the asset allocation - something that is very easy to learn yourself.

These concepts and how to do them are addressed in a superb book written by one of the people on this Board. "Work Less, Live More The New Way to Retire Early" by Bob Clatt is probably the best book on the subject that I have ever read. (and I've read a lot of them). Do yourself a favor and run (don't walk) to your local book store to pick up a copy. Seeing how you still have several months to go before you have to make a decision, you have plenty of time to read it.

Now after you get it, make sure you read it cover to cover!! There are pearls of wisdom on every single page!



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